Tag Archives: general contractor

Barndominium Costs Part II

Continuing my discussion of Barndominium costs from yesterday’s blog…
For sake of discussion, we will use 2400 sft (40×60) of finished living space (includes any bonus rooms) plus 1600 sft of garage/shop. To have a GC (General Contractor) turn-key this for you expect an average of:

2400 X $122.46 = $293,904
1600 X $61.56 = $ 98,496
$293,904 + $98,496 = $392,400 / .6977 = $562,419

This is having your barndominium built (turn key), not for owner-builders.
If your barndominium will be very simple, rectangle, standard sizes, with little to no upgrades on finish materials (counter tops, flooring, cabinets, showers, lighting, trim, etc) then your costs could be less per sft.

 

On spectrum’s other end would be for very intricate, high end, everything upgraded barndominiums. Including things like custom cabinets, real hardwood flooring, high end appliances, custom fireplace, built in entertainment options, oversized windows and doors, vaulted ceilings throughout, steep roof, extra bathrooms/kitchens, etc.

But what you really want to know is what it will cost for you to build it, right?
We will assume you are willing to do some legwork, so if you don’t do any physical work yourself and just act as general contractor (making phone calls, hiring people, ordering materials, dealing with problems, etc) you can build this average barndominium for $170,000 less than it would cost to hire a general contractor.

I can make a LOT of phone calls for this. In fact, I could easily take well over a year off work and still come out ahead!

Beyond making phone calls, hiring people, ordering materials, and dealing with problems, you can lower your price by doing some work yourself.
It’s all about what YOU are willing to do as an owner-builder.

Our prices above are for “stick frame” construction. By using post frame construction with embedded columns, rather than pouring a footing and foundation, a savings of $11,400 can be found: https://www.hansenpolebuildings.com/2011/10/buildings-why-not-stick-frame-construction/.
This reduces your $392,400 investment by about 3% to $381,000
NAHB (National Association of Home Builders) allocated percentages in their Construction Cost Breakdown. These included:

Site work 5.6% (of this 1.6% was for architecture and engineering)
Foundations 11.6% (this includes excavation and backfill)
Framing 18%
Exterior Finishes 15% (siding, roofing, windows, doors)
Plumbing, Electrical, HVAC rough ins 13.1%
Interior Finishes 29.6% (insulation, drywall, interior trims and doors, painting, lighting, cabinets, counter tops, appliances, flooring, plumbing fixtures, fireplaces)
Final Steps 6.8% (Landscaping, decks, driveways, clean up)

Of framing and exterior finishes (roughly 1/3rd of costs), if you invest in an engineered post frame building kit package and do your own labor (labor being roughly 1/3rd of this portion), save $43,164 (I can take a lot of time off work for this).

Hansen Pole Buildings GuesthouseAnd my engineered post frame building kit package includes engineering, saving $6278.
Obviously even more savings can be achieved for those capable of doing electrical and plumbing, however assuming nothing other than what has been listed, your $562,419 barndominium has been built and is ready to move in for $331,558!! This resulted in over a 41% savings and kept over $230,000 in YOUR pocket!!

Of course your investment and savings could be more or less depending upon your tastes and location, however this should give you a feel for where you will be headed. It would be prudent to budget another 1% for every month you delay your start, as well.

How Much Will My Barndominium Cost?

How Much Will My Post Frame Barndominium Cost?

This may be the most asked question in Barndominium discussion groups I am a member of. Or at least a close second to wanting to see floor plans. And why not? If one does not have a semblance of financial realty, they could end up finding themselves severely disappointed.

This is a really important questions because if you don’t know what your barndominium or shouse (shop/house) will cost, how can you plan on paying for it?

Hansen Buildings TaglineIt is also a really hard question to answer. You can probably guess standard cabinets and custom cabinets come with a very big price difference. This is merely one example of a myriad of differences between every single barndominium.

Sitting down and figuring out what each individual thing in your barndominium will cost, is a very difficult (if not impossible) thing to do.

There is no way for me or anyone to tell you exactly what your barndominium will cost. I can help you best I know how, but you also need to do your own homework in your own area.

Your own style and preferences will play a big role in your barndominium cost. Please use these figures as a guideline only, and know this is not an exact science. This is simply meant to help you figure out a good idea of how much money you will need.

Our International Code Council friends publish a table of average costs for new construction and update it every six months. https://www.iccsafe.org/wp-content/uploads/BVD-BSJ-FEB19-converted.pdf

Post frame construction is Type VB and homes are Residential R-3. As of February 2019, this places an average constructed cost at $122.46 per sft (square foot). An attached garage or shop would be S-2 storage, low hazard at $61.56 per sft. A detached shop or garage could be U utility, at $48.73 per sft. Unfinished basements would be $22.45 per sft.

NAHB (National Association of Home Builders) 2015 data supported these figures with an average total construction cost of $103.29 per sft. This is before General Contractor’s (GC) overhead, profit, financing, marketing and sales costs and does not include the price of land. Outside of land values, a General Contractor’s share added another 30.23% to total construction costs.

Do you need a General Contractor? Read more here: https://www.hansenpolebuildings.com/2012/04/general-contractor/

Tune in for our next action packed article, where an example barndominium will be broken apart for costs!

7 Ways to Avoid a Shady Contractor

Consumers can protect themselves from unscrupulous, often unlicensed pole building contractors. By following the following suggestions, it minimizes the possibility of becoming a victim to this all too common problem.

Carefully watch how your money is being spent

Deal only with a licensed contractor.

Many states, as well as smaller jurisdictions require contractors for construction services to be registered or licensed. The license number should be displayed on all business cards, proposals and any other contractor materials.

Verify the license.

Do not just assume the registration is valid. I once hired a contractor who provided a copy of his license to me. Only later (when there was a problem) did I find out it had expired and had been altered. Call the issuing agency to confirm it is valid.

Require Insurance.

Require both a certificate of insurance showing liability insurance coverage AND proof of workers compensation insurance for all workers. Some contractors are registered with an industrial insurance account, however they report their workers as having zero hours, and pay no premiums. The workers are NOT covered.

If someone is hurt, and uninsured, the building owner can very well be held liable.

Know Who You are Dealing With.

Doing business with a Contractor who has a good reputation for doing the job right, in an ethical manner, at a reasonable cost is the ideal situation. Ask for references and then verify them.

Understand What You are Getting.

Before agreeing to any work (as well as making any payment), require a written proposal describing in plain language what work will be done. A statement regarding compliance with applicable Building Codes should be included. If the contractor is doing building permit acquisition, it should be stated in writing and a copy of the permit should be provided prior to work starting.

A total price should be as inclusive as possible. Any unforeseeable work or unit prices clearly addressed (like what happens if holes are difficult to dig). If the contract is not understandable, have it clarified in writing. Maintain all paperwork, plans and permits when the job is done, for future reference.

Familiarize Yourself With the Terms.

Contractor’s proposals and Contracts should contain specific terms and conditions. As with any contract, such terms spell out the obligations of both parties, and should be read carefully. Be wary of forms which are extremely short or are vaguely worded. A well written contract should address all possibilities and may very well take more than one page. Payment terms may vary, however most will require payment in full upon completion of all work. Do not pay for all work until the Contractor has finished the job.

Don’t Let Price or Warranty be Your Only Guide.

Many building owners subscribe to the idea of obtaining three bids and if they all appear to be roughly the same, take the low bidder. This is simply not always a good practice, especially if there is a large disparity between prices. Be extremely cautious of prices which are substantially lower than others. It can mean a mistake has been made, or something is being left out. The Contractor may be planning on shortcuts in quality which can make the building owner the ultimate loser.

Be wary of unusually long warranties as an enticement. It is reasonable to expect a year or two of warranty for labor.

Keep in mind a good contract is written to provide clear communication between two parties.  It also protects both parties, and should never be “one sided”.  From my years as a general contractor, a well thought out and spelled out contract (in writing) made for the smoothest projects. When clients followed all of the above suggestions, I knew they cared enough to do “their best” and I was on the same playing field….the one where both of us “played fair”.

Owner Built: Build it Yourself

Build your own garage, shop or barn in this economy?  With unemployment remaining in the nine percent range and the economy sputtering along, the last few years have been less than perfect.  Real estate has continued on an ugly path with no end in sight.  There couldn’t have been any Americans crazy enough to act as the general contractor for their own new pole building right?  According to the Census Bureau, a whopping 53,000 owner built homes were completed for owner occupancy on the owner’s land in 2010.  Let’s dig a little deeper into the census numbers so we can answer the question most of us have…why would you want to build your own building in today’s nasty environment?

Owner built is another way of saying the owner acted as the general contractor for the project.  As the general contractor, the owner takes on the full responsibility for the budget, quality, and overall schedule of the project and either does the work himself or hires trades to do most of the labor.  So, even with the sluggish economy, a huge group of Americans are taking on their dream building projects.

But everyone keeps saying how difficult it is to get a loan, so how did they get owner-builder financing? Surely a bank wouldn’t make a risky loan to an owner who thinks he knows enough to get it done.  I can hear it now, “Build your own building?  We don’t do owner-builder loans anymore.”  According to the census numbers, seventy percent of owner-built homes in 2010 were financed with conventional loans and twenty-eight percent paid in cash.  Apparently, all the horror stories heard about how it’s nearly impossible to get a loan today are more than a bit exaggerated.

If you decided to build your own building in 2010, you must live on a farm where building codes aren’t enforced…we’ve all heard of the Amish barn raisings right? Actually, most owner built buildings were built inside metropolitan statistical areas. These were code conforming buildings!

Owner built projects may have been motivated by the slowing in labor and material costs for building.  According to the Associated General Contractors of America, the producer price index (PPI) for nonresidential (accessory buildings, garages, shops, barns, etc.) buildings rose only 0.3 percent during 2009.  This price change was a huge improvement over the previous several years.  As recently as 2003, this PPI was 9.3 percent and from 2003-2007, the average increase was nearly six and one-half percent per year!

So, 53,000 of you out there decided to build your own home in 2010.  This represents about eleven percent 11% of all new homes built in the U.S. in 2010.  How does this compare with other countries?  Believe it or not, the U.S. is way behind other countries in built-by-owners each year.  A whopping 80% in Austria are built by owner.  Most of Europe is at or above 50%.  What are these countries doing which makes so many more people take on these projects themselves?  What would make you take the plunge and build your own building?  Speaking about self-builders UK minister Grant Shapps feels they deliver “more affordable, greener and innovatively-designed buildings”.

Acting as the general contractor to build your dream project is a great way to save money and get exactly what you want.  More and more Americans are realizing this every year.  Whether you are an accountant, lawyer or writer, you can take on the responsibility of the builder and save tens of thousands of dollars on your new pole building.  Is this the year for you to build your own building?

Pole Building Insurance

Todays guest blog is written by a fellow Rotarian of mine, Rich Wilson, who is an Insurance and
Financial Services Agent for Farmers Insurance out of Coeur d 
Alene, ID.

So you want to build a pole building structure behind your home.  So how does pole building insurance work?

It’s always best to check with your local contractor’s board and insurance company to make sure you are following all local, state and federal requirements before you start the project.

Here are some basic areas to be aware of with a couple different scenarios.

Let’s say you have decided you want to be the general contractor for this project.  The first thing to be concerned about is your liability.  What if someone you hire gets hurt?  What if an excavator damages your home?  In each of these circumstances, you as the general contractor could be liable and typically your homeowner’s insurance will not cover it.  What you’ll need is a commercial policy for general liability insurance.  Additionally, if you hire employees you will need a worker’s compensation policy.   Many times you will hire sub-contractors to do some or all of the work.  This is where it becomes very important you do your homework.  If they are subs, not employees, they will likely need to have their own insurance.   What’s critical is that it is up to you as the general contractor to verify their coverage because unless your business policy clearly states subs are covered, your claim may be denied.  So get a copy of each of your subs certificate of liability and have them name you as an additional insured.  If you are having friends help, your homeowner’s policy may cover your liability should they get hurt on your premise but it won’t cover paid sub-contractors, so be careful.

Now what about your materials while the building is being built?  Being the homeowner, your homeowner’s insurance policy will typically cover the cost of materials being used to build your new structure under personal property (check with your individual company because each policy and state may vary.)  So, if you have a substantial amount of building materials on site, you should consider increasing your personal property coverage.  There are some exclusions to be aware of; things like weather damage and mold are typical exclusions should you not properly secure your building or materials.

What about once the building is built? Are we done yet?  There is one more important step to consider insurance wise once your structure is complete.  The typical homeowner’s policy defaults to 10% of your primary dwelling coverage for separate structures.  Say your dwelling coverage is $250K, your separate structures are probably only covered for $25K.  So since you know what it costs to build, you will want to increase your separate structures coverage accordingly.  One thing to keep in mind is in the event of a loss, separate structures will include all non-attached buildings (read detached garage or shop) and fencing.  So if you have a detached garage, new barn and an acre of fence you will want to insure for the combined value.

One more note of caution.  Today there are many contractors and subs who have been downsized and are looking for work.  That may present what seems like an opportunity.  Just remember it’s your responsibility to double check to make sure their insurance and licenses are in order.  Being cautious here could save you thousands when someone is hurt on the job site or digs into your sewer lines.

Thanks Rich, this is great stuff!

To contact Rich – email him at: rwilson1@farmersagent.com

 Mike

Bid Jobs: How Do Contractors Blow Budgets and Still Get Paid?

How do Contractors Blow Budgets and Still Get Paid?

Bid jobs are a miracle all in themselves. Usually they begin from an interested party at an organization realizing, “Hey, we need a new building”.

Bid Jobs

Eventually they will get enough of their cohorts involved to reach a critical mass. One of them will then go forth and (after doing some level of research), obtains some price quotes.

At times, some things tend to be overlooked in the early stages of the process. The most overlooked – between the beginning and the time the project goes out for bid, an architect or engineer will probably be hired. This will generally astronomically increase the complexity of the project. Next most overlooked – if this is a publicly funded building, labor to construct it will probably be governed by the Davis-Bacon Act. This act, dictates prevailing wages and benefits must be paid to laborers who work to assemble the building. This, in itself, can significantly raise the price of the completed project. In many cases, unusual insurance and/or bonding stipulations are required (usually at an architect’s insistence), further bumping up costs.

Assuming all of the previous bid job pitfalls have been survived, the project goes out to bid.

Now reality sets in – as generally the project bids will overrun the initial budget. Often by two or three times budget. Why? Reflect back to the overlooked items above.

The budget either gets bumped up (usually the case, as by now, all are convinced the building has to be built), or the scope of the project is reduced.

And it goes out for bid again…..

I’ve been a general contractor, so I will explain how the results turn out in reality, rather than how they should turn out.

In most cases, the lowest bidder will lose money on the project, exactly as the project is specified in the bid documents.

The answer to this dilemma?  Make darn sure you know exactly what you want in the beginning, and don’t make any changes.

Carefully watch how your money is being spent

After being awarded the bid, the low bidder first does the “OMG – I got the bid”, as they know the lowest bidder has to work like crazy in order to turn a profit.

And how do they turn lemons into lemonade? First, the bid documents are scoured to minimize the cost on every possible item. No stone is left unturned, and if it means a sacrifice in the quality of the finished project, so be it.

The number one way to salvage….Change Orders.

The contractor has been awarded the bid to provide the materials and construct the building. Any changes will be expensive…what is the alternative? Have someone else come in to do some very small portion of the work, or provide an individual item or items? It isn’t happening.

You and your organization have no real practical choice, you have “bought the proverbial farm”.

Change Orders are the low bidders’ salvation; they count on them to guarantee a profitable outcome on any bid jobs.

To receive more pole building tips and advice subscribe to the pole barn guru blog!