October 17, 2011 Leave a comment
There is a common general public misconception on the costs that are related to a construction project and all the services that actually go into it. In this article, we will break the different services of a project into pre-construction and construction costs to better educate a building owner on all the incurred costs of doing construction. As a home or building owner, one must understand all the professionals which are necessary to hire, to better budget for the entirety of the proposed project. Most people do not realize the amount of work and different services that go into simply designing a building, let alone building it. The rule of thumb here is the smaller the project, the fewer number of professionals are needed on your project.
For most projects, pre-construction expenses at a minimum, consist of an architect/designer fee, title 24 consultant expenses, plan check fees and building permit fees. However, this is usually the best case scenario, depending on your scope of work and the municipality where the project site is located. For example, if the proposed scope includes removing of any walls, then the project will immediately need a structural engineer/consultant to determine if the wall is load bearing and how to redistribute those gravity loads down to the foundation. Additionally, some cities are more lenient during their plan check phase opposed to other jurisdictions. Other pre-construction expenses that one may experience consist of: land surveyor, geotechnical engineer (soils), mechanical engineer, electrical engineer, plumbing engineer, acoustics consultant, landscape designer, plan check fees, building permit fees and other City fees.
The first major thing a home owner will need to identify is how big of a budget they are willing to work with. Realistically, you will want to take that number and increase it by like 40%. What I have encountered with many construction virgin clients is that they grossly underestimate the expenses of a construction project. They typically prepare a tiny budget and think just because they heard that so and so got their new house addition for cheap that is how much they should pay. There is a lot of cheap labor and construction rates primarily due to the economy creating a more competitive playing field, but more often than not it is because they are unlicensed individuals, uninsured, inexperienced, and/or illegal citizens. These practices are considered “Illegal Contractor Activity” by the Contractors State License Board (CSLB):
“It is illegal for an unlicensed person to perform contracting work on any project valued at $500 or more in labor and materials. Besides being illegal, unlicensed contractors lack accountability and have a high rate of involvement in construction scams. They also are unfair competition for licensed contractors who operate with bonds, insurance and other responsible business practices.”
Additionally, these projects are typically unpermitted, so if an appraiser or a City Inspector discovers this, the home owner will be required to either get the work permitted, (Legalizing Unpermitted Construction) or they will need to significantly reduce the asking price of the home when it is put on the market so that the new owners can deal with the unpermitted work. Both of which can be very costly to the building owner and should be avoided.
Once the realistic budget is finalized, the home owner should look into hiring an architect or a design-build company to act as an agent for project and guide to obtaining their building permits. If the project is a renovation project within the existing footprint or a small addition, then the client most likely will not be required to hire a surveyor or a geotechnical engineer. These services could save the owner up to $5000 or more. However, if the project is a brand new building on an empty lot, then these services will be required. Furthermore, an architect will most likely need to hire consultants to complete all the drawings necessary for the plan check review. At a minimum, they will need an electrical engineer and most likely a structural engineer. If the project is something other than a single family residence, it will usually require mechanical and plumbing drawings & calculations too.
Lastly, the client should budget for the City fees for their project. These typically consist of at least the plan check review fee and the building permit fee. Some cities will require other fees, which they will either include with the building permit fee or have as a separate fee. These may include but are not limited to: school district, county sanitation, road, development impact, demolition & waste, and public arts fees. Once these fees are paid off, the owner will have their building permit issued and receive an inspection card.
An owner will need to hire a licensed general contractor with an active license to carry out their construction needs once the building permits have been issued. It is probably a good idea to ask the contractors that you are pursuing proof of insurance and an active license to ensure that you are working with a legitimate professional. Additionally, it may be wise to ask about if they provide any warranties for their work and if they have any pictures of work they have worked on recently. Selecting a contractor is probably the biggest and most important decision that will be made by the client because the actual construction is the most expensive part about any project. If you select a an inexperienced contractor that gives you the best bid, you may end up regretting it in the end. Keep in mind, you pay for what you get and this is especially true in the construction industry. If you want to be cheap, you’ll most likely have a flawed project, in which case you’ll have to spend additional money to repair or redo the work, opposed to paying a bit more upfront for work that is done right the first time through.
Once the right GC is selected, then project will suddenly start to take form. Many general contractors will subcontract trades of the construction to other specialized companies or individuals. These include electricians, plumbers, cabinetry installers, framers, drywallers, painters, glass installers, stucco workers, roofers, etc. However, these subcontractors are all hired under the GC, so a client does not have to find and hire anyone else besides the general contractor for the construction services.
Another option for a client to take is to hire a design-build company. A design-build company, such as L.A. Design Group performs both the pre-construction and construction services with one firm. For example, the need for hiring a separate architect, engineers, and the general contractor is eliminated with working with a design-build company. At L.A. Design Group we have prepare all the necessary drawings, perform all the engineering requirements and we provide the general contracting of an entire project. The only services that we do not perform in-house are the geotechnical reports and the land survey. This is a great alternate for a client because it takes away the worry of hiring individual entities and the confusion that typically comes up with working with multiple companies. Please contact us today, if you are looking for help on your next construction project.