Homeowner: My friend told me they built their home addition for $100 per square foot. Can we build ours for that much?
Us: In Santa Barbara?
Not to be cynical but living in Santa Barbara has a lot of positive benefits but one of them is not the cost of construction. Our small city has some very high construction costs, ranging from $250/s.f. to as high as $1200/s.f. With today’s recession in full throws, many people are expecting, or at least hoping for, a large reduction in the cost of building. They believe in the supply and demand principal, and hope to take advantage of these “hard times” to finally get that project they have dreamed about, at a price they can afford. While we are also seeing some changes in the pricing, it isn’t quite as dramatic as we expect.
The cost of construction is a tricky subject for all of us involved in the building industry and it is usually the critical factor in determining the feasibility of a project. Let’s look at the factors involved in construction cost. There are really only three elements to the cost of any product or system:
- the size of the project – the amount of stuff being installed
- the labor involved - how many people does it take to get the job done and how long it takes them for them to do it. Labor can range from 40% to 60% of the cost of construction
- the scarcity or quality of the material being installed – think white ceramic tile versus Ann Sachs glass tile
That’s it. Nothing more, nothing less.
From the start of any project it is important to be honest about your budget and equally honest about the expectations you have for your project. Most clients are afraid to say what their budget is for fear that the actual cost will eventually trickle past their budget after they are locked into the construction. We certainly understand the concern. We don’t want to spend more than the actual value of a product or service, and we always hope to negotiate a discount with our vendors and consultants.
The reality is this: plan your budget for the worst (higher cost) then design and specify for the least (cost). Our recommendation is to design for 80% of your budget and then use the remaining 20% as a contingency for unforeseen circumstances and potential material/finish upgrades. For more complex remodels the numbers may shift slightly to reflect a more conservative approach. Collect as many proposals from qualified subcontractors as you can. Experienced bidders will provide a bid for the materials that have been specified with line item additions/deductions for proposed alternate materials or construction methods. We tend to put aside bids that don’t provide pricing for the materials specified in the drawings. It’s usual a clear sign that the bidder isn’t reviewing the drawings carefully and, in our experience, a warning of future change orders. You want to know exactly how the cost is broken down so that you can appropriately select the most qualified bid. Notice that we said the most qualified bid not the lowest bid. It’s important that your project be built correctly and in a timely manner. Trying to squeeze the most from the least can be more effort (time) than it is worth (delays).
So, more than ever, working with an experienced and creative architect is an important first step. We develop a budget that includes the soft costs of design fees, engineering fees, permitting fees, and a contingency. Those will generally add 15% to 25% on top of the construction costs. We also highly recommend working with a contractor from the start of the project. We work closely with them to have the cost fit in to the clients budget and schedule. That said, it is important to talk about your budget in terms of what you would like to spend in total and clearly state the maximum budget for the project. While it isn’t always easy to talk about cost, it’s clearly an important factor in any project and it’s better to get it out in the open than to have undisclosed expectations. After all, you’re looking for a project that meets your expectations and demonstrates money well spent.
