While the failure of a custom home project can be attributed to a host of reasons including decisions made in the wrong order or purchased for unknown reasons, the majority of problems are handed off to individuals or teams that cannot absorb changes to the scope of work. By the end of the first ninety days of a project, it will be apparent whether or not the project is staying on track to meet the original intentions of the owner.
A set of metrics to track and the different ways a relationship can be set up between an owner, designer and builder to stick to a schedule and budget.
Selecting a builder on evidence rather than impression
In terms of home building projects, a portfolio of home building projects is impressive but in no way indicates how well a home builder can handle the pressures involved in your home building project. To get a sense of how a home builder handles home building projects, look at the following 4 signals. The useful signals are all procedural in nature. How many projects does a home builder run for each of their home building superintendents? How does a home builder document and approve change orders to the scope of work of a home building contract? What is the average difference between the contract price and the final cost of completion for a home builder’s last several home building projects?
The best reference calls will be those where the builder refers to other owners of similar homes and describes the problems encountered with previous projects and how they were resolved. As mentioned above, happy clients who have had their homes completed to specification are of little value.
Contract structure and its consequences
The contract form will determine how uncertainties in a project will be handled. Owner and designer should choose forms of contract carefully.
| Structure | Owner risk | Best fit | Watch for |
| Fixed price | Low on cost, high on flexibility | Complete drawings, settled scope | Contingency buried in the number, allowance padding |
| Cost plus fee | High on cost, low on flexibility | Complex sites, evolving design | Weak invoice substantiation, unclear markup base |
| Guaranteed maximum price | Capped, shared upside | Builder engaged during design | How savings split, what triggers a cap adjustment |
Front-loading the planning phase
It is very important to complete the preconstruction meetings before the site work begins. It is difficult to complete the design while trying to determine the cost of the site work. In many cases the cost of the site work such as the utility connections, the soil conditions, and the building setbacks can cost as much as the design refinements. Therefore, it is best to complete the preconstruction meetings prior to the beginning of the site work.
In areas with flood elevation requirements, historic districts, and high coastal winds, owners of custom homes should consider the process of obtaining necessary entitlements as a design input rather than a step to obtain permits. The design of the home’s foundation, the structural framing, and the sizing of the home’s windows will be determined by the requirements for the home’s entitlements.
The questions worth answering before drawings begin
- What is the realistic all-in number, including site work, landscaping, permits, and furnishings?
- How long will the owners hold the property, and does that change specification decisions?
- Which three rooms carry the emotional weight of the project, and which are simply functional?
- What are the fixed deadlines, for example a lease expiration or a school year?
Building a budget that survives contact with reality
Allowances are typically set at a high number to make the initial total look as good as possible. Owners should price out the products that they have physically seen and approved, rather than relying on a high allowance number for items such as tile.
We track two separate lines for contingency, design contingency (approximately 5% of the design budget) for unknown scope not yet designed, and construction contingency for unknown site or construction conditions that surface after demolition or excavation. If we were to roll both of these numbers into one contingency line, I fear that owners would end up spending that contingency on upgraded finishes rather than encountering and resolving problems that truly surface during construction.
Cost tracking during construction
- Reconcile committed costs against budget monthly, not at draw requests.
- Require change order pricing before work proceeds, with schedule impact stated.
- Track allowance reconciliation separately so the owner sees the running variance.
- Flag any line running more than five percent over at the point it is detected.
Design decisions that determine construction quality
Quality is largely designed into a home and then protected during the home’s construction. Therefore, great attention should be paid to details of wall assemblies, penetrations of walls and roofs, creation of and protection of a home’s drainage plane, and proper sizing of equipment such as heating, ventilation, and air-conditioning systems. A great deal of thought and planning goes into these details, and will have a much greater impact on the home’s long-term satisfaction than selection of finishes.
Detailing for a house can include many items to ensure proper construction and prevent costly repairs down the road. The following are some of the details that should be included in the drawings for a house, Roof-to-wall intersections, Deck ledgers, Window head flashing, etc. These details will cost many hours of time but will pay off in the long run. Anyone planning to build a custom home in Charleston is well served by insisting on this level of detailing, since the humidity and coastal exposure punish assemblies that were drawn loosely.
Managing the construction phase without slowing it
All selections for your home must be completed prior to the framing of the walls. Open selections during construction will result in you making poor decisions under the pressure of a tight schedule, resulting in high costs and much regret. Having a ‘selections calendar’ which outlines all needed selections and their corresponding procurement lead times will enable you to remain on the critical path and complete your selections in a timely manner.
Communication that scales
A weekly meeting on the job site with owner as decision maker, using shared written documents to record minutes will cover most of the project coordination. As decisions are made on the job site, they can cause problems at closeout. Therefore, all decisions and communication must be written and distributed on the same day. A 3-week look-ahead schedule should be distributed by the builder for upcoming decisions.
