Week 7
Budgeting and Estimating
Residential Budgeting – What should a client spend?
The client should not put more money into the house than the house is worth.
For example, the current market value of the client’s house as appraised is $200,000. The client has a $150,000 loan on the house. If they sold the house today, closing costs would be about 8-10%, or about $18,000. That leaves about $32,000 in equity.
If the client spends all $32,000 on a remodel project, they will have no equity left, or no profit if they sell.
The remodel will increase the value of the house, but not by the amount they will spend – they will probably increase the value of their home by about 50% of the remodel cost, or $16,000. So they will spend $32,000 to make $16,000.
If the house is in bad condition or is very dated, a remodel may be considered maintenance, or simply bringing the house to the neighborhood average. In this instance, the client might expect a much better return on the investment simply because the house would not sell at all in the current condition.
If the client plans to be in the house for a long time, the equity loss isn’t a strong consideration, so a larger budget may make more sense.
The house should be typical for the neighborhood.
For example, your client is building a new home in a new subdivision. The typical finish-out for other homes in the neighborhood is vinyl flooring, average quality carpeting, laminate countertops, and painted sheetrock walls with minimal trimwork.
Your client wants to do granite countertops and flooring, 3-step mouldings, and faux finished walls.
This would be an overimprovement for the neighborhood. Your client will not get a return on the investment amount over the neighborhood average. This will, of course, be your fault. Discourage clients from major overimprovements.
Conversely, If the average finish out in the neighborhood is granite, extensive trimwork, and specialty finishes, the client should not consider choosing sheet vinyl flooring and Formica countertops. The house will not be comparable to the other homes in the market area, and may have a hard time selling.
Estimating
Nonresilient flooring
Nonresilient flooring is estimated by the square foot, both for materials and labor.
Tile materials orders should include a 10-20% waste allowance for cutting. A straight lay (tile set parallel to walls) requires 10% waste overage; diagonal lay or patterned lay requires 20%. Mastic, grout, and any required sealers must be included.
Wood flooring
Strip wood flooring should include a 5% waste allowance for straight lay, 10-20% for diagonal or patterned installation. Plank flooring may require a larger allowance. Strips are usually 2.5" wide, planks may be 4-8" wide or even random widths.
Unfinished wood must be sanded (or scraped), stained and sealed after installation. Make sure to include material and labor costs for finishing.
Wood floors (solid or engineered) may come in tongue and grove or a click-type style. Flooring may be nailed down (solid), glued down (solid/enginered) or floated (engineered). Install as per manufacturer's specification.
Carpet
Carpet usually comes in 12’ widths, though sometimes in other widths, so be sure to double-check. It is estimated by the square yard (9 square feet = 1 square yard). Carpet tiles may be priced per piece or per suare yard.
Create a carpet map of the area to estimate amount needed, with all pieces running the same direction, and seams in the most out-of-the way place. Oddly-shaped rooms may have a lot of waste.
Residential carpet is usually installed using tack strips, foam pad, and heat-sealed seams. Commercial carpet is often glued down, either with or without pad.
Resilient sheet flooring
Vinyl, rubber, and other sheet flooring flooring is priced by the square foot. Different materails come in various widths; vinyl is 6' or 12', linoleum and rubber are often about 6.5', and cork is often 4'. Make sure to check the manufacturer's standard width before purchasing.
Sheet flooring also requires a room map to accurately estimate materials. Make allowances for pattern matching. Resilient flooring is usually glued down.
Sheet vinyl information at Architectural Record
Resilent tile flooring
Usually available in 12" x 12" tiles, although other dimensions are available, depending on manufacturer. Some resilient tiles come pre-glued, or "peel and stick," although these are usually of lower quality. Cork also comes in a floating or click-type floor, like engineered wood floors.
Vinyl tile information at Architectural Record
Paint
Paint is often estimated by the square foot for materials, time for labor.
Special paint finishes can vary widely, and require a subcontractor’s estimate. Most paints will cover 350-400 square feet per gallon. Estimates will usually include basic preparation of surfaces, but extensive prep work will cost more. To get are of the wall, multiply length of entire wall surface to be painted ("circumference" of room), multiply by height of wall. If measured in inches, divide area by 144 to get square feet. Door and window openings are usually not subtracted from area. Make sure to include primer or multiple paint coats, if
required.
Wallpaper
Wallpaper is estimated by the roll for material and labor, even though most papers come in double or even triple rolls. A single American roll is 27" wide by 4.5 or 5 yards long (30 or 33 square feet). European rolls are 20.5" wide by 5.5 yards (27.5 sf, usually French) or 11 yards (55 sf, usually English). Make sure of the exact dimensions of any wallpaper rolls before ordering.
Wallpaper borders are usually sold in 5 yd. spools.
Measuring for wallpaper requires knowledge of the pattern, due to pattern matching & repeats. Random match has the least waste. Make sure all paper ordered for a job is the samy dye lot.
Cabinets
Stock cabinets are priced per piece, but often a rough estimate by linear foot is displayed for comparison purposes. This estimated price does not include trim or extras, and is usually increased by 50% for a true rough estimate.
Custom cabinets require a subcontractor’s estimate.
Bidding
For most jobs, a designer should get 3 bids for each specialty from subs that are reliable. Check references for quality and customer satisfaction. Check for Green Advantage certification if the project is green; they have been trained in correct completion of green projects.
Make sure that the bids cover the same items – same materials, same things included, etc.
Once bids are in, a final budget can be drawn up, and materials adjusted as necessary. Allow 10% of the budget for incidentals – things that will be needed during a project that aren’t planned for. Remodels, especially in older homes, should have an extra 10% built in the budget for unplanned expenses – you never know what you’ll discover during demolition!
National Construction Estimator software, 30-day trial download available at www.craftsman-book.com (class handouts from this book, version 2005)
Downlad free customizable estimate and bid forms
from this site, too.
Don't like math? Home Depot Calculators will figure the areas for you.
Exercise:
Estimate materials and labor to demolish the classroom to the studs and rebuild it. Use handouts from National Construction Estimator book.
Assignments:
Read the article (Architectural Record CEU course): Rapidly Renewable Materials' Complex Calculus
Select a bathroom in your house (or design one). Complete an estimate to gut and redo the bathroom, including demolition to the studs and new everything. Use wallpaper for the walls.