Project Cost Estimating
Looking to start a new project but unsure how to begin your financial modeling? Or have you reached out to a couple contractors and received varying estimates for the cost of the work? After the past two years of increasingly rising costs, it can be difficult to get a realistic number. While there are many factors at play here, most important are the availability of supplies and the increase in demand - notably are lumber shortages and concrete strikes. Additionally, spending unforeseen amounts of time in our homes has not surprisingly led to an increase in the desire for remodels and new construction. With the slowdowns brought on by the spread of Covid amongst subcontractor teams and delay in receiving materials, the past year has been difficult to find a Contractor altogether. All this in mind, it is evermore important to begin your project with a well-rounded financial plan that includes contingencies during these uncertain times.
Let’s take a look at the two most common ways of estimating a project before there are any design documents put together:
Square Footage Costs: Easy to apply if you have a rough idea of the size of the construction area. Say you are building a Powder Room that is 30 square feet and you estimate $500/ sf. Your estimated cost would be $15,000. With this form of estimating, it is important to take into account the finish level (expensive ceramic tile vs inexpensive linoleum) and adjust the cost per sf accordingly.
Lump Sum (Bucket) Costs: Giving you a rougher picture than with Square Footage Estimating, applying a Lump Sum to each “space” you are constructing will give you an overall idea of cost. For example, a Powder Room could cost $15,000 - $30,000 depending on the level of finish and whether it is new construction or a remodel. As you can see here, there is greater variability in costs.
Taking a look at a few of our projects and speaking with a couple of our contractors, we have put together here some ballpark square footage costs for you to consider when planning your project. While we know it is tempting to take the bare minimum approach with these numbers, we suggest you be honest with the level of finish and design that you are wanting and plan for a higher number:
Building a new home: $500/sf minimum (bare bones). This cost/sf would be for a simple structure with minimal finishes. If your lot is on a steep slope or other Environmentally Critical Area, you should plan for higher to accommodate a more advanced structural foundation system and difficulty of construction planning. We would recommend you plan for a higher cost/sf and give yourself some wiggle room.
Second story addition: $500/sf minimum - yes, this is the same number as building a new home. The difficulty here is that you are typically building all new for the second story AND doing a fair amount of remodeling on the main story to structurally retrofit the house. This typically involves replacing exterior siding and some interior sheetrock to add structural shear walls and tie the addition to the foundation. Keep in mind - the older the existing structure, the more you will need to spend and you might elect to make other updates along the way such as replacing old knob & tube electrical or upgrading finishes at the main level. Our projects are currently running around $500,000+ for a second story and minimal remodeling at the main floor.
Kitchen Remodel: $700/sf minimum. This number is higher than the average for a new home due to the condensed amount of fixtures, finishes, and casework that a Kitchen holds. If you know you are going to want higher end casework or window/door replacements, bump this number up.
Bathroom Remodel: $500/sf - $800/sf minimum, depending on the number of fixtures. Similar to a kitchen, this number ranges from a Powder Room to a Master Bathroom.
Here are some Lump Sum (bucket) estimates for a few of our current projects:
Second story addition: $600,000. This includes 3 bedrooms and a full bathroom at the second story as well as a re-design of the existing entry and replacement of all existing exterior siding.
Kitchen remodel: $140,000. This includes a higher level of casework and tile finish and minimal changes to the existing space.
Master Bathroom: $100,000. This includes a few changes to the existing walls and a high level of design and finish work.
A few additional considerations:
Tax: Contractors vary greatly on whether tax (10.1%) is included in these numbers and you should always ask.
Contractor’s Overhead & Profit: This number can range from 14% to 24%+ and may or may not be included in the above numbers. Don’t hesitate to ask the contractor.
Consultant Fees: You should plan add 20% to the construction cost for the architect, structural engineer, geotechnical engineer, and other possible consultants. If your project is located in an Environmentally Critical Area, keep in mind that you will need a greater degree of consultants to submit documents to the local authorities having juridiction for permitting purposes.
Permit Fees: These fees can range from $2,000 for an over-the-counter permit to $10,000 for a full permit review in an Environmentally Critical Area. Your architect may need to send in exemptions or submit for waivers which will come at an additional fee (for both permit fees and architectural fees).
Appliances & Decorative Fixtures: Typically purchased by the Owner and installed by the Contractor. Your architect will assist you in defining what is needed and coordinate allowances with the Contractor.
Contingencies: Most important for the last!! Keep a contingency on top of your construction estimate. This number is yours alone and should not be included on the construction estimate. A safe contingency could be 10% and be slowly decreased as the project progresses and more elements of the estimate are defined.
That’s all she wrote! We hope this rough idea of estimating gives you a better sense of costs during this wild time as Covid (hopefully) comes to an end. The most important takeaway here is to always plan for the higher number and be realistic with the level of finish you are expecting.