How to Build a Home: Step 8, Finalize Plans
In step eight of our How to Build a Home blog series, we want to finalize our plans and specifications. Leading up to this point, we’ve determined out overall budget, located and purchased a lot, selected a house plan, determined a rough cost to build, and setup a construction loan. Now we are ready to finalize the plan details so we can get one step closer to your dream.
Finalize Plans and Specifications
At this stage of the home building process, we are close to sending out the bid packages. These bid packages, including the house plans, specifications, bid sheets, and subcontractor information sheet, will be used by the suppliers and subcontractors to determine costs to perform their particular activity. Within that package you will give each vendor a bid sheet telling them how to break down their price. This will allow you to easily compare pricing from one company to the next so you can choose the best price. If you haven’t checked out our bid sheets, stop by our ESTORE when you get a chance…these will save you big money and time when remodeling or building a new home.
So before you send the bid packages out for pricing to the subcontractors that will build your home, you want to make certain the plans and specifications are complete. When we say plans, we are talking about your house plans. You want to take a hard look at them to make sure every detail is how you want it. From room and door sizes to window locations, make sure everything is just right. The same goes for your specifications which include things like roofing material, door makes and models, casing, railings…etc. You want to take the time now to really nail down the exact items that will go into the home.
By making all of your changes now, you will save yourself a great deal of money. Your vendors will give you pricing based on the plans and specifications you give them. If you don’t give them the correct information up front, the pricing will be wrong. But the worst part is, you will give them another chance later on to raise their price. Remember, each subcontractor and supplier submitted a bid for your project knowing they were competing against other companies. Once you have selected the companies to work with, you will go through some pain in order to change them. The pain includes extra work to set up new contracts, insurance, determining value of work already put in place…etc. And the vendors know this. So making changes during construction cracks the door for them to raise pricing.
Nobody likes to remodel a new home that is being built. When you make changes to completed work, that is exactly what you are doing. Cutting holes in newly built walls…replacing windows and doors…relocating interior walls…these are all possible in-process changes. Not only will they cost you big money, but they will also create aggravation for your trades and suppliers.
Whenever a change is made, the plan must be changed and the permit updated. This can create big time delays in your schedule. And if the products you are changing are not in stock, you will experience additional delays when ordering. As we mentioned in several other articles, time is money in your schedule. You will be paying overhead costs for portable toilets, construction loan interest, utilities,…etc so each additional day added to your schedule is expensive. We have estimated the cost per day to carry the average home under construction is about $100 (ball park number…averaged over the life of the typical project).
Don’f forget, your construction loan will be based on the initial budget you put together. When you make changes during construction, your initial budget will go up. This can get you into real trouble as your loan will be fixed at the original amount. Do you have the cash to make up the difference? And don’t forget, your construction loan has a fixed time frame. If you don’t finish on time, you could have problems with the lender.
Stay tuned to the Armchair Builder blog as we will continue step by step through the construction of your new dream home.