Learn the Lingo of Construction Project Costs
When you buy a jug of milk or a loaf of bread, the price is clearly marked. Even products that have negotiable prices, like cars and properties, can at least be seen, touched and inspected before you buy them.
But when you tackle a building or remodeling project, pricing is a lot harder to come by. It’s likely your project has never been built in exactly the same size, finishes, circumstances and location you have in mind. That makes your project entirely custom — and that means the price is, too.
Arriving at a cost for a project involves creating plans and specifications, and requires lots of time, thought and shopping. The more detailed the plans are, the more accurate the price.
So how do you get the accuracy you need when you ask about price? Start with an understanding of the process and the lingo.
Estimates. At its core, every price a contractor provides is an estimate — of the labor and materials it will take to complete your project. In residential construction, an “estimate” (also known as a bid) generally is not a firm price.
Estimates and bids are only as accurate as the information they’re based on. For instance, the least accurate estimate would be one based on square-foot pricing, a range of square-foot pricing or a typical cost for projects of that type. The result won’t tell you what it will cost, but it will tell you if your cost expectations are generally in alignment with the likely price.
This level of accuracy also means that you’re likely to get a wide range of estimated costs when you consult with multiple contractors, as each will have a different interpretation of what you have in mind and a different way of creating a ballparkestimate. To use a car analogy: a Honda, BMW and Porsche might be the same size and weigh about the same, but they have very different price tags.
With a floor plan and a general idea of engineering and finishes, a more accurate line item estimate can be created, but it will still be a rough order of magnitude (ROM). That usually entails allowances based on square foot and unit costs, and extrapolation from other projects of similar size. You haven’t selected the tile, so it can’t be priced yet. The ROM is useful in narrowing down and selecting the contractor with whom you want to work, but it still doesn’t tell you exactly what your project will cost.
A floor plan, also known as a schematic design, can be created by an architect, designer, design-build firm or even a homeowner. When you pay for plans, be aware of any contractual restrictions on the use of the drawings if you decide to hire a different firm to complete the plans or build the project.
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