How to Save Money on a Residential Project ?

How many times does this topic, become the primary focus of discussion, whether it is at a Saturday night cocktail party, the local Brew Fest, a family discussion or a heated debate. Everyone is looking to save money on their residential project! It becomes the focus of relationships between husband and wife as well as designers, architects, engineers and all parties involved with a residential project.

Unfortunately the question is normally pursued after the money has been expended. Savings takes an entirely different meaning, when it is required to maintain the construction loan value, balance other seemingly innocent expenses as the project progressed, or absolutely necessary due to errors or omissions.

There are special insurances, such as errors and omissions insurance that designers, architects and engineers can offer, as well as contractor liability insurances, which can be attached by the homeowner. Once again, as stated elsewhere in various discussions within this website, the legal pursuit of money from contractors, designers, engineers, etc. is a long and tedious task and not to be taken lightly.

For this discussion, let’s consider options other than legal ones, to save money on a residential project.

One of the foremost lessons learned, after the first project has been performed by any residential owner, is that the money goes quickly and effortlessly. At first, the bank has offered the construction loan, and the residential customer is both excited and nervous that they are spending so much money. This excitement is similar to starting out on the summer vacation to Disney World. Everyone is excited and energized, the attitudes are positive; the family is well rested and has the support of, in some cases, years of savings. However, as the construction project matures, as with the vacation, the initial impact of uniqueness and positive vibes gets used up, the actuality of the situation begins to take its negative toll. The construction project gets bogged down in the issues and the problems again, similar to the vacation, as we hit the Wednesday mark of the week.

A construction project must be looked at in a very objective and analytical way. The extent of financial support at the start of the project will definitely drain away. I have bene in the business all of my life and it is getting long, and I have yet to witness a residential project where the owner says, heh, I have all this money left over!! Never happened, and I don’t anticipate such an event!

It is important that we take this discussion step by step, because I feel that all parties taking on a residential project will encounter financial stress and turmoil, prior to the satisfactory completion of the project.

The most conscientious and intelligent method for advoiding the panic attack regarding lack of money is to be prepared. How many times I have stated, that and I wish I could go back, and count all the times I have warned, begged and cajoled individuals go GO EASY when planning a residential construction project.

Prior to the initiation of the construction;

• Land value / where, during the search and decision on what piece of property is suitable for your new project, can we save money?
• Location / can the land be purchased in a less desirable area? This needs evaluation regarding resale, schools, shopping as well as real estate SF values. However, there is a very large difference with property locations and sometimes the primary spot is not necessarily the best spot.
• Utility access / does the land offer utilities from the City municipality or does it require self-contained systems, such as the artesian well and a septic system. Obviously City utilities are more reliable and always there. Self-contained are expensive and totally the home-owners responsibility.
• Does the project location offer gas service in the street? Gas is normally more efficient than other types of energy.
• How far from the street is the property? Basically how long is the driveway, and if the utilities are coming down the driveway, will the City extend the utilities without cost, if the distance is excessive?
• What type of property is being considered? Does the land have potential rock excavation which is extremely expensive, is there water on the site, and are there other issues, such as neighbor set- backs which will cost money to manage?
• Special zoning provisions, such as proximity to churches, schools, academic institutions, etc.
• Special remediation requirements, is the land contaminated and requiring remediation?

Each one of these land issues will influence the amount of money paid to construct the residential project. This is where the owner must begin, if a financial efficiency plan is seriously being planned and instituted.

• Design, Architectural, Engineering Services / where in the selection of all the professionals necessary to construct the project, can we save money?
• Sometimes the most prominent and well known professional is not the most economical. In fact, my experience has noted that in many cases the best service, as well as fresh and honest ideas, comes from the inspirational, young talent, and not the entrenched, over rated popular professionals. Sorry boys!!
• If economy is the key to the project, which in most cases, is should be the primary objective, the choice of a more conservative and down to earth professional, is many times the most economic choice.
• Try to combine the disciplines, if the architect can assemble the team of engineers, in most cases the package is less money than the specific, individually selected professionals.
• Retired professionals that are simply trying to stay pertinent to the local market, and are willing to negotiate a lesser fee for the opportunity to be a part of the project. In many instances, patience and personal communication with friends and family could produce a design team that is willing to offer their services, for a very economical value.

The selection of the proper type of professionals, for design and engineering services, can influence the entire scenario of the project’s conception and development. The foundation of the project is based upon the design package, if it is presented in a very efficient and economical point of view, the result will be an entirely different result, than if the presentation is ostentatious, presumptuous and pompous. I have laughed at groups of professionals that think their product is so much better than the next. This is a deep financial chasm that can quickly deplete financial pockets, very quickly!

• Design / structural / mechanical / electrical
• Try to select the easiest and most common method of constructing your project. If the local homes in the neighborhood are constructed in masonry, there is probably solid reasoning for this method of construction. Unless uniqueness is one of your goals, consistency with local customs and procedures, usually produces a more economical construction project.
• Mechanical and electrical systems should also follow the majority of the existing construction in the area. This is not to indicate that technology and new ideas and concepts are not valid considerations, it just needs to be understood that, normally anything cutting edge and new, will cost more than the common place, consistency of normal.
• Initial selection is important, and must be balanced with the economic energy savings of new and cutting edge technology with the use of standard, consistent equipment.

During Construction

• Project Indecision and Scheduling / it is essential that the owner be certain of design, dimensions, product selection and construction schedule, prior to the start of construction. Indecision and changeability throughout the project will delay the project and certainly cause increases in cost as well as frustration. As crews become frustrated, efficiency slows and the overall project cost increases. It is very important that there is a clear cut scope of work that can be scheduled and followed as well as an owner that is decisive and consistent.
• Construction Crew interference/ the owner must realize the negative affect that constant visits to the home will cause, especially during the work day. Workers on a job site are more than happy to discuss the weather, the stock market, sports, or, yes, even the house with the owner of the project. Unfortunately this does nothing but cause delays and increased indecisions. Every worker will have an opinion, a new product, a different method of installation, or construction, and this will confuse the owner, causing delays and indecision.
• Owner selected and purchased material and or equipment / it is strongly suggested that the owner NOT purchase material on EBay, or other sites, where they feel they are getting a deal. A deal is only worth the savings, as long as it does not interfere with the construction schedule and cost more in the field, than the material savings realized. In addition, the perceived responsibility, due to the owner selection of the amount, the size and even the color, is now the owners and not the contractors , where it should NOT be.
• Payment delay / the owner should resolve all payment issues immediately upon their discovery. There is nothing that will delay and cost the owner money, more than payment delay. Contractors and material suppliers need to paid, this is extremely important.
• Answers to questions / if the contractor asks a legitimate question to the owner, the owner must be willing and able to make the decision. The owner cannot wait for the interaction of a third party, or the input by another professional. Whoever is the key contact for the owner must make a timely decision.
• Owner physical interference / the owner cannot stop at the site every night to clean up, deliver garbage to the site to be placed in the dumpsters or physically get in the way of the workers as the work is being completed. Construction workers have been told that safety is first! Therefore, if the owner is on the site and in the way, the contractors will merely stop work and wait. This cannot occur, if the project is going to be built on a schedule and budget.

Once Construction is Completed

• Owner must expedite the issuance of the punchlist to the contractor for completion. This punchlist should have completion dates clearly identified on the list.
• Any owner decisions such as, whether the contractor should provide an additional change order to perform the landscaping, needs to be made immediately upon construction completion. The owner cannot decide one month after substantial completion, that they want to finish the basement for example.
• Resolution of all outstanding issues. Allowing issues to fester and not be resolved, will cause unnecessary frustration on all parties, and will delay the completion and satisfactory budget closure of the project.
• Maintenance and Guarantee information / the owner must insist that all information be forwarded within 2 weeks of completion. This as with any other outstanding issues, must be quickly and efficiently managed and finalized.

In summary, cost savings on a Residential Project must commence at the initiation of the design and follow through to the final payment from the owner to the contractor. There are several management tools and procedures that we will discuss within this website that will accommodate cost savings procedures and techniques and try to analytically foresee issues and minimize cost overruns.

The most important realization, is that you will end up spending MORE money than you wanted, however there are means and methods for attempting to control this spending frenzy!