What to Expect During Construction: Additional Costs and Unknowns

If you’re up at night fretting over everything that can go wrong during construction, you’re not alone. From permits to contract types to site services, the process is full of unknowns for contractors and owners alike. Understanding and expecting these surprises can put you in control. The guide below will show you how to tackle construction surprises before they surface and help you stay on time and on budget.

Permits

The 2019 national average fee for a residential building permit stands at $1,050. In California the figure is closer to $2,700. That’s why it’s a good idea to ask your builder which permit fees, if any, are included in the construction budget. Most counties require permits for the activities listed below:

  • Demolition
  • Construction of a new dwelling
  • Installation of electrical, mechanical and plumbing systems
  • Installation of solar rooftop systems
  • Building swimming pools, sheds, tall fences and screen rooms

The costs don’t always end with permit fees. Some cases can mandate additional analyses and reviews. For example, building close to an active fault may entail a geological investigation to detect seismic threats. If your site is in a wildfire hazard zone, your plans and materials must meet the State’s Fire Safe Regulations. New construction in a Special Flood Hazard Area needs a Floodway Encroachment permit from the Federal Emergency Management Agency, and must be flood resistant. If any of these circumstances apply to your project, make sure your builder has budgeted for the costs they will incur.

Site Works

Your building’s site can hide many surprises; if you haven’t done your homework, they will surface with the first shovelful of dirt. Soil conditions, utility easements, slopes and site access are the often-overlooked factors that can inflate your budget.

Compaction is a must for sites on disturbed soil. Without it, you may end up with cracked foundations, settled slabs and leaning stairs. Compacting the soil under slabs, footings, driveways and sidewalks will offset the cost of repairing these faults later on.

A high water table can pose several challenges. Soil can cave in during excavation. Mud can seep into the concrete mix and undermine the strength of footings and slabs. Your builder should know the water table depth at your site and allocate funds for dewatering if necessary.

Utility easements under or over the site can limit your building options. You should account for any easements affecting the lot at the design stage, making sure not to plan for any permanent structures or trees over them.

Two methods are popular for building on a slope - cut and fill, and stilt construction. The former entails excavating the slope and/or adding soil to make the ground level. This approach is cumbersome and costly, but practical on slight slopes. The latter method involves placing the lower floor of the home at the top of the slope, and supporting it on sloping walls or columns as the elevation lowers. This method is cheaper than cut-and-fill on moderate-to-steep slopes and affords greater design flexibility. Either way, make sure that your builder accounts for the slope in their estimate.

All too often, site access ends up on the back burner during the planning phase. As a result, crews, equipment and materials can struggle to get to the site within projected timeframes. If the project interferes with public transit or temporarily blocks sidewalks, expect a hefty price tag from your local government. To avoid delays and extra costs caused by poor logistics, ask your builder what their site access plan is ahead of time.

Unknowns In Remodeling

Gauging the existing conditions of a house is hard. Faulty work from the past can deteriorate over time, hidden by drywall and out of your sight. Defects can stay obscured for years, only emerging when you knock down your walls. This difficulty in assessing conditions often exposes remodeling projects to stunning costs. Though the focus of this article is on new construction projects, it’s worth pointing out surprises that often rattle remodelers. These can include:

  • damage to the structure caused by moisture or termites.
  • defective or unpermitted work done in the past
  • rotted drywall
  • asbestos survey and abatement
  • lead-based paint testing and removal
  • knob and tube wiring in bathrooms and kitchens
  • Title 24 compliance issues with lighting, HVAC systems and water heaters

These complications can have a serious impact on your budget and schedule. For more details, read our post on unexpected costs in remodeling.

Exclusions

Remember those hardwood floors in your builder’s showroom? Unless you include them in your contract, the new home will probably come with carpets. The same goes for window coverings, light fittings, mirrors, kitchen cabinets, and… driveways. The pretty granite countertop? If you didn’t scribble it into your contract, it’s staying in the showroom too, and you’re getting the laminate impostor.

The moral here is this: showrooms feature premium products. These are seldom included in the base price of your house. To avoid change orders during construction (say, if you want your driveway paved or change your mind about that eggshell gray everywhere), you need to know what your builder is including in the contract. Review, study and challenge it, and ask questions if something seems off. Should you want to upgrade a finish or a fixture, it’s better to plan for it before construction starts.

Contracts

The three common contracts in residential construction are fixed-price, cost-plus and guaranteed maximum price. Choosing your contract can create a dilemma between flexibility and comfort. Whether you’re concerned about unplanned expenses or making easy changes during construction, find out what types of contracts your builder offers and how they work.

If you are confident that the stipulated methods, materials and finishes align with your intentions, a fixed-price contract can offer you peace of mind. If the project blows its budget, the builder is responsible for the difference. That said, if you omit or misunderstand a clause and want to make a change during construction, you are on the hook for extra costs.

A cost-plus contract can afford more flexibility to you and your builder. You pay the cost of labor and materials, plus a prearranged fee. If you are open to changes during construction, this contract is right for you; just beware that you will have to cover any unplanned expenses. Higher costs also mean a larger fee for the builder, giving little incentive to look for savings during construction.

A guaranteed maximum price contract works like a cost-plus, but with a limit on the contractor’s fee. This contract type balances flexibility with an upper limit, and can make the owner-contractor relationship less adversarial.

How Design Everest Can Help

Construction is a risky process with many variables. We know just how nerve-wracking it can be. With over 3,000 projects under our belt, we have learned how to prepare for surprises in construction. Whether you are building or remodeling, our team of experts is ready to guide you through the project. Call us at (888) 311-3015 for a FREE consultation and quote.


Sources:
[1] http://buildingincalifornia.com/flood-zones/
[2] https://www.concreteconstruction.net/how-to/materials/soil-compaction-in-residential-construction_o
[3] http://www.fire.ca.gov/fire_prevention/fire_prevention_wildland_codes
[4] https://www.homeadvisor.com/cost/architects-and-engineers/get-a-building-permit/
[5] https://www.thespruce.com/building-on-an-easement-4125929