HOW TO SAVE ON BUILDING COSTS WITHOUT SACRIFICING QUALITY
Every home builder has been there. Poring over plans and estimates, trying to figure out how to cut 10% off a build project without compromising the quality that their reputation is built on. The go-to question always seems to be the same, “What are you willing to give up?” But is this really the right question?
In a recent The Build Show Q&A webinar featuring host Matt Risinger and Paul Evans, VP of Millwork and Engineering at Builders FirstSource, the two offered creative and effective solutions for cutting costs from a project and examined the concept of value-engineering.
WHAT IS VALUE ENGINEERING?
Value engineering in construction is generally defined as an analysis of building components, materials, techniques, and physical and aesthetic attributes in order to deliver the same essential functionality at the lowest cost. In construction, this takes place pre-build during the design phase, and relies upon builders, providers and subcontractors to stay within the agreed-upon costs.
While some people focus only on material selection when they think of value engineering, there are many other, better approaches to managing your build costs. Evans said he hates the term because it’s often associated with building something cheaper instead of building something differently. He said, "True value engineering means ‘ Let's find a different way of doing that.'"
In fact, Matt Risinger cautions against skimping on critical materials such as roofing, waterproof sheeting or windows that would damage the ultimate comfort and quality of the finished home and therefore, your reputation as a builder. So where can you save?
Risinger and Evans recommend looking at four different areas of your build plan: square footage, architectural design, smarter substitutions and advanced framing.
Certain material substitutions do make sense for your bottom line without sacrificing quality. For instance, are you paying too much for your plumbing package simply based on brand name, as Risinger suggests happens often, or is there a medium-priced option that works as well, if not better?
Countertop selections, cabinetry and tiles may have equally beautiful, equally functional alternatives – or perhaps the most expensive choices can be used in more limited quantities, such as accents in areas of the home where they deliver the most impact. While you never want to skimp on millwork details that lend excitement and sophistication to a home, Evans recommends that you ask your millwork salesperson if there aren’t options available that look similar to an original choice but that may cost less.
Substitutions like these help trim build costs without compromising quality, aesthetics or customer satisfaction.
An example of this that Risinger and Evans discuss is Builders FirstSource’s READY-FRAME® option. In this system, lumber is cut based on the plans you submit, Smart Bundled®, labeled and shipped to the jobsite – ready for your framers to assemble with less skilled labor needed.
While this type of method may look more expensive upfront, “look how much you’re saving on the trash side, look how much you’re saving on the labor side,” Evans points out, “because that framer is out of that house 30% faster.”
Matt Risinger points out another advantage: “One thing I like about READY-FRAME® is that you build the house on the computer so you actually see the physical sticks, and you’re able to go, wait a minute, why is there a header on a non-load-bearing gable, right? You start making enough of those changes and all of a sudden, you’ve built that house for less money and no one knows any different.”
Using advanced technology to identify construction conflicts pre-build helps ensure that you get everything right the first time, without delays or blown budgets after you’re already on the job.
So, going back to that question of what you’re willing to give up? “You’ve given up nothing,” Evans points out. “It’s actually built better now.”
Another way to potentially streamline costs is to look at highly customized or overly complicated features of the home design, and especially those features that use expensive materials. For example, does a home have too many needless elevations? Could the design be simplified by making it more level? Could you implement shake shingles in the gable so the bricklayer’s façade doesn’t go all the way up to the roof?
Simplifying architectural designs can actually improve the elegance of a home, while reducing costs in ways that clients won’t miss.
One clever work-around is that contractor estimates are generally based on interior square footage. If you’re building homes in warmer climates, consider replacing interior square footage with large outdoor decks or patios, or even elegant and airy central courtyards, to maintain the overall living space. This trims the on-paper square footage and thus, your overall build cost.
SAVE MORE, SACRIFICE LESS
There will always be times when customers or circumstances demand more than 10% off your build cost quote, and those are moments when Risinger advises turning the question back toward the customer: what are they are willing to give up? Sometimes you can temporize by building a media room that’s not fully equipped with high-end sound systems yet, but has the potential to be in the future.
When your goal is to shave 10% off your build costs, though, don’t assume you have to give anything up. With some creative reimagining, smarter sourcing, and the advantage of advanced framing technologies, you can build better homes at a better cost, perhaps even faster than expected.
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