Psychology of Construction Cost Denial

Psychology of Construction Cost Denial

Psychology of Construction Cost Denial is about what we ALL go through when we start a custom house project.  We all (every single one of us) firmly believes that we will get our new house project built for about 1/2 to 1/3 of what the actual final cost will end up being.


The Architect will try to tell you the truth.  Most people don’t want to hear it.   The Builder knows, but might not want to discuss this in the beginning of the project.  Why?  Because he wants you to do the project.  He needs the income.  And if too many people hit you over the head with the reality of construction costs (for what you really want), you might get cold feet and not have him/her build it. 


The Architect, knowing that you may try to blame him/her later (and for your own good), will do their best in the very beginning of the project to educate you about the realities of construction costs.  However, the Architect is Not responsible for what your Contractor decides to charge you for your dream house. 













You’re the one who said how big to make it.  You’re the one who said what finishes you wanted.  You’re the one who indicated your preferences for the appearance and most of the features of the project (including those expensive Sub-Zero and Wolf appliances).  And ultimately, you approved the design and Construction Documents and allowed the project to be bid to your Builder.  Can you guess who that makes responsible for the cost?  You.  The sooner you accept responsibility for your construction cost, the sooner you are going to be on the right track to understanding where you’re heading financially for your project.


Rule #1: YOU ARE RESPONSIBLE FOR YOUR CONSTRUCTION COST, because of what you want.  No one else.


Let’s face it: it’s your house.  Your money.  You picked that property.  And while we’re on the subject, let’s talk a bit about your land.  Is it steep?  Many people pick steep lots/acreage because it provides them with a sensational view.  The reason you obtain a great, open view is because you can see over the tops of trees.  Tree height can vary, however, this architectural firm has seen an average of around 70′ for trees between 20 to 30 years old.  So, if you have tremendous, big, blow-out views, chances are that you have either cleared your land for several hundred feet from where you intend to build your house, or your land is very steep, pulling those tall trees down below your angle of view.


Okay.  So you have steep land and a great view.  So what?  Well…there’s this construction feature that holds up your entire house.  It’s called your foundations. 














Foundations are composed of poured-in-place, steel-reinforced concrete footings and either poured-in-place steel-reinforced concrete foundation walls, or steel-reinforced, grouted CMU (Concrete Masonry Units (“concrete block”)) foundation walls.  And the placing of these very important structural elements will have to take place on your steeply sloping ground.  Have you even tried to walk down and up your steep slopes?  Can you imagine carrying 60 pound concrete blocks and heavy steel & wooden formwork up and down those slopes?  And how about all that scaffolding that will have to be erected on that sloping ground?  That’s a lot of work.  No one does that for free or for next to nothing.  It’s hard work and it’s expensive.


So, now you are thinking: “Oh, oh, I bought this site without consulting my Architect.  I just thought it had a great view.  I didn’t understand that my choice for the ground I wanted would result in my foundations costing me 6 figures…”  Welcome to reality!  Now you are starting to get a little insight on the realities of construction costs.   This is not some dream world where you can, through the power of your thoughts and hopes, change reality to result in a less expensive house. 




















Your greatest ally is your Architect.  And your worst enemy?  Can you guess?  Wait for it.. wait for it…  YOU!  Why?  because you’re the one that wants all of those nice materials and features, and increased square footage!  Did you really think all of those things would somehow be absorbed by a kindly, sleepy and stupid Contractor?  No!  That’s not going to happen.  Contractors go out of business and their families’ starve if they don’t make a profit.  They are not in business to price things below what it costs them to build.  They have to earn a living.  And $100/HSF won’t buy you the nice wood floors, wood ceilings, exposed big beams, large glass areas, exotic hardwood oversize front door, stone cladding, big fireplace, gourmet kitchen, bonus room over the garage and all the other things you know you want.


Rule #2:  If at all possible, ENGAGE YOUR ARCHITECT BEFORE YOUR BUY THE LAND on which your house will be located.  Your Architect can advise you as to the relative cost impacts of various site features, such as (but not limited to): site slope(s), building setbacks, septic considerations, view quality, drainage issues, driveway maneuverability, exposures (public & private) and a host of other issues that can help guard you against making million-dollar mistakes.


Rule #3:  “ABC”: ARCHITECT BEFORE CONTRACTOR.  Your Builder could possibly soft-pedal concerns that he/she perceives are near and dear to you, because they want your project to move forward.  Your Architect has strict ethical and legal requirements relating to their licensure that mandate that they always act in the best interests of the Health, Safety & Welfare of the public and their Clients.  They are more prone to give you the bald truth about issues that could come back to bite you later. 













So what are these costs that people seem to misrepresent to themselves?  This architectural firm has found, that over the last decade, most people start out their custom home projects thinking that they are going to get whatever they want for around $100/HSF (Heated Square Foot).  In other words, if they want a 3,000 HSF home with all the bells & whistles, they believe they can get that built for them for around $300,000.  NOT GOING TO HAPPEN.


If you are looking for low-grade carpet and white painted drywall and a nearly level lot, with no decks or porches and no garage and low-end 30″ wide standard grade appliances, sure, you might start approaching $100/HSF.  But all the goodies?  Construction costs can vary widely.  Try $500 to $1,000/HSF for high-end custom lodges on ski slopes in the Rocky Mountains to $85/HSF for low end tract housing in suburban Arkansas.  However, this architectural firm has seen that to start obtaining reasonably nice features, fixtures and the like on gently rolling to nearly level ground, you need to be anywhere between $150 to $200/HSF.  And it could be more.  The firm recently bid out a project in Tennessee that will be built for around $230/HSF (after some serious Value Engineering from where it initially came in around $343/HSF). 


Rule #4:  BUDGET BETWEEN $200 TO $350/HSF if you really want some of the “goodies.”  This can be more or less, but the economy seems to be improving, which usually means that construction costs escalate with the improvement.  If you’d like to build for closer to around $150/HSF, you have to have nearly level ground (like in a parking lot, not on a ski slope). And you will have to allow your Architect to make almost everything that you deem “nice” as being an Option.  And the design will need to be simple and still, the construction costs could end up exceeding $200/HSF.  Nice homes cost more.


Back to the Psychology of Construction Cost Denial.  Why do people lowball what they anticipate their construction costs being?  Rand Soellner, Senior Staff Architect of HOME ARCHITECTS ® has been designing custom residences  for over 40 years. He believes:

“I think that people want to believe that they are going to be able to build their house for a tight budget that they probably know, deep down, is not realistic.  They want what they want, for the low price they want, but they don’t want to admit to themselves (or to their spouse) what the reality of the cost (and effort) will eventually be, once the construction is complete.  And if they really knew (or admitted to their conscious mind) what this ultimate amount would be, they know that they probably would not embark on this journey in the beginning, because they don’t think they can afford it.  It’s sort of like deciding to have a baby.  It’s going to hurt the mother horribly giving birth, but the memory of that pain fades with time.  And that child is going to cost more to feed, house and educate than you ever imagined.  But in the end was it worth it?  Most families would probably think so.  Your house becomes much like a beloved member of your family.  It will cost much more than you ever imagined, and be a huge amount of effort, but in the end, you love it, enjoy it and can’t imagine life without it.  And in the end, most people CAN afford what they want, they just didn’t want to admit to themselves how much that would ultimately become.”




We don’t know the psychological term for this interesting and conflicting set of emotions and desires, and can’t find anything online about this condition, other that this single article authored here by this architectural firm.  But it is real and omnipresent.  Perhaps some future psychology student looking for a doctoral thesis will find this article and possibly devote some scientific study to this condition.  Approach-Avoidance syndrome?  People want something and will do whatever they have to do to get it, spending more, incrementally, while fighting with themselves about how much they are paying to obtain it, not wanting to admit to themselves what the total will finally become.  Because, if they admitted to themselves how much they were going to spend, they might not start the project in the first place.  And they know that, in their subconscious, but don’t want to bring that to their forebrain, otherwise, their conscious mind might terminate the effort.  And they want it.  But they don’t want to pay that much for it.  But they want it.  Back and forth their thoughts go… and in the process, their budget ratchets upward.  It takes time, but this inevitably happens.  It is sometimes a painful process for some people to work their way through their conflicting wishes.  There is some discontent motivating their desires for a new and better place in which to live.  And this desire for a better way and place will drive them, relentlessly, to reach their final objective of new house Nirvana. 


When the Contractor(s) provide their estimated cost to build the house (their Bid), this what this firm calls the “Come to Jesus Meeting,” during which the Owner typically lashes out at others (like the Architect, who warned them early in the project about this).  There are red faces and high-blood pressures aplenty.  However, in the end, there eventually takes place an effort called Value-Engineering.  This is where your Architect and Contractor hammer on the design to see what can be cut from the project, while still retaining the basic essence that is acceptable to the Owner.  At some point of cutting, the Owners begin to understand that all of the goodies they wanted will actually cost more to build than they wanted to admit to themselves.  When this realization comes to their conscious minds and stares at them boldly in their faces, they then make the hard choices: do you really want that heart pine flooring, or will southern yellow pine be okay?  Do you really need to have a real slate roof, or will an architectural grade of asphalt fiberglass be acceptable?  Will Kitchen Aid appliances be okay instead of the Sub-Zero?  And so on.  At some point, the number for which the Contractor indicates that he/she is willing to build the project, becomes acceptable in the minds of the Owners and they typically proceed.   And this amount is inevitably more than they imagined or budgeted.  This is how the process works and how this psychological condition plays itself out.  The Architect told them about this and warned them.  They didn’t want to believe that.  But in the end, here you are. 





Contact for your Architect:  828-269-9046





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