How to Estimate Construction Costs for a New Home

The cost of building a new home doesn't have to be a mystery. Break it down into its components to estimate how much it will cost you. Factor in everything, such as labor, material and any possible license/permit fees. It's better to generous in your calculations rather than coming up short in the end.

Difficulty: Moderate

Instructions

1. Obtain a house plan for your new home.

2. Decide what types of materials you intend to use (think of flooring, windows, roofing, the frame, siding) and get prices from supply houses.

3. Decide how many contractors you want to work with. You can hire a single firm (a general contractor) to build the entire project or you can subcontract the work out to the various trade specialists such as masons, carpenters, roofers and electricians, acting as your own general contractor.

4. Get prices from each contractor for the work required. If you're using a general contractor, this figure will be substantially equal to the total cost.

5. Add the costs quoted by contractors to the prices you obtained for materials not included in the contractors' prices to generate the total construction cost.

6. Add the costs of building permit fees, architectural fees, insurance, financing fees and legal costs to come up with the total expense of building the house.

Tips & Warnings

• The trade specialists required for most home construction are (in roughly chronological order): excavator, mason, carpenter, roofer, siding contractor, plumber, electrician, heating/AC contractor, insulator, drywall installer, finish carpenter and painter.
• Acting as your own general contractor can allow you to save considerably on construction costs, but be advised that hiring and supervising subcontractors is a difficult and tricky project. Be honest with yourself about your ability, knowledge and available time before undertaking this task.

[aeelrod]

on 1/9/2007 Or the other left out option is hiring an architect if you care about quality and sticking to a timeline. While it may cost a bit more, the architect can make sure you get what you deserve and don't get stuck with a house you don't like.

on 11/22/2005 I did it myself and it worked out fine. My local credit union gave me an equity builders loan, and the building supply company gave me an account with a contractor's discount. I ordered most of the materials myself, so I knew I was getting good quality materials. The local subcontractors were good, and appreciated that I wasn't giving them cheap materials to work with. The materials were all written into the estimate when the subcontractor supplied them. My advice would be to get every smidgy little thing down on paper, verbal promises count for nothing! The municipal building inspector was happy to give advice about the building codes. I was required to sign an agreement as an owner-builder. The agreement stated that I would be responsible, if I choose to sell the house to someone else (I'm in Canada, I guess this kind of program may not be possible in other places). I got a GST rebate on the house construction, too. The best part was - I didn't have to pay somebody else as a general contractor! It wasn't their house, they could have used to building specifications that were cheap and fast. They could have screwed up and walked away.

on 11/22/2005 In your caveat about being your own general contractor in building your own home, you advise that one should be very knowledgable before undertaking the job. Another important consideration is liability. In some states (for example, New York), certain labor laws impose absolute liability upon a GC (or anyone supervising the means and manner of work) for personal injuries sustained to subcontractors and their employees while on the job. However, in New York, owners of single-family homes who do not supervise the means and manner of the construction are not liable. So, if labor laws of a state impose absolute liability, it would behoove a homeowner not to supervise the construction himself, but to to hire a general contractor.

on 11/22/2005 Unless you have enough cash to build your home without financing, you will likely need a general contractor, because most banks won't lend to an owner who wants to act as their own general contractor. Another point to consider is that you will be paying retail or higher prices to your subcontractors if you act as your own general contractor, because those subcontractors know they'll never see you again. Most have regular general contractors they work with, and those are the ones who get the best prices. The bottom line is that you're not likely to save anything, and the project is going to take longer than you think. Any subcontractors you hire will put you last on their priority list. Hire a general contractor and avoid all the headaches.

on 11/22/2005 I used to make my living from estimating building costs. I always saved clients more than I charged them. It may be different in the US, but it's always worth it in the UK. I managed the subcontractor costs as well.