Budget: Setting good expectations

Every build has a cost; How do you design with budget in mind?

Establishing a range of accuracy

If this is your first build or you haven't built for a while, how are you supposed to know how much to budget?  What influences budget?  How do you make decisions through the design that affect budget?

While we can't cover every aspect of cost in one post we will walk through some ideas and examples that will shape our thinking around design, building cost and budget: Starting with a review of industry standard methods and working our way to design principles that will help you make better decisions.

You'll develop a framework that will aid in identifying elements that add to construction cost and therefore should be considered when thinking about budget. Our belief is that good design plays an important role in budget and that you shouldn't have to go through the process blind not understanding the factors that contribute to building cost.

Common ways of creating a budget

Actuals: The final cost to build a home once everything is done. Not exactly helpful if it's your house, but can act as a benchmark value for a similar house being built at a similar time. 

Formal budgets: Created by a process called quantity surveying and estimating. This is performed by your builder's team once the design is completed, construction documents are done and finishing specifications have been selected. 

Ballparking: Uses rules of thumb and building cost averages. It represents the average based on actuals of a house for a particular location built recently. So to ballpark well, your pricing needs to be updated regularly with active builders.  (See example calculations below)

On average how much does it cost to build one square foot of a house? 

In British Columbia the practice is to take the Actuals (entire finished building cost, no landscape and no appliances) and divide that number by the total built square footage. The calculation would look something like the equation below.  $ = Cost 

$ Main Floor + $ Upper + $ Lower Floor + $ Garage + $ Decks (Roof to Foundation)

SQFT Main + SQFT Upper + SQFT Lower

Let's use the following example: Client Budget is $700,000. Divided by an average build cost of $275/SQFT = A square footage goal of 2,545 SQFT

This benchmark can now be used through out the design to keep the total size of the project in check.

Disclaimer: I will be first to acknowledge that there are limits with this method if applied in isolation. It doesn't represent every builders best practices so there are some additional limits when comparing builders. In fact many builders won't give an average cost per square foot to a prospective homeowner and I understand the concern. Every home is different. 

Enhanced Ballparking: Uses Ballparking and adds the concept of Design Decisions to enhance the predictive quality for budgeting. If ballparking is used to establish the size parameter of the house then Design Decisions is used to predict other factors that affect budget: Complexity and Price Density.

Design Decisions = Price Density + Complexity

While Enhanced Ballparking is not as precise as the Formal budget, when it's approached skillfully it can establish good parameters for house size and design in a way that is complementary, compatible and consistent with the formal approach to budgeting.

Additionally Enhanced Ballparking is improved when design is paired with builder engagement at specific milestones to help refine estimates along the way. This is especially relevant when adding complex or unique customization.

Price Density 

Is the fact that not every square foot is created equal. Some spaces are more dense with respect to the amount of elements that go into making the space. Another way of thinking about it could be the short hand: designing by the numbers. The more of something you have, the higher the final cost. 

Some specific elements  to keep tracks of during design: 

• Number and size of doors
• Number and size of windows
• Number of light fixtures
• Number of plumbing fixtures
• Number and size of stair cases
• Number and size of fireplaces
• Number of open to below or above
• Number of changes in floor height
• Number of changes in ceiling height
• Lineal feet of cabinetry
• Lineal feet of counter top
• Lineal feet of builtins

The Kitchen is a great example of how cost by the numbers can drastically increase price density. 

Consider the layers of materials and work that go into the kitchen. 

Cabinets, counter tops, back splashes, primary and maybe secondary sinks, faucets, area lighting, task lighting, mood lighting, flooring, windows, and cabinet hardware, plus the appliances. Behind the walls and for every plumbing, electrical fixture, and appliance there is another integrated system running back to the mechanical room. 

Price Density Map: Intended to get a sense of what different spaces cost in relation to other spaces for a typical house. As you can see, Kitchens and Baths have a high level of price density when compared to bedrooms. 

Complexity

Complexity is design that varies from the standard and acts as a multiplier to cost. It can arise in both floor planning and elevation design. Once you start to understand this way of thinking you will be able to see it yourself during design.  

Less complexity will be less expensive to build and more complex will be more expensive to build. 

Our Houses: We will use a series of illustrations and 3 fictional houses to highlight some of the elements that add complexity and cost to a build. 

Street View:

Our example houses are two stories from the street and all with the same approximate foot print. That is where their similarities end

House 1: Our baseline and represents an older and simpler style.

House 2: Might seem more familiar and can be found in many suburban neighbourhoods.

House 3: Represents a contemporary approach to house design. You can think of it as an evolution of design.

Floor Plans:

Similar square footage but different forms. 

House 1: A basic rectangle with a centre beam for the upper storey floor system. One roof and one foundation. 

House 2: Starts to articulate the envelope, creating more interest and specialized spaces. The upper floor does not match the lower floor and needs additional beams to hold up the walls and roof above.

House 3: Continues to add complexity in the envelope by adding bump outs. The upper floor varies from the main floor even more and adds an upper floor deck. 

Roofs:

House 1: Simple gable roof with a slope of 4:12, facia is 6", soffits are 2'-0", 2 gutters for water. The roof covering is common shingle. This gets the job done.

House 2: Adds complexity with the hip style roof having 4 planes of drainage. Add multiple roofs as created by the inset upper storey and elevated entrance. This is a more expensive design

House 3: This roof is very low slope at 1/4":1'-0", a facia of 1'-4", soffits ranging between 2'-0" and 3'-0" with internal drainage.  This requires more on-site carpentry, specialized roofing materials, more robust metal work and higher end drain systems. 

Cross Section:

There is a lot going on here. You will notice some site and some structural differences

House 1: 8 foot ceiling.  Lower ceilings require less material and labour. Very tall ceilings will require more material and labour. Ceilings above 11'-0" may require engineered design. 

House 2: 9 foot ceiling. Added structure at the deck and the lower floor walk-out

House 3: 10 foot ceiling. Increased complexity because of the deck over heated space with obstruction free cantilevered deck. Requires additional planning, structure, specialized thermal and weather proofing. The stilted solution for the steep site requires all of the same considerations and time.

Elevations:

Increased materiality and articulation of the envelope adds complexity. In some ways the differences are subtle, especially between house 2 and 3. But it adds up quickly. 

House 1: Single exterior cladding, with standard size windows and doors.

House 2: Adding a second more expensive feature material, larger windows and covered outdoor living spaces. 

House 3: Three unique materials, custom oversized windows with black frames. Roof top deck with glass railing. 

Overlooked but important spaces: These spaces are included in the ballparking calculation but can increase budget by design density and complexity.

Outdoor living: Decks and Balconies are not incidental spaces. They cost on average less than interior spaces but they still include all the structure, level of finishing, roof to foundation and the addition of railing. A medium sized deck of 12 x 16 would be averaged into the ballpark price. But additional decks, roof top decks and oversized decks will add to the average cost. Increasingly you are going to want built in cabinets and supplementary fixtures for outdoor living. 

Garages: Two car garages is a standard that is quickly evolving. Three car, over-height garages with built in work benches, cabinets and epoxy floors are becoming the normal. Added complexity and cost comes with creating a suspended slab for living and or storage below the garage. 

Where budget exceeds design influence:

There are a couple more categories to consider that are less affected by design but can have a big impact on cost to build: The site as illustrated above and the level of finishing. 

Site works and Foundation: 

Establish the building platform. The transition from earth, through concrete to creating a stable and buildable foundation all adds cost. The more complex the site, the higher the investment in the initial site works. 

Factors that contribute to site complexity include:

Topography: Flat sites are easier to build on than sloped or steep sites. Simple foundations get replaced by deep foundations or stilted foundations. Natural slopes are replaced with retaining walls. 

Geotechnical: Once excavation begins, the undisturbed soils may be suitable for construction. However excessively rocky terrain may require a rock hammer or blasting. Wet soils will require water mitigation and organic soils will require replacement with engineered soils. 

Environmental: Is related to the sites specific location in relation to the surrounding environment. This could mean additional setbacks in the case of streams, rivers and lakes. Or restrictions due to wildlife habitat that requires additional sensitivity. 

Level of Finishing: 

Finishing is everything after drywall is installed, from flooring to cabinets and includes stairs and fireplaces. Let's be honest, in most people's minds, finishing is the most important part of the home experience. But this category is less in the hands of the designer and more in the hands of the client or increasingly with the interior designer. 

I look forward to having a chat with an interior designer to get their perspective on designing within a budget. 

Wrapping Up

There is a lot of moving parts in a house and understanding all of the connections is not easy. But by engaging yourself with a team of professionals, you'll get to your destination with new insights and the confidence that you made good decisions along the way. 

  

If you thought this post was informative, please share it. If you have any further questions and want to discuss your next project, give us a call at 778-480-0341. If you like our way of thinking, check out our catalogue at uprisehouseplans.com