How much will it cost?

One of the first questions a prospective client asks us is "How much will it cost to build what we have in mind?" It's a hard question, but we'll try to answer it.

Contractors are the ones who actually price projects of course, but architects develop seat-of-the-pants estimates in order to get the design in the right general ballpark. And then there's a back and forth to arrive at a construction cost that works for the client. 

Let's declare some general assumptions:

• For a new house, the site is relatively flat and soils are good. For a renovation, the existing foundation is in good shape and structurally sound.
• For a house (either new construction or renovation), total square footage is between 2,500 and 4,500, including an unfinished basement and garage. Cost per square foot is higher on smaller projects and on projects where all space is finished to the same degree.
• You hire an excellent, reliable, licensed and bonded contractor who carries appropriate levels of insurance and pays his or her (legal) workers decent wages (such as one of these companies). The prices below are median ranges quoted by those contractors in 2006.
• You implement a comprehensive yet sensible range of green building strategies such as those we mention in the techniques section of our manifesto. (Going green, by the way, does not have to cost more. For more on that subject, see the first question on our Green Building FAQ.)
• You do a project of a quality similar to what you see on our featured projects pages. Note that some of the projects were more expensive than  others, some less. 

In terms of features, the level of quality chosen by most of our clients includes:

• A nice level of detail in the interior and on the exterior of the building.
• High quality energy-efficient wood or fiberglass windows.
• Hardwood flooring in living, dining and bedrooms, cork or linoleum in the kitchen, ceramic or stone tile in baths and entry. (No carpeting.)
• Ceramic tile or art plaster shower surrounds. (Not fiberglass or acrylic inserts.)
• Custom cabinetry in the kitchen, as well as a few built-ins throughout the house. (Not Ikea or Home Depot cabinets.)
• Solid surface counter tops, such as granite, Silestone, or Richlite.
• High quality appliances from Dacor, Thermodor, Bosch et al. (Somewhere between Sub-Zero, Viking or Wolf on the high end and Kenmore or Whirlpool on the low but still decent end.)
• Highly efficient and comfortable heating, ventilation and filtration systems.
• Nice lighting, including good looking, high quality fixtures, with dimmers through-out.
• High quality paint in (often) different colors on the ceilings and walls.
• With the contractors I recommend, working with nice people on a project that is done on time, within 5% or so of the contractor's estimate, and conscientious follow-up with any problems in the work.

We're going to talk about construction cost only here. The following numbers do not include design or permit fees. Here's the bottom line:

Kitchen Renovation - Starting at $50,000. From scratch, down to the studs, all new cabinets, countertops, lighting, plumbing fixtures and appliances, but without moving many walls inside or expanding into an addition.

Second Story Addition - Starting at $225,000 for the typical two or three bedrooms and a bath upstairs, and a new stair up, if the main floor of the house remains as it is. Figure $350,000 and up if you are remodeling kitchen and bath on the main floor at the same time, because that usually adds new plumbing, electrical and heating systems.

New House or Whole House Renovation - starting at $275 per square foot, counting all square feet including basement and garage. To that, for a new house on an undeveloped site outside of the city, you would add $50,000 to $80,000 for site work (septic system or sewer connection, gas and electric connection, a well or water hook-up, driveway, walkways) and a minimum of $10,000 for landscaping. A "real" landscape, including new plantings and trees, paths, garden walls, rain garden, small pond or water feature and so on is going to be $50,000 and up.

Garage or Outbuilding - $100 to $150 per square foot, for buildings that do not include plumbing. For heated finished space square foot prices are similar to those for new house construction.

Is it possible to build for less? Absolutely! But you'll have to give up something in return. Fewer features, simpler design, less detail, and as a last resort, lower build quality, are a few of the options. We're working on a couple prototype "Case Study Houses" with which we hope to demonstrate it is possible to build a nice house for less. See the posts on The More Affordable Green Home on our blog.

(You may well ask, for example, how Quadrant can build their houses so inexpensively. I did. I talked with Quadrant's chief architect. This is how they can do it, he says: Quadrant builds 11,000 homes a year in the Puget Sound region. They buy 50,000 windows, millions of board feet of lumber, and tens of thousands of yards of concrete a year. Because of this, they get good prices from all of their suppliers, much lower than the prices available to custom home builders. They build 40 or more of the same house a year. They get to work out the kinks on the first couple, and streamline both the construction process and the materials list, down to the number of 2x4s they order delivered to the job site. They build a house in 55 days. It's phenomenal really. With all due respect though, there is a massive difference in build quality between a developer house and a custom house.)

Program, Quality and Budget

There are three constellations in the galaxy of construction cost. Program, Quality and Budget.

• Program is the list of rooms and functions you want to include in your project. A simple program for a house would be "three bedrooms, two baths, a great room, and a two-car garage." The program typically also includes intentions for the feelings or style of the various spaces, and sometimes detailed requirements for the function. 
• Quality includes both the level of fit and finish and the kinds of materials and assemblies in the work. The difference between say granite and plastic laminate countertops, vinyl and wood windows, paint that lasts four years and paint that lasts fifteen years, etc.
• Budget, of course, is budget. It might also include your willingness to reduce costs by participating in the actual building process.

As the owner, you can pick any two of these three things to be fixed. The third must remain a variable that the architect or contractor "controls." That is, if you have a fixed budget and a fixed program, you have to allow the quality to be the variable. (That is, you may have to reduce the level of quality in order to reduce the cost. You might settle, for example, for less expensive appliances, use a lower quality contractor, have a comp roof instead of a metal roof, forced air instead of in-floor radiant heat, etc.) If you have a fixed budget and a fixed level of quality, you have to let the program be the variable. (That is, to meet your budget you may have to give up a bathroom or bedroom, or build a garage later, etc.) If you have a fixed program and fixed level of quality, the budget has to be flexible.

Getting a project built almost always involves a process of balancing all three areas. Maybe giving up a little quality and a bit of program and increasing the budget some.

Residential construction costs, especially for renovations, are difficult to predict. It is possible for the cost to be less or more than average, depending on the site, the design, and the materials and finishes, not to mention market conditions. Architects estimate based on previous similar projects and usually get pretty close, but every project and time has unique aspects, so there is a practical limit to any architect's accuracy.

Most importantly, architects or designers have no control over how a contractor will price the work. The contractor is a completely separate business, with his or her own means and methods of determining prices. If it's summer the price may be higher because all of their subs are busy. If it's winter the opposite may be true. In the middle of a building boom, prices are higher. If the economy is in a slump, they may go down. (Or they may not.)

Over the last three or four years (2002-2006 say) the costs of materials have risen dramatically. Steel, wood, oil and concrete have all just about doubled. If you think about it, that pretty much covers everything that goes into making a building, from roofing to foundation. Materials usually make up 40% to 60% of the cost of a project.

Another factor is the cost of insurance. One contractor with whom we work told me his insurance costs have increased 100% since 2000. He now pays $43,000 per year in liability insurance. That's over $20 per hour before hammer hits a (doubled in price) nail.

In general, we're finding that construction costs have increased ten to fifteen per cent per year for the last three or four years. Compounded, that comes out to about a 50% increase over the last several years. What this means is that your neighbor's second story addition that she did for $150,000 three or four years ago is going to cost you closer to $225,000 today. Your other neighbor's $50,000 kitchen renovation will run $75,000. You get the idea.

There is no magic budget bullet. There are ways one can design to reduce costs, and we employ as many of them as our clients are willing to consider on their particular project. We believe there is a direct connection between construction cost and ecological consequence, so keeping costs down is part of our green approach. But, like virtually everything else, when building or renovating a house, you get what you pay for.