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Construction Fixed Price vrs Cost Plus

April 17th, 2018

Construction Fixed Price vrs Cost Plus is about this Architectural firm’s perceptions of Contractor Construction contracts and how one is probably much better for you than the other.

why Architect should design your house

One of HOME ARCHITECTS successfully designed & managed projects, (C)Copyright 2017 Home Architect, PLLC, All Rights Reserved Worldwide.

 

 

 

 

 

 

 

 

 

 

 

 

If you are a millionaire, retired school teacher, law enforcement officer, or a billionaire, the words this Architect has never heard with legitimate clients are: “Money’s no object.” In other words: everyone wants a good deal.  A good value.  Not cheap.  Value.  Good and durable materials installed properly. 

 

Well, when you pay a Contractor with his preferred method of contract, he’s always going to want you to pay him with a COST PLUS contract.  Do  you know what that is?  That’s where he pays his subcontractors and material providers whatever they ask for (no matter how much they want), then your GC (General Contractor) piles on another 10%, 20% or more (that could be his secret), then socks it to you with whopping invoices.  This is one of the best kept and dirtiest secrets of the custom home construction business.  Essentially, you pay your Contractor whatever he says you owe him.  Does he/she really care how much his/her subcontractors charge?  Not really, or actually, the more the better for them, because they will tack on a hefty percentage of whatever they get charged, then pass the entire amount on to you.  You get stuck with the big bill.

 

Now, you’re thinking: “Hey, that’s not fair!”  But you know what, there may be collusion going on in some areas.  Collusion is where there is a spoken conspiracy or even unspoken knowledge about certain practices in a given geographic region, wherein many of the providers collude (or discuss and agree) on certain practices that inhibit fair trade.  This is typically hard, if not impossible to prove, as discovering evidence of such agreements and discussions is nearly impossible.  But the actions of many of the providers become painfully obvious, when you may be searching for a Contractor to treat you fairly when you want to build a project, like a new house or renovation.

 

 

 

 

 

 

 

 

 

 

 

For instance, the Senior Staff Architect at this architectural firm just spent 7 months trying to find a fair deal with General Contractors all over an area in western North Carolina.  He interviewed over a dozen GCs within 20 miles of his new family house project, where he and his wife are to spend the rest of their lives.  But without fail, every one of those GCs demanded a Cost Plus form of contract.  Once again: that means what: you don’t know how much it’s going to cost you, in terms of hundreds of thousands or millions of dollars, until you’re done building it.  This particular wannabe homeowner simply couldn’t afford to take such a risk.  He wanted a fixed price. 

 

What were the reasons for the dozen GCs demanding a Cost Plus contract?  Mainly, they would say: “there’s never enough detail in the Architect’s drawings and no specs, so we have so many unknowns, that we can’t get stuck with and can’t price up front.”

 

And that may very well be the case with some/many “residential designers” or some other Architects of houses (skimpy sets of drawings and zero specifications), but this particular custom house Architect had 38 sheets of drawings and specifications (24″x36″) for his project.  There are lots of details, specs, structural plans, electrical layouts, even 3D imagery including a YouTube 3D video 360* around the project.  Very little unknowns, if anything.  So: the GC typical excuse for demanding Cost Plus didn’t exist.  So then what did these dozen GCs say: “Well, that’s what we’re used to doing and that’s how it’s going to be.”

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However, our Architect refused.  He said: “No sir, that’s Not how it’s going to be.”  But he was concerned.  There seemed to be a conspiracy of high-priced collusion, whether spoken or not, going on in his area of the world.  What to do?  He thought, finally, that he would use a “spiral” principal, wherein he would continue searching and interviewing GCs from farther and farther away from the den of iniquity in which he appeared to find himself (whether real, imagined or whatever, he had no proof other than his experience that 100% of the GCs around him would only go Cost Plus).  So, the Architect reached out on the Internet, farther and farther away: 15 miles, 20 miles, 22 miles…Finally at around 25 miles, he found a GC with whom he was not familiar and who had never done a project in his area. 

 

Yes!  That was the one.  That GC had significant commercial and custom residential experience.  They loved the detailed drawings and specifications.   And they were okay slightly expanding their service zone to undertake a project at that distance from their location.  As a matter of fact, they were so gung-ho, that the Architect began introducing them to his other clients, helping them also obtain better deals.  How: because they agreed to go FIXED PRICE with the construction contract.

 

This Contractor, honest and open-minded, was eager to undertake the Architect’s project.  It is now under construction, for an amazingly low cost of $166/HSF (Heated Square Foot).  For the record, most of the other custom house projects being built in this corner of WNC are going for around $250 to $350/HSF, which is about double what the Architect’s custom designed house is actually being constructed for.       Continued below:

 

 

 

 

 

 

 

 

 

How about that?  It took the Architect over 7 months to find the right Builder (a Licensed General Contractor of good character and who didn’t mind providing a fixed price for a detailed set of documents for a mid-level house in the mountains).  And the new Contractor had about 20 references from happy clients for whom they had built projects.

 

Now then: this Architect did things that not everyone might want to do.  His floor plan was virtually identical to the multi-million $ houses he designs for clients.  So there’s not much missing there.  However, he did make some value-oriented choices for materials: much of the outside has prefinished dark brown industrial metal siding (which means about $14,000 of exterior painting won’t be necessary (ever) as there is on most mountain homes every 5 to 7 years forever).  The windows are vinyl framed (but are in a handsome tan color).  The interior walls and ceilings are drywall (and so are many other mountain houses).  The walls are 2×6 (guess what: many other million $+ houses are 2×4).  The roof framing is prefabricated roof trusses (so are many other mountain houses, or they may be stick-framed, which wastes both material and especially labor).  The roof is high-quality Kynar painted standing seam metal roofing (which would be an upgrade for most other mountain houses).   Hey: this isn’t sounding bad; it’s sounding pretty good!

 

There is a 2-1/2 car garage (most other mountain houses may not even have a garage or a 2 car only).  There are large timbers at the front and rear porches (which many other mountain houses have).  The design style is referred to as Mountain Modern (most other mountain houses have either no particular style, or cutesy cottagey).  There is a giant 78′ diameter motor court with center landscaped island in front of the house (no other mountain houses under $5M have such a feature).  The kitchen has double stainless steel Whirlpool appliances (some higher end mountain houses spend large amount of money on “name” designer brands like Wolf and SubZero, which along with many other high end brands, may tend to have more questionable reliability ratings than the more common brand, according to Consumer Reports). Wait: did you catch what was said: DOUBLE appliances: 2 gas ranges, 2 ovens, 2 microwave/exhaust vent hoods, 2 sinks, 2 dishwashers, for LESS than the cost of the appliances in most mountain houses.

Appearance is nearly identical to the higher priced appliances. Glass areas: the glass in the windows is Identical to the glass in Marvin and other expensive doors and windows.  And the Architect’s house has about twice as much glass in width and height as most other mountain houses.  The Architect’s house is up for a design award. 

 

In other words: the Architect’s house will deliver probably a more enjoyable, more durable and lower maintenance house for half the money. There’s another benefit: NO CONSTRUCTION LOAN WAS REQUIRED. 

Now then: did the expensive other Contractors Cost Plus contracts for million+ houses do better?  No.  Actually worse. 

 

Moral of the story: find an experienced Architect that will provide thorough and detailed documentation for your house, so you can obtain a Fixed Price Contract Contractor, so you can pay less than the Cost Plus Contractors.  Pay your Architect to help find the Fixed Price Contractors in your area (or just outside of it).  It should be worth the wait and extra effort.

 

Material note: if you would like to have other materials that require more maintenance, like wood (inside and outside), our firm does this on most client projects.  Our Staff Architect simply could not afford the initial cost or the ongoing maintenance costs.  And if you prefer more traditional styles, our firm normally designs client projects in that manner.  Once again: our Staff Architect could not afford that and needed to simplify.  Why: because one of the definitions of insanity is: keep doing the same thing and expect different results.  In other words, because our Staff Architect knew that normal costs for traditional materials and styles were significantly more expensive, he opted for a simple design with less costly prefinished materials.  The result: half the cost.  No loan.  Low maintenance.  Same floor plan.  Larger garage.  Larger site features.  More enjoyment for much less cost.  However: this firm can design more traditional houses for clients that have more robust budgets. 

 

 

 

 

tags: cashiers, lake toxaway, highlands, glenville, sapphire, sevierville, timber frame, post and beam

Mountain View Meadow House

April 3rd, 2018

Mountain View Meadow House is the house of the Senior Staff Architect for Home Architects.  These photos show in chronological order, the construction.

1 Clearing

 

 

 

 

 

 

 

 

 

2 Gravel Drive Sub base and Silt Fence

 

 

 

3 Gravel Road & Circle

 

4 Electric Service Entrance

 

 

 

 

 

 

 

 

 

 

 

5 Survey of Foundation Footings

 

6 Footing Excavation

 

7 Footing Rebar Steel

 

8 Pour Concrete Footings

 

 

9 Concrete Block Foundation Walls

digital GPS laser transit precision nailing of foundation wall corners into top of footings.

 

10 Grout CMU walls

 

 

 

 

 

11 Garage Slab Pour

 

 

 

 

 

 

12 Framing Materials Delivery

Builders First Source carefully unloaded and placed each bundle of lumber, using Moffet loaders, not dumped like most deliveries from other companies.

 

3 Big Steps to Your New Architect Designed House with No Loan

March 21st, 2018

3 Big Steps to Your New Architect Designed House with No Loan is how this Architectural firm is doing this very process right now: getting a new Architect-designed house and with no loan required.

why Architect should design your house

One of HOME ARCHITECTS successfully designed & managed projects, (C)Copyright 2017 Home Architect, PLLC, All Rights Reserved Worldwide.

 

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Does that mean that no money or capital value is required?  Quite the opposite.  You have to already have a substantial amount of pre-paid investment in order to pull off what appears to be this magic act.  But this method works and makes sense, once you understand how to accomplish it.

 

First: THIS IS REAL.  This Architectural firm is doing it right now.  This is not fiction.  And it is legal.  Nothing improper at all.  In a nutshell: it is like the 3D mind game: Rubik’s Cube.  That’s the hand-sized cube with primary colors on each side, divided into multiple sections. The object of the game is to get the scrambled colors on each side of the cube to each be one of the primary colors.  And that’s sort of what is required in this Architect’s 3 BIG STEPS method to obtaining your new Architect designed house with no loan involved.  Sound impossible?  You’ll see: it is very possible.  It just takes logical, sound planning.  At the end of this article, you’ll probably sit back and say: “Of course!  There’s nothing magic about this.  You’re just taking money from one pocket and putting in into another.”  Yes: that’s exactly what is going on here. 

 

PREREQUISITES
A.  You need to already own the land on which you intend to build your future Architect-designed dream house.
B.  You need to already own your existing house (no outstanding debt, or very little).
C. You need to have a realistic construction budget in mind and work with your Architect and allow them to help you make certain critical decisions so that the economics of this 3 BIG STEPS process works.  The sides of the mathematical equation have to balance.

 

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D.  You will need a separate fund with a chunk of cash in it for items/ features that exceed the income generated by the sale of your existing house.
E.  You should also have another General Savings account(s) to protect you in the event that unexpected things happen, which often occurs in construction projects.
F.  Once again: once this is explained in writing, in this article, you’re going to say: “Sure.  That makes sense.  No magic there.”  However, there may be some divine guidance at certain points in the process, as it takes large things to come together in just the right way for things to evolve properly and in a timely manner.  So a healthy amount of prayer may help you.  Certainly can’t hurt.

 

DEFINITION OF TERMS AND FUNDS
1.   CLOSING AMOUNT 1: Closing Cash Amount from Existing House Sale that you walk away with free and clear at the sale (your Real Estate Attorney’s HUD form defines this amount). This is cash (usually in the hundreds of thousands of dollars (or more) that you receive when you complete the sale of your existing house that you own outright.
2.  INCREASED FEATURE SAVINGS AMOUNT 2: the amount of cash you have in a separate savings account that is there to help you pay for increased size, features and quality in your new house, in addition to the funds provided from the Closing Amount 1.  This in cash you already have.
3.  RENTAL HOUSE SAVINGS 3A: amount of cash you need to have saved to use to pay rent on a leased house/condo/apartment while your new house is under construction.  This in cash you already have.
RENTAL HOUSE COST 3B: this is what you will have to pay for your rental lodging. 

 

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4.  OWNER CONSTRUCTION ITEMS YOU PAY FOR 4: this is a separate fund that you use to directly pay for certain items for which you don’t want your GC paying.   This in cash you already have.
5.  CHANGE ORDERS 5: these are typically improvements you pay additionally to your Contractor to add better features to your project, after you have already signed the main contract with them.  These typically increase the cost of construction.
6.  MAIN GC CONSTRUCTION CONTRACT PRICE 6: this is the main agreement you and your Contractor sign, wherein they agree to build your house (hopefully for a fixed price amount of cash).

 

STEP 1A & 1B

ARCHITECT HOUSE DESIGN, GC PRICE & CONTRACT
A.  Have your future house designed by a Licensed, competent Architect that specializes in custom residences, and in the type of environment where you want to live. 
For instance: HOME ARCHITECTS ® is a leading Mountain residential Architect, across the USA and the planet.

B.  Pay your Architect to help you find the right General Contractor (GC). 
This is a crucial step most people miss.  And it can take time.  For instance, it took this firm 7 months to find a GC in one part of a specialized mountain region to find the right GC for the construction of their Senior Staff Architect. 

 

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They went through a dozen other GCs closest to the project site and every one of them would only price the project as a “Cost Plus” method.  That’s where the GC charges you whatever it might cost them, using whomever they want as their subcontractors, then they typically tack on another 15% to 20% or so, no matter how much it costs.  Usually, only very wealthy people can afford such a method of GC operation.  The Staff Architect at the firm certainly couldn’t take that risk.  And there was no reason for any GC to demand Cost Plus, because the firm prepared 38 sheets of drawings and specifications, carefully detailing what the project design and specifics would require.  No guesswork.  However, skimpy drawings, no specs and many unknowns are the only reason for Cost Plus GC contracts.  See this related online article to better understand this: Cost Plus versus Fixed Price Construction Contracts.  So, when you hire the appropriate Architect to design your dream house and pay them to prepare a properly detailed set of documents, the hope is that there will exist a GC willing to build your house based on those detailed documents for a Fixed Price.  That’s the goal, if at all possible and if a Fixed Price GC can be found willing to take on the project for a reasonable price.  THIS IS A CRITICAL STEP.  Your circumstances may or may not allow for this painstaking and time consuming search.  But if they do, the pay off can be hundreds of thousands of saved dollars.

 

What you want to establish is a construction contract price from the GC that is no more than the combined amounts you can obtain from the 
CLOSING AMOUNT 1  and the
INCREASED FEATURE SAVINGS AMOUNT 2.

 

Why: because this is the main equation:
MAIN GC CONSTRUCTION CONTRACT PRICE 6 +
RENTAL HOUSE COST 3B+
OWNER CONSTRUCTION ITEMS YOU PAY FOR 4+
CHANGE ORDERS 5
=
CLOSING AMOUNT 1  and the
INCREASED FEATURE SAVINGS AMOUNT 2.

 

However, let’s modify the equation a little: You should really bump the amount of cash in the Savings 2 fund to be perhaps 20% to 40% MORE than the Contract Price 6.  Some Architects think it should even be 100% more.

Why: because S**t happens during construction.  Be Prepared (Boy Scout’s motto).  Rarely does any construction project conclude costing exactly what the amount planned for indicated at the onset of construction.  Like what?  Well, how about the old classic: “Concealed Existing Conditions?”  What concealed conditions in a new house project?  How about the soil on which the house is built?  This firm has seen where tens of thousands of dollars had to be approved in construction Change Orders due to unconsolidated  earth under the surface, which had to be removed, and foundations taken to a lower depth than engineered.  That’s not free.  Or the reverse: bedrock nearer to the surface (even soil borings can miss this), which may require blasting, or other more involved precautions for foundation securement than originally planned.  And there are more.  If you live long enough, you see more and more. 

 

But that’s really not the only reason why you should put more into the INCREASED FEATURE SAVINGS AMOUNT 2.  Why: YOU.  Huh?  Me?  Yes, YOU.  Because owners of new houses are their own worst enemy when it comes to construction cost.  Like what? 
How about: you decide you want the SubZero and Wolf appliances instead of the Frigidaire?  That can be a $60,000 decision.  Don’t believe us?  Price them out.  You’ll see.  Or you decide you want the high-end heart pine recycled distressed historic wide plank flooring with dowels, instead of the low end white pine closet boards, with exposed face nails.  Once again: change in cost?  from around $2.50/sf to perhaps $11 to $14/sf.  Overall change for a 3,000 HSF house? Around $34,500.  Such things are not like changing the color of paint on a wall.  And how about those wood ceilings you’d prefer, rather than drywall? Or Brazilian Quartz vein counters instead of lower end beige granite?  Tens of thousands of dollars.  And there’s much more that you want.  And you will find a way to get it.  Usually that will end in you signing and paying for Change Orders, paying the GC more for those items that were not included in your original documents upon which your Main GC Contract 6 is based.  So: word to the wise: have a substantial additional savings fund from which you can take funds to not only pay for more house than your Closing Amount 1 gives you, but to also cover probable change orders.

 

 

SECRET INFORMATION: the construction cost of your new house is going to always be MORE than you want to pay a Contractor to build it.  Therefore, from the beginning, tell your Architect to make the house as compact as you can reasonably live with, and as plain in materials, features and other aspects as you can accept.  Because ultimately, no matter what you say, how much you can afford to pay will start dictating nearly everything.  For instance, nice mountain houses typically go for from between $200 to well over $350/HSF.  And as another example: this firm’s Staff Architect could not afford that. The math of the equations in the Excel spreadsheet went “Tilt.” 

 

The magic number turned out to be around $166/HSF.  Now then, this is a significant reduction in the cost of most mountain houses.  And here’s the part that most Owners don’t understand: no GC is going to simply reduce the construction cost just because you want them to do so.  No way.  They won’t give you a $250/SF house for $166/SF.  Uh-uh.  So what needed to happen to get the cost down?  The Architect (his own client) made it smaller.  The main house is only 1,987 HSF.  And there was a Phase 2 with a 200 HSF pantry, and a 2.5 car garage.  He made the exterior walls 70% prefinished industrial metal warehouse siding.  No painting necessary by local painters.  The interior: all ceilings and walls: drywall.  Floors: the lowest end possible wood planks: white pine closet shelving boards, lightly distressed (to conceal future bruising).  Windows: colored vinyl (however the insulated glass is identical to high end Loewen or Marvin).  Cabinets: partical board core, with real wood then veneer on vertical surface, with hardwood, prefinished doors.  Lower end granite counters.  Appliances: Frigidaire Pro series stainless steel.  On and on.  Nothing bad.  Just carefully selected value-oriented items and would decrease the cost of the Contractor, which allowed the house to be built for less than most other conventional houses in the area.  The result: a more contemporary mountain modern house, built for around $90/hsf less than most other houses in the region, but with MORE glass facing an incredible mountain view. And and much more generous circular entrance driveway, with some very nice future features designed, but not yet built.

 

 

STEP 2

SELL YOUR HOUSE
FOR THE AMOUNT OF MONEY YOU NEED TO PROVIDE THE FUNDS NECESSARY
Necessary for what: to satisfy the equation. 
However, DO NOT ATTEMPT TO SELL YOUR EXISTING HOUSE FOR MORE THAN A REASONABLE AMOUNT.  And a reasonable amount may very well be slightly under the going market rate, to help secure a swift sale. And you WILL want a swift sale.  So much depends on it.  Like what: like the GC Contract Amount 6.  They’re not going to hold your price indefinitely.  30-60-90 days max.  After that, you’re going to be looking a Change Order simply to cover increased market costs in return for nothing.  So don’t get greedy on the sales amount for your house.  And don’t think, using this method that you “don’t have to sell”. 

If you’re using this 3 BIG STEPS method, you do need to sell your existing house.  Listen carefully to your Real Estate Broker.  She/he doesn’t make a penny unless your house sells, so they do want it to sell.  And they make more if your house sells for more.  So they don’t want you or them to lose money on the sale.  Ask your Broker to prepare a CMA (Comparative Market Analysis) for similar houses in your area to understand comparable house values.  Don’t think that because you over personalized with polka-dot wallpaper that makes your house worth more to buyer.  It may detract.  Same goes for other improvements.  Talk to an experience Real Estate Broker before making random improvements in your house, so that the improvements you make help increase the value of your house.  They may not, or they may hurt you.  Consult a professional. 

 

All the above being said, NEVER FORCE YOUR BROKER TO LIST YOUR HOUSE AT A HIGHER PRICE THAN THEY HONESTLY RECOMMEND.  You won’t get the amount you want.  And it will take far longer to sell.  And in the end, you may actually get even less than comparative market value, due to an overly-aggressive initial price.  Other Real Estate Professionals smell blood in the water and advise their clients accordingly.  If a property has been on the market for hundreds of days or years, they know you are getting desperate to sell.  That doesn’t help your market price.  It hurts it.  So don’t make this mistake that so many triple A personality sellers do.  Back off and listen to your Broker. You’ll be glad you did and your life will move forward int a bright new direction: to your dream house.

 

Now then, the planning for this sale STARTS BEFORE YOU BUY IT. In other words, years ago, hopefully you bought your existing house in an economic downturn (a “bust” rather than a “boom”).  Because what wealthy investors have always said is true: “Buy low, sell high.”  But in terms of real estate, it may be more: “Buy low, sell at future improved amounts.”  And you can do certain things, after you bought low, over the years, to improve your sale value.  For instance: if you bought a 3BR/2.5Ba ordinary plain house in a typical neighborhood and it was perhaps 1,728 HSF when you bought it, and it has an unfinished basement, you can always finish that basement.  Perhaps your house is then improved to become a 2,300 HSF (Heated Square Feet) house. And there was an empty Zone 3 to the AHU (Air Handler Unit) control panel allowing you to simply plug that into another zone damper to give your basement HVAC for less than $1,000.  And you didn’t go crazy with the walls, floors and ceilings and lighting.  Just give them about another 600 HSF for not much cost to you.  So: perhaps a house you paid $200k for in a bust you end up selling 7 years later for $290k. And after closing costs, maybe you walk with around $280k.  So look there: you got $80k more than you paid for it.  And chances are, your CPA will tell you there’s no taxes on that capital gain, because you are immediately turning that around and reinvesting that into a new house.  That’s critical to this 3 BIG STEPS method.  You have to invest wisely.  Plan years ahead of time.  And do simple things: big bang for little bucks.  For instance: maybe you splurge $3,000 to have a stone mason clad a couple of front porch posts with native rock.  Looks great. Helps resale speed.  Kitchen improvements are usually #1, but those are also expensive, so hopefully you already have granite counters, an island, nice lighting and cabinetry there.  

 

 

STEP 3

A: RENT A PLACE TO LIVE
B: HAVE GC BUILD NEW HOUSE
You should have a RENTAL HOUSE SAVINGS 3 that you use to pay for a place to live while the new house is under construction.  This fund could be part of the equation you establish as coming from the CLOSING AMOUNT 1.  Or from other savings you had.  But you definitely need this amount (unless you are independently wealthy).  The amount of time to build a new house may vary from 6 to 8 months for a smaller project, to over 30 months for a larger, more detailed construction effort.  And rental homes/ condos/ apartments vary greatly in size, cost and features, not to mention location.  If you’re trying to obtain a rental close to the project site, that makes it even more difficult to find a place for what you may wish to pay.  Somewhere between $1,000 to $2,000 a month would not be unusual for a 2 to 3 BR (BedRoom) place with 2Ba (Baths), although this can and will vary considerably.  But let’s say it was $1,500/month.  If your house takes a year to build (it always takes longer than you think it will), that’s at least $15,000 for temporary lodging.  And of course, normal costs of utilities are over and above that, normally.  So that accrued value you made on the sale of your house is starting to get some bites taken out of it. 

 

Now some math equation variables to make for a happy ending:
The amount of
CLOSING AMOUNT 1  and the
INCREASED FEATURE SAVINGS AMOUNT 2
must not be less than the total costs you are going to incur for ALL of your expenses, which are typically:

MAIN GC CONSTRUCTION CONTRACT PRICE 6 +
RENTAL HOUSE COST 3B+
OWNER CONSTRUCTION ITEMS YOU PAY FOR 4+
CHANGE ORDERS 5

 

However, there may be something in your project that makes it even more expensive.  Never cheat on the numbers.  Always imagine that unknowns are higher that you think, never less.

 

The ideal: having Steps 1, 2, & 3 all happen in perfect sequence, with no delays between each of them.  That is the perfect order you want.  If there is too much time between any step, there will be economic pain.  You do not want that.  You want each step flowing smoothly from one to the next.  This takes planning and patience, on the part of all parties, and as said before, most likely prayer.  And having a Licensed Architect manage the entire process for you can certainly help take the edge off.  Why: because they are going to know people in construction and have other resources that will speed things along faster than you could ever accomplish on your own.  And it will still take long than you imagine.

 

SUMMARY

STEP 1A & 1B
ARCHITECT HOUSE DESIGN, GC PRICE & CONTRACT

STEP 2
SELL YOUR HOUSE

STEP 3
A: RENT A PLACE TO LIVE
B: HAVE GC BUILD NEW HOUSE

 

And don’t forget: hire an Architect to manage the process for you.

 

 

 

 

 

tags: 3 big steps to architect designed house with no loan, cashiers, lake toxaway, highlands, glenville, aspen, telluride, sevierville, post and beam, timber frame

 

 

 

3 Things Clients of Architects Should Never Say

March 17th, 2018

 

3 Things Clients of Architects Should Never Say is about the taboos surrounding customer/ client behavior.

 

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1. YOU’VE GOT IT ALL FIGURED OUT

Never call an Architect, hoping to hire them and say:
“I’ve pretty much got this all drawn out myself, so all I need  you to do is do the “prints”.

Why:
That is condescending, arrogant, misinformed, naive, and will probably not help you get the services you really need.  You, with your 48 hours of scribbling with a pencil on the back of an envelope (or worse, some “house design software”) think because of who you are, you’re going to transplant the 50+ years of experience of the Architect your talking to has and do a better job of design than him or her?  I don’t think so! 

Why:
That’s like calling a criminal defense Attorney from jail and telling them that you’ve researched your case in the jailhouse library and you know how to plan your defense, and you just need the Attorney to pilot 2nd chair to “make things legal.”  How do you suppose that Attorney’s going to react?  If they even stay on the phone long enough to hear the entire crazy plan of attack?

Or:
Like calling an experienced cardiac surgeon from your mobile phone, when you have collapsed, clutching your chest, having a heart attack on the sidewalk, telling him that you just Googled “Heart Surgery” on your phone, and here’s how you’d like him or her to go about performing the operation, so that you can save some on the operation.  Once again: I don’t think so.

All the same thing: you telling an experienced, trained & licensed professional how to do their jobs because you think your brief exposure to something on a TV build-it-yourself show, or Google is enough to know everything about the subject.  No it’s not.  And you’re going to get yourself into a lot of trouble if you continue going down that road. 

 

 

 

 

 

 

 

 

 

 

 

 

THE REAL REASON WHY YOU SHOULD NOT DO THIS:
It’s the 99% of what you Don’t know that’s going to kill you, financially ruin you, and consume MONTHS or YEARS of your life (when you should be earning your living doing what you really normally do to create your income, so  that you can pay professionals to do these things for you properly). 

 

 

2.  HOW MUCH TO DRAW SOME PLANS AND GIMME PRINTS?
Wow.  So much is so wrong with that question, it’s hard to know where to start.
First: Architects do a LOT more than just “draw floor plans.”
They first PROGRAM your Lifestyle, analyze your Site (land) and then combine the important aspects of each to create a DESIGN that works for both of those custom factors, then DEVELOPS the DESIGN, then creates CONSTRUCTION DOCUMENTS, then BIDS out your project to licensed Contractors, then VALUE ENGINEERS the bid price, then ADMINISTERS CONSTRUCTION so that you get the house you want, down to handing you the key (several of the latter services are often optional).

And about the other drawings beyond Floor Plans:
Site Plans
Exterior Elevations
Detail blow-up floor plans
Building Sections
Wall Sections
Roof Plans
Details: Plan view
Details: Section View
Specifications

(continued below):

 

 

 

 

 

 

 

 

 

 

 

Electrical Schematics
Cabinetry Elevations (and blow-up detail plans)
and also possible:
3D renderings, isometrics

For a 2,200 HSF (Heated Square Foot) house with perhaps 3,818 GSF (Gross Square Feet) this might be 38 to 45 sheets of 24″x36″ drawings.
For a 6,000 HSF custom house with many custom features (such as an elevator, stairways, site roads, remote gate entry complex, helipad and other items) with could be 100 sheets.

In other words: the creation of a custom house project is MUCH more than just “plans.”

Second: Licensed Architects rarely “run prints” these days.  You’re not buying “prints.”  You are paying for the expertise to analyze and design your project.  Most Architects these days don’t even give you blueprints. Instead, they email you PDFs of their drawings, and you, yourself, pay local printshops to run the plots of the drawings and bind them for you and the bidding Contractors.

Third: Really?  “How much?”  Without knowing anything about the project size, location, complexity or budget?  That’s like phoning a car dealership and saying to the first salesperson that answers: “Hey, how much is a car?”  By doing so to an Architect, you have just informed them that you regard their profession as a commodity: that all Architects are the same, pasty white bread in the grocery aisle and you couldn’t care less about their experience, talent or abilities to help you get the house of your dreams.  Every Architect is different.  They all have different skills, education, experience and specialties.

 

 

 

 

 

 

 

 

 

 

 

3.  I’VE BEEN GOOGLING THINGS LIKE SUCH & SO AND WANT TO USE THAT TO BUILD MY HOUSE BECAUSE I KNOW IT WILL BE CHEAPER & BETTER AND I WANT IT

Oh my gosh.  As if your 3 weeks of Googling can possibly replace the half-century of real world knowledge your Architect has about not only what you are suggesting, but about the relative costs, effectiveness and systems that you really should be considering if you’re going to be able to afford your proposed house.

Does that sound like a cheap shot?  Well, consider this:
Just had a call from a guy in the middle of the USA who wants to build a custom house in Tennessee.  He says he wants it to be all ICF (Insulated Concrete Forms) and concrete floors and hydronic piped heating in the floors and all steel structural system, on a steeply sloping site.

When the Architect asks the guy: do you have any idea what such systems are going to cost you to build?

No.

Would you like to know?

I guess.

Ok: how about $400/square foot?

Ok.

What do you mean, “ok?”

Huh?

Have you done the math, sir?

No.  What?

Sir: for the 3,000 HSF house you described, that’s probably going to cost $1.2 Million to build.  Does that fit within what you wanted to spend for the construction of your house?

????Huh?  No!  That’s more than double what I had in mind?  How did it get so expensive? What did you do?

What did I do?  I didn’t do anything.  I’m just informing you what all those exotic systems you said you wanted are going to add up to when you have a Contractor start pricing any design made of them.

Really?

Yes sir.  Now then: would you like to hear about the types of building systems more within your budget capability?

I suppose.

At this point, the Architect informs the guy want he can afford and the guy doesn’t react with much enthusiasm, because his big dreams of exotic (and expensive) systems don’t fit within his budget.  The Architect discusses that just because those expensive systems aren’t used doesn’t mean it can’t be a great design.

 

BOTTOM LINE: you, with your Googling and watching of Do It Yourself Construction TV episodes are never going to acquire the knowledge your Architect has about all of those tricky, pricey systems, as well as more reasonable methods of building.  If the systems you think are so cool and unusual are some sort of best kept secret to better housing that’s also cheaper, do you really think that every Builder and his brother and sister wouldn’t be using that system right now, in every town across America?  Of course they would.  But those Builders know the same things your Architect does: those exotic systems are NOT less expensive. They are MORE expensive. And could it be that the enthusiastic people on TV are perhaps being partially or totally reimbursed by the system manufacturer to use their products and scream about how wonderful they are, without informing you how expensive they typically are for everyone else.  Perhaps: misdirection and lack of critical information (like the real world cost). Once again: do you really think that you are the first person to have ever heard about ICF, Hay Bales, Timber Frame, Prefab Modular, Container, Hydronic slab heating, Log, Steel Stud and every other exotic construction system out there?  I don’t think so.  And by demanding them, you are forcing your Architect to educate you (sometimes painfully) about their realities so you don’t get hammered by Builders who will sock it to you when you start pricing a design made of them.  Please listen to your Architect and heed their counsel.  They are trying to help you.

 

———————————————————-

 

SO HOW ABOUT TRYING THIS:
How about you instead call an Architect whose website interests you. 
Tell them you like what you’ve seen on their website.
Inform them about your project land, your construction budget, then ask them how they might suggest proceeding.

Any Architect is going to love you.

 

By the way: regarding construction budgets: Nice homes in the custom category are going to typically cost between $200 to $350/HSF these days in most parts of the USA. 
Home Architects just designed a family house for their Senior Staff Architect, and he is building that for $166/HSF.  But he did many things to reduce the cost per square foot, that not everyone would want to do.  So if you want to pay less to build your dream house, be ready to have your Architect design it with some simplicity and sparseness of materials that would be associated with lower costs.

 

AND WHAT NOT TO DO
Save yourself some time and disappointment: Stop trying to do the Architect’s job.  Do NOT try to draw a plan.  It will be clumsy, inept, not to scale (which means it won’t work), and wasteful of space and area.  And it won’t work on your land.  And you won’t even understand why.  Designing a custom house is one of the most detailed, complex tasks an Architect can undertake.  Let your Architect do his job.
And don’t “research” by surfing Google, falling in love with exotic building systems, thinking you are breaking new information barriers “discovering” better, cheaper ways of building things.  Ain’t gonna happen.  Once again: let your Architect do his or her job.  They are much better at it than you.  They already know everything you think you discovered and much, much more.

 

DO YOURSELF A FAVOR
And before you buy your land, pay your Architect to evaluate it.  Did you know that a very steep site can easily ADD $150,000 to your construction cost for the foundations?  It’s true!

 

RESPECT
Do you respect what your Lawyer does for you?
Your doctor?
Your Carpenter?
Your Electrician?
Your Plumber?
Your Surveyor?

Would you really stick your fingers into what they do for you and attempt to partially do their job?  How do you think your Plumber would react to you trying something like that?

Then also respect your Architect. 
Don’t “play” Architect.  Let them do their job. 

In the end, you’ll get your dream house and it’ll go a lot smoother.

 

REASON FOR THIS ONLINE ARTICLE
Some people might think this was an Emily Post lesson regarding how to treat your Architect.  While that might be understandable, that is NOT what it is about.  It is about you obtaining the best possible professional services for the design of your dream house.  When  you think you are “helping” to accomplish that, you may be doing just the opposite.  If in doubt, please reread this article.  And all the best with your project!

 

 

 

 

 

 

tags: Cashiers, Aspen, Telluride, Lake Toxaway, Highlands, Glenville, Sapphire, Sevierville, timber frame, post and beam

 

 

 

 

 

LED vrs CFL vrs Incandescent

March 14th, 2018

LED vrs CFL vrs Incandescent is about how this Architectural company is going all LED and why.

There was a time when all humanity had was campfires.  Then candles and oil burning lamps.  Then during the last hundred+ years, incandescent bulbs (bulbs are technically called “lamps”) were the only choice for electrically powered lighting, and then fluorescent and metal halide and other commercial lamps that weren’t suitable for residential use, due to the cold white, blue, and pink color shifts (also called Kelvin Temperature for visual coloration of the light output), not to mention higher voltages not typically found inside a house.

 

 

 

 

 

 

 

 

 

 

 

 

Then, about 10 years ago, CFLs (Compact Fluorescent Lights) became a viable alternative to homeowners, due to lower wattage consumption for the same lumen (light brightness) output.  And they latest longer than incandescent.

 

Then came LEDs (Light Emitting Diode) lamps.  They last longer than CFLs and provide even more lumens per watt.  Until recently, they have been prohibitively expensive.  But right about now, their cost is becoming more reasonable. So that there is really no reason not to use them for nearly 100% of a new house’s lighting, inside and outside.  Once again: LEDs provide more brightness for less watt consumption and last much longer.  Probably not as long as manufacturers claim, but yes, longer than CFLs, which last longer than incandescent “bulbs.”

 

What’s the comparison?  Check out this chart of functionality comparing Incandescent versus CFL versus LED:

              Lumens   Watts    Cost     Lifespan             Cost/20yrs
LED     1250+/-    13w        $3         25,000 hrs      $ 34
CFL     1250          20w       $2           8,000 hrs       $ 54
Incan  1250          75w        $1           1,200 hrs      $211

 

Lamps (bulbs) required for 25,000 hours:
1 LED, 3 CFL, 21 Incandescent.
Price of lamps (bulbs) over 2 decades: LED:$4, CFL: $6, Incan: $21.

In other words: LED lamping results in 620% better life cycling costing.  You spend a little more when originally lamping a house, but you rarely need to replace lamps and in the end, you save more than 6x as much than if you had installed wasteful, old-fashioned incandescent lamps. 

 

 

 

 

 

 

 

 

 

 

 

 

 

CFLs are better than incandescent, but LEDs are still by far, the most efficient way to light a house.  LEDs last longer than CFLs last longer than Incandescent.

And another benefit: lighting is a significant percentage of heat accumulation in a house (in incandescent terms), which adds considerable heat load to HVAC system operation for cooling.  Since LEDs consume much less wattage, the heat load contributed by LED lighting become reduced to nearly 1/6th.

We know what some of you are thinking: “Oh, I don’t want nasty pink-white colored lighting in my house!”.  And LEDs won’t do that to you.  There’s this specification of lamp light color.  It’s called Kelvin Temperature. For instance, most incandescent and halogen lamps are in the 2700 to 3000 K range for a warm yellowish white light.

Guess what?  LED lamps can be purchased out of any Lowes or Home Depot with a warm white 2700K “temperature” (color).  In other words, you can have super efficient LED lighting in your house that is virtually indistinguishable from incandescent light. 

 

 

 

 

 

Cashiers, Sevierville, Lake Toxaway, Sapphire, Highlands, Glenville, post and beam, timber frame, Aspen, lake tahoe

 

 

 

 

 

Better Documents Equals Lower Construction Cost

February 24th, 2018

Better Documents Equals Lower Construction Cost is about how this Architect prepares detailed Construction Documents that results in lower prices for construction projects.

Home Architects

First: there are good Contractors, so-so Contractors and some bad Contractors.  Same for just about any profession.  However, some methods of working can tend to warp things in a particular direction. 

 

 

 

 

 

 

 

 

 

 

 

This architectural firm has found this out directly.  The company Owner is now in the process of having his own family’s house (that he designed) built.  He’s not a rich man.  He needed a good value.  His solution: do what he advises his Clients to do: create a great design with plenty of documentation.  He produced 38 sheets of drawings and specifications for a 2,188 HSF (Heated Square Feet) house (3,818 GSF).  This is about  5 times the amount of drawing sheets (24″ x 36″) most firms turn into the building department to pull their permit in this region.  This company often produces 100 or more sheets of drawings and specifications for larger projects (92 sheets for a 6,000 HSF house with a mile of driveways and a Helipad recently).

 

So what is the economic advantage to Clients who pay their Architect more to produce a more detailed set of documents?

 

Answer: to obtain a fixed price proposal from a Contractor to build it for less construction cost than a Cost+Plus Contractor charges to build the same house with skimpy documents.

 

What is the reason a Fixed-Price project costs less, when based on detailed documents, and why a Cost+Plus project costs more, when based on skimpy documents?

Interesting question.

 

Here’s the answer:

WHY COST+PLUS PRICING FROM CONTRACTORS BASED ON SKIMPY DOCUMENTS OFTEN COSTS MORE

(continued below)

 

 

 

 

 

 

 

 

 

 

 

 

Cost+Plus Contractors have no incentive to prepare a detailed estimate/subcontractor bidding for the approximately 150 line items that would normally be found on a Construction Schedule of Values (like banks use to disperse funds during the construction of a project).  Let’s think about that: Cost+Plus Contractors have no desire to prepare a detailed cost proposal.  Why should they?  If their customers are willing to pay them WHATEVER IT COSTS, plus the Contractor’s hefty profit on top of that.  The reason Cost+Plus Contractors say they HAVE to do it this way is blamed on the industry wide practice of skimpy documents with which to build houses.  This additional amount, as you will shortly see (as you read ahead) can be in the hundreds of thousands or millions of dollars.

 

In other words, some (or many) Cost+Plus Contractors can get accustomed to higher profits, and not do as thorough of a job estimating (or better yet: obtaining 50+ subcontractor and material provider solid quotes, which can take 2 months of intense work to receive).  Once again: why should they, if people are willing to pay them for whatever their subcontractors demand, in a non-competitive situation, then scoop a big profit margin on top of that for the General Contractor?

 

Does this all sound like an “inside secret?”  IT IS!  You are probably hearing this for the first time.  But it seems to be the truth, more often than not.  So: once again: many Cost+Plus Contractors may not even want detailed Construction Documents, because then they’d be more compelled to provide the detailed work to properly estimate/price those, and they really don’t have the time to do that, nor do they want to do that, and in fact, providing a lower QUOTE to their customers works against them obtaining a higher fee, based on higher prices from their subs.        (continued below)

 

 

 

 

 

 

 

 

 

 

In other words, Cost+Plus billing for house construction projects works against the customer, while maximizing the General Contractor’s profit (often guaranteeing him/her 20%+ added to the sub prices).  In other words, the GC (General Contractor) appears to want you to sign a blank check, so they can fill in the amount later.  Does this really sounds like a process that is in YOUR best interests?  Probably not. Once again: a dirty BIG secret revealed right here and now on this website.  One of the Cost+Plus Contractors misinformed this Architect that his “fixed price” to do only about 2/3 of the project would be $341,000.  Then when the Owner-Architect, said, okay, let’s do this deal, that GC then turned in a “quote” of the $341k, then tacked on another $30,000 “profit.”  In other words, he was really a Cost+Plus Contractor, trying to hide inside a Fixed Price shell, then at the end, slammed another bucket load of profit on top of his already high number.  That’s not honest Fixed Price Quoting.  That’s Cost+Plus hiding in a sham Fixed Price.  So you really have to watch what’s going on carefully to understand the schemes being worked on you. And your Architect can help. 

 

And one of the main reasons Contractors SAY they HAVE to go Cost+Plus is that the Architect’s documents are too skimpy, so how can they price what they cannot see?  Good reason, because that is typically true.  So how to combat this abuse?  Any ideas?  Part of the problem is YOU.  Huh?  Me?  Yes, you, the Clients of Architects and Contractors.  Whenever you refuse to pay your Architect what it is really worth to prepare an excellent set of documents, you are going to get a skimpier set of documents, thereby playing into the hands of the typical Cost+Plus Contractor: “Hey: there’s not enough information here!  I need to go Cost+Plus.” 

 

 

 

 

 

 

 

 

 

 

 

Good point.  But here’s how to correct his insult:

 

VALUE OF DETAILED CONSTRUCTION DOCUMENTS BY ARCHITECTS AND HOW THEY CAN RESULT IN LOWER CONSTRUCTION COSTS THROUGH FIXED PRICE GC PROPOSALS

Alright.  Let’s think about what was said above and how to fix that sorry state of affairs.  How about: pay your Architect what it takes to prepare a thorough set of CDs (Construction Documents) with proper details, specifications, building sections, wall sections, roof plan, blow-up plans, cabinetry elevations, electrical schematics, 3D imagery and the like.  THEN: what will an honest Fixed Price Contractor say: “Wow.  Nice detailed set of documents.  I can see 99% of what I need to price and build.  I’ll get to work right now, getting 3 or 4 subcontractor and material supplier quotes on every line item of the Schedule of Values so that I can price this project honestly, with a reasonable profit (like 10%).”  Let’s face it: if everything is there, on the Architect’s set of documents, and the Contractor is willing to price that, what’s the problem with giving a Fixed Price?  It’s a lot of work, and most Contractors won’t want to do that.  But you let air out of their balloon, when you have a detailed set of CDs prepared by your Architect. And however much you think you are paying your Architect, you will always be paying your Contractor many times that, so don’t be penny wise and pound foolish.  Pay your Architect well to get the detailed documents you need so that fair and honest Fixed Price Contractors can give you a Fixed Price.  Almost always this is going to be far less than what Cost+Plus Builders can/will do. 

 

REAL WORLD EXAMPLE 1

This Architect, whose house is now under construction, looked for 7 months to find a General Contractor that would be right for his project.  He went through over a dozen Cost+Plus Contractors.  The numbers he got from their “estimates” were typically around $500,000 to build his house.

Then, one day, a couple of months ago, he finally found a Fixed Price General Contractor from a little farther away, from a metro area, but a small city, just the same.  What a world of difference.  The house is now under contract for $319,000.  In all fairness, the Owner will probably have direct costs of another $30,000 or so.  But even with those, this price is about $150,000 LESS than any of the Cost+Plus Builders from the nearby area closer to the project. in other words, over a 30% savings.  Now, it took this Fixed Price Builder from a little farther away about 2 months to provide and verify their numbers.  They worked long and hard and honestly.  They wanted the work.  And that’s a big part of it.  They have to want it.  And they have to be trustworthy, as proven by their actions.

 

REAL WORLD EXAMPLE 2

Here’s another example: this Architect had 2 simultaneous customers that had very similar floor plans, but with exterior features that made them look different.  One Client insisted on using a Cost+Plus Contractor that he liked and the other Client agreed to use a Fixed Price Contractor whom the Architect knew was trustworthy.  And the fixed price project was bid at $2.5 million. Sound like a lot?  Well, it was a huge and elaborate mountain style home, including a 3 car garage.  The Architect begged the other Client to use the same Contractor.  The Client decided instead to stick with the Cost+Plus Contractor that he had met.

 

$5 million later, the Cost+Plus Client admitted they had made a huge mistake and that they should have instead listened to the Architect’s advice on their choice of Builder.  Let’s see: that would be a $2.5 million mistake, wouldn’t it? 

 

Is it beginning to become clearer as to the advantages of a Fixed Price Contractor, based on detailed Architectural documents?

 

 

 

SUMMARY

THAT’S the value of your investment in a good Architect creating proper and detailed documents for your project.  Your pay back for better documents could be in the tens of thousands, hundreds of thousands or millions of dollars.

 

And for the record: there are some honest Cost+Plus Contractors.  There just seems to be a distance between them.  And when supplied with detailed Architectural Construction Documents, there’s only a few Contractor reasons for not going Fixed Price:
A.  Too busy (then you don’t want them).
B.  Not interested in doing the detailed hard work to provide a reliable detailed price (you don’t want them).
C.  They don’t want an Architect or anyone else looking over their shoulders and want free rein to make substitutions at will, without any professional oversight.  (you don’t want them).

So: there’s really no reason to go Cost+Plus IF YOU HAVE DETAILED AND THOROUGH CONSTRUCTION DOCUMENTS FROM YOUR ARCHITECT.

 

The only reason for honest Cost+Plus Contractors to demand to go Cost+Plus is skimpy architectural documents, due to the unknowns.  And that is realistic and a good reason.  That’s really about the only one.  What you haven’t known (until now) is just how much more that is likely to cost you: possibly 30% to 100% more, than if you had proper, detailed architectural documents. Is that worth paying your Architect to do a proper job?  Most people would probably think so.

 

 

 

 

 

 

 

tags: mountain, cashiers, highlands, sapphire, glenville, atlanta, sevierville, lake toxaway, timber frame, post and beam