How to Budget Home Construction on Target, Every Time
Bucking industry norms, these builders stay on budget with up-front, fixed pricing on every new home and remodel.
Synopsis: Jeremy Martin from RisherMartin Fine Homes, a custom-home builder and remodeler in Austin, Texas, outlines his company’s process of offering fixed-price contracts for new-home builds and remodels, flying in the face of decades of industry practice. By setting up a preconstruction services department, the company considers all the detailed specs from subs; all the pricing and lead times; all the plans and elevations for every system; and every bit of hardware, color, and finish and creates a comprehensive contract that sorts out all of the possible hidden details before construction begins. Their contracts assume the worst-case scenarios in order to shoot high with estimates and come in under budget. This article describes in detail how they make it work.
Six years ago, my business partner and I went searching for the trifecta of residential construction: being on time and on budget, with happy clients. After a lot of hard work and fundamental changes to our staff and workflow, we created a front-loaded process that is very rare on high-end, architecturally driven home-building projects. When I tell other experienced builders that my firm has now been offering fixed-price contracts for six years on both new homes and remodels, and that we come within 1% of that price on every project and absorb the difference so the customer’s price never varies, they are often incredulous, and for good reason. What we do flies in the face of decades of industry practice, a legacy that most builders don’t have the time or inclination to challenge, and so instead they accept the usual frustrations as part of the process used to budget home construction.
Following the practice of commercial construction firms, we created a preconstruction services (PCS) department, staffed by two specialists. Where most residential contractors have maybe one estimator bidding…