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The True Cost of Construction

When planning a project, it’s important to be aware that there is more to a comprehensive budget than simply the final construction costs.  A Construction Budget, the cost of labor and materials required for constructing the project, and a Project Budget, all the costs associated with a project from start to finish, are two very different things and it’s important to properly communicate to your project team.  A $500,000 Construction Budget and a $500,000 Project Budget do not have the same end results.

To assist with your planning, we’ve pulled together an outline of some of the potential costs that can be expected for a typical residential project.

Site Preparation Costs

These costs are typically reserved for new home projects, though they may be applicable for some residential additions as well.

·       Installing Driveway Access

·       Demolition of Existing Structures

·       Site Preparation, including Removing Trees, Re-Grading the Site, Etc.

·       Providing Utilities to the Site: Electricity, Gas, Water, and/or Sewer

General Construction Costs

This is the cost for actually building your project, i.e. the hammer and nails. These costs vary dramatically between projects and depend on the specifics of what you are setting out to do. A new house? Renovation only? Big? Small? Cost of materials? Unique site conditions? As you can see there are a lot of variables at play.


The following is a rough breakdown of how we’ve seen project costs play out when reverse engineered after-the-fact to determine the general price per square foot.


$250 per Square Foot (and below)

It’s hard to do much more than interior renovations at this amount. For this price you can replace existing finishes and fixtures with new but you will still need to keep an eye on costs.  For example, some wall tile retails at well over $150 per square foot.

$250 – 350 per Square Foot

This is the lowest amount we typically achieve for a new home or large addition. To stay within this price point we need to keep the structure simple and use standard materials such as 1/2” drywall and 2-1/4” oak flooring for the interior and asphalt shingles, cement-fiber siding, and standard clad windows for the exterior.


$350 – 500 per Square Foot

This is the range that most of our projects end up in, including new homes, additions of all sizes, and major renovations. For this amount we gain more leeway on what we are able to design. The basic structures can become more intricate and we have more options for fixtures and finishes, both inside and out.

$500 – 750 per Square Foot

For this amount you can do quite a lot, including more complex structural forms, custom fabricated architectural components, and a wide range of high-end finishes and fixtures.

$750 per Square Foot (and above)

This is when you begin to be able to stop thinking about the cost. If you want it – you can get it.

Landscape / Hardscape Costs

There is more to think about than just building the house.  These costs relate to all the exterior amenities surrounding the house.

·       General Plantings

·       Retaining Walls, Garden Structures, and Fences

·       Sidewalks, Driveways, Patios, and Decks

·       Pools and/or Water Features

·       Exterior Fireplaces or Fire Pits

·       Exterior Kitchens or Grill Stations

·       Exterior Lighting and Sound Systems

Contingency Costs

Every project has surprises and unforeseen expenses, and you should plan for them.  On the upside, as you progress through the project, from nebulous idea to detailed drawings, the likelihood or extent of these costs lessen.  The following is a guide for what percent of “construction budget” is recommended you set aside at each stage.


(15-20%) Start of Project: At this point you may not even know the final size of the project.

(8-12%) Completion of Design Work: While the size may now be known, not all the fixtures and finishes are selected nor has the detailed engineering been completed.

(3-7%) Final Documentation / Start of Construction: This is for the unknowns found during construction.  Undersized existing structure and buried oil tanks are often only discovered once the contractor starts opening up the walls and digging into the dirt.

Professional Design Fees

You will need the services of several different design professionals to get your project from idea, though permitting, and to completion. Depending on the specifics you may require the assistance of one or more of the following professionals.


·       Architect

·       Interior Designer

·       Landscape Designer

·       Site Surveyor and/or Civil Engineer

·       Structural Engineer

·       Mechanical Engineer

·       Specialty Consultant


The design fees for these professionals are usually determined in one of the following manners.


·       Percent of Construction Cost

·       Hourly Rate

·       Fixed Fee


We typically work with the fixed fee model as this lets you know the cost before starting the project.  It also removes any sense of conflict – i.e. when we recommend a more expensive finish or fixture you know it’s because we think it’s the best choice, not because we want a higher fee.

Permit & Utility Fees

These are the miscellaneous fees and taxes paid to local governments and utility companies.


·       Permit Fees: General Construction and Stormwater Management

·       Construction Bonds: Right of Way and/or Erosion Control

·       Impact Fees and Taxes for New Homes

·       Utility Disconnects and Temporary Services

·       Upgrade of Services: Electrical, Gas, Water, and/or Sewer

Ancillary Costs

We’ve found that these are the most overlooked costs of any project.


·       Moving Expenses (Before and After a Renovation)

·       Rent or Double Mortgage during Construction

·       Construction Financing Fees and Interest

Moving Forward

There’s a lot to keep track of, but know that we’re here to assist in managing all the various costs to get you the most value for your budget.

Reach out to us with any questions and we’ll be sure to get back to you!