How to Control Construction Cost

Summary: Cost control in construction of a new home is possible by understanding what variable factors affect cost.

Hi Carl,

I've enjoyed your book and your website. I've owned a nice lot for over two years now and have been planning on being a builder/owner.

The one thing I get nervous about is of course the cost.

Using the cost to build estimator from building-cost.net, the results just seem way too high.

When I enter in a 2500 sq ft house as plain as can be; 4 corners, no garage, no fireplace, no attic, no porches, and standard quality everything - basically a plain box of a house, the estimated cost WITHOUT land and contractor markup is 300 grand!

This is in ZIP 76227, Texas, not an expensive place to live.

I see 2,500 square foot new homes being built in nearby subdivisions selling for just under $200,000, including the land.

I realize these home builders build more than one new home at a time (I see maybe 2 or 3 at a time), but I cannot believe a quantity discount would be over $100,000 per house.

It looks like the cost to build estimator from building-cost.net is based off data from the Craftsman guide.

Would I get a more accurate, realistic figure if I bought the book and did the calculations myself?

Thanks again, your site is making this seem feasible!

Mark

Hi Mark,

Using your input information and the cost estimating software from building-cost.net (the Craftsman Book Co.), I come up with a cost of building new house in zip code 76227 of $168,582...not $300,000.

This is only a rough estimated cost to build a 2500 square foot, one level new home, in Fort Worth, TX, including a general contractor' s markup of $19,385 and including central heat and central A/C.

I (always) use the Standard Homes # 6 Quality Class when using the estimating software as I feel one can always upgrade any of the thousands of items that go into a new home, as their budget allows.

Besides, “Standard” is a nebulous term, meaning different things to different people.

Even the “Standard Quality Home Classes” on the cost to build calculator comprise 4 of the total 6 quality classes available.

A range of several hundred dollars per square foot for the same house plan can be realized by using different classes within the “standard” class.

This is because the selection and/or design of windows, doors, moldings, ceiling heights, staircases, roof shingles, flooring, plumbing fixtures, appliances, etc., all can vary the cost to build the same new home by hundreds of thousands of dollars!!!

If you are a good "shopper", you will be amazed at how much you can save on almost every category of building.

Windows and doors alone can vary by several thousand dollars and after the "stickers" are removed, no one can tell the difference.

No one will ever get an accurate estimate until they actually start getting real time bids and estimates from local subcontractors and building material suppliers.

The cost to build calculator is a tool...and a good one.

Even the Craftsman Book Co. says in their excellent and comprehensive book, 2011 National Construction Estimator:

Estimating Is an Art, not a science. On many jobs the range between high and low bid will be 20% or more. There's room for legitimate disagreement on what the correct costs are, even when complete plans and specifications are available, the date and site are established, and labor and material costs are identical for all bidders.

No cost fits all jobs. Good estimates are custom made for a particular project and a single contractor through judgment, analysis and experience.

This book is not a substitute for judgment, analysis and sound estimating practice. It's an aid in developing an informed opinion of cost. If you're using this book as your sole cost authority for contract bids, you're reading more into these pages than the editors intend.

Use These Figures to compile preliminary estimates, to check your costs and subcontract bids and when no actual costs are available. This book will reduce the chance of error or omission on bid estimates, speed "ball park" estimates, and be a good guide when there's no time to get a quote.

Would you get a more accurate, realistic figure if you bought the book and did the calculations yourself?

Sure, but the time you spent might be better off taking your new home plan and getting actual (local) bids and estimates.

By the way, that Craftsman book is available as a Free 30 day trial: Download 2011 National Construction Estimator 30-Day Trial

And Mark, be sure to check on the Texas registration requirement for owner/builders.

Thanks for the reply Carl! You’re right! I tried it again with “6” for all the quality settings, and the price came down almost half. I had no idea that could make that much difference. The project seems much more do-able, now. Thanks! Mark

You are welcome. Good luck,

Carl Heldmann