Friday, August 22, 2014

Timeline - Estimating Costs

Past Year

St Charles home
Our Budget
Both Dorothy and I had already downsized considerably when we bought the house in St Charles, MO.  And we agreed that, since our house was paid for, it made no sense at our ages to rob other assets or borrow money for a new house.  Our construction budget, after selling our modest home in St Charles, MO during the great recession and paying for the land in Collinsville, IL, turned out to be $72,000 and the final design turned out to be 2,100 sq ft.  Do the math and we are talking $34 per sq ft which is about 25% of contractor prices.  But building at this price is a challenge worth confronting, not only for the satisfaction of succeeding but to set an example for what can be done.

Revised Drawings
The drawings scenario that played out before costs could be estimated accurately was as follows:  Amateur pencil drawings -Quarter-scale model of the house - First set of cad-cam drawings - Revised cad-cam drawings - Another set of amateur pencil drawings.

I had barely started estimating before it was clear that we were still way over budget even though we had down-scaled considerably from the first set of cad-cam drawings.   Earth on the roof, the timber frame to support it and the attached greenhouse were the first major deletions before doing the revised cad-cam drawings but, even then, we were still over budget.  

Back to Pencil Drawings
As I looked for ways to cut costs, I decided it would be easiest to trace onto velum paper the things on Steve's drawings that should be kept then draw in the changes required to meet budget.  By the time the estimate was complete, the drawings I gave to Steve to use for the final iteration were mostly pencil drawings.

Crane truck required for a St Charles County timber frame
An interesting observation
While seeking ways to cut costs, it became apparent that merely reducing square footage did not have the impact that one would expect.  If the price per square foot for everything from metal roof down to gravel base under the slab -- sheathing, insulation, drywall, tile floor, concrete -- is added up, the total is not impressive.  Cost cutting is better done by modifying methods and materials and eliminating rental equipment and professional labor. An example...... rental on a crane service to erect timber framing and structural insulated panels would constitute 7-10% of our budget and the frame and SIPs together would have surpassed our entire budget.

Professionals use their experience to develop strategies and shortcuts for estimating jobs. In the absence of experience, I created an Exel spreadsheet for line-item estimating.  It ended up being 12 columns wide and over 200 lines deep on which I included every item I could think of that needed to be budgeted.  For example, I drew a wiring diagram in order to get numbers for such mundane things as electrical boxes, switches, receptacles, cover plates, Romex, etc.

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The first few columns of the spreadsheet were descriptive and the next few were per-each costs and extensions which were then tallied at the bottom in order to know total costs.  The last few columns broke costs down into phases of construction to provide a timetable as to when the money would be spent.  This was important because the track loader represented a big chunk of the building budget and would have to be sold during the latter stages of construction to free up cash with which to finish the project.

Click image to enlarge
The prices for the spreadsheet were obtained in many ways. Some came directly from manufacturers and vendors, e,g,, geo-textile fabric for French drains and rice hulls for insulation.. Some prices were from subcontractors who will help with a few phases such as concrete work and waste plumbing (labor costs only; I shopped the materials that would be used).  Some came from distributors such as those for insulated concrete forms and fiberglass windows and doors.  And a lot of pricing was done piecemeal by shopping online at the home improvement centers or walking their aisles, by noting the price of diesel fuel for the track loader at the local gas station, by continuing to shop Craigslist, etc.

Click image to enlarge
Finagle Factor
If our estimate can be faulted, it is because the finagle factor is too small. Some wiggle room was created by using retail prices at the big boxes that will be negotiable when it comes time to buy. And some choices in the finish phase are flexible -- laminate or DIY wood or concrete counter-tops instead of stone; Habitat Store floor tile instead of tile store tile or homemade interior doors instead of prehung.

During construction, we will be reporting on how well.we are tracking against the $34 per sq ft budget.

Update:  Winter 2021
Well, reality has a way of shackling naivety.  Before the year is out we will have moved into the house and I will have the time to dig up several years worth of invoices and other documentation to understand the true cost of the build and just how futile my DIYer attempt at estimating was.   At this point, I would guess that the figure is at least twice as much as my estimates here.  The review will probably show that I grossly underestimated the cost of subcontracting for such jobs as excavating and concrete work as well as the amount spent on salaries when a second or third pair of hands was unavoidable like for setting roof trusses and sheathing the exterior shell.  And, since construction has been strung out over multiple years, the costs for materials rose beyond anything that I envisioned, particularly the past year during the COVID-19 disruption to the supply chain.  I will link back to this post in the future when the follow-up analysis is posted.

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