The 3 Big Things You Must Know to Control Your Home Construction Budget

Bedroom - low cost per square foot
I don't like being the one to tell people their house dreams and construction budgets aren't going to agree.

But we take frequent calls from nice folks like you who've been given bad information about what new homes cost to build.

Often that information is based on a very simple (and way too low) "square foot cost", and sometimes that info gets you way, way off track.

Figuring out how much you should spent to build your new home before you design it can make you feel like you're in a maze - you don't know what to budget until you have a design, but you don't know what to design until you have a budget.

Hang on, there's a way out.

"Per square foot" estimating can help you get into a reasonably realistic range of cost for the design in your head, if you understand the "Big Three" and how they affect construction cost.

1) House Design Size

Many things affect the cost of building a typical house but there are three big ones: size, complexity, and the level of finish. The effect of house size on construction cost is obvious - I don’t need to explain this in detail, do I? Bigger houses cost more. But it’s not quite that simple.

Significantly more important than house size alone is the matter of where that size goes since the “cost per square foot” of a house varies tremendously from room to room. It’s obvious that a kitchen, with appliances, cabinets, countertops, plumbing fixtures, tile flooring, and other expensive finishes will cost more “per square foot” to build than a bedroom – which doesn’t have much more finish than carpeting and paint.

If you squeeze the size of a house down by taking space from low cost-per-square-foot rooms like bedrooms you’ll find that you haven’t affected the overall cost of the house much at all. In fact, you’ll likely not do much more than simply raise the cost per square foot of the entire (now smaller) house – and maybe not change the overall cost at all.

So a smaller house – if the size difference is in inexpensive rooms – may not be a less expensive house.

A simple shape helps keep construction costs down
2) House Design Complexity

The effect of the complexity of a house on the construction cost is frequently misunderstood and it’s one of the sources of many an unpleasant surprise for house plan buyers.

Simply put, a complex house is more expensive to build than a simple house. But what makes a house complex? Mostly it’s a function of the shape of the house and the relationship of the amount of roof and the amount of foundation to the area of the house.

Consider two typical house designs: A rectangular two-story Colonial house and a French Country home with a first-floor master bedroom suite. Both houses are 3,000 square feet and both have the same level of finish.

The Colonial home is the picture of simplicity; both floors are exactly the same size and are stacked directly over another. So while the entire house is 3,000 square feet, the foundation and the roof are each only 1,500 square feet (I’m ignoring the garage for this example). It’s efficient and easy to build.

A complex shape is more expensive to build
The French County design is the same size but less efficient; with the master bedroom suite moved from the upper floor to the lower, the roof area and foundation area increase by about 500 square feet – but the overall size of the house stays the same at 3,000 square feet. More roof and foundation containing the same area; same size but with more lumber and concrete = more cost.

Colonial homes have simple gabled roofs. In the simplest examples the roof is made entirely with just one truss configuration. That’s a huge sigh of relief for the truss fabricator and the framing crew – every truss is the same! And without any intersecting roofs or dormers, there’s no overlay framing and no flashing or valley metal to install.

But French Country design is distinguished by its more “rambling” nature; an attractive home of this style spreads itself out a bit. French County roofs are typically hipped rather than gabled (hips are more expensive) and are often steeply pitched – more lumber is required and the roofing labor is more expensive.

Every angle, intersecting roof, bay window, porch, or level change adds complexity to a house. If you’re evaluating several house design ideas, look for complexities in the layout that may make one significantly more expensive to build than the other.

Bath - high cost per square foot
3) Finishes and Fixtures

Let’s compare two houses again, only this time they’re both 3,000 square foot Colonials. One has a fiberglass tub in the master bath (about $500) and one has a $5000 whirlpool tub. That one change adds $4500 to the cost of the house but more importantly, it changes the “square foot” cost of the house by almost $1.50 per square foot.

Careful - here’s where homeowners get “nickeled and dimed” to death. Perhaps you were quoted a base cost of $120 per square foot for your house. Add the tub, and it’s gone to $121.50. Add hardwood, granite, under-mounted sinks, brass hardware, and other upgrades and suddenly you’re at $140 per square foot and way out of your budget.

Finishes and fixtures (flooring, cabinets, countertops, trim, etc.) represent about 30% to 40% of the cost of a house. You may only increase the cost of each item a little but because so many items fall into this category it’s very easy to lose control of the total cost.

If you want nicer finishes but your budget is tight, do what my clients do – put the nice stuff in the kitchen and master bath and the cheaper stuff everywhere else. More importantly, assemble a list of the finishes and fixtures you want at the beginning of the project and stick to it.

A Few More Notes on Controlling Cost

"Budget creep" is the gradual, sometimes unnoticeable increase in the cost of your project as new items are added, mistakes are uncovered, or unusual site conditions are revealed. Budget creep happens slowly, one decision at a time, creeping up and devouring your building budget before you know it. It can afflict you during the planning of a house project but more often it’s a disease of the construction phase.

A little planning, patience, and foresight can help avoid it.

On any project, start with a clear idea of the level of finish and quality you expect. Don’t assume that your builder is in tune with your ideas about finishes – discuss your expectations in detail and whenever possible, see the actual finishes and fixtures. If you’re not the detail-oriented type, hire a professional interior designer.

Poor quality drawings cause additional unplanned work during construction, and always end up costing homeowners money and time. My firm’s been hired many times to correct drawings done elsewhere that contained glaring errors, omitted necessary structural steel, or just plain didn't work. Sloppy drawings are an open invitation to Project Creep.

Finally, always have realistic expectations about your project budget and communicate that budget to your Architect. When everyone understands the project’s financial goals the chances for success are greatly increased.

Need expert Residential Architectural advice for your new home or remodeling project? Contact Richard Taylor, AIA at RTA Studio Architects to arrange a meeting or an online consultation.