Construction Budget Estimate

Residential construction costs are not that complicated unless you really want to make them that way. There are some general broad stroke pieces of information that if you know them, you will not be surprised when it comes time to planning your budget. I get asked these questions all the time, it makes me wonder if doctors get asked to look down people’s throats everywhere they go? (I hope so…).

Since all these cost’s can be screwed up in any number of ways, take all this information with a grain of salt. It would seem reasonable to assume that masonry construction in the border states, with the amazing amount of readily available skilled labor, will cost less than masonry construction somewhere in non-border states. Texas is also a right-to-work state and we don’t face some of the typical cost issues that unionized states enjoy. So now that I have my disclaimer out of the way, let’s talk numbers!

When starting to plan for a construction budget, there are some items that you should plan on including in your budget. These would include:

• Providing utilities to the site if not currently present
• Site Preparation (clearing away trees, stabilizing soil, cutting and filling to grade the site, etc.)
• Demolition (if there are structures currently on the lot)
• Construction costs, including foundation, framing, electrical, mechanical, plumbing, interior finishes, exterior finishes, lighting, cabinetry, appliances, plumbing vessels, etc.)
• Construction Management Fees and Site Superintendant Fees (in my area of the world, these are typically set at 10% to 20% of the total construction cost)
• Sales Tax
• Hardscape (exterior built items i.e. sidewalks, driveways, patio’s pools, etc.)

The list above are large categories that will represent most, but not all of the total project costs. These are the expenses that are generally not considered part of the construction budget. Hopefully you and your architect would discuss these matters up front, I know I would. If you say your construction budget is $500,000, most would literally consider that to be the construction budget, not the project budget. Please make this clear, otherwise the relationship between architect and client won’t be all that great when the disappointment sets in. Other expenses you should plan for that complete the project budget include:

• Professional Service Fees (Architect)
• Consultant Service Fees
  • Interior Designer – provide a great service but can add significant costs to a project. I used to work in an interior design office and let’s just say that I am aware just how much mark-up some interior designers put on the FF+E (fixtures, furnishings, and equipment). I would recommend that if budget is an issue, rather than telling you to dismiss the services an interior designer offers, try and find one that works only as a designer and doesn’t try and purchase the items for you on your behalf (you will be getting ripped off). Okay, maybe that’s a bit harsh because I do like what interior designers bring to the mix. Let’s just say that you will be paying a premium one the items purchased on your behalf.
  • Structural Engineer – very cost effective service to retain. We use a structural engineer on every project we design, partly because we carry professional insurance that requires it but a structural engineer will design a foundation specifically to the soil conditions on your site. Depending on the complexity of the site conditions and the house design, their fees always seem to run around $0.75/sf or .05 to 1% of the cost of construction. Even on our most complicated and large custom homes, I don’t think I’ve ever seen a fee over $9,500 (and this was on a 17,000sf, 4 story w/basement, steel superstructure and vertically cast concrete wall home).
  • Energy Consultant – we don’t use these very often simply because we have been using energy conserving strategies (other than not building small homes) for years; it’s ingrained into our process. One of the items we are seeing now  is that cities have different “green initiatives” and Energy Consultants can provide evaluation and inspection services that satisfy the 3rd party requirements of the city’s inspection process. We have that in Dallas now and are going through our first new home that will have to comply with these additional inspection requirements. When I called around for proposals, we received bids ranging from $500 to $1,000 (we went with the $500 – I’ll have to let you know how that goes).
• Permit Fees – In Dallas, Texas, the fees are based on the cost of construction. The highest cost category would cost you $2,600.
• Landscaping – obvious

Finally, let’s cover something a little more tangible, what do you get for how much? I mentioned in the beginning that there are some very broad stroke assumptions you or your design professional can make that will get you very close to a realistic construction budget expectation. We use these costs per square foot references all the time during the schematic and design development phase and it’s rather remarkable how often they bear out.

$150 per Square Foot

• This is the lowest amount we generally design to, not on purpose but we just don’t seem to attract the clientele who are looking for something less expensive. $150/sf will get you a brick house, composition shingle roof, wood windows, ogee profile galvanized gutters, and a slab on grade foundation.

$200 per Square Foot

• This is the cost where most of our projects fall, in between $200 and $225 per square foot. $200/sf will get you Brick house with cast stone features, standing seam metal paint grip roof, clad wood windows (Marvin or Weathershield type brands – both are excellent btw), 1/2 round paint grip gutters, and a pier and beam foundation.

$250 per Square Foot

• At this price point, you can do just about anything practical that you could think of. I say practical because importing Tibetan orphan monks to stamp gold leaf on the ceiling with their feet falls into a higher price category, not to mention that it isn’t very practical. $250 will get you a brick house, or masonry stucco on cmu block, standing seam metal paint grip or tile roof, high end clad/wood windows (Loewen brand), 1/2 round copper gutters, and a pier and beam foundation. You will also be at the point where you should expect high-end stainless steel appliances, designer plumbing vessels, and some extremely custom fabricated peices i.e. steel framed entry doors, specialty feature lighting, and exposed floating staircases.

$300 per Square Foot (and up)

• Bring on the monks and other artisans from around the world! At $300/sf, the exterior can be entirely 4″ thick cut Hadrian limestone panels on cmu block walls, true slate roof, whole house integrated art and audio visual controls, custom steel windows, etc., specialty energy features like geothermal, handmade tiles, etc. I am always amazed when I see houses that cost $500/sf and more - you really have to put some effort into geting the cost up that high.

A question that I get asked with some regularity (other than if I am Robert Downy Jr.) is where stucco falls on this list. In my world, with how we detail stucco, it costs just a hair more than brick. Our stucco wall assembly, from inside to out is:

1. 5/8″ gypsum board
2. 2×6 framed exterior wall (studs 16″ on center)
3. 1/2″ exterior rated sheathing
4. vapor barrier
5. 1″ insulation board
6. Expanded metal lath
7. 3/4″ three-coat masonry stucco
8. Exterior insulating finishing system topcoat

We do not stucco on top of sheathing. This is a hybrid system – a combination of E.I.F. system because we use an insulation board and a finishing system topcoat; and part traditional system because we have a true three-coat masonry stucco. By themselves, the performance in our environment isn’t what our clients demand as a final product, but working together, this hybrid system is great and gives us a finished monolithic product that suits our modern designs.

I should also point out what it really means when someone says things will cost a certain dollar amount per square foot. This is for the total construction cost, (which includes the contractor fees), but only use the amount of air-conditioned square feet of the project. For example, if you have a house with 2,000 sf of air-conditioned space with an additional 400 sf of garage and 250 sf of covered exterior patio, the project would still be the 2,000sf x $200/sf (or whatever) for a construction cost estimate of $400,000. This next part is where experience kicks in – when do you start including exterior spaces and garages? Historically the cost per square foot would take these non air-conditioned spaces into consideration and are built into the overall cost; but now that garages are getting bigger and exterior living spaces are becoming more developed and include more bells and whistles, they need some additional consideration. When these spaces get developed as real programmed space, we add around $40 to $60 per sf extra to make sure that there aren’t any surprises when the construction bids start coming in.

I’ll finish by saying that I had intended to make this a short post, kind of a residential construction cost cheat sheet, but I just couldn’t do it – maybe I didn’t want to do it. If you don’t have any knowledge behind the figures, I don’t think you will be equipped to consider the nuances of your particular situation. Hopefully, there is enough information here so that you can interpolate between what I’ve outlined so you can develop a reasonable expectation of your own project needs. You should be able to slide the costs per square foot to account for regional cost differences but if you can’t, I’m all for pulling the curtain back. Send me a email or leave a comment and I’ll see what I can find out for you.

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