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Estimating Construction Costs

The greatest building design is meaningless if it’s not buildable. So, from the beginning and as the design evolves, paying close attention to the budget and the cost of construction is critical for a successful project.

The best way I know to do this is by creating a collaboration between the Owner, a qualified Builder and the Architect. This approach develops costing information based on the different phases of design and becomes more exact as the design and drawings become more specific. 

In order to estimate costs at the level needed to sign a fixed-price construction contract, a Builder will need complete, permit-ready construction drawings and specifications. However, at the very beginning of a project, it may not yet be clear if investing in those high-level construction documents makes financial sense. This is why I recommend several different stages of design and drawings that become more specific at each stage, following cost estimate feedback from the Builder. This is more like walking into the water from the shallow end rather than diving in head first. 

At the earliest stage of a project, there may be no more information available other than a rough budget and a general idea of project size and type of construction. This is an ideal time to have a qualified Builder on board who can provide a rough, $-per-square foot calculation based on average, local construction costs. This is a very rough approach but is also a good way to see if the project concept and budget are compatible. And if not, what may have to change to make the project viable.  

As you’ll see in my Outline of Architectural Services, we provide four phases of professional services where the first three relate to design and drawings. In that outline, I describe the scope of each phase and how they correspond with the preliminary and eventually final construction cost estimating. 

The interconnected levels of design and drawings begin with design Programming and Conceptual Design, then increase in specificity through the Schematic Design, Design Development and finally, Construction Documents phases. At the completion of each phase, a Builder can provide feedback, constructive criticism and cost estimating that reflects the level of information provided at each step.

With this approach, in the early stages of design, we can confirm if we’re generally on course for meeting the budget and make any necessary changes before moving forward with the next, more detailed level of design and drawings. This process is longer than completing Construction Documents right away but consider the potential predicament of seeing the construction cost estimate for the first time only after all the drawings are completed. In my experience, it’s far better to take more time to regularly check the pulse of the project and adjust the design as needed as early as possible so that the Construction Documents are buildable within the budget. 

Another important aspect to consider is how volatile the construction market may be during the time of design and cost estimating. Historically, there have been extended periods of time when construction costs and their inevitable increases were fairly predictable. Recently, the Covid pandemic changed that dramatically so that during that time, any predictability in many costs from materials, labor and availability disappeared. This problem is gradually settling but it continues to be an issue that needs close attention.

Finally, a word about working with your Builder. It’s not necessary to contract for the actual construction of your project during the design phases in order to have the cost estimating described above. Some Builders will charge a fee for their estimating time while others won’t or they may fold it in with the cost of construction if the project reaches contracting. I recommend first identifying several Builders, studying their website, reviews and referrals and then meeting with at least two or three to discuss the project and see how the “chemistry” feels. 

Once you find a Builder and you’re both comfortable working with each other, then we will have the team in place to manage your budget and help guide the design. And by the end of this process, your Builder will have a very high level of understanding the project and you’ll have established a working relationship which usually results in the most competitive price and a solid Owner-Builder contract.