Russ Robertson

The Key School encountered numerous hidden conditions and substantial site-related challenges while converting an old golf course into athletic facilities for youth.

Introduction

In the dynamic world of construction, volatility is the name of the game. Increasingly, builders and executives responsible for real estate and space use face unpredictability in both costs and funding sources. This is particularly true for private nonprofits, where the stakes are high and the capital landscape is uniquely complex.

The challenges are twofold: (1) cost volatility, worsened by long planning and fundraising cycles that fail to keep up with rapid material cost increases, and (2) capital source volatility, where promised funds can disappear due to market shifts, political winds, or other factors. We believe these challenges are not roadblocks — they’re signals to plan smarter. With savvy preparation and strategy, these risks can be transformed into manageable opportunities.

Build Flexibility Into Your Project Design

A truly resilient project starts with a design that embraces flexibility. This means designing with “alternates” in mind — elements that can be swapped, paused, or removed without jeopardizing the core mission.

For example, if a donor’s gift falls through midstream, a facility plan with modular or phased construction components enables progress to continue without compromising critical operations. This doesn’t mean cutting corners on quality — it’s about maintaining control over scope and ensuring mission alignment regardless of external shocks. Flexibility also gives teams the ability to pull the right cost levers at the right time based on the construction sequence and funding realities.

Anticipate Earthwork Surprises 

As the saying goes, “You get hurt in the dirt.” Earthwork remains one of the most unpredictable budget elements. Subsurface conditions — whether unsuitable soils, undocumented infrastructure, or unexpected environmental features — can derail even well-planned projects.

Projects with large earthwork proportions (like park expansions or campus infrastructure) are particularly vulnerable, with overruns representing a disproportionate impact on budget and scope. Pre-construction studies, soil borings, and early geotechnical assessments are essential to minimize the impact of hidden liabilities.

Understanding your site is foundational to understanding your risk.

Leverage Technology and Expertise

Today’s tools and consultants provide more foresight than ever before. Encourage your design and construction team to use modeling software like BIM to explore multiple cost scenarios and visualize downstream impacts of material substitutions or scope changes.

Seek advisors who bring diverse experiences and can challenge assumptions — particularly during programming and design phases. A structured programming exercise is especially useful for classifying your building’s requirements into mission-critical, “nice-to-have,” and luxury elements. This ensures early alignment on where flexibility can be exercised when needed.

And finally, stay educated about commodity-specific risk: steel and lumber price volatility are particularly acute in the post-COVID construction environment and should be factored into both contingency and timing strategies.

Budget for Surprises

In the nonprofit sector, being conservative about budget risk is not pessimism — it’s prudence. Early in the project lifecycle, contingencies may reach 50 percent to reflect today’s volatile cost environment.

It may feel uncomfortable to include such large buffers upfront, but it prevents a more damaging scenario: returning to your board or donors midstream with hat in hand. Worse, optimism bias can result in trimming these buffers too early — an error that can make projects financially unviable when surprises inevitably arise.

In the nonprofit sector, being conservative about budget risk is not pessimism — it’s prudence.

Create a Proactive Funding Strategy

Capital source volatility is just as threatening as cost inflation. A major donor can change priorities, a foundation’s endowment may shrink, or a capital campaign may falter.

To navigate this, plan to pursue funds even beyond what is required, with the understanding that not all requests will come through. A lot depends on the nature of funders, the economic climate, and the degree to which your project appeals to a wide – or narrow – pool of capital sources. Raising funds from a range of sources will build in the resilience to weather the inevitable fluctuations. Should excess funds remain, donors may allow them to be repurposed toward an endowment for facility upkeep, paying down debt, or preparing for future upgrades.

Equally important is sequencing: start stakeholder engagement early, build trust through transparency, and have a plan for managing restricted gifts. This approach helps ensure that any course correction doesn’t become a crisis.

Conclusion

Navigating cost and funding volatility is no easy feat. But with a clear-eyed view of risk, mission-aligned flexibility, and strong upfront planning, it becomes not only possible—but predictable. The real opportunity isn’t in eliminating uncertainty, but in managing it.

Whether you’re deciding how far to stretch design goals, weighing contingencies, or sequencing donor outreach, it’s wise to conduct thoughtful analysis before these uncertainties become emergencies. The storm may not pass—but with the right map, you won’t lose your way.

Key Takeaways:

  • Modular, phased, or alternate designs can help maintain momentum if funding shifts. Flexibility protects your core mission during external shocks.
  • Subsurface conditions can derail budgets fast. Early site studies and soil testing are essential to managing risk.
  • Use tools like BIM and advisors with diverse expertise to pressure-test assumptions and prioritize what’s essential vs. optional in design.
  • Don’t shy away from high contingencies—up to 50% early in planning is prudent. Better to be over-prepared than underfunded mid-project.
  • Seek funding above the minimum required, plan for fall-offs, and engage donors early. A proactive and transparent approach builds long-term trust and resilience.
  • Rising costs and unstable funding sources are part of today’s capital project landscape. Don’t see them as roadblocks—see them as planning cues.

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