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Figuring out how much your building project will cost

by Steve McKee on September 19, 2007

If the title of today’s article got your interest, get in line. Estimating the cost for a building project is one of the most critical steps in the early decision making, yet remains one of the most vexing.

It’s a classic “catch 22” situation: We need a full set of drawings to figure out the cost but don’t want to commit to drawings until we know we can afford the project.

Later, when a design is finalized and a full set of drawings and structural calculations are meticulously completed, a bid process exists in which builders scrutinize these drawings and commit to a specific dollar figure, all very professional. |

The design process that precedes the bidding is also very professional, a very disciplined blend of mostly methodical steps punctuated by moments of exciting creativity. I can guarantee excellent results in designing projects of all sizes; it’s that darned “shoot from the hip” cost estimating step early in the process where full professionalism is replaced by mere educated guesses. (In my defense, you should see what can happen to the price of lumber, copper or asphalt-based roofing over a two month period.)

Builders are not much better at it in those early phases. It’s understandable. They can’t provide a real bid for a project without receiving a completed set of blue-prints and then taking days to pass out copies to subcontractors and making their own lists estimating material quantities and hours of labor before they arrive at a cost figure to which they are willing to sign their name.

Sometimes builders will try to help out with early estimating, especially if they feel the homeowner has committed to using them for the project (and therefore everyone’s on the same team.) All of these builders have tales about how they tried to help a homeowner plan for a project by providing early estimates, only to later discover their preliminary number was either too high (and they get tagged with the label of being an expensive builder and are now off the homeowner’s list of candidates) or too low (and they end up looking like a schmuck because in the final bid they are now asking for more money.) Attempts to show preliminary designs to contractors to get “rough estimates” are rarely met with enthusiasm.

One method I often use to hazard an educated guess regarding costs is to compare our project with past projects similar in size. There is much “interpretation” necessary here. “Hmm,” I’ll think, as I gaze off into the middle distance, “it’s sort of like the Jones addition except with an entire kitchen remodel added, but not all the foundation repair. Hmm. Or maybe it’s more like the Smith job except one third again as large.” So it goes. If it’s later revealed that I got within twenty percent accuracy using this method, I’m taking high fives from the homeowner and then moon-walking out the door.

Another cost estimating method is to apply a “per square foot” price to the size of the project. Often inaccurate (simply because it doesn’t factor in numerous variables), using this square foot cost technique is often hard to resist because it takes only about 15 seconds to apply it to your project and it has the feel that you’re somehow being scientific.

This per-square-foot cost technique works better with new construction on vacant land. With other projects, like additions, it’s flawed. On small additions the cost per square foot goes up quite a bit. That’s because all the subs are there, but there’s not as many square feet to lower the average square foot costs.

By the way, since I know many of you are interested to know the latest number, I can tell you a pretty good quality custom house can be built for about $200 -$250 per square foot. (This figure is for “Benicia quality.” Better than Fairfield but not as high as Lafayette.) I tell you this, despite all the warnings about abusing this figure, because if I didn’t, you’d just find out about it on the streets from your friends.

Applying this per-square-foot figure is as much art as science. Skew the number down if it’s a big addition without plumbing or cabinets. Skew it up if your project is small. Skew it up – way up – if your project is a kitchen or bath with much higher labor and material costs going into countertops, cabinets, fixtures and appliances. With a kitchen, by the way, it’s often better to forget the square foot technique and just assign a big chunk of money, such as $40K to $75K for the kitchen. (Of course it’s possible to exceed this if you have expensive taste.)

Remodeling is much tougher to account for using this kind of figuring because you never know what square-foot charge to apply to existing space being remodeled. You’d think that having existing work already in place would bring the cost down. Alas, there’s a major headache factor of having to work around and lining up with troublesome existing conditions (such as framing not being level or square; having to meet and match unusual hardwood floors, etc.) The money saved by keeping existing pieces of house can be offset by the extra labor charges in fitting new work into the existing.

I could write a whole column about what’s so tough about remodeling compared to new construction. I suppose I will some day.

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