Cost of Construction

As someone that directs and designs building projects, clients often assume that I will be able to provide them an accurate and up front price to have their project built. However, it's not always easy to estimate - project price is affected by any number of factors and the combined matrix of these factors determine the ultimate cost, the primary being that I ultimately don't build the project, contractors do! In general, there are a few givens that will always affect the price of a project:

  • Location - different geographies, building codes, and economies affect costs
  • Size and complexity - will a contractor need multiple subs? is the scale and shape of the design complex? will new construction marry up to old construction?
  • Quality - is time important? materials? etc.

Architects may have an idea of a range of Construction Cost, but no rule of thumb can determine actually cost.  There is however one certainty about construction costs: owner(s) don't accurately anticipate the true cost of construction and are often surprised that their project is going to cost what the number(s) come in at.  Owners planning on building a custom house, building an addition, or renovating their existing home in New England should expect estimates to be an average of $200+ SF; and it can be upwards of $300 SF depending on location, topography, desired features, materials, size, etc.

In my previous blog:  A Fee Based Expertise, I wrote about the way in which an Architect structures their compensation. This blog elaborates on how that relates to the Cost of Construction.  An Architect may base their fee on the Range of Construction Cost based on their better knowledge of construction costs.  For the Architect to have an understanding of what their fees should be, they may conduct their own guesstimate of what they believe the cost of construction will be based on standard Basic Services, past projects, and the knowledge of specific project needs.

On Residential projects in New England, it is common for Architectural fees to run between 8 and 15 percent of the cost of construction. The range in percentage has to do with the specifics of the project and the quality and level of services offered.  A smaller percentage reflects the minimum requirements to obtain a building permit while the larger percentage reflects full architectural services and a robust drawing set required to build the ideal project with fewer surprise costs during construction.  

The best approach for a homeowner is to first know how much they can spend, and then discuss their budget with the Architect. This will sever as the limiting factor for size, materials, customization, etc.  When preparing for a realistic cost of construction, owners should understand that architectural services are an important and vital component of the total design project budget and just like how construction cost are determined by a matrix of factors so too are architectural fees.

A Fee Based Expertise

There was a time when The American Institute of Architects (AIA) actually published a recommended fee schedule.  However, in 1990, the Department of Justice won a lawsuit where the AIA was to withdraw these recommendations and could in no way, directly or indirectly, restrain the way architects charge for services. Therefore, no real standard drives Architectural pricing which can pose a challenge for both Clients and Architects.  For Clients, it is common to select the lowest bidder and that can have costly downsides.  For Architects, it can be hard to successfully convey the value of their expertise.  

Rather than being paid for expertise, as some doctors or lawyers are, Architects are thought to be compensated for an object – a Drawing Set.  As mentioned in Beyond the Drawings, services provided by an Architect are so much more than just a set of drawings.  According to the National Council of Architectural Review Board (NCARB), it takes about 13 years for the average architect to complete school, solidify practice hours (Intern Development Program), and pass the seven required exams to secure their license.  After completing such steps, it is assumed they have developed skills and knowledge of great value to clients and should charge accordingly for professional services.  This expertise is what it comes down to thus a client pays an Architect for the hours it takes to design and document each unique project created for each individual client. 

While an architects' fees are an additional project cost, hiring an architect can actually save you money in many ways. Beyond the value of their expert professional knowledge of the industry, codes, and local by-laws (that fuel an in-depth and successful design project) Architects can monitor your budget, propose designs that reduce energy costs, and provide design and planning solutions that function efficiently. They can turn a difficult lot into a successful building site, and fully develop a project to avoid changes once construction is underway.

An architect's compensation can be based on time and/or a fixed fee.  It is typical to perform architectural services on an hourly basis, with estimated costs depending on client’s requested levels of service, anticipated project scope of work, and town/city requirements.  A hybrid fee that combines both an hourly fee and a fixed fee based on the individual phases throughout the entire project typically works best for both the Client and the Architect. 

It is best for an Architect to understand the scope of a project and the Client's budget in order to create a fee that makes the most sense for each specific project.  There should be a clear understanding of the scope of the work and a custom fee created to reflect that work.  It is reasonable that fees have a proportionate relationship to the cost of the project.  It is common in residential projects, especially additions or renovations, for fees to reflect a baseline of work.  This is due to the fact that there is a minimum amount of time required to document, design, permit, and coordinate the project; whether the project is a 300 SF mudroom or a 1,000 SF master bedroom and bath. 

A Registered Architect who believes in providing a high quality of service is able to keep fees in proportion to the project scope while working with the Client to meet the standard requirements that comes with every design project.  An Architect brings a valuable expertise to every project that strengthens the success of that project. 

FEASIBILITY STUDY

My previous blog post Working with an Architect touched upon the various steps and processes that define the services of an Architect.  After working with a Client in Cambridge MA to determine the viability of a project on a unique lot with many zoning restrictions, I thought it beneficial to discuss yet another aspect of service that benefits dimensionally challenged sites in towns with restrictive zoning - a Feasibility Study.

Most often an Architect will get hired to perform a feasibility study in towns that are known to have multiple lots/properties which don’t conform to typical zoning laws.  The benefit of a feasibility study is to determine the viability of a client’s anticipated project prior to engaging in full-blown design services.  The study will establish if the project is possible or what the potential problem(s) may be.  

A Feasibility Study investigates in detail the requirements for the Client’s project as well as the constraints, resulting in a written and graphic documentation of the Client’s project’s potential. This service is performed in combination with Phase One: Existing Condition Documentation and Code/By-Law Research yet results in a more robust gathering of information related to challenging sites.   

The process begins with an initial meeting to discuss the requirements of the project and to establish the overall scope and preliminary budget. A thorough investigation of the existing house, in conjunction with a zoning code review, and a site analysis is performed. It is important to have an accurate and up-to-date Plot Plan generated by a licensed surveyor prior to beginning the study. Meetings with town inspections personnel such as the Building Inspector, Zoning Specialist, and Conservation Administrator are imperative to the accurate completion of the study.  The end result from this phase is the establishment of the overall parameters that will affect the design and determine any/all viable options to support zoning code compliance.

Performing a feasibility study is the ideal way to thoroughly evaluate a site in towns that are known to have strict building constraints, non-conforming lots, and dense by-law requirements.  It is important to engage the services of a Registered Architect to assess the viability of an anticipated project.

Working with an Architect

Chances are you haven’t worked with an Architect before.  This is a new relationship and your understanding of how it unfolds is unclear.  Below I will describe how Architects go about designing your project and the various steps and processes that define their services.

The American Institute of Architects (AIA) defines industry standards for professional services by an architect.  The AIA formalizes the design process in three parts: schematic design (SD), design development (DD) and construction documents (CD).  These are followed by two construction related activities where the Architect has an administrative role: bidding and negotiations (with contractors) and construction administration.

For all residential projects preliminary research is a necessary part of the process therefore some studios begin their services with a Pre-Design phase and combine SD and DD into one Design Development phase.

PRE-DESIGN: This is when all of the fact finding begins.  A very personal relationship between the Client and the Architect begins to form. Meetings are set to discuss design objectives, program needs, aesthetic desires, and construction budget.  Additionally, the Architect becomes familiar with the existing house, or plot of land, to gain an understanding of both the site and structure.  To develop this understanding, the Architect performs existing conditions documentation, extensive code research, and town by-law analysis.  This phase concludes with a set of existing conditions drawings to be used during the following phases.

DESIGN DEVELOPMENT:  This is when design begins and the exploration of preliminary spatial concepts and layout options unfolds. Design Development is typically the longest of the three phases.  A good Architect will provide the necessary guidance to keep the project on track while effectively meetings design objectives.   Multiple meetings with the Client contribute to the evolution of the design while any obstacles or constraints are address.  Ideas flow from Client to Architect and back again in an involved, imaginative process. Based on these ongoing conversations, two or three design options consisting of plans, elevations, and 3D vignettes are presented and a final design selected.

CONSTRUCTION DOCUMENTS:  Typically the Client is less involved in this phase since the design has been finalized and agreed upon. Now the Architect will create a technical set that conveys construction methods which are permit and code compliant.  Once the Construction Documents are complete the Architect will take on an administrative role to assist with construction efforts.  

The process of designing a home - from incorporating spatial quality, program, and building code requirements- is actually a formal, defined process.  Working with an Architect is a creative and exciting process that is ever evolving within a defined framework of service.  My next blog with discuss the administrative role an Architect plays during the construction phase.