“You’ll see a red box that shows we are way over budget.”
That wasn’t how Shaun’s cover email for the first budget started out, but that was the line that made my stomach drop. He also mentioned that structural engineering was running behind and likely wouldn’t be done until the end of the week, putting us at least a week behind schedule for a fall groundbreaking. And that was if the permits got pulled fast. But back to the money.
The spreadsheet Shaun sent us broke things down into “hard costs” (labor, materials) and “soft costs” (profit and overhead, other professional fees). When I first scanned through it, it didn’t look all bad. Our target budget was $600,000. His breakdown put us at $634,000. We could live with that.
Then I realized I was only reading the “hard costs” subtotal.
Add in soft costs, and we were up a build budget of nearly $800,000 – 25% over our target. And that was with Shaun cutting his profit margin in half.
Things broke down like this in the first budget (I’ve folded together labor and material costs to streamline things a bit):
The Detailed First Budget
|Drywall and Thincoat wall||$28,175|
|Drywall and thincoat ceiling||$7,773|
|Interior doors Solid Core||$15,231|
|Closet Door System||$3,965|
|4 Fixture Bathrooms||$19,096|
|2 Fixture Bathroom||$3,177|
|Gas Fired Heating||$11,502|
|Hot Water Heating||$21,728|
|Exhaust Fan Wiring||$265|
|Hard Cost Subtotal||$551,846|
|x1.15 Location Factor||$634,623|
|Summit County Permits||$9,188|
|Soft Cost Subtotal||$156,665|
|Hard Cost Subtotal||$634,623|
|Total Build Budget||$791,288|
This was unnerving. It gave the impression that either the initial plan wasn’t conservative enough from a cost standpoint, or Shaun didn’t push back hard enough when we suggested changes that increased the square footage (and therefore the cost), like smoothing out the jog in the north wall. Whatever the cause, it was an unpleasant surprise.
Shaun flagged a few things that could serve as low-hanging fruit to trim: the flooring allowance, the deck, the driveway, the siding. But when I dropped everything into a spreadsheet so I could tinker with the numbers, they still didn’t look great.
By my math, even with some shaving, we were still talking about a $700,000 build. Still $100,000 over our target. He mentioned potentially relaxing the “location factor,” which multiplied material and labor costs past what the “should” cost to account for higher prices in the mountains. But since that number is a forecast, we didn’t want to make an optimistic guess now only to run over-budget later.
We emailed back and forth about some other places to shave things back (interior fittings and surfaces; the siding, since we don’t want to maintain wood anyway, etc.). We want to keep the square footage, so a lot of the structural numbers (framing, roof, rough electrical) were essentially fixed. They also could be checked against fairly firm benchmarks from Shaun’s other projects, since they didn’t fluctuate much based on tastes. Our focus turned to creating a high-end shell while potentially skimping on some of the interior finishes, which could be upgraded over time. We also asked about other room for movement, including whether we could pare down the architectural fees, even though we were already midstream on that contract. Shaun sounded optimistic that we could bring things down to land within budget; the question was where we wanted to compromise. We set a call to talk things over in some more detail.