PACIFIC PALISADES CONSTRUCTION COST SAVINGS

For a typical two story custom home project, approximately 90% of the project costs are associated with construction costs. The remaining 10% is associated with architecture and engineering fees.

So when it comes to evaluating a project’s costs, this is the area to focus on, regarding the many line items compromising this cumulative end game price. There are about (26) subcontractor Trades and about (10) material supplier Trades, that add up to (36) project line item ‘costs'.

These ‘costs’, as they are commonly known, are then added up and a general contractor multiplier is used for his fee. On the average, could be a little more or a little less, the general contractor would then add his 20% mark-up to this total. This fee typically covers his overhead and profit. General contractor’s have variations to this model, but we are using a typical fee structure for purposes of this blog.

Therefore let’s assume in this case that the general contractor is working with a cost-plus contract to the property owner/homeowner. As an example, if the home is 4,000 sq. ft. at an estimated $500/sq. ft. for construction ‘costs’, then the total ‘cost’ is $2,000,000. Now he adds his plus 20% or $400,000 general contractor fee on top of the total costs and provides an estimate to the property owner for $2,400,000. This fee covers him for approximately (18) months of construction time.

The ‘costs’ are pretty much fixed, especially if he obtains written bids for the majority of the line items. So the big variable is the $400,000 fee. 

As an alternative to paying this substantial fee and especially if the property owner has possibly done some building in the past or is open to us providing our (35) years of building experience as guidance, we offer a Construction Administration fee for this work. In this case the property owner would be the daily eyes on-site, along with our on-site work at intermittent important milestones throughout the project. 

Our Construction Administration fee for a typical Pacific Palisades new home, is 7.5% of ‘costs’. In this example $2,000,000 x 7.5% = $150,000. So the project cost savings to the property owner is $400,000 - $150,000 = $250,000 in construction mark-up savings to the homeowner. 

Our Construction Administration services would include: bidding out the architectural plans to (36) Trades; negotiating/substituting some of the line item Trade costs to further enhance the property owner’s project savings; negotiate the awarded bidders' contract inclusive of unknown change-order charges during construction; on-site coordination with the property owner at pertinent times throughout the process; quality assurance evaluations; and photographic documentation of the home’s construction processes.

For more information on how we may be able to help you rebuild your new home in the beautiful Pacific Palisades, please start by providing us with basic project information that can be submitted on our Inquiry form on our website.

As a former Palisades Architect resident whom designed and built a new home for my wife and I there, it’s my sincere hope that you are able to rebuild, whether it’s us that helps you or another firm.

Best Always!

Barry R. Shaw AIA, G.C.

BSA Inc. Design & Construction

www.bsadesignbuild.com