How To Develop Your Home Construction Cost Estimate
The Home Construction Cost Estimate (sometimes called a "take off") is the heart of your financial plan. If you're doing custom plans, here's how to get your home construction cost estimate done.
You did a rough cost estimate when you put your budget together. Now it's time to get some real life numbers that you can use to guide your home building project.
Believe it or not, some people don't bother with precise cost estimates. You could just go to the bank with your plans and say, "How much will you lend me to build this house?", and hope you come out all right.
Maybe you have plenty of cash and don't even need a construction loan. You could just take your plans to a supplier and say, "Send out what I need," right? Wrong!
Here is a better way!.
In order to maximize your savings (or equity), you must be in control. In order to be in control, you must have a pretty good idea of what this house is going to cost - before you start building it.
FACTORS AFFECTING YOUR COSTS
You have probably heard people talk about costs per square foot, and maybe you're thinking there is some magic formula you can apply to come up with what your home will cost. Unfortunately, that's not the case.
Every home is unique. In developing your home construction cost estimate, you will discover that what your home will cost to build will depend on several things:
1. The design and specifications - the kind, amount, and quality of the things to be included in your home.
2. The prices you are able to negotiate for the labor and materials to be used in the construction.
3. How long it takes to build the home (this affects the interest you will have to pay on the construction loan).
4. How successful you are in ordering the correct amounts of materials and in controlling waste and theft.
|COST VS WORTH
Your banker may be able to give you some idea of what the home will be worth . This has very little relationship to its cost!
You and builder Brown are building identical homes. The home will require 14 rolls of wallpaper in the dining room. Builder Brown pays the retail price of $10 per roll.
Total cost is 10 x 14 = $140. After a little shopping, you find the same paper on sale at a discount house for $3 a roll. Total cost is 3 x 14 = $42.
Your cost on this one item is 70% less than builder Brown's!
The lesson here is clear. If you are a careful shopper and are willing to haggle a little and look for bargains, you can significantly lower the cost of your home. The worth of the home will not be affected.
One way to get a mental picture on all of the construction costs involved in building your home is to group them as follows:
|If the home is being built for sale, you'll want to include|
The most time consuming task in developing your home construction cost estimate is to tie down the the hard costs. These home building costs involve some figuring in order to determine the quantities of materials needed. Fortunately, almost all of this work can be done for you by other people - suppliers or subcontractors.
If you buy your plans from a plan service in the US or UK, they will often provide a detailed List of Materials along with the plans. This could save you some real time and effort but be carefull the materials used in these plans may be different to what is available in Barbados. In any event, we have included all the information you're likely to need to get a detailed cost estimate together on your own.
GETTING STARTED ON YOUR HOME CONSTRUCTION COST ESTIMATE
So how do we go about putting all this together? In order to know what your home should cost, you simply need to price all of the different elements and add them together. This is not as complicated as it may sound. There are a lot of people who will be happy to help you - like suppliers and subcontractors. You already know your lot costs.
You talked about your financing costs when you met with your lender to get prequalified for the project.
Assuming you're not building a for-sale home, that leaves the "hard" and "soft" costs to tie down. And since some of the subs furnish their own materials, we think is a good idea to start the process with your labor costs.
The first is to find your subcontractors. Here's some help.
- Once you've found them. Here's some guidelines on getting their quotes.
- Once you have your subcontactors' prices in hand, it's time to get your suppliers' quotes. Click here to get started with suppliers.
- And last (but not least) you'll need a way to record it all in an organized way. Download our cost estimator Form.
Once you've gotten your quote together, it'll be time to do some more planning! It's time to plan your Construction Schedule. Basically prepare a flowchart of each aspect of the construction phase and items and show how they are linked together.
Do not let this subject throw you! The sequence of events in building a home is really very simple. It includes:
Reproduced and adapted from home-building-answers.com