How to Cut House Building Costs
In today's economy, cutting costs is a central element of survival for any business or household. In particular, those in residential real-estate development have been exposed to a rough market. Few people are buying homes; those who are will only do so if presented with a low price point. For a housing developer to reduce prices, they must first reduce costs---the largest of which are building costs.
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Instructions
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1
Read and understand the current house design. Before any cost-cutting measures can be taken, you must first understand what you intend to build. Read through the plan set, take particular notice of finishes (such as counter tops, cabinetry, flooring). Engage the architect if you have questions as to why a particular finish or design was used.
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2
Determine a basis cost for the project. Obtain pricing based on the original house design. Send your plans to various contractors to obtain their quotes. It would be best to ask three contractors for pricing and average the three costs to determine your basis cost. The basis cost will be used to measure how much you save.
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3
Determine what substitutions can be made without affecting function. Ask your architect for recommendations of less costly materials. For example, instead of marble counters, you can use laminate (they serve the same function but cost less than half the price). Make a list of all substitutions and ask all contractors to re-price the drawings based on the new specifications. Average these new quotes to obtain the revised pricing.
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4
Compare your original pricing with your revised pricing (based on the substitutions). When you subtract the revised cost from the original cost, you are left with the amount of savings. Determine whether the savings are sufficient or if you will require additional cost cuts. Typically, a 20 percent or more savings is substantial.
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5
Determine elements you can live without. If the savings from substitutions were not sufficient, work with the contractor to eliminate elements from your home. For example, you might want to eliminate an extra bathroom or reduce the garage space to further reduce costs. Once all eliminations have been determined, send the revised plan set back to all contractors for a new round of pricing. Once the new pricing is complete, repeat Step 4 to determine cost savings.
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Tips & Warnings
You will typically achieve the best price saves of the cost-cutting exercise if performed before construction has began and before you have contracted a contractor.
