Many of the major expenses for a residential project are committed prior to the arrival of the construction crew. Even the best field performance with the framing of a home will not allow you to recover from a bad budget that was established based on incorrect assumptions. Therefore, the critical decisions and corresponding criteria to judge them by must be established prior to the actual construction of the home.
Budgeting against the site, not against a square foot number
The cost per square foot of easily draining sites with very little grading contrasted with flat sites that require lots of retaining wall (30’ or more) would have little value in fixing a price for a residential construction project. The budget for a residential construction project is established based upon the scope of work for the project, and cost per square foot is a poor determinant for establishing a bid price for said project.
Where the variance actually lives
Slope, rock, narrow driveways and strict stormwater requirements are examples of items that can end up costing 3 times the cost of a site plan package for homes in Asheville, NC when unknown site conditions are finalized as part of the design process for the home.
- Excavation, rock removal and retaining structures, priced after a geotechnical report rather than a visual walk
- Utility runs, septic or sewer connection, and the distance from the road to the building envelope
- Foundation type driven by soil bearing and grade change
- Driveway length, grade and turning radius for delivery and emergency access
- Design contingency of eight to ten percent during schematic design, tightening to five percent at permit
Floor plan choices that cannot be unwound
Many change orders come from decisions made during the planning phase of the residential construction project. Some of these can be changed at minimal cost and time; others are critical to the completion of the home and must be locked in to prevent future cost and time for change orders.
The decisions that set the structure
Some unknown expenses are buried in the plans and appear as structural or mechanical features such as large openings between exterior walls, high ceilings, vertical wet-walls and long clear-spans between exterior walls that require very expensive engineered beams to support. Often the point loads to the foundation can be site specific and may vary greatly from another similar home and be very cost impactful. The major forms, number of roofs, etc. And relationship of plumbing up and down between floors should all be locked in prior to too much decorative work being added to the plans.
Test the plan against how the building will be used
Determine how your client intends to use their new home and start to map out the typical sequences of daily activities. Outline the flow of groceries from the car to the pantry. Identify the path that will be taken to carry laundry from the bedroom to the washer. Delineate the approach that visitors will take when arriving at the home through the entry. Work these out on paper prior to the drywall stage of construction. These can be identified and resolved prior to becoming problems that cost change orders and impact the schedule of the home’s completion.
When to lock design selections
Unresolved allowances in the cost to build a home equal spent money which will most likely increase in cost and be spent at the worst time in the construction process of your new home. Convert these to fixed selections with a locked completion date.
| Selection category | Latest practical decision point | Cost of changing after that point |
| Window and door package | Before permit submission | High, triggers header, structural and elevation revisions |
| Plumbing fixtures and locations | Before rough-in inspection | Moderate to high, re-piping and possible floor work |
| Electrical layout and lighting | Before insulation | Moderate, rewiring plus drywall patching |
| Cabinetry and countertops | At framing completion | Moderate, lead time risk more than material cost |
| Paint, hardware, plumbing trim | During drywall | Low, mostly a labor sequencing issue |
Building a schedule that reflects permitting and procurement
A long period can pass between the time of final approval for a project (i.e., a permit) and the start of work by the contractor. The work of many others is bogged down in municipal bureaucracy, and they try to complete many other things before they can process the needs of a residential contractor. Anyone planning to build a custom home in Asheville should treat that review window as a real line item on the schedule and order long-lead materials against it.
Long-lead items to order against the framing date
- Windows and exterior doors, frequently the longest lead on the project
- Custom millwork, steel and specialty structural components
- Mechanical equipment, particularly high-efficiency or ducted-to-spec systems
- Appliances and plumbing fixtures with imported supply chains
- Roofing and siding in non-stock colors or profiles
Choosing the contract and the team structure
The fixed-price contract is the best form of construction for those homebuyers who have completed the architectural working drawings for their home and all selections for interior and exterior finish have been made by the homeowner. It is not suitable for those homes where there are continual changes to the scope of work for the home.
Matching delivery method to design maturity
A Cost-plus contract with a General Materials and Construction Price (GMCP) for a home is ideal for people who want to follow their capital expenses to complete their new home. Cost-plus construction with a GMCP is best for people who have selected all materials and options and have a good knowledge of the site where the home will be constructed. Price it fixed if you have selected all materials and options and have a good knowledge of the site for your new home. Pay for transparency and get the contractor involved early in the home design process if either of these unknowns exist.
