The previous post asks you to imagine a scenario in which you describe your dream home to two different architects in order to solicit an estimate of the total cost to build. The first architect replies that the work required to develop an accurate estimate will cost a significant amount of time and money, leaving you in a situation where you may not want to or even be able to afford the total cost. The second architect tells you he can develop an estimate of how much your house will cost in just a few days. Then we ask the question: at this point, which of the two firms do you think is more likely to do a better job working on your dream home?
(A couple things to note here: We did not ask which firm will be cheaper. This is not because cost is not important. It clearly is very important. We also don’t wish to give the impression that a firm that costs less will do an objectively bad or even worse job, and just because the second firm is willing to produce a quick cost estimate doesn’t mean they won’t be the more expensive of the two.)
What we’re really asking here is this: if the complexity of the dream home you have in mind is the same regardless of which firm you choose, which of the two firms is more likely to do the better job: the one willing to produce an estimate with a minimum of research or the one who will take whatever time they, as experts in the field, deem necessary to develop such an estimate?
It seems obvious that the firm that takes more time and expends more effort to develop an estimate will be armed with more information from the outset. It’s also likely that this firm, by virtue of their unwillingness to render what they deem a premature assessment, even if it means they lose the business, is more willing to be diligent and conscientious in all their efforts. Therefore, it does indeed seem likely that this firm will do a better job.
If you’re not yet convinced, I would invite you to closely examine the consequences of choosing the second firm. We’ve established that the objective complexity of the house you want to build is the same in either case, so by selecting the second firm on the basis of their estimate you are taking a very real risk that the firm in question is performing only a cursory examination of the actual costs of building your house and instead is more concerned with winning your business and getting you to commit to them before the true costs of building your dream home become clearer.
In other words, the house will cost what it will cost based on its intrinsic complexity and requirements. It won’t magically become cheaper as a result of someone giving you an estimate that you want to hear, and in fact receiving such an estimate should immediately raise a flag. (We’ll discuss that in more detail in Part 4 of this series.)
So if we recognize that the second firm’s incentives in providing you a free, low-effort estimate probably aren’t entirely in line with your own incentives of building your ideal dream home, we’re still left with a dilemma: what happens if I spend a bunch of money to get an estimate to build a house I can’t afford? Two things can happen in this situation:
You walk away, a bit poorer but wiser.
You work with a now-trusted partner to establish the path forward.
Which would you choose?