Home Design

Lesson 3: House Design - The Nitty Gritty

Design To A Budget

In order to design to a budget you must do your homework and become aware of the many factors which drive the cost of a new home.

First, the contractor’s overhead and profit; profit margins are determined by market conditions, time of year (winter work in snowy climates), and competition (bidding) and possibly your skill as negotiator. Overhead is determined by company structure, affected by company dollar volume, worker's compensation/health insurance, office staff, rent, etc. Remember to include job costs such as builder's risk insurance, temporary utilities including heat, job phone, permit costs, etc.

As a rule of thumb material costs represent half of your overall budget. Lumber costs are volatile, they change with Canadian tariffs, seasonal demand, natural disasters such as hurricanes and the like. These events effect costs nationwide. Know that the quality and costs of materials vary widely, "clear" all-heart vertical grain cedar clapboards vs. rough sawn with knots. Know what you are specifying and why. Also, board foot costs of lumber change significantly from 2x4 to 2x12. An efficient structure, a compact design relative to square footage can greatly reduce costs.

Again, do your homework. Analyze prices at retail or list prices, contractor discounts can be significant, but vary product to product. Use list prices only for comparison.

Avoid proprietary specifications. Allow equal products to be selected or substituted whenever possible. Locking into one manufacturer will raise prices especially if local distributors have regions locked up from competition.

When considering labor costs be aware of regional differences, masonry labor may be 3 times higher in the northeast as the southeast for example. Labor costs also vary seasonally, winter work is often taken at cost just to keep a workforce without layoffs in snowy climates. Also in small labor markets costs fluctuate with the local economy, depending on if "everyone is busy right now." The final factor, which you have some measure of control is the complexity of your design. Complexity will effect labor costs, it takes many more man days to frame hip roofs vs. a roof design with pre-engineered trusses or simple gables.

Site costs can break your budget before you are out of the ground. Know what your costs will be for utilities, city sewer and water, septic, well, company hookups and permits. Driveway and sidewalk costs vary with material from gravel to asphalt to concrete to pavers, landscaping costs vary with plantings, size type and quantity, site clearing, availability of top-soil on site for lawns. Excavation and backfill costs are affected by sub-surface conditions, high water table, ledge, poorly draining soil, etc. a few hours with a backhoe to do sample test pits should be done if any questions exist, the earlier the better.

Things to Ponder:

1. How early can you get your preliminary design to a contractor for analysis?

2. Can you effectively negotiate with a Contractor or must you bid the project to get the best price?

NOTES

The following is a list of pitfalls to avoid; blindly using square foot costs to budget your project, know what assumptions are being made for square foot number quoted, type of flooring, manufacturer of kitchen cabinets, quality and complexity of construction, you must shop and do your homework, never blindly believe there will be no "extras", no change orders, everything will go 100% as planned.

RESOURCES

1. Home Builder's Cost Book, Building News Publications, Inc. Los Angeles, CA

2. Local Lumber Yard Flyers.

3. Registry of Deeds of recent sales of new construction.

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