|Estimating Construction Costs|
Estimating Construction Costs:
I hear clients, real-estate agents and contractors talk all the time about housing construction cost by quoting a per square foot number. My clients ask me all the time “how much do you think it will cost us to build this house”? My reply is always the same, I simply illustrate a point by asking them a question in return, “How much does it cost to buy a car” I then explain that there are too many variables in a construction project to guess at a number to answer their question and I emphasis that is all it would be is a guess. Averaging costs by the square foot is only good for a very loose ball park figure and should never be used to plan a construction project.
I have wanted to do a brief on the subject of estimating construction cost for some time now. It is a very complex topic and one of the most important in the whole construction process whether you are building a 1,500 sq. ft. or a 10,000 sq. ft. home. In my time as an architectural designer and as a home builder I have seen and tried many different methods of estimating costs and have come to the conclusion that there is really only one sure way and that is the hard way. If you build houses for a living and do several projects a year the job can get easier providing you do a near perfect job of tracking your construction costs. This provides a data base that can yield a reasonably safe per square foot cost to build providing all of the homes were similar in style and design criteria. If you do not build houses for a living or if you only do a couple of projects a year you really have no choice but to do the tried and proven line by line cost by cost process. There are many tools today to make the process easier and more organized like Excel or QuickBooks and getting at the actual costs and numbers has become easier with the use of the Internet and the many available online databases like Home Depots. But overall the process is the same and as mentioned it is to beak the house down and create a list format line by line estimate of both materials and labor.
The first step in the process is to decide how you are going to get the house built. Are you going to hand the whole project over to a General Contractor or are you going to act as the G.C. and manage the project yourself. If you are going to have a G.C. build the house then all you need to do is have a well drawn set of house plans in which all of the specifications and fixtures are on paper so that they know what type of products you will expect and thus what to bid on. The more details and item specific the better your cost estimates will be and the closer the bottom lines will be when comparing one Builders quote to another. Do not get lazy on the plan development. Take whatever time is required to make the necessary item by item decisions during the design process and then compile all of the information in a clear and concise manner combined into a professional bid package. You are going to have to do the shopping and choosing anyway so just take the time and do it right. Your reward will be a much better picture of the costs to build and a very close to on budget build out.
If you are going to act as the General Contractor you will need to do all of the items listed above and then break it out into the various Trades. The Plumber doesn’t need to see what kind of shingles you are using on the roof for example. In addition you will need to follow good practices and get a minimum of three bids for each trade category. Nothing less will give you a hard cost figure you can trust and go to the bank with so take your time and be diligent and follow the rules. There are several books on Amazon to help you with this part of the Owner Builder process. Buy all of them and read them, as my Dad used to tell me “If you think education is expensive, try ignorance” In my time as a spec builder I promise that his quote is very true and if you spend the time to do the homework you will get a positive result. The result of not following the proven methods and steps will be a disaster that can cost you allot more than you expected to spend and in some cases land you in court or even bankruptcy. It happens all the time and I assure you that estimating costs to build your new home is the best investment of your time and effort you will make. If you do a great job on this step you will be in great shape at the end of your homes construction if you don’t you will be in trouble.
Most of the CAD (computer aided design) Software programs can create a materials take off or cut list. As a home designer I offer this as an add on service to my clients. I have been surprised by how many do not want to spend the extra money to have this valuable tool. They for the most part do not have the knowledge to sit down with a scale ruler and do a manual take off of the materials so that means they are going to trust the suppliers and contractors to do it for them. This is without a doubt the beginning of a disaster in the making. For example, Builders do not generally provide line by line item costing to their potential clients in the bidding process. Therefore if Builder A estimates your house will take 800 2x4 studs and Builder B comes up with 900 2x4 studs but the house is going to take 700 studs how will you know which is right and what bid makes more sense and is the most accurate. If you furnish the materials list then they both bid on the exact same number of studs and now you have an apple to apple comparison to make your decisions on. If you are going to build a house and your designer does not offer this then pay someone to do one for you have is checked for accuracy and then start the bidding process. Do not cut this corner.
If I could drive one point home and make it stick it is that there is no shortcut to setting up a house for construction. It will cost you money and will take allot of time to do it right. There are hundreds of resources out there to help you know what and how to do this the right way. Take the time and invest the money to get a really good house plan and a really accurate materials list. The bottom line is that every dime you spend on these items up front in the beginning will be repaid to you in the construction process. Remember this, you are not spending money or wasting time in the set up of your home project you are investing it for a very good return. The return is a well built home that comes in on time and on budget and is exactly what you wanted for your money.
Breaking Down House Price and Construction Costs Special Studies, March 5, 2010 By Paul Emrath, Ph.D, Vice President for Survey and Housing Policy Research Economics and Housing Policy National Association of Home Builders http://www.nahb.com/generic.aspx?sectionID=734&genericContentID=134543&channelID=311
How Features of a Home Impact Its Price Housing Policy, November 30, 2004 by Paul Emrath Ph.D. http://www.nahb.com/generic.aspx?genericContentID=33077
Price per Square Foot by Location March 2010 by NAHB http://www.nahb.com/fileUpload_details.aspx?contentID=80055