Your Budget

Understanding Your Budget
We encourage you to think of your overall project cost, not what each individual part of the project will cost. In the end, you have a certain amount of time, energy, and money to devote to your project. Let us help you get the best project you can for your available resources.

What are some of the costs of your project?

1. 1. Construction cost (by far and away the largest number).Over the last several years tariffs, wildfires, Covid, inflation, and materials shortages have affected construction costs. Construction costs have seen year-over-year inflation since 2011, especially from 2014-2018 and again recently. We discuss here whether we may see prices go up or down as the economy changes. Demand has remained high over the past few years as people have shifted to more work from home, and insurance settlements allowed people rebuild the structures lost in the wildfires.Future construction costs are hard to estimate at this point. These days we see a higher range of costs than ever before for our clients’ projects. Larger remodels and remodel-addition projects seem to range from $500 to $600 per square foot. Because economy of scale dictates your square-foot cost, those numbers are higher for smaller projects. A modern new house currently seems to range between about $800 and $1000 per square foot. These numbers don’t include landscape design and construction, soft costs like architect/engineering fees, or permit fees.
   2. Soft costs. These include architectural / engineering fees and permit fees among other things. For many projects you would expect to spend an additional amount equal to roughly 20% of your construction costs on your soft costs. If your project is really small, that percentage would be higher.
   3. Relocation expenses. It depends on the project, but you will probably move out at some point.
   4. Loss of income. The more of your time you spend on the project, the less you can be at work producing your regular income. The more you can earn at work, the more you want to hire us to do as much as possible for you.
   5. Stress. Projects are difficult, time-consuming, and stressful. The more professional your team, and the more help we provide, the better. But there will always be some stressful times.
   6. Time away from family. Like stress, this isn’t quantifiable in terms of dollars and cents, but it is still a cost that many people want to minimize.

Klopf Architecture can Help You Control Costs
Having a qualified professional on your side is an expense. But is it going to make your overall project cost higher? Maybe or maybe not. Our services reduce many of your other costs; on some projects our services will reduce your other costs enough to offset what you have paid us. On other projects the money spent may be a bit more but we’ll reduce your costs of stress, lost income, and time away from family. For any project, we can help you control your largest cost by far: construction costs.

We help you control your construction costs in two steps. For larger projects we recommend presenting a preliminary design to a handful of builders to get preliminary pricing for your project. Once we have that feedback, you may change your project scope or budget accordingly before we perform the lion’s share of our services. Later in the project we help you get a more complete and accurate bid for the largest portion of your project cost: construction. We can work with you create a detailed “game plan” for the contractor to stick to that he/she will price out before you sign their contract. More certainty in the drawings and specifications removes the guesswork from contractor bidding. They’ll know more about the real cost and schedule of your project up front, and therefore you’ll get the best possible pricing. And again, the price will be known up front so you will control your biggest cost.

I heard construction only costs $250 per square foot. What gives?
We used to say that people talking about $250 per square foot construction costs might be talking about less expensive types of construction. But as the market in the Bay Area has heated up year over year, those numbers are just outdated for any type of custom construction. Maybe tract homes can be built at that cost but we’re not involved in that type of housing so we aren’t knowledgeable in that area.

You may be hearing from a friend or neighbor “what they paid” for their project. If so, keep in mind the following: their project is already built, making their pricing figures completely outdated; they may not be giving you the full cost picture – sometimes people talk about the contractor’s costs, but don’t add in the materials, appliances, or fixtures they bought themselves; and people generally want to sound like they’re not rich and they got a good deal, both of which incentivize them to “round down” if you will on what they paid.

Times have changed. Not only have building codes, energy codes, and green codes continued to call for more expensive, higher quality construction with each update, but we are also still in a growth phase during which contractors have been in high demand for well over a decade now, materials are in high demand with long lead times, and labor is in high demand. Today is nothing like 2009 when contractors were practically begging for minor projects just to stay afloat.

Modern construction, minimal detailing, and openness to nature typically cost more than traditional construction because of the complexity required to create a simple appearance. Minimal detailing means contractors must plan ahead (they can’t just slap a piece of trim over a mistake… Sometimes the rough structural components must be placed within about a 1/8″ tolerance to avoid failure down the road). Modern clean construction means every piece must fit well, so finer craftsmanship may be required for items like cabinets, windows and doors, placement of lighting, etc. Openness to nature means wall to wall, large windows and doors that are more expensive than small ones, and are usually installed all the way to a wall, ceiling, floor, or post. It’s much easier to put a small window in the middle of a wall than to make the windows into a wall. These are just a few of the ways that modern construction is inherently more costly than traditional construction.

Controlling vs. Reducing Construction Costs

There are three main ways to reduce construction costs effectively:

1. 1. Reduce Scope. If you want your project to cost less, make it smaller. Instead of doing just a little bit of work in each room, draw a line cutting off half your house from any work at all. This is probably the number one way to save money and still get a quality project,
   2. Reduce complexity. This is not particularly possible in modern construction because of the reasons discussed above. But reducing the number of walls, corners, floor level changes, and other complexities would make a project cheaper. Most people who want custom design are not willing to sacrifice the complexity.
   3. Go for a luxury look without spending luxury prices. Putting in a less luxurious line of appliances, cabinets, flooring, tile, plumbing fixtures, light fixtures, or windows/doors can reduce project costs as well. Some of these items have great options in many price ranges, so we work with clients to pick the cost range that they’re interested in pursuing, then include those types of items in the project.

While often help clients reduce scope through master planning, and have lots of ways to go for a luxury appearance with lower-cost items. But we can only go so far before it’s a waste of resources for the client to move forward with their project. There is a certain minimum level of quality we must include in each project, so it’s not in the architect’s power to make good construction really cheap. If you want really dirt cheap construction, I’m sure there are ways to get that done, but it probably wouldn’t involve us.

Contingency
We also recommend that you establish a contingency for your design and construction budget. Contingency is an amount over-and-above what you wanted to spend. A design contingency prepares you in case your project becomes larger, more complex, or changes repeatedly. In these cases you would pay your design team extra for the additional services. The construction contingency prepares you for the potential that a project will change to some extent during construction. As we move through the design process, the contingency may start out larger and shrink as more detail and information is included in the drawings and therefore the pricing.

Klopf Architecture can help you control contingency costs. To keep the design contingency costs down, we outline your project goals and program (so that the scope is well-defined), provide our detailed scope of services, and let you know our fee estimate before you hire us (read more about these). Assuming you hire us for the services mentioned in “controlling constuction costs” above, we can also help you keep your construction contingency costs to a minimum.

If You’re Interested in Services that are not “Required” for your Project
Sometimes you’ll require a level of quality, a level of predictability during construction (cost and/or schedule), or a level of attentiveness in project management that architects like Klopf Architecture are expert in providing… even though your project is small. If this is true for you, you may want to work with an architect so your project turns out the way you want it to. If you haven’t already, see how we work with out clients.