The Contractor’s Estimate - First Development
Our contractor did a good job pricing this new preliminary design discussed in our last post. He provided us with a 31 page estimate with the detail we needed to fully analyze this pricing. We couldn’t afford to get this wrong and have to go back to the bank a third time.
The Numbers
The contractor’s estimate came to $1,073,514. Using 4,164 of heated square feet, this equated to $258/SF. We knew we would be over on raw square footage. Now we were also more than 25% higher on price per square foot. When it rains, it pours. The contractor explained that our unheated to heated square foot ratio was way out of whack. We had tremendous amount of outside space in covered and screened porches and decks. We had almost $7.00/SF in just the fireplaces. Then the high end finishes and materials were also driving the costs higher than normal.
Here’s the breakdown of the estimate:
- Permits $2,100
- Foundations $76,600
- Framing $92,000
- Exterior Windows and Doors $75,200
- Electrical $23,000
- Plumbing $36,210
- HVAC $21,000
- Fireplaces $28,000
- Roofing $47,150
- Insulation and Drywall $22,000
- Exterior Veneer $140,600
- Cabinetry and Countertops $47,500
- Interior Trim and Stairs $79,000
- Floor Covering $24,860
- Tile and Ceramics $13,000
- Interior Finishes $48,365
- Door and Closet Hardware $8,500
- Bath Hardware $4,000
- Appliances $18,350
- Site Improvements $49,000
- Exterior Areas and Finishes $13,500
- Specialty Systems $4,050
- Construction Clean Up $7,000
- Insurance $5,000
- Jobsite Facilities $2,700
- Misc. Equipment and Escalation $13,500
- Supervision $23,500
- Contingency $21,936
- Overhead and Profit $125,893
- Total $1,073,514
Importance of an Estimate Review
We went through this estimate line item by line item. This is a laborious process, but is the only way to understand what is really in the numbers. Areas where the contractor added contingency because he wasn’t sure of the details, we made firm assumptions and removed contingency. Areas where he didn’t have quotes and estimated the costs himself, we reviewed and agreed on realistic numbers. At the end of the day, we agreed on a lump sum price for this work of $1,037,570. Lesson learned - Require a detailed, line item estimate and spend the time required to review it. This review saved us $35,944. That is real money in anyone’s pocket.
Next step is to re-run our financial model with this better information and see if we can still make this real estate development work.
[…] the work is for this payment period and the amount due on each work item for this pay period. The estimate listing in this previous post is typical of the work items that may be on a payment application. The AIA has a payment application […]
[…] per SF was determined by interviewing a number of builders. This cost had also gone up since we first contracted the construction. The aggravation factor was determined by calculating what a construction management firm would […]