Introduction

Whether the discussion is taking place around the kitchen table or the boardroom conference table, and whether the subject is redecorating the family room, creating a new exhibition or building a new museum, immediately after the undertaking is suggested, inevitably the discussion shifts to consider the questions “How much will it cost?” or “Can we afford it?”  Even as a kid when I earned money doing such things as painting a neighbor’s garage, splitting firewood, mowing lawns or spading gardens, I was generally expected to tell the neighbor up front how much the work would cost.  Few individuals, businesses or institutions can simply decide to create something and then proceed to do so without considering how much it will cost and how long it will take to complete. 

As I moved from my boyhood clients into operating my own cabinet shop and onto building natural history exhibits and managing the design and fabrication of interactive science exhibitions, the projects have become much more complex and the budgets tremendously bigger. But, large or small, nearly all the projects I have been involved with have required a detailed cost estimate and budget to be produced and maintained.  And, no matter the size of the project, at its core the estimating process for each is essentially the same, consisting of: 1) envisioning the project; 2) assigning accurate values to each of the parts; and 3) adding up all the values – which can include overhead and profit.  The process is similar no matter where you are positioned in the project; whether you are the client, the designer or the fabricator, whether you are estimating the costs in order to create a budget, determine the feasibility of a proposed design or bidding on a set of plans in order to win a contract to build the exhibits. 

Initially, creating cost estimates and budgets was a dreaded but unavoidable step in the process of getting work and doing a job.  They were tasks that brought with them a fair amount of apprehension, that couldn’t be avoided and certainly weren’t the part of the work that I found particularly interesting, any more than I liked calculating payroll taxes or filling out worker’s compensation reports.  But as I have done this work from different positions – as the sole proprietor of a small shop, as a fabricator and project manager for a natural history exhibition fabrication firm, and as a project manager for exhibition design firms – I have come to see the cost estimating and budgeting process as a creative undertaking because funding allocation shapes the project in both subtle and dramatic ways.  And in every project, no matter the scale or complexity, accurately estimated costs and proper allocation of resources are necessary prerequisites of success.

Starting Out:  Creating a Budget

In essence, a budget consists of a list of items needed and their costs.  A slightly more complex budget includes time, so is organized to reflect the duration of the project in addition to the cost of the component parts.  Including the aspect of time allows one to project not only how much money is required to complete the work but also approximately when during the project different expenses will be incurred.  A useful budget will include:

• Complete list of all the components of a project
• Cost for each component
• Distribution of the costs over the project period so that:  1) cash needs can be predicted and 2) cash flows managed. 

At the beginning of a project much is unknown.  This is particularly the case if the purpose of creating a budget is simply to generate a “range of magnitude” estimate so as to understand the scale of a proposed project.  Often budgets are created primarily to test a given number, for instance, to answer the question: “Is X amount enough to build an exhibition of this size?”

Regardless of whether you are creating a “back of the envelope” estimate or a detailed budget for an established project, the first step remains the same – make a list.  Often this list will consist of only a few known items – e.g., the projected size of the exhibition or museum, the subject of the exhibition, or the type of exhibition.  Next, consider and list any specific exclusions – items or services that are not going to be included in the budget.  For instance, there may be reason to exclude lighting design and fixtures or the cost of media production.  Maybe the estimate is strictly for the cost of the fabrication and installation of the exhibits and not the cost of the exhibition design.  Creating these lists begins to define the project as budgeted.  Such lists also inform the client, funders or others what the budget does and doesn’t include.

Setting Up the Spreadsheet

Spreadsheet software is nearly indispensable for estimating and budgeting a project.  A properly designed spreadsheet will do exactly what its name implies – it will spread the numbers out across the budget categories and organize, dynamically link, sub-total and total them in many different ways.  Properly designed, spreadsheets allow one to see the impact of any change in cost to all relevant areas of the project, as well as to see quickly how the change affects the total project cost.  The budget workbooks, which typically start out as a single worksheet, can become quite large and complex over time, changing and developing increasing detail as the project matures.

Project spreadsheets are, or can be, as complex as the projects they represent and it is beyond the scope of this article to discuss their layout and organization except in a general way.  The design of any particular exhibition budget spreadsheet or workbook depends on the person who is creating it and how they want to organize and present the data.  For example, the workbook may consist of individual worksheets for each gallery that are then subdivided according to cost categories such as exhibits, lighting, furniture or infrastructure.  Alternately, the workbook could be composed of individual sheets, one for each category of expense or the budget can be organized by vendor contract/category. 

Most of the time, budgets are some combination of these approaches as some costs are specific to a part of the exhibition or to one phase of the work and others, such as taxes or insurance, are associated with the whole of the exhibition.  Generally, no matter how many worksheets exist in the budget workbook or how the costs are organized, there should be a single summary sheet where the major cost categories of the budget are listed and totaled.  This summary sheet shows the estimated project cost compared with the total project budget.

Budget design and organization usually evolves.  The budget may start out as a single sheet listing every element that is likely required.  The list might next be sorted into categories with subtotals for each that accumulate into a single total at the top or bottom of the page.  As the exhibition design develops and there is more information and more complexity to deal with, it will be necessary to modify the structure of the budget to sort out and track what has been learned so that the budget accurately reflects decisions that have been made or priorities that have changed.  Sometimes it useful to set up linked sub-sheets within the budget workbook in order to track competing cost quotes for single items or categories of items or to allow quick comparisons between one scenario and another. 

A recent exhibition budget workbook included the following worksheets:
 

Not all of these sheets existed at the beginning of the project.  Most were added as needed and even those that were included in the original workbook underwent multiple modifications and changes by the end of the project.  How the worksheets worked together and how they were dynamically linked also evolved and changed over time.  Early in this project, when soliciting preliminary cost estimates for groups of exhibits, I wanted to compare estimated costs from different vendors and set up a sheet to do this.  As the project moved forward and contracts were signed, this particular sheet was deleted from the workbook because it was no longer necessary.

The “Delay cost” sheet arose when the project was experiencing building delays and I was concerned about handling costs associated with such delays.  The “Vendor risk assessment” sheet quantified the vagaries of currency fluctuations in an international project where there were contracts involving different currencies.  “Lists and reference tables” is a sheet that contains values and data that all the other sheets use for calculation - values such as currency exchange rates, or data like a project calendar, etc.  Changes to this sheet immediately propagate to the other linked sheets in the workbook. 

Good budgets anticipate change in the project, but not every cost can be anticipated.  When unanticipated project changes occur, include them in the budget immediately, for such timely inclusion often prevents unwelcome last minute surprises.

Estimating and Verifying Costs

There are several methods of estimating costs and each is useful at different points in a project.  The easiest, and the one most likely to be used initially is simply estimating based on the size of the exhibition – how many square feet or meters of exhibition area are being planned?  In order to estimate with this method it is necessary to find out the costs of comparable exhibitions.  Ideally, these exhibitions are substantially similar to the one being envisioned.  Sometimes the designers, museums, or fabrication firms that created the “reference” exhibition can supply this information– if they are willing.  Of course, figuring out what is included in, or excluded from, any number given is the tricky part!  Little published data is available for museum or science museum exhibitions, probably due to the small size of the market and the specialized nature of the work. 

The Smithsonian Institution (2002) estimate of the median direct cost (exhibition-related costs such as design and fabrication only and not in-house staff, overhead costs, publications, brochures, public programs, and advertising) per square foot for permanent non-art exhibitions was $197.  However, the variation in cost per square foot for the 77 exhibitions included in the survey was huge, from well under $50 to $1,533.  The variation in direct cost reflects the complexity of the exhibition.  Poster shows, or exhibitions consisting primarily of artifacts displayed in cases and interpreted on text panels are considerably less expensive to design and produce than exhibitions that include custom made one-of-a-kind mechanical and electronic interactive exhibits or high impact video and other media presentations.  Over time cost estimators develop their own databases of exhibit costs in addition to the budgets they have created for previous projects to use for comparison and reference. 

Obviously, any calculation generated by multiplying the exhibition area by a dollar amount, no matter how that the square foot or square meter cost was generated, needs to be qualified.  By qualified, I mean that it is still necessary to think about the available money and envision specifically what one hopes to accomplish with it.  Develop as much of a detailed picture of the desired exhibition as is humanly possible, even given limited information.  Are there any particularly large or really unique elements that are being contemplated?  Are there special conditions created by the building or the environment that might introduce additional costs?  Does one of the funding bodies have a particular interest in a particular technology or type of exhibit that is exceptionally expensive – for instance, on one project Boeing made having Flight Simulators a condition of their providing funding.  Is there a strong desire for a lot of flash and excitement in the form of highly produced highly visible media presentations?  Is the proposed building likely to create installation or lighting challenges?  Are any of the proposed exhibits highly experimental or relying on technologies that are “not quite ready for primetime?” 

Other questions that can yield useful information at this stage are: Is the schedule for design and production of the building and the exhibition realistic?  Is the funding in place?  How likely is the project to stay on schedule?  How many exhibits may need to be prototyped and tested?  What kind of evaluation is being proposed, if any?  Are outside experts necessary for any part of the production and planning and how much will they cost?  What will be the requirements for accessibility: will there be special or extraordinary accommodation made for any group of visitors?  Will exhibits require labels in Braille or are super-titles and subtitles necessary on all visual presentations? 

The goal of such “qualifying exercises” isn’t to drive the cost up, but to make sure that the budget is reasonable for the project being considered.  Many of these things are impossible to know at the outset, but if allowance is made at the beginning for some of them, the money is then available in the budget.  If not all the things that are anticipated in the early budget are included in the final design; one can count on the fact that something that wasn’t contemplated will show up to claim the “allowance.”  My goal when doing an estimate for any project isn’t to get all the details correct, because I never will, but simply to have included enough items in the budget to serve as placeholders for the real items and the money they will eventually require.  Initially the only thing you really must get right is the scale, difficulty, and overall complexity of the project.  Get this right, and there should be enough money in the budget to insure completion.

Hidden or unexpected costs

Any project includes unknown or unanticipated costs.  Moreover, at the beginning of a project, when the overall project budget is often being determined, there is generally little specific information available on which to base a cost estimate.  Typically, the budget is designed with contingency funds to cover these future expenses – either directly by adding a percentage to the overall estimate, assigning varying percentages to individual components or categories of the budget or indirectly by exaggerating the estimated costs of the known elements.  At the beginning or conceptual stage of the project the contingency can be 30% or more of the budget. 

Depending on how the budget is constructed, contingency moneys can be distributed throughout so that there are contingence funds allocated to specific areas of the project.  For example, say the estimated lighting costs are $200,000 based on a calculation of the number of exhibits and circulation area to be lighted.  This might normally be adequate but, in this example, knowing the designer prefers to use custom lighting fixtures, until the lighting design is complete a contingency can be assigned to the base amount.  But at the same time, it might be that many of the planned individual exhibits are well understood and the risk of underestimating their cost is small so there is no need to add a contingency to this part of the budget.  As time goes on, as more planning is done and more elements of the exhibition are determined, the accuracy of the budget naturally improves.  And as estimated costs are replaced with good quotes from qualified vendors, the contingencies can be reduced. 

Strategically, in order to make sure that the money needed to do the project remains in the budget, it is probably better to assign specific contingencies to budget categories according to the level of risk rather than simply assigning a percentage to the entire budget.  This way the money is distributed within the project budget and is more defensible – the rational for the amount of the contingency is likely to be perceived as stronger and more compelling and the money less likely to be seen as extra.  “Extra” money tends to be taken away and reassigned to other areas of a project.  Exaggerating costs for individual components of the exhibition in order to create contingency moneys is probably okay in the early stages, but is usually less desirable as time goes on because it is deceptive and, from my point of view, less flexible.  It distorts or hides the real or estimated costs of items and makes it difficult to know which numbers are dependable and which are inflated.

Variables

There are cost categories that may only be occasionally required.  But it is important to think through the entire process of exhibition design, fabrication, and installation to see if any of them are applicable.  For instance, in the US there is typically no tax levied on services, such as exhibit design or text writing.  However, this is not always the case in other parts of the world.  In Europe, VAT or “value added tax” ranges from 16% to 23% depending on the country -- and this tax applies to most work in Europe.  In addition, there are customs duties and import fees to be considered.  Less exotic expense categories, nevertheless often overlooked, might be 24-hour on-site security or the cost of the cleaning crews required for the exhibition installation phase.  Finally, one variable cost might well lead to others. For example, the rental of temporary storage facilities during or prior to exhibition installation may bring along with it insurance or transportation and labor costs not covered elsewhere in the budget.

Verifying Estimates

Verifying costs is always difficult and it isn’t an exact science.  The fact is that the price for any item in the budget will not be certain until someone has agreed to provide the item for a fixed price and there is a contract to ensure its delivery – and even then there can be some question about the final price.  Until such time it is necessary to rely on personal experience and that of other professionals in the field to assign reasonable values to the components of the exhibition.  Estimating is always a combination of adding up the costs of those items that can be priced reliably and the best calculation or educated guess as to the cost of the other parts. 

One of the best sources for cost information is, of course, people who actually build exhibits and ideally, might be firms that would be contracted for the exhibits being estimated.  Early in the design process these vendors can provide guidelines for the price range of a particular exhibit, given a set of general performance and materials criteria.  They are often understandably unwilling to be very specific about costs, especially early in a project when there is little for them to work from, because designs tend to change and become more complicated over time but the quoted price is remembered and is somehow expected to remain the same.  Salesmen and factory or company representatives can also be helpful, especially where standard technologies are involved.  AV equipment, video walls, computers, projectors, do not represent a huge estimating challenge given some parameters of size and performance but the media that is to be presented with them can be vastly variable. 

Most of the time it is necessary to talk to a number of producers in order to get a range of costs and then decide how much money can be spent or how much the client wants to spend and budget that amount.  Then, as with many other things in the exhibition budget, the design, production, and/or fabrication has to be managed.  Often there will be the temptation to seize on a low estimate and use it in the budget.  Resist this urge.  Be skeptical of any quote that is outside the general range of the other estimates; often it represents a misunderstanding of what is required, but sometimes it can be a ploy to get a contract and then “change-order” to profitability. 

The design of a major exhibition tends to be a long process and the exhibition concept will evolve along with the physical and visual design of the exhibition.  The budget must also evolve.  As things change one may find oneself going back to the same firms and the same people asking them to do things for which the only payoff is the prospect of future work – getting to build the things they are helping to design and price.  This is how the process works, but it is important to be mindful of what is being asked of these people and to be fair in the process.  Do not make promises that cannot be kept: if the project will ultimately go out to competitive bid, this needs to be clear in all interactions with potential fabricators.  If there will be negotiated contracts with pre-qualified vendors, let them know that and also how they can qualify to be one of those firms.  Give people time to respond and provide them as much information as is available to help them answer the question or provide accurate quotes.  Don’t burn them out by making repeated requests for the same or similar information; rather wait until there are significant changes in the design or the specification to ask for a revised quote.  And always be aware that until there is a contract there is no obligation for vendors to honor any quote they provide.  The actual bid when it comes in may very well include indirect costs, administration and overhead, and other costs that were not included in the informal estimates. 

Budget and schedule

The greatest and most common budget-buster is project delay.  Once a project begins, money is being consumed every hour of every day.  Unless you are managing the entire project and responsible for the entire budget, many of these costs do not effect you directly – unless the funds needed for your own work you are consumed by other parts of the project—typically the building construction.  However, when the project is delayed, for whatever reason, the delay will affect the total exhibition budget and the longer the delay, likely the greater will be the increase in exhibition costs.  Fundamentally, exhibition design and fabrication work doesn’t stop simply because the project is delayed or halted.  Since exhibition design is directly related to the design and construction of the building, design work that directly relates to the interface between the exhibition and the building will continue at some level even if other exhibition design work is completed or put on hold.  This “attenuated” work, basically work that takes more time and effort simply because information and communications have to be tracked and maintained across a span of time, won’t likely add anything to the project except cost but nevertheless it must be done. 

Exhibition fabrication costs can increase as well as a direct result of project delays; how much they increase depends on when in the project the delays occur.  Fabricators are always intensely interested in the building schedule and how closely the contractor is adhering to the official timeline because they need to time the completion and delivery of their work to the delivery of the building.  Since the completion of the building and the installation of the exhibits are linked and exhibit fabrication usually takes at least a year, delays that occur during the last project year, when exhibits are in production, can cause huge problems for exhibit builders.  Fabricators may have to stop work on the project and pack and move the exhibits into storage and there are many costs associated with such storage that they will want to pass along to the client.  Or they may be contractually able to continue the work and deliver the completed exhibits to the client – who then has to deal with the costs of formally receiving and storing the exhibits until the installation can take place.  Exhibit fabricators may have problems with cash flow because they cannot complete and deliver the exhibits and so cannot invoice for the work.  Often they turn to other projects to keep their people busy and sometimes this means that after a long project delay, particular exhibit fabricators will actually be behind schedule and have difficulty delivering on time. 

Just as it is necessary for the exhibition designers to maintain communications and to continue to work with the architects, building contractors and engineers during delays in the building construction, it is also necessary to continue to manage the exhibit fabricators during periods of inactivity or delay.  It is absolutely necessary to keep them informed of progress on the building so that they can restart the work and deliver the exhibits on time.  There will be ongoing communications about text and exhibit design that need to be tracked and followed up on – and frankly, remembered.  Things tend to get lost or forgotten during delays, parts are misplaced and papers buried and it requires active management to keep the project on track during the periods when the fabricators have other projects on their minds.

It isn’t possible to know in advance exactly when delays will occur or how long they will be, but it is important to think about this eventuality when planning the project and negotiating the budget.  Make sure that exhibition design and management contracts include a mechanism to adjust for increased expenses associated with delays.  Savvy exhibit contractors will address the cost of delay in their contract – because they will have been through this experience before – and those potential costs should be accounted for in the budget, probably as part of a contingency that is carried until nearly the end of the project. 

Budget Management

Exhibition budgets are generally dynamic documents.  Such budgets change as the project develops and are finished only after the last contract is closed.  The budget has to be updated regularly and quite often.  In the early stages of a major project, estimating costs and creating or developing the budget is a full time job as concepts are brought forth and have to be evaluated and their costs estimated.  As design proceeds and decisions are made, the budget will become more accurate and reliable.  Initial estimates will be replaced with vendor quotes that are based on drawings and specifications and ultimately those quotes will be replaced with contracted prices.  In many cases, a large percentage of the project cost is not really settled until design is complete, bids received and contracts closed.  In other cases, the fabricators are brought into the project fairly early in the design process via a strategy of negotiated contracts and it is often possible to finalize costs earlier. 

In any event, different types of work will be finalized and contracted at different stages of the project.  Generally, large contracts for services like exhibit construction and media design and production will close first, as they have the longest lead-time.  Contracts that involve modifications or additions to the building or large structures that are built into the building should also be finalized early in the contracting period.  Contracts for lighting, graphics, and text production will come later.  Most contracts for the services required during the exhibition installation can’t be finalized until just before they are required, but these are typically small contracts – equipment rental, labor, cleaning.  And, as each contract is agreed and signed, the budget is updated to reflect newest, incremental level of certainty.

Project budgets are intended to allocate and track money in a project, but such budgets are no substitute for proper bookkeeping.  A project budget is not a general ledger.  While the project budget absolutely must be up to date and accurately reflect the current status of the project, only the general ledger contains detailed accounts of actual contract payments and other project expenses.  These are reconciled against bank records.  Properly managed the general ledger and the project budget do act as a check on each other, in that the project budget will usually have a “projected to actual” worksheet.  Generally, the project management authorizes the accounting department to make payments after contractor invoices are checked against the contract terms and the budget.  After payments are made, the project management updates the actual payment in the project budget.  One can import the actual accounting information necessary to update by setting up dynamic links in the project budget to the general ledger or more simply by entering the totals in the correct locations. 

Conclusion

A project budget is a dynamic planning document; it changes constantly as the project develops and matures and is finished only after the project is done and the contracts are closed.  One of my favorite remarks about how to successfully budget a project is attributed to a NASA administrator who said, “The key to successfully managing the budget for any complex project is to always start with plenty of budget!”  However, too much money can lead to complacency, poor allocation, lazy oversight, wasteful spending and does not by itself guarantee success.  Too much money can be more of a problem than not quite enough.  The latter forces examination of all options and requires that hierarchies of need be created with each item be ranked according to its significance in the project.  A tight budget means that hard questions must be asked of each budget item; “how important is this for our success?” and “Is there another way to do it?” and prompts critical thinking and decision making.  Each expense has to be justified in the light of competing needs. 

Used properly, a thoughtfully designed budget is a flexible and powerful planning tool that can be used to hone the exhibition concept and design.  The core thinking involved in creating a budget is really what, how and how much: What is it that is to be done? How can it be accomplished? Compared to: How much will it cost?  The budget can be used not only to list and track the many and various services and supplies required to create an exhibition and organize the contracting and fabrication of exhibits, but also to prompt forward and long term thinking and planning.  More than a record of planned expenses, a good budget is really a road map that if accurately drawn, carefully studied, and followed, can help us to get to the place we want to go.

Often wrongly dismissed as simply “bean-counting.” the cost estimating and budgeting process required in any project is a creative undertaking of great influence.  The allocation of money is a powerful factor and can shape any project in multiple ways, some subtle and others dramatic.  And, in every project no matter the scale or complexity, accurately estimated costs and proper allocation of resources are necessary prerequisites of success.  

Reference

Smithsonian Institution. 2002. The Costs and Funding of Exhibitions: The Smithsonian Institution, Office of Policy and Analysis: 20 pp. http://www.si.edu/opanda/Reports/EXCost.pdf