ARTICLE 17
The Real Cost of Building
Why the Cheapest Decision Isn’t Always the Cheapest
Why the Cheapest Decision Isn’t Always the Cheapest
Most people assume a project becomes too expensive because construction costs go up.
Sometimes that is true.
But a project can become unaffordable long before construction starts.
It can happen when the design grows faster than the budget. It can happen when contractor allowances are unrealistically low. It can happen when important decisions are rushed to meet an aggressive schedule. It can happen when small changes quietly pile up.
And sometimes it happens because everyone is afraid to have an uncomfortable conversation early.
The strange part is that none of these things necessarily look like problems at first.
They usually look like progress.
A Low Number Can Be Misleading
Imagine two contractors pricing the same renovation.
Contractor A says the project will cost $425,000.
Contractor B says $490,000.
At first glance, Contractor A looks like the obvious choice.
Then you look closer.
The design includes a substantial custom kitchen. Based on the size and quality of the project, the cabinetry may realistically cost somewhere around $100,000.
Contractor A carried a $20,000 cabinet allowance.
Contractor B carried $90,000.
Contractor A did not figure out how to buy $100,000 worth of cabinetry for $20,000.
Most of that cost simply is not showing up yet.
Once the client selects cabinetry that actually matches the design, that money comes back into the project.
The same thing can happen with appliances, flooring, tile, lighting, plumbing fixtures, countertops, landscaping and dozens of other items.
An allowance is basically a placeholder.
And a placeholder is only useful if it has some relationship to reality.
The Lowest Bid Isn’t Always the Lowest Cost
Construction bids need to be compared on more than the number at the bottom.
What is included?
What is excluded?
What assumptions were made?
Are the allowances realistic?
Did one contractor include work another contractor left out?
Were unresolved questions addressed before the price was submitted?
Experienced contractors are often very good at finding unclear conditions or missing information.
That is not necessarily a bad thing.
A contractor who asks twenty questions during pricing may actually be giving you a more reliable number than the contractor who asks none.
Think about buying a used truck.
One mechanic puts it on a lift, checks the brakes, notices a leak and asks about its maintenance history.
Another walks around it once and says:
“Looks good.”
The second answer is easier to hear.
It is not necessarily the one you should trust more.
Construction works the same way.
Questions dealt with before construction are usually easier and less expensive than surprises discovered after people are already working.
Winning the Job and Pricing the Job Are Not Always the Same Thing
Construction is competitive.
Sometimes contractors price aggressively because they want the work.
That can be perfectly legitimate. A company may have better purchasing power, faster crews, strong subcontractor relationships or simply need to keep people busy.
But an unusually low number deserves careful examination.
There is a practice sometimes referred to as “buying the job,” where a contractor prices very aggressively to win the work and additional cost may later appear through changes, allowances, exclusions or added scope.
That does not mean every low bid is dishonest.
And it does not mean a higher bid is automatically better.
It means you should understand why one number is substantially different from the others.
Imagine three contractors price the same project:
$600,000
$620,000
$510,000
The $510,000 proposal is hard to ignore.
Maybe that contractor really can build the project for less.
But ask why.
Are the same finishes included?
Is sitework included?
Are the allowances realistic?
Are there exclusions?
If $80,000 or $100,000 eventually comes back through changes, the client did not really save that money.
Think about buying an airline ticket for $199 and then discovering that the seat, bags, food and everything else costs extra.
The advertised price got your attention.
What matters is what you paid when the trip was over.
The same idea applies to construction.
The question is not only:
“What is your bid?”
It is:
“How confident are we that this number represents the project we are actually planning to build?”
Death by a Thousand Paper Cuts
The giant change order is easy to notice.
The smaller ones can be more dangerous because none of them feels catastrophic by itself.
$1,800 here.
$3,500 there.
$750 for something that was not included.
$2,400 because a detail changed.
$1,200 because a selection exceeded the allowance.
Another $4,000 because something unexpected was discovered after demolition.
Ten $2,500 changes equal $25,000.
Twenty equal $50,000.
Add a few larger ones and suddenly a project that started at $500,000 is approaching $600,000.
It becomes death by a thousand paper cuts.
The same thing can happen during design.
“Can we move this wall?”
“Can we make that window larger?”
“What if we change the roof?”
“Can we see one more kitchen option?”
There is nothing wrong with exploring ideas.
But one change rarely affects only one thing.
Moving a wall may affect structure, electrical work, HVAC, cabinetry, flooring, ceilings, windows and drawings that have already been completed.
What sounds like moving one line may actually mean changing ten other things.
That is why projects should occasionally stop and ask:
Where are we now?
What has changed?
What has that done to the budget?
Are those changes still worth it?
Architects Can Lead Clients Down the Same Road
Contractors are not the only people capable of creating unrealistic expectations.
Architects can do it too.
One of the harder parts of architecture is telling a client something they may not want to hear.
A client shows you a dramatic floating cantilever.
A huge wall of glass.
A complicated staircase.
A kitchen that looks like it belongs in a luxury hotel.
They love it.
It is much easier to say:
“Absolutely. We can do that.”
The client is happy.
The architect is excited.
Then six months later a contractor puts a price on it.
Now nobody is happy.
Architecture is almost always a balance between wants, needs and resources.
Sometimes “No” Is Part of Doing a Good Job
If a client wants a large floating cantilever but the available construction budget cannot realistically support it, the architect has choices.
Maybe the cantilever becomes smaller.
Maybe it is supported differently.
Maybe we create a similar visual effect using a simpler structural solution.
Maybe the client loves that feature enough that we simplify another part of the building.
Or maybe the feature is important enough that the client decides to increase the budget.
There is nothing wrong with that either.
The important part is that it becomes an informed decision.
Sometimes the right response is not:
“No, you cannot have that.”
It is:
“Yes, we can do that. But here is what that decision is likely to mean. Before we commit to it, let’s look at a few other ways to accomplish the same goal.”
That conversation may disappoint someone for ten minutes.
It can prevent a much larger disappointment six months later.
When the Budget Problem Is Already Obvious
I have also seen projects continue through months of design and detailed construction drawings even when there were already strong indications that the project would not fit the client’s budget.
Then the bids arrive.
They are far higher than the client can afford.
Now the project has to be redesigned.
That can mean additional architectural fees, additional engineering, revised drawings, lost time and another round of pricing.
Whether that happened because of optimism, poor communication or inadequate cost checking, the result for the homeowner is the same:
They paid to fully develop a project before answering one of the most important questions: can we afford to build it?
An architect cannot guarantee exactly what a contractor will charge. Markets change. Labor costs move. Material pricing changes. Contractors price risk differently.
But if there are strong signs that the design and budget are moving in opposite directions, that conversation should happen early.
Sometimes the architect’s most valuable decision is not another drawing.
Sometimes it is recognizing when it is time to stop drawing and check whether the project still makes sense.
Good Design Is Give and Take
Design is not just creating beautiful things.
It is constantly asking:
Where is the money most valuable?
Maybe the kitchen is where the family spends most of its time.
Perhaps that deserves more of the budget.
Maybe the elaborate roof over the garage does not.
Maybe the view from the living room is the entire reason the client bought the property.
In that case, spending more money on the glass and structure there may make perfect sense while simplifying something somewhere else.
That is not ruining the design.
That is the design process.
A budget should not simply kill ideas.
It should help prioritize them.
Why I Prefer to Separate Early Design and Feasibility
This is one reason I prefer to treat schematic design and feasibility as a meaningful phase of its own.
That is the stage where we figure out what the project actually wants to become.
How much space do we need?
What is changing?
What is staying?
What matters most to the client?
What are the major structural or site challenges?
Where is it worth spending money?
Where could we simplify?
And most importantly:
Does the project we are imagining have a reasonable relationship to the money available to build it?
At this point, the goal is not to draw every screw, cabinet hinge or flashing detail.
We need enough information to understand the project and begin testing it against reality.
That might mean floor plans, exterior elevations, general material direction and enough information to begin meaningful conversations about cost.
If the design appears too expensive, we still have room to change it.
Move a wall.
Simplify a roof.
Reduce an addition.
Change the structural approach.
Keep the feature the client loves and find savings somewhere else.
Those are much easier conversations while we are still moving lines on a page than after hundreds of hours have gone into developing the design.
Why Start With a Giant Architectural Fee?
A homeowner may call an architect and say:
“We are thinking about renovating our house and maybe adding onto it.”
They are not sure how large the addition should be.
They do not know what it will cost.
They have not decided how much of the existing home should change.
Then they receive a proposal that includes early design, design development, construction drawings, consultant coordination, bidding, construction administration and potentially years of professional services.
Suddenly the client is staring at a very large architectural fee before they even know what they are building.
That can scare people away from architecture altogether.
Imagine taking your car to a mechanic and saying:
“Something doesn’t feel right when I drive it.”
Before looking under the hood, the mechanic hands you an $18,000 proposal.
Your first question would probably be:
“For what?”
Before defining the solution, we should understand the problem.
Once the early design establishes the scope, complexity and general direction of the project, it becomes much easier to understand what professional services are actually required to move it forward.
More Drawings Don’t Automatically Mean Better Drawings
A thicker drawing set is not automatically a better drawing set.
Too little information creates problems.
Too much information can waste time and money.
Cabinetry is a good example.
The architect should communicate the design.
Where does it go?
How does it relate to windows, doors and appliances?
What dimensions matter?
What should it generally look like?
But a qualified cabinetmaker may ultimately be better equipped to develop the fabrication-level details.
That is their specialty.
An architect could spend hours drawing every joint and drawer before a cabinetmaker is even selected, only to have much of that work developed again later.
That does not mean the architect should not detail things.
It means the team should understand what needs to be detailed and why.
If too little information is provided, everyone guesses.
If too much is drawn unnecessarily, time and money are spent without adding real value.
Good documentation lives somewhere in the middle.
Not Every Change Order Means Someone Made a Mistake
There is another important distinction.
Not every change order is evidence of bad drawings, poor planning or an aggressive contractor.
Buildings, especially existing buildings, contain unknowns.
You can measure carefully.
You can inspect.
You can review old drawings.
And there may still be things nobody can see until construction begins.
A wall is opened and there is rot.
An old renovation was framed differently than expected.
Underground utilities are not where anyone thought they were.
The electrical system needs more work than was visible before demolition.
Think about surgery.
A doctor can gather imaging and information beforehand, but sometimes the complete condition only becomes clear once the work begins.
Buildings can be similar.
The goal is not to pretend every surprise can be eliminated.
The goal is to reduce the avoidable ones and leave room in the budget for the unavoidable ones.
That is what contingency is for.
The Construction Budget Is Not Always the Project Budget
Another common misunderstanding is assuming the contractor’s price represents the entire project cost.
It may not.
Depending on the project, there can also be architectural and engineering fees, surveys, permits, testing, utilities, financing costs, furnishings, landscaping and other expenses outside the construction contract.
So if someone says:
“I have $500,000 for the project,”
one of the first questions should be:
“Does that mean $500,000 for construction, or $500,000 for everything?”
Those are very different numbers.
The Cheapest Material Isn’t Always the Cheapest Solution
Construction cost is not just the price printed on a product.
Labor costs money.
Time costs money.
Heating and cooling cost money.
Maintenance costs money.
Delays cost money.
Sometimes a product looks expensive when compared with another product sitting on a shelf, but that does not tell you what it costs as part of the complete building.
Integrated wall systems are a good example.
A product such as ZIP System sheathing may cost more than conventional sheathing alone.
But the real comparison is not necessarily one sheet against another.
It is the complete wall assembly.
How many materials are required?
How many installation steps?
How much labor?
How quickly can the building be protected from weather?
What other trades are waiting for that work?
Think about paint.
Paint A costs $40 a gallon but requires three coats.
Paint B costs $65 but accomplishes the same result in fewer steps.
Looking only at the price of the can does not necessarily tell you which option costs less once the work is finished.
Construction works the same way.
Schedule Is Part of the Budget
Homeowners often think construction schedule and construction cost are separate.
They are not.
Time affects almost everything.
Workers continue to be paid.
Equipment remains on site.
Project supervision continues.
Financing may continue accruing interest.
A homeowner may still be paying rent or carrying another property.
One delayed trade can hold up several others.
Suppose one construction method saves $5,000 in materials but adds two weeks to the schedule.
Did the project really save $5,000?
Maybe.
Maybe not.
The better question is:
What does this decision cost the entire project, not just this one line item?
Decisions Have a Schedule Too
Products are not the only things that can delay construction.
Decisions can.
Windows, appliances, doors, lighting, plumbing fixtures and specialty materials may have significant lead times.
If a decision is made too late, the preferred item may not arrive when needed.
Then there may be three choices:
Wait.
Pay more for an alternative.
Or redesign around something that is available.
A client does not need to choose every doorknob on day one.
But some decisions must happen early enough that they do not become schedule problems later.
Sometimes the expensive part of a product is not its price.
It is what happens to the rest of the project while everyone waits for it.
Fast Is Not Always Efficient
There is another kind of pressure that shows up on many projects:
“We need the drawings by this date.”
Sometimes that deadline is real.
A contractor may be trying to start before winter. An owner may have financing requirements. A family may need to move.
Those pressures matter.
But a deadline does not make the decisions required to meet it disappear.
There are often many ways to build the same thing.
A wall, roof or window connection may be detailed several different ways.
Two solutions may look identical when the building is finished, but what is happening behind the siding or drywall can be very different.
How does water drain if it gets behind the exterior finish?
Can the assembly dry?
Is insulation continuous?
Are there unnecessary thermal bridges?
How will the contractor actually build it?
Those questions may not be as exciting as choosing countertops.
But they can determine whether the building performs well for decades or develops expensive problems later.
A cheap detail that leads to water intrusion, poor energy performance or moisture problems was never really cheap.
It was simply cheap on the day it was built.
There Are a Thousand Ways to Build Something
One of the biggest misconceptions about construction drawings is that the architect simply needs to “finish the drawings.”
But drawings are really a record of decisions.
And before those decisions can be drawn, someone has to think through them.
The architect may understand the building science and design intent.
The contractor may understand how their crews prefer to sequence and install the work.
A subcontractor may know that one product is difficult to obtain or another works better with the equipment they use.
The owner knows what matters most to them.
Those perspectives need to come together.
If everyone simply tells the architect:
“We need the drawings Friday.”
But nobody is available to answer questions or participate in decisions, the deadline may be met on paper while the project itself is being set up for problems.
You can produce drawings quickly.
That does not mean every decision inside them has been properly resolved.
Sometimes Slowing Down Is How You Keep a Project Moving
This sounds backwards when everyone is under pressure.
But sometimes the fastest way through a project is to stop long enough to make the right decision.
Imagine driving and realizing you may have taken the wrong road.
You can keep going at 70 miles per hour because stopping feels like losing time.
Or you can pull over for five minutes and make sure you are actually heading in the right direction.
Speed is useful only when you are going the right way.
Projects work the same way.
There are moments when the responsible question is:
“Is this deadline actually realistic for the decisions we still need to make?”
That is not an excuse to move slowly.
It is project management.
Good Schedules Start Months Before the Deadline
A realistic schedule is not created by deciding at the last minute that drawings need to be finished quickly.
It is created by planning backward.
If construction needs to begin in June, when does the contractor need pricing?
When does the permit need to be submitted?
When do consultants need information?
When do long-lead materials need to be selected?
When does the owner need to make major decisions?
When does the architect need feedback?
Those dates may begin months before anyone arrives on site.
Good planning creates room for pricing, discussion, coordination and changes while those changes are still relatively inexpensive.
Green Building Has the Same Problem
Energy-efficient construction is often treated as an expensive luxury.
Better windows may cost more.
Additional insulation costs more.
Air-sealing requires attention.
High-performance mechanical systems may cost more upfront.
The understandable question is:
“Why should I spend more money on that?”
But there is another question:
“What does it cost me not to?”
A home may be occupied for decades.
During that time, someone will continuously pay to heat it, cool it and maintain it.
That does not mean every energy upgrade automatically pays for itself.
It does not.
The point is to understand what you are paying for and what you may receive in return.
Lower energy use.
Better comfort.
Fewer drafts.
Improved durability.
Or, in some cases, not enough benefit to justify the cost.
The decision should be based on the whole picture.
Cheap Today and Cheap Over 20 Years Are Different Questions
There are really two costs associated with a building.
What does it cost to build?
And:
What does it cost to own?
Those are not always the same conversation.
Sometimes spending more today reduces labor.
Sometimes it shortens the schedule.
Sometimes it reduces future energy use or maintenance.
And sometimes the simpler, less expensive option is perfectly adequate.
The goal is not to automatically choose the cheapest option or the most expensive option.
The goal is to understand what each choice actually gives you.
At Some Point, It Has to Become About the Project
This may be the most important shift a good team can make.
It stops being:
“The architect needs to finish.”
Or:
“The contractor needs to start.”
Or:
“The owner wants this.”
And becomes:
“What does the project need right now?”
Sometimes the project needs a faster decision.
Sometimes it needs another estimate.
Sometimes the architect and contractor need to sit at the same table.
Sometimes the owner needs to decide which feature matters more.
And sometimes everyone needs to recognize that pushing forward before an important question is answered may create a much larger problem later.
A good project is a shared effort.
The architect, contractor and owner bring different knowledge to the table.
The question becomes:
What gives this project the best chance of being built well, within a realistic budget and schedule, and performing the way it should for years to come?
That is very different from simply trying to get the drawings out the door.
So What Should a Homeowner Actually Do?
You do not need to become an architect, contractor or estimator.
But you should keep asking a few important questions.
Do we have a realistic overall project budget?
Do we have contingency?
Are the contractor’s allowances realistic?
Are we comparing the same scope between bids?
Are there expensive design decisions we should price before developing them further?
Have the small revisions started adding up?
Are important selections being made early enough?
Is the schedule realistic?
Are we spending money where it matters most?
And perhaps the most useful question of all:
If we make this decision today, what is it likely to affect tomorrow?
The Goal Is Fewer Expensive Surprises
Buildings are complicated.
There will always be questions.
There will always be coordination.
And there will always be decisions made as a project develops.
Good planning is not about pretending every unknown can be eliminated.
It is about dealing with the biggest questions while they are still relatively inexpensive to answer.
Define the scope.
Understand the priorities.
Test the budget.
Ask uncomfortable questions.
Understand the allowances.
Watch the small changes before they quietly become large ones.
Keep contingency for things nobody could reasonably predict.
Consider labor and schedule, not just material cost.
Think about how the building will perform, not just how it will look on move-in day.
And bring the architect, contractor and owner to the table when important decisions need to be made.
Sometimes good architecture means showing a client an exciting possibility.
Sometimes it means finding a smarter and less expensive way to achieve it.
Sometimes it means slowing down long enough to prevent a much larger problem.
And sometimes it means being willing to say:
“We can absolutely do that. I just want you to understand what it means before we do.”
That might not always be the answer that makes someone happiest today.
But it can make for a much happier project tomorrow.
Michael Demetrios Frudakis, AIA, NCARB
Principal Architect