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  • Writer's pictureLaurie Fisher

How to Design Within Your Budget

Part Two of our Two-Part Blog Series "Taking the Mystery Out of Construction Budgets"

As discussed in Part One: How Much Will My New Home Cost?, since your new home doesn’t exist yet, it's impossible to know how much it will cost without a good, detailed set of drawings. That doesn’t mean we can’t start with a reasonable baseline budget; having a realistic budget from the beginning is probably the most important factor in determining whether or not you will be able to successfully complete your project.

While the most common measure of cost we tend to use is “per square foot”, there are many pitfalls to be aware of when using this formula. Putting too much faith in a generic per square foot cost model will almost certainly lead to a design that exceeds your budget.

One Size Does Not Fit All

Per square foot cost estimates are helpful at the very beginning, if only to establish a budget goal and give the architect appropriate design parameters. When you first start fleshing out your wishlist and budget, know that different parts of your home will have different per square foot costs. Your architect should be able to help you establish rough square foot costs for different types of rooms and areas.

For instance, wet areas like bathrooms and kitchens have a very high cost while bedrooms, living areas and common areas will be less. Garages and patios are not free; do not make the mistake of leaving out the garage in your square footage calculation! The overhead garage door is one of the most expensive doors in the project, and the garage will cost just as much as the other common areas in your project. A typical 3-car garage will add at least 800 SF to your project.

Decks require railings and waterproofing, both expensive items. Covered patios have paving, foundations, large openings that are spanned with heavy beams, as well as a roof and ceiling. All of these spaces also need to be accounted for in a per square foot rough budget.

Calculate Square Footage the Way Design & Construction Professionals Do

In design and construction, we measure square footage from the exterior face of the walls, not the interior as is done in real estate. It may not seem that important, but wall thickness does add up - this is especially important to know if you are building a house with Insulated Concrete Forms. ICF walls are at a minimum 12” thick, and this can add hundreds of unexpected square feet to your project if not considered right away at the start.

A smaller home will have a higher per square foot cost than a larger home; if someone tells you $350/SF for a 2,400 SF home, do not think that you can build an 800 SF granny flat for that cost; it will likely be 1.5 to 2x that. A smaller home needs everything a larger home does (kitchen, bath, heating, cooling, etc), but there is less square footage available to distribute the cost.

When to Switch to a Line Item Budget

As soon as you have a conceptual design nailed down, i.e. complete floor plans, roof plan, site plan, all exterior elevations and at least one or two sections, it will be time to begin compiling a Line Item Budget. Most architects should have a template of standard line items used in a typical construction budget. If not, you might want to start conversations with general contractors who are willing to work with you in the early phases of design.

Windows and doors are high-ticket items in any project, and budget accuracy will depend on knowing the quantity, size and type of all your windows and doors. Cabinetry is also one of the more expensive line items in a residential project. While costs and quality vary widely, know that more cabinetry means higher cost. Replacing a linen cabinet or media wall with furniture is a good way to save money.

Don’t Forget the People!

The largest number in any construction project is labor. People. Do not fall into the trap of searching online at home improvement stores, thinking that will be the basis for your budget. The cost of labor frequently exceeds material cost. And just because one material is less expensive than another does not mean the labor will be less too. In fact, the opposite is usually the case; sometimes certain products are more expensive but they can save enough on install time to make the increased material cost worth it in the long run. Don’t expect to shave significant amounts off your budget simply by choosing a less expensive tile or plumbing fixture; these savings are minor compared to the labor required to install them. Whether a tile is $4/SF or $14/SF, the labor required is still the same.

Experienced Professionals are the Key

Finally, be sure to select an architect that is knowledgable about current construction costs. If they only discuss budget in terms of flat per square foot numbers, then you might consider finding someone else, or hiring an experienced construction/project manager to monitor costs as design progresses.

Regarding the design process and the level of detail, there is an inverse relationship between budget accuracy and the ease or difficulty of making changes. Changes are most easily made in the early concept design phase; there are fewer drawings to change and therefore less coordination. Unfortunately, less detail in the drawings means less detail in the budget too. As the design develops, the budget becomes more accurate. At the same time, design changes become more complicated to make. Changes significant enough to reduce the budget will likely incur additional design fees; depending on the potential savings, the additional cost may be worth it.

The PHNX Home Advantage

With our proprietary streamlined design process and the PHNX Cost Dashboard, we stand alone in the custom home industry in providing our clients with unprecedented budget accuracy early in the design process, when it’s easier to make design changes that can affect the budget. The products and design methodology we employ enable us to maintain predictability and control over the entire design and build process that no one else in the custom home industry can match.

There are few things more risky and unpredictable than building a new, custom home. While no home builder can eliminate all risk and uncertainty, PHNX does make the process more predictable, transparent and easier to navigate than anyone else can. Contact us today to start talking about your new, true Forever Home!

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