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  • Writer's pictureKeith Groninger

Understanding Construction Costs and Estimates

How much does it cost to build a new custom home in Winter Park, Orlando and Central Florida?

How much does it cost to build a new home? This is the question I often hear in the first meeting with a new prospective customer. Understandably, it’s a crucial question that most buyers want to know as soon as possible. If only there was a simple answer. 

Understanding construction costs really isn’t that complex but the way it can be presented can be quite confusing. There are a number of different types of estimates with varying degrees of accuracy and purpose. Starting with the least accurate, here's how we see it.

Ballpark Estimates can be used to compare other projects. They provide a large macro view of the budget with inaccuracy that can exceed $100,000. A ballpark estimate opens the conversation to see if the anticipated cost is within an expected range. This conversation should include discussions about the design and size of the home, and the amenities and features desired. This judgment call budget should not be used to make a decision about whether or not to use a particular builder. 

Cost-Per-Square-Foot is the universal language and is prevalent amongst buyers, builders and real estate agents. Property values cause additional confusion because the same size home in two different locations can vary wildly in price. Understanding what’s included in the cost-per-square-foot price is the biggest obstacle that limits the accuracy. Is the cost-per-square-foot all-inclusive or does it only include the “standard” house without options and upgrades? Make sure you understand everything that’s included and everything that is not. Be cautious selecting a builder based on information that may be incomplete or unrealistic.

A Conceptual Budget is the first estimate with tangible quantities. We can provide a list in the form of a spreadsheet that shows everything that’s included and everything that is not. Frequently we provide this before moving forward with the home design and drawings. Of course we make many assumptions but you will have a tool to start refining the scope of the project and be able to make some decisions. We can use this budget to smooth out the design process and prevent expensive re-designs.

A Preliminary Estimate can be started once preliminary drawings are available. Sometimes we will perform several preliminary estimates during the design process. This is a thorough estimate that relies on historic cost records from completed homes and still includes some assumptions but the accuracy is greatly improved. Our goal is to manage the design and budgeting process to meet your budget goals.

Specifications are the written descriptions of everything included in the home. Drawings by themselves do not provide enough information to allow the trade contractors and material suppliers to provide accurate bids for their work. A good set of specifications should address every component, product, system and installation technique required to build the home.

A Detailed Estimate along with Specifications allow us to start requesting bids from the trades and suppliers. A detailed estimate should be performed before entering into a construction contract. The only way to have certainty about cost and timeline is to account for all the details before starting construction. We share all of the project information with our customers. Our estimating spreadsheet has evolved and improved constantly over the 30+ years we have been in business. You should find that the detail and comprehension provide a good level of comfort and understanding.

I’ve lost projects to other builders that presented unrealistic budgets to the owner. In my heart I know there’s no way the home could be built for what the other builder proposed. Most of my prospective buyers will ask how much it’s going to cost within the first two meetings. They will ask even before the home has been designed.

Our entire design-build process is full of transparency and designed to remove uncertainty and establish a team approach to the management of your project. We share everything openly, so please don’t hesitate to ask if you have any questions.

Some additional articles that compliment this topic:

Little is more meaningful and personal than a home, and the experience of designing and building your own home should be rewarding and enjoyable. Choosing a builder is difficult. The process of designing and building a home involves numerous decisions about components, systems and services selected from criteria that includes price, quality, appearance and performance. How can you possibly understand everything unless the builder is willing to share all of the information?

Allow us to introduce you to The GCH Way of building your next home. Please let us know if you have any questions.  Keith Groninger

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