The Process of Building a Custom Home: Part I

The process of building one-of-a-kind custom structures contains many pitfalls that can derail the project. There are too many bad experiences due to budgets being overrun and delayed completion. However, with the proper controls and an informed plan, building a home can be a series of predictable, controlled activities from the start of design all the way through to an enjoyable first night at your new home. The key is to form the right team to work for you, including the owner’s project manager.

This Custom Home Building series is a Q&A to answer many of your preliminary questions about selecting a designer and builder, setting a budget, and creating a construction timetable. These are true wherever you build, and I’ve included some details specific to homes in the San Francisco Bay Area.

Developing a Budget and Making Sure it Sticks

Which should I pick first, the designer or the builder?

Create a team to work on your behalf. First hire an owner’s project manager (OPM), that you trust and feel comfortable with. That person will become your trusted ally to help you choose the design team and building team best suited for your particular wants and needs.

Should I hire a design-build firm?

In places where design styles are similar, and sites are not too challenging, this can be a good option. Subdivisions where homes are fairly similar to each other tend to be (but are not always) easier for this option.

A team that includes an architect and a separate builder is more prevalent where design styles are varied, architecture is more adventurous, and/or building sites are more challenging. This is often the case for homes in Tiburon, Belvedere, Sausalito, and also along the coast in Big Sur, where building sites are more complex.

Start with budget before design

The wants and dreams of the owners and the design of the architect will soon bump up against the budget limit. This is where you want to give your OPM the authority to be the “guardian of the budget.” The earlier your OPM is given a contributing role as part of the team, the more influence he can have on the cost outcome. Make it his role to compare the design evolutions against the budget. A thorough “get real” meeting with the entire team should take place and the budget total should be agreed upon.

All projects are driven by cost considerations, whether it is a $250 per foot residence or a $1500 per foot castle.

The earlier costs are identified and a realistic target budget established, the better the chance for a smooth process. Initially, square foot costs can be useful as a guideline for the cost. However, line item budgets eventually need to be developed. After all, you don’t compare the price of a Mercedes to a mid-grade Chevy by comparing the cost per pound!

  • Between 80 and 90 % of the project cost is determined by the complexity of the design. The OPM will ensure the design is developing within a realistic budget.
  • Typical factors in a real budget
  • The challenges and nature of the building site
  • The size in square feet of the envisioned structure
  • The cost of the design including all outside consultants such as engineers
  • The choice of products such as windows
  • The complexity of the structure
  • The amount of heroic engineering
  • The envisioned quality of finish (using other homes and photos as samples helps)
  • The builder’s fee
  • Site costs, such as landscaping and bringing in utilities
  • Permits and hook-up fees for utilities

Ask for a written set of guidelines prepared by the OPM that includes clear responsibilities and accountability for each member of the team, including the owners, leading to a guarantee of a realistic cost that is within the previously agreed upon budget.

Construction project manager owners representative marin - 49

Are the horror stories true that many projects are way over budget?

It is true that a huge percentage of dream home designs are significantly over the desired budget. Perhaps as many as 70% of designs are over budget, often by as much as 30% in cost. Even in luxury homes, budgets are a big consideration.

Usually, when the budget is missed, the next step is a harrowing process of “chopping things out” of the desired design, as well as compromising with a lower level of quality in products and finishes.

The trouble is, once the dream is visualized it is hard to imagine doing without. What typically happens is these items find their way back into the project as change orders during construction, which is much more costly in time and money.

Sustainable home features

The “chop” stage is, unfortunately, where green building features usually get eliminated, though that doesn’t need to be the case. It is possible to have a green home and stay within budget if the plans are well coordinated from the start to include energy and water efficiency designs and features.

It’s also short-sighted to eliminate eco home designs, because they often pay for themselves over time. An integrated approach to design and material selection can result in fewer materials consumed, higher performance over time, and stunning design.
How do I avoid the mess of losing synergy between designer and builder?
A key ingredient in pre-construction is value engineering–researching alternative methods and products that attain the design intent. This is one of the OPM’s primary functions.

Overall, hiring people who will act as a team and making them accountable is the most important choice you will make and can preempt most troubling scenarios.