BLOG.TIMBERDALEHOMES.COM

Connecticut Residential Energy Costs...1 – The Situation

2011-12-01T21:20:55Z

Homeowners in Connecticut need to come to terms with the realities of local energy costs. The fact is that across the board Connecticut homeowners pay energy prices that are at-or-near the top price levels in the United States. I don’t mean just high electricity prices, I mean the prices of fuels to heat our homes and fuels to power our automobiles. Connecticut homeowners need to understand the overall energy picture in the State in order to make better decisions about taking near-term energy conservation measures and in making long-term energy conservation investments in existing building retrofits and new construction building components.

The following bar graph from data provided by U.S. Energy Information Agency (EIA) shows the average retail price of total residential energy purchased per million Btu’s by households for each state. (Btu's is used as a common measure allowing us to compare/combine quantities of fuel that have different volume measures and energy outputs. For example, 1 MCF (one thousand cubic feet) of natural gas has about 1,020,000 Btu's which is the same energy output as approximately 7.4 gallons of fuel oil, which has 138,500 Btu's per gallon.) The price level reflects the average energy cost based on the actual mix of energy sources for home use consumed by the residents of each state. The energy sources include: electricity, home heating fuel oil, natural gas, LPG, coal, kerosene and biomass (wood). The data is for 2009, the latest year available.

At $28.70 per million Btu's Connecticut has the third highest residential energy cost among the lower 48 states for the mix of energy sources consumed by the average CT household. Florida is the highest, paying a little over $35.00 per million Btu’s, which is a result of Florida’s residential energy mix being heavily weighted by electricity. Florida is very unusual in its dependency on expensive electric energy for both summer cooling and winter heating -- approximately 90 percent of Florida households are heated electrically.

Connecticut is 28% higher than the national average residential energy cost of $22.13 per MM Btu’s and nearly 70% higher than the lowest quartile of states.

While the above chart does not include motor fuels consumed by residents it is useful to note that Connecticut residents are further burdened by shouldering the highest annual household auto expense (excluding financing costs) in the United States (lower 48.) Consider the following chart with inputs provided by Bundle, from analysis of actual VISA and MasterCard spending data for 2009 (latest available.)

The average household in CT spends $7,652 per year on automobile fuel, maintenance and other non-financial expenditures. This is approximately 40% higher than the national average and 64% higher than the states in the lower quartile.

One response may be that while Connecticut residents are burdened by the highest energy costs in America, the State benefits from the highest per capita income in the United States to offset these higher costs. The problem with this logic is that there is great income disparity throughout the State; although New Canaan has one of the highest per capita incomes in America ($85,459,) Hartford is one of ten cities with the lowest per capita income in America ($13,428.) As with Bridgeport, New Haven and other cities in the state, Hartford is surrounded by wealthier suburbs. High energy prices are blind to this income disparity and the burden is disproportionately felt by the middle and lower income households.

My next blog on Connecticut’s residential energy costs will try to shed some light on the drivers of our relatively high costs. My final blog will discuss the implications for homeowners in the State.

Budgeting for Residential Construction...8 -- Size & Shape Trade-offs

2011-11-17T22:39:00Z

In the humorous 1948 film Mr. Blandings Builds His Dream House, Jim Blandings (Carey Grant) and his wife Muriel (Myrna Loy) meet with their architect Henry Simms to review preliminary design drawings. With pencils in hand they pour themselves into the drawings adding rooms and stretching the footprint in many directions. Poor Simms finally calls a halt to the session telling his clients that he will sort it all out, including budget impact. At their next meeting the hapless Blandings are shocked to discover that their scribbles have nearly doubled the budget. By the end of the movie Blandings’ best friend (played by Melvyn Douglas) declares “… maybe there are some things that you should buy with your heart not your head, perhaps they are the most important things.” Needless to say, Jim and Muriel had difficulty making ‘size’ trade-offs in the design of their new home. It was as difficult in 1948 (when new homes only cost $15,000) as it is today.

According to the NAHB, when the Blandings built their house in 1950 the average new home size was 983 square feet. In 2010 the Census Bureau reports that the average new home built in the northeast is over 2 ½ times that size -- about 2,600 square feet.

The notion that bigger is better in building new homes was addressed head on by Sarah Susanka in her ground breaking book The Not So Big House. In her book Susanka defines a “not so big house” as approximately a third smaller than the owner’s original size goal but about the same price as the original budget. The idea is to make conscious tradeoffs between quality and size (fixed budget.) A “not so big house” more intelligently configures the space, better matches it to owner needs/lifestyle and more appropriately finishes the spaces in a way that each room has substance and style.

Timberdale Homes is familiar with these notions and received a HOBI award in 2011 from the Homebuilders and Remodelers Association of Connecticut for the “Best Not So Big House Remodel” in the state. The small, 1,000 sq. ft. house located in Ridgefield exudes quality and custom detailing normally seen only in larger luxury homes. Those of us who have lived in larger homes recognize that daily living is focused in a relatively small amount of space – the kitchen, dining nook, family room, bedroom and bath. The Ridgefield house takes a laser focus on these spaces incorporating design, layout and finishes that are fully customized to meet the owner’s needs. It’s not uncommon for somebody entering the house to declare: “This house is all the space I would need to live!”

There are three broad dimensions of the size/shape trade-off that should be considered – footprint, volume/roof and outdoor space.

Usually homeowners focus on the footprint dimension exclusively. The most common question that I am asked by homeowners is: “How much will the construction cost per square foot?” My answer is usually: “It depends…” A simple illustration shows why my response is appropriate. Consider two simple footprints, both 1,600 square feet:

Footprint “A” has 160 linear feet of wall while footprint “B” has 200 linear feet of wall. Clearly these two structures will have different costs to build and, all other things being equal, will have different costs per square foot. Also, it should be clear from this illustration that a simple square is the least cost footprint to build. As the footprint becomes elongated with various jogs and incorporates complex geometric patterns (such as round and/or polygon shapes) the building cost goes up for the same amount of square feet.

The second dimension of the size/shape tradeoff is volume/roof. This refers to the design elements that occur above the footprint which can have an equally dramatic impact on costs. For example, a common volume-related design element is room height, such as a cathedral ceiling. Cathedral ceilings add to costs in a number of ways, including: special accommodations for mechanical systems -- perhaps requiring scissor trusses; higher insulation and finish costs due to the greater amount of ceiling surface; additional labor costs to erect and move the scaffolding required to build and finish the structure, etc.

As the footprint becomes more complex and the interior spaces assume different undulating shapes, the roof is inevitably impacted. Complex roofs consume a considerable amount of large-dimension framing material and are very time consuming to frame properly. Roofing material is also an expensive finish on a per square foot basis (in CT roofing costs are $2.50 per sq ft. for basic asphalt roofing to well over $10.00 per sq. ft. for high-end roofing materials.) Hence as the roof becomes more complex building costs will inevitably rise.

A final dimension of size/shape that is often ignored in trade-off discussions is outdoor spaces. Sometimes outdoor spaces are not adequately factored into the initial overall space requirements planning. In this situation, as the homeowner considers size/space tradeoffs, the addition of outdoor spaces in the plan can become a cost effective way to trade-off expensive interior space requirements with less costly outdoor space living options. Although seasonal, outdoor spaces expand the living area at a time of the year when the household is most active and contracts it when occupants naturally gravitate toward the inner living core of the house.

On the flip side, sometimes outdoor spaces are designed into the house plan but ignored in the "bricks & mortar" house construction budget discussions -- deferred as part of the post-construction landscape planning and budget. Later, as the project progresses, it rears its ugly head when it becomes very evident that the outdoor spaces are an extension of the adjacent indoor spaces, requiring an equal amount of attention (and additional money) in finish detailing. In the words of a very problematic presidential candidate....oops!

Budgeting for Residential Construction...7 -- Green Building

2011-11-09T08:59:38Z

The question of the public’s green commitment has never been more challenged than in the home building arena today. With falling home prices and related declines in real personal wealth it has become more difficult for home owners to allocate investment dollars into green-related construction upgrades and retrofits. In addition, the public’s willingness to invest in green, energy-saving initiatives is heavily influenced by the level of fluctuating energy prices and the availability of enabling state and federal subsidies. As a case on point, it is well documented that the historical demand for photovoltaic panels has been whipsawed by changes in these underlying demand drivers. With recent large discoveries of natural gas and usable shale oil and ever-tightening state and federal budgets, it is easy to imagine that the historical cycles will repeat themselves.

The importance of residential building decisions to the national green agenda is evident when viewed in the context of residential resource consumption and environmental impact. There are over 120 million homes in the United States and according to the DOE the residential sector accounts for 22% of total energy consumed in the nation and 74% of the water. Levels of indoor air pollutants can often be four to five times higher than outdoor levels and the residential sector contributes 21% of U.S. carbon dioxide emissions.

The essence of green building is to construct a home with low environmental impact. Virtually all elements of home construction have environmental consequences, some lasting for decades or longer. In some cases construction decisions impact the macro environment such as decisions about using sustainable materials and energy efficient building components. In other cases the decisions are more micro- environment oriented such as low impact site development, the selection of durable construction components and the choice to build a healthy living environment. In all cases, it requires the home owner to make conscious decisions and budget trade-offs concerning the shade of green to be incorporated into the house design and construction.

Green budget decision making in home building is not always concerned with hard dollar trade-offs. At times the cost is the time required of the homeowner to become informed about the options. As pointed out in my previous blog post on quality trade-off levers, some green decisions, such as lighter framing, can actually be lower cost than the alternative conventional construction method, but they require the builder and homeowner to be sufficiently informed to identify and implement the alternative.

The most difficult green decisions are the initiatives that involve lifestyle and hard dollar tradeoffs. With respect to lifestyle, excessively large homes are generally viewed as contrary to green ideals. Obviously, very large homes consume significantly more resources and energy than a smaller home with the same number of bedrooms. For example, the LEED for Homes Reference Guide points out that a 100% increase in home size yields an increase in annual energy usage of 15% to 50%, and an increase in materials usage of 40% to 90% depending on the design, location and occupants of the home. The LEED guidelines target the square footage for a three bedroom home at 1,900 square feet. This is below the national average for new home construction of approximately 2,350 square feet in 2010 and significantly smaller than the typical three bedroom house being built in affluent Fairfield County, Connecticut today. The good news is that the trend in new home size has been declining in recent years -- largely due to the economy. According to the NAHB this trend is expected to continue with a decline of an additional 10 percent by 2015, to 2,150 square feet.

More complex green building budget tradeoffs occur around building assemblies that impact energy consumption and costs. These assemblies are usually large-ticket budget items with very different efficiency, investment and payback profiles. The green-budget equation asks you to spend more today on a high quality, better performing alternative energy system allowing you to save money over time in reduced fossil fuel consumption while making a significant contribution to a greener environment. The budget dilemma arises over the trade-off between spending more today to do the right thing versus spending less and condemning the home to future inefficiency until the next replacement cycle (usually 20-to-30 years out.)

At the margin, when confronted with the relatively high initial cost of an alternative energy system, homeowners regularly opt out of the green alternative and select a less efficient, polluting conventional system with its much lower initial investment cost. This decision is understandable given the complexity of the problem, where most homeowners must act with insufficient information on the costs, benefits and economics of the alternatives. Also, most residential designers and builders do not take a comprehensive approach to designing home energy systems, resulting in over sized, inefficient and more costly systems. Timberdale Homes’ affiliate company, Green Energy Systems, is focused in part on helping homeowners and small businesses deal with the complexities of alternative energy system tradeoff decisions and investment.

Incorporating green building into new home construction and major renovation project budgets involves a systematic assessment of the numerous green-related inputs, methods and guidelines that can impact building assembly choices. These factors impact all three of the major elements of the Trade-off Triangle (Budget, Size & Shape and Quality.) Effective homeowner decision making is dependent on access to a design/build team that is knowledgeable and experienced in green construction and capable of sorting out the costs/benefits of the various alternatives.

Budgeting for Residential Construction...6 -- Quality Trade-off Levers

2011-10-24T17:18:17Z

When I see a home that exudes quality I feel an instinctual sense of grace in its presence. I don’t think people need a lot of education on quality, when they see it they know it. I’m not sure why that is the case. It may be that we all naturally share an inherent sense of order and harmony that when properly translated in the physical world evokes immediate recognition and appreciation. I think the ability to pull that off successfully is one of the greatest rewards of home building for both the builder and the homeowner.

Obviously, quality doesn’t just happen. It’s the result of many hours of thoughtful reflection and the investment of significant energy in design, materials selection and execution. It is also the result of a homeowner’s willingness to invest financial and emotional capital in the endeavor. The most challenging home construction budget trade-off task for most homeowners is to come to terms with the level and type of quality they want to build into their house given available financial resources.

New home construction and renovations are essentially a group of building sub-assemblies married together to produce the whole structure. For each sub-assembly, decisions are made concerning the quality level of its construction. At times the decision is made by the homeowner but often it is made by another player in the value chain. A very important role of your General Contractor is to be aware of all of these decisions and to oversee them on your behalf, so the overall quality level desired is achieved. Perhaps one of the most common problems homeowners confront in major home construction projects is the discovery that the builder cut corners or compromised quality to save a few dollars in construction costs.

Even the most basic sub-assembly components are subject to a quality-budget trade-off examination. For example, wall assembly costs can be reduced by using new framing techniques that have the benefit of reducing the quantity of framing material and the labor to assemble it, since fewer parts are being assembled. Depending on your point of view, the lighter framing may or may not be a significant quality trade-off issue. According to industry research the lighter framing does not sacrifice structural integrity (quality) and it has the added bonus of being consistent with the LEED for Homes Materials & Resources Guidelines, so it’s green compatible (a quality plus.) For many people the quality neutral-to-plus trade-off for lower framing costs would be a convincing quality/budget trade-off argument. However, the building trades are very conservative when it comes to adopting new methods. There have been some notable disasters such as urea-formaldehyde insulation, polybutelene pipe, among others, that have made builders slow adopters. Hence, in this case the justifiable (and possibly ill-informed) builder quality concern with structural integrity may trump the other benefits of light framing, leaving the homeowner to pick up the tab, often without their knowledge.

The ability to deliver cost-effective quality requires the builder to possess a range of demanding capabilities that lead to a quality mindset. These capabilities include: a craftsman’s sensibility and appreciation of quality, an up-to-date knowledge of the inputs that create quality, a disciplined process to oversee its execution and, finally, a sense of integrity to deliver it, even at the risk of some financial sacrifice. It’s understandable why quality is difficult to deliver consistently in the building trades, which tend to be production-oriented and cost conscious to a fault.

There are four quality trade-off levers: architecture, materials, detailing and fit & finish.

The architecture lever refers to the form and structure of the various building components. While form deals with aesthetics and complexity, structure addresses how the form is translated into a building component. The wall assembly discussion above is a good example of the architecture-structure trade-off.

The materials lever addresses trade-offs that are made around material aesthetics, performance and availability.

The detailing and fit & finish quality levers deal with trade-offs around the level of finish detail included in the building assembly and the level of craftsmanship that is employed to execute it.

Green building is an important dimension of quality that was alluded to above but not explicitly included in the trade-off levers. My next blog post will discuss how this aspect of building is incorporated into our trade-off thinking. I will also discuss some of the quality levers in more detail.

Budgeting for Residential Construction...5 -- Stretching Dollars

2011-10-19T14:15:13Z

The other avenue for creating more spending power is to increase the productivity of the dollars budgeted -- effectively stretching the dollars. There are two levers for accomplishing this; lowering project overheads and value-engineering the design.

Project overheads are soft-dollar expenses that serve to reduce the amount of capital available for “sticks in the ground” investment. Some of the overhead expenses are controllable, others are not. Perhaps the most significant controllable overhead items managed by homeowners are professional fees -- namely project management fees and design fees.

An experienced general contractor normally charges around 20 percent of the total construction cost as a management fee. It is not uncommon for a homeowner on a tight budget to manage the project without a general contractor. Depending on the size and complexity of the project, the owner's time availability and the owner's knowledge level, this may be a reasonable course of action. A homeowner acting as his/her own G.C. assumes many risks, such as work completion risks, work quality risks, budgeting risks, scheduling risks and personal stress risks that need to be carefully considered. Some lending institutions are reluctant to invest in projects managed in this way, given the potential pitfalls.

A prominent licensed architect’s fee can amount to 10-to-15 percent of the total hard construction costs. This is a significant number and most homeowners are not willing to invest that level of resources on design; which is the reason that a small percentage (depending on how the number is defined, 2%-to-28%) of homes are custom designed by licensed architects. The typical alternative is to purchase off-the-shelf house plans for a few thousand dollars from various publishing sources, including the National Association of Home Builders (which, by the way, may be designed by a licensed architect.) I believe that much of the homogenization of home design is attributable to this trade-off made by homeowners. There is a remarkable similarity across the plans since they are designed to appeal to as broad an audience as possible. The very important design activities of merging the building's functionality to the owner's needs and of merging the location and site with the building design are completely missing from these plans, often resulting in a home that looks and feels out of place.

Selecting a builder that has both design and build capabilities can be a good intermediate alternative for many homeowners. Bensonwood Homes is an excellent example of a design/build firm that offers true custom home designs with a very reasonable design fee structure. There are a number of reasons behind the operating approach of design/build firms that make them a more cost effective choice. I plan to write a future blog post on this subject.

The second lever for increasing capital productivity is value engineering. When a client makes a specific choice to incorporate a feature into the house design, it is often possible for the design/build team to identify alternative means to execute the design without sacrificing quality. When this process is focused on identifying the least cost approach for delivering the design feature, it is called value engineering. This is one of the major advantages in working with an experienced design/build team.

My next blog post will discuss the trade-off levers in the Quality dimension of the Trade-off Triangle.

Budgeting for Residential Construction...4 -- Sizing & Filling the Budget Bucket

2011-10-15T11:29:01Z

The budget trade-off component of the Triangle deals with the hard dollars available to fund the project. A home owner can create more spending power either by adding dollars to the budget bucket or by stretching the dollars that have already been committed. This blog will discuss the process of defining the size of the budget bucket and some options for filling it up. My next blog will address levers for stretching the designated budget dollars.

The first budgeting task that home owners must address is defining the targeted size of the budget bucket for purposes of bounding the design process. In my experience there are two issues that interfere with specifying a realistic budget target – level of disclosure and exclusion of costs.

Level of disclosure addresses the tendency for home owners to withhold information regarding their true budgetary intentions. This behavior may be a result of a legitimate lack of information on construction costs and a desire to err on the low side. However, often the behavior is based on the misguided belief that the owner is entering into a negotiation and that it is better to play the budgetary “cards” close to his/her chest. In either case the behavior bounds the design process with a false set of constraints that will cause design trade-offs to be triggered that are not relevant.

Exclusion of costs is the sometimes intentional but usually unintentional tendency to ignore or underestimate costs during the early stages of the design process. A good architect or building designer should police this, however without the early involvement of a general contractor to provide a comprehensive budget perspective and grounding of project costs, it is likely that the early budget target and subsequent estimate will be incomplete and inaccurate. For example, some of the components of CSI Division One and Division Two costs (General Requirements and Site Work) are often unintentionally excluded from the design budget -- landscaping costs are almost always under specified. In some cases budget items are intentionally excluded in order to move the design process along. I’ve seen this happen around HVAC costs where the owner wants to consider a range of complex alternative energy options. This approach always leads to surprises down the road that can trigger last minute trade-offs which could have been better anticipated with a more comprehensive and disciplined budgeting process early on.

Once the budget is defined, the design process will inevitably lead in directions that will compromise the designated amount. The simplest trade-off to make is to increase the amount of funding for the project by reaching deeper into your pockets. Obviously, for most home owners there is a hard limit to this type of funding. At times the objectives of the project change so there is no other alternative. This happened to Timberdale a few years ago when the economy went into a tailspin. The owner’s original renovation objective was a limited fix up of the home to meet near-term family needs with an eventual sale of the home to downsize. When the real estate crash occurred, the home owner made the decision to increase the budget to make the house more suitable for long-term occupancy in order to ride out the economic storm.

There are two other funding levers commonly used by homeowners to add money to the budget bucket. One is to phase the project over time. As more financial resources become available in the future, the investment level can be increased over time to add space and features that were postponed in the initial construction phase. The trick to making this work is to design the project at the outset for progressive construction. There are at least three benefits to this early planning:

The designer can help the homeowner decide which spaces are best for building now and best for phasing in later. In some cases space can be designed to perform one function today and be converted to another later.
The designer can organize the floor plan and spaces of the house so there is a logical connection point between the phase-one construction and the phase-two expansion. This will minimize disruption.
The mechanical systems and other components of the house can be sized and positioned in phase one to support and easily interconnect with the phase-two space.

The other lever for adding funding to the bucket is to secure better financing terms that will provide more money for a specified, affordable mortgage payment. This can be accomplished either through fortunate market timing or through better homeowner diligence in identifying and negotiating financing options. At its simplest this involves securing a mortgage loan with a lower interest rate -- as financing terms improve, a homeowner has the choice of either lowering the size of the mortgage payment or borrowing more money to invest in the project. Most homeowners are familiar with this lever to a fault, so enough said on the subject.

At a more complex level, there are a number of energy-efficiency related rebates, tax credits and loans that are increasingly available for retrofit remodels and new home construction. Some of these programs can contribute a significant amount of money to the installation of selected energy-efficiency building components. A knowledgeable general contractor is invaluable in identifying and securing these funding sources. Timberdale's affiliate company Green Energy Systems is an expert on these types of programs.

Budgeting for Residential Construction...3 -- Schedules & Surprises

2011-10-11T12:02:41Z

Another activity area that the Trade-off Triangle does not address fully is the construction phase choices and decisions. These are the seemingly ad hoc but potentially consequential choices made about construction timing, scheduling and contingencies that will impact the project budget.

With respect to timing, once the construction plans are completed the understandable desire is to break ground as soon as possible. However, seasonal timing can have a big impact on cost. In the Northeast, outdoor construction during the winter months has higher costs for two reasons; worker productivity and weather delays. I have experienced first hand the worker productivity decline in winter. With shorter daylight hours, the work day begins later and ends earlier. The bone chilling cold requires additional breaks to recover. And, the fact is, working in cold weather tires you out sooner since more of your energy gets invested in keeping your body warm. I’ve seen estimates of seasonal productivity declines of 20-to-30 percent. That is to say, if a contractor is developing a budget to frame and enclose a house in the winter months, he should increase his labor costs for those activities by approximately 25% to account for the productivity declines.

The other seasonal factor is weather and related delays. Construction sites are potentially dangerous locations where a coating of snow and ice can shut down a job or slow down progress. These schedule delays will add to the carrying costs of the construction project.

The desire to get the project underway and completed can also tempt a homeowner to push the contractor to deliver the house on an accelerated time schedule. Here the old maxim comes to mind: “good, fast, cheap – pick two!” In other words if you want a good project done fast, it isn’t going to be cheap. In lower Fairfield County, where people build large, elaborate and expensive homes, projects can easily run two or more years to completion. One contractor has carved out a niche in delivering complex, high quality homes on an accelerated schedule. Needless to say, he gets a price premium for performing this feat.

Finally, the other construction phase choices that impact budget and that are not addressed by the Trade-off Triangle are the decisions around contingencies and change orders. Budgets anticipate contingencies by creating a reserve for that purpose and if all goes well, that sum should be adequate to cover surprises. The risk and reserve level increases in major renovation projects, although a careful building inspection during the planning stage should minimize surprises. Occasionally budget-breaking problems arise and, unfortunately, they usually do not have a lot of decision-making latitude to resolve (such as discovering ledge at the excavation site.) The homeowner must come up with additional budget dollars for the project to proceed and should be realistic when entering into a large project by maintaining a cash reserve for unexpected contingencies.

Change orders are one of the most stressful elements in managing a good client relationship during construction. Many builders look at change orders as a welcomed addition to revenues and profits and will typically charge the hapless, boxed-in homeowner a price premium for undertaking the work. Timberdale resists this type of behavior and typically prices change orders consistent with the overhead and profit targets used for the project overall. We believe that the client relationship management benefits outstrip any added profit we might squeeze out of the additional work. Also, we take some culpability in change orders. We ask the question, “was this something we should have done a better job anticipating on the client’s behalf during the design and planning stages?” Sometimes the answer is yes and we shouldn’t be rewarded excessively for those short comings.

Budgeting for Residential Construction...2 -- Site Selection: Shangri-La or Shackle

2011-10-09T11:15:22Z

My discussion of the Trade-off Triangle needs to be put in context. New home construction and major renovations involve an interwoven chain of activities that can easily stretch over a year or more from initial conception to completion, involving scores of different people and skill areas. The Trade-off Triangle is concerned with design and planning stage choices and decisions. The trade-offs considered and resolved at this stage determine the form, structure, detailing and ultimately cost of the home to be built.

There are other choices and decisions beyond the design and planning activities that will have a considerable impact on budget and the other elements of the Triangle. Perhaps the biggest item on this list for new home construction is site selection and development. It is very common for clients to approach Timberdale with a project idea after the site decision has been made. In fact, often the emotional connection with a particular site drives the inspiration for a major construction project. It should be obvious that as the largest single project expense, the site decision will have a big impact on budget. Assuming constrained financial resources, every dollar spent on the land and site development costs is a dollar less that can be spent on the building itself.

About two years ago a couple from New York approached me with a new home project to be built on a beautiful wooded lot they had purchased in Redding, CT. The odd-shaped lot had some great views, interesting topography and a stream. The couple envisioned a home that could house their three children and a guest suite to accommodate frequently visiting guests and family (5 bedrooms.) Of course the view demanded a dramatic timber framed great room as the living core of the house. As the initial discussion evolved it became apparent that the couple had not adequately investigated site development costs.

A visit to the property revealed that access to the building site required significant road and utility infrastructure, with some likely wetland disturbances. The town of Redding has very strict land development and wetland codes, which the town enforces vigorously. The building site itself was challenging with a steep grade to the view site with evidence of significant ledge. It became clear that the site development cost would compromise the couple's preliminary budget target for the house resulting in either a down-scaling in size or some trade-offs in the quality of the building (the timber frame may have to go!) Ultimately the project was put on hold until the couple could accumulate the resources to deal with the added costs. For them, the required trade-offs were not acceptable.

The point is that site selection should not be separated from collaboration with a knowledgeable design and building professional in the early design and planning stages. The site impacts virtually every element of the Trade-off Triangle. It impacts budget, as discussed, and quality (availability of sunlight, views, etc.) and often the size and shape of the building. So, it seems obvious that the site decision should not be made in isolation of the other design-related choices. But it often is.

Budgeting for Residential Construction...1 -- Trade-off Triangle Framework

2011-10-04T08:46:20Z

From the homeowner’s perspective the project budgeting task primarily is one of identifying and making decisions on trade-offs. In new home construction and large addition/renovation projects, the starting point is gathering input from the homeowner’s family about its requirements. These are inputs about the family’s lifestyle, space uses and needs, special living requirements and other desirable house features that become the basis of the home's design. This is a very important stage of the design process and most designers spend a significant amount of time on gathering and codifying the owner inputs. Timberdale has developed highly effective tools to facilitate this information flow.

After the requirements are translated into a building program, conceptual design and initial schematic drawings, the design/build team can begin to formulate preliminary budget estimates. At this stage, the focus of the homeowner’s budget trade-off choices is largely around the building's size and shape. As the design process advances and the drawings and specifications become more detailed, the budget trade-off discussion focuses more on the type and quality of the building’s features.

The Trade-off Triangle is a visual tool to aid the homeowner when tasked in making a decision on whether or not to include a specific design feature in his/her house by placing the trade-off within the context of the overall design/budget decision-making landscape. It is useful to be reminded that at the budget margin, a specific design decision must be paid for, either with additional dollars added to the investment or by modifying/eliminating features previously designed into the house. Since large projects contain a myriad of details and therefore possibilities to trade-off against, the problem is simplified somewhat by focusing the homeowner on the major levers available to him/her. These levers are summarized in the Trade-off Triangle diagram below:

The Trade-off Triangle simply says that making a decision in one dimension, such as specifying a fixed budget, will necessarily require trade-offs to be mediated in the other two dimensions. Obviously, if decisions are made in two of the three dimensions, such as fixing the budget and the size & shape of the home, then trade-offs must be all made within the quality dimension. So, we want to understand the nature and type of trade-offs available within each dimension in order to get a feel for the overall budget and design decision-making process.

Using a Trade-off Triangle as a visual aid in understanding the major levers in managing a project is not a new concept. The idea has been used extensively in IT circles for software development projects. In that context, the three dimensions of the triangle are “budget,” “features” and “time.” This is really an elaboration of the old euphemism: “Good, fast, cheap – pick two.”

Architects and homebuilders have adapted this model to focus the discussion on the budget dimension and two others that are feature subsets – building quality and building size. This is a more meaningful partition of the topics that tend to dominate the trade-off discussions that occur during the design phase of the project. Although the time dimension is important, for a home building project of a given general size and complexity the standard amount of time required to complete the project seems to be well understood and/or easily verified, within bounds.

Over a series of five Blogs, I intend to elaborate on the Trade-off Triangle as a vehicle to communicate the nature of the trade-offs and decisions that home owners should anticipate when entering the design and budgeting process. I believe that this perspective is helpful by providing a model for home building project budget decision making.

The Nature of Bespoke

2011-09-29T17:23:43Z

I thought that I'd restart my blog by republishing some of my favorites from my previous blogging effort. This speaks to the nature and pleasures of building custom things.

My first encounter with the notion of “bespoke” happened early in my business career when some gents visiting from England were caught up in a conversation about their clothing. I had never heard the word before but its suggestive sound and context made me understand what it meant. At the time custom-tailored clothing seemed like a lot of trouble for getting duds that I could easily buy off the rack for a lot less money. I guess I still think that’s the case at least for clothing. Chalk that up to my “Yankee” upbringing or, more to the point, to the fact that I was never very fashionable and can be seen these days wearing mostly plaid shirts and jeans.

Years later the company I was working for at the time moved into new office space and each of the Partners was given a budget to purchase office furniture. I decided to get a custom-made desk by David Margonelli, a furniture maker working out of Edgecomb, Maine. I was about to undertake my first experience with a bespoke personal object.

Initially, it seemed like a very straight forward task: pick a design, tweak it a bit, wait a while, sign a check, get to work! Fortunately David didn’t share my perspective on the task at hand (except for the sign the check step.) His idea was to create a unique piece of furniture that would embody my design tastes and, importantly, my personal work style. So he began to ask questions about my design preferences and work habits and how I wanted them reflected in the desk. Needless to say, I did not have any ready answers. To provide them, I needed to step back, observe, reflect and codify my personal work habits and to think about how something as prosaic as a desk could become a tool for making my work life better.

The trivial organizational and work flow details that occurred in and around my desk had always been taken for granted. I was never in favor of the clean desk philosophy but, in some cases I admired the not so subtle message it held that the clown behind the desk was in control. In other cases it only confirmed that he had either a serious case of lint-picking ECD or inconsequential duties fit for a bobble head. Since I suffered from none of these afflictions, my deskscape was somewhat chaotic receiving an occasional reordering reminiscent of an autumnal yard clean-up. The prospect of designing a desk that would facilitate more orderly work habits was intriguing.

I decided to borrow a design from a desk my grandmother used for many years. It was a tilt top, where the desk top is folded down from the cabinet to reveal storage drawers and compartments and folded up to hide the clutter when work is finished. For a month or more I thought about how those drawers and compartments should be configured to absorb and organize my clutter. I created 12 compartments that would each take a small stack of papers, since I liked to organize my project work in piles. I had a compartment made for my lap top computer so it could be easily stored and retrieved. I had drawers sized for specific desk items like tape and staplers to get them off the desk top. Meanwhile David came up with a simple but elegant design that suited my taste perfectly.

When the desk finally arrived it performed its function admirably. But it was more than just a tool to make my work life better. For me the desk had a heart and soul with roots to my grandmother and features that reflected my own personality and idiosyncrasies. It was a selfless personal steward that anticipated my needs perfectly and never asked for anything in return. It was a work of art that reminded me daily of the value of craftsmanship, elegant design and vision. It reminded me of the transformative power of excellence and dedication, where David was able to take rough, gnarly wood and make it into a graceful object of true beauty and function. It was a very personal object standing tall in an impersonal office filled with steel, glass and shiny reproduction office furniture trying to convey an image that is something more than the objects deserved or could ever hope to be.

That is the nature of “ bespoke.” It’s why building a custom home is so rewarding.