The Piazza Difference Build Process, a process that is simple – effective and efficient. Please do take the time to review our build process here, any questions? Don’t hesitate to contact our team.
We build to endure the test of time, through quality craftsmanship!
The budget drives everything and everyone has a budget. The budget may be dictated by the bank or by your personal comfort level. Another item, which can affect your budget, is the reasonable fair market value for the home you are contemplating. Be prepared to discuss your budget constraints frankly with your designer and builder. Do this early on so that the guidelines for the rest of the process can be established and the team will have a budget to go by. You should establish a budget ceiling, then use your professional team to find out how much lot and home you can fit into those limits. Some homebuyers try to be coy and not reveal their budget. Their only concern is to know how much per square foot a builder charges for the homes he builds. To this, I would suggest an alternate scenario to consider. Picture a custom builder as if he were automobile manufacture who builds everything from the bottom-line Chevy to a top of the line Mercedes. A true custom home builder should have the ability to build this range of size and quality. Would you ask a “custom” automobile manufacture how much they charge per pound for a car? Probably not. The question would be nearly impossible to answer. The actual price for the car (price per pound) depends on what is included in the car and its relative quality. The same is true for a home.
The budget is composed of 5 basic elements- land, land development, home plans (size and difficulty of the build), specifications, and financing.
The land is the single largest line item in any construction budget. In our area, it usually ends up being somewhere between ¼ – 1/3 of the overall price of the home. If this line item is handled incorrectly, then the remaining elements of the budget will be seriously impacted. The single biggest mistake that the customer makes is to go out and purchase a lot without considering the other elements of the budget. If a person pays too much for the lot in relation to the rest of the budget, or if they pick up an apparently cheap lot that has large land development costs, there may not be enough money remaining in the budget to meet the minimum standards for the home that were envisioned. This is not an anomaly and happens far too often when people purchase property without consulting a construction professional to put together the entire budget first. It is our recommendation that a customer meets with a design and building professional (or even better a design/builder like (John Piazza Jr. Construction Inc.) before embarking on a land search. You need to put together a budget concept to see approximately what the home and required finishing will cost so that it can be determined what is left in the budget to purchase the property. At John Piazza Jr. Construction, we encourage customers to have us walk their potential lot(s) so that we can give an evaluation of how the lot and its price might fit into their overall budget and construction plan.
Land development is probably the least understood area of the entire process. It is not only misunderstood by the client but also by a large number of builders. If you can imagine placing a hook on top of the home and picking it up from the lot, the work that remains on the site with the home removed is “Land Development” This includes excavation, clearing trees, septic fields, sewer, water, bringing in and connecting utilities, driveways and permits. On a typical lot in Skagit County, it generally runs between $30,000 and $100,000. As you can see this could easily be the second largest line item in the overall budget right behind the cost of the lot. Another consideration in selecting your lot’s location is the possible impact fees (i.e. schools, parks, sewer, traffic, fire, etc.) that are charged in that jurisdiction and the wide variation of costs from jurisdiction to jurisdiction. We feel that it is unconscionable for a builder to ask an owner to go into the custom home process without having a very good idea as to what the overall land development costs are going to be.
Home plans can be obtained in many different ways. You can engage an architect or a design/builder to create your plans. Either one can make modifications to some existing plans that they own or start with a blank piece of paper and create a totally unique design. Plans can also be obtained from plan books that are available in most bookstores however these plans rarely conform to local building techniques, structural engineering requirements or they may not fit on your site and would need to be redrawn to fit those requirements. Plans can also be created by combining many different ideas from many different sources into a unique plan that fits your needs. Many times, the custom home plan process is actually a combination of the above. The home design process should not start until an overall budget review has been agreed upon between the owner and the design team. Before the first pencil meets the paper, the builder/ designer and the owner must come to a general agreement as to what the overall size of the home should be, the general specifications, and to what the overall budget is for the structure and finishing items. National statistics indicate that if this policy is not followed, the money and time put into the design process probably will not end up in a home being built. I have had potential clients come to my office that has already purchased their lot and have a complete set of plans end up never building their dream home because the overall cost to build the plan vastly exceeds their budget. Unfortunately, this happens all too often, but with the aid of an experienced design team, like John Piazza Jr. Construction, we can help guard against doing this.
Perhaps, the most infectious disease in the custom home process is the “while you are at it” syndrome. Everyone is guilty of this including architects, builders, and homeowners. The syndrome works like this, “While you are at it”, let’s add 4′ to the master bedroom because that would really be nice. “While you are at it”, let’s make the kitchen bigger and add an island. “While you are at it”, let’s add a bonus room over the garage, etc. etc. We find that this area is where the architects and the design/builders are really separated. Unfortunately, there are some architects who do not have the discipline to say no to budget-busting ideas and/or the owners will not listen to them. The project that starts at 3000 sq ft ends up being 4200 sq ft and everyone is amazed when they consult a builder and find out that they are decidedly over budget. I should point out that architects generally make their living by drawing and not building. A design/builder, however, realizes that their income is based on actually building the home. It is in the design/builder (as well as the owners) best interest to make sure that the entire design process ends up with a plan and specifications that fall within the owner’s budget. Trust me, you do not want to put your heart and soul into spending many thousands of dollars and several weeks of time designing your dream home only to find out that it will never be built. The construction process, like life itself, is a series of compromises. Those compromises should be made at the beginning of the design and specification process and not as an afterthought when the wish list has been finalized and the plans are complete. Cost surprises at the end of the design process are not fun.
Many of the technical selection items, such as what kind of lumber to use, how the plumbing and heating systems are installed, etc. which are necessary for building a home can be made by your building contractor or designer, so it is wise to pick an experienced and trustworthy builder. The fun part of the selection process is lead by the client, it includes plumbing fixtures, light fixtures, cabinets, countertops, and so forth. Once again, if the budget has been carefully monitored up to the point of making the selection, then there should be enough money left in the budget to put the finishing touches on the home that were envisioned.
An improperly handled budget, where the cost of the lot is too high, the land development cost was unknown until it was too late, and the home design has grown larger than the budget can handle, will cause the selection and finishing items to suffer. This does not have to happen if the whole budget process is carefully evaluated at the beginning so enough money is set aside to do the nice light fixtures, granite, appliances, cabinets, etc., which will transform a house into the dream home you have envisioned.
There are two stages in specifications- the budget stage and the final stage. Everyone has heard about budget overruns in the finishing areas. This sometimes leads to an ill-advised process of the owner trying to pick every knob and light bulb before the construction process starts. Most clients will go back and completely revisit all of their selections and sometimes put themselves through the process two and three times on certain items.
We believe the correct way to handle the specification process is as follows:
The designer/builder can block out the various finishing areas and you can address that one by one. A reasonable quantity, quality, and price need to be allotted to each of the areas to make sure you preserve enough money in the budget, so when it comes to finishing you can put into your home the items you had envisioned. You can help this stage by creating a simple file with ideas taken from your previous home, magazines, visits to stores, etc. File the photos by category (kitchen, plumbing, trim, etc.) Do not wear yourself out by trying to make your final decisions at the budget stage of construction. You will burn yourself out and will change your mind multiple times as you see the home being built. We help our clients to be educated on each of the finishing areas so they can then agree with the designer/builder as to how much to budget for each area. For instance, with appliances, the thousands of appliances available can confuse any purchaser. In our initial budget process, we will have a discussion as to what level of quality of appliances you think you are looking for, then we offer suggestions that fit that category. We will then put prices on each of these appliances for you and show you a total we suggest being included as a line item (allowance) in the budget to cover appliances. We sometimes recommend bumping the allowance 10% to 15% to allow for some latitude in the selection for upgrades should you decide to do this later.
Once the entire budget is put together, you can revisit each of the areas in a casual and informed fashion to refine the selection in plenty of time so the product can be ordered and delivered within the construction schedule. We have our customers start the selection process early, once they are done the owner can go back and make trade-offs from one selection category to another to come up with a final specification that meets their needs at the agreed-upon budget. Our goal in John Piazza Jr. Construction is to have the allowance trade-offs “revenue neutral” at the end of the job, so the owner does not run over the agreed-upon budget. It is infrequent that any of our clients run over more than 3% to 5%. The overruns, when they come, are generally caused by the client completely changing their minds as to the level of finishing which were originally agreed upon. Many customers are concerned about being penalized for making changes as the process proceeds. If you selected a good, quality, true custom builder as your contractor, there should no monetary penalty for you to change your mind on the refrigerator as often as you want, up to the date that we actually place the order. We are, after all, a custom builder, and custom means unrestricted choices.
Financing is the last item in the budget process but should be thought of first. Many times, the amount the banks will finance drives the overall budget. In most cases the finance part of the overall project is a small percentage of the cost and is not a large line item in the overall budget. Custom home financing in Washington is generally handled as follows. With the cooperation of the builder, the owner will obtain the loan to acquire the building lot, build the home, and provide for permanent financing once the home is complete. This is typically referred to as a “land acquisition/construction/permanent loan.” This is a very specialized area of financing and we strongly recommend that you interview lenders that specialize in this area of financing. We have witnessed unnecessary delays and expense stories when clients went to their everyday bank for financing and end up having their construction delayed 6 months or more because the bank was not familiar with this type of special financing. We can provide you with a list of good lending institutions that will treat you fairly and will gladly have an initial no-obligation meeting with you to explain the process. They can also quickly give you an idea as to how much they will finance and what the costs to you will be.
The next area to review is the Construction Team and their duties. The team is composed of the owner, designer, builder, and eventually the subcontractors and the suppliers.
The builder should have the total responsibility for the selection of the subcontractor and suppliers, who will work for the builder to meet the client’s goal. The builder should also work with the clients as early as possible to establish a budget that will guide the entire process. The builder should also work with the owner in the selection process to make sure the items chosen are within budget and on-site when the tradesmen need them to keep the flow of the project moving.
The designer has the obligation of putting the dream (not those of the designer) on paper in a professional manner so it can be understood by the other professionals who will be charged with actually building the home, within the agreed-upon budget and in a reasonable time frame. From “scratch” plans can easily run $20,000-$40,000 with an architect, a design/builder can start from “scratch” for an average set of plans for $12,000.00 or modify an existing set of plans for a relatively small charge.
Before you decide on your designer, find out if they use the computer-aided design program (CAD). This can greatly accelerate the design process (and lower costs) as well as making changes easy. It is a custom home, isn’t it? Also, find out who does the design. At John Piazza Jr. Construction our design team does 80% of the homes we build, working directly with the clients. If you must go through third parties the cost and time involved can get out of hand.
The owner is the most important part of the team and their duties. Referring to the intuitively obvious. These duties include communicating to the designer/builder of what they are envisioning in their new home and how much they are willing to spend. Duties also include making selections on a timely basis, funding the project, and cooperating with the rest of the team during the process.
Subcontractors and suppliers should also be a part of the Builders Construction Team and not someone who happens to be “low bid” on your home. Many times, these trades are looked at as subordinate to the overall process and this attitude can lead to lack of cooperation, an unstable schedule, and poor quality. At John Piazza Jr. Construction, we have selected some of the finest tradesmen in the Snohomish, Island, and Skagit Counties and use them exclusively for each of our operations. We know we can have drywall installed at a lower price, but we also know that we cannot get the same quality if we “low bid” each job, hop from subcontractor to subcontractor, and try to deny the drywall man a reasonable profit for the high quality work we expect of him. By making the subcontractors and suppliers a part of the team, we can get the best prices for top quality work and keep the jobs on schedule. Our drywall contractors have been with us for many years and they know what we expect and know they will be treated fairly and will always get paid on time. They give us great prices, top quality work, and always finish on time. When the heating contractor, electrician, plumber, etc. work side by side year after year, camaraderie is created on our jobs which leads to a pleasant job site. This reflects positively on the quality of the final product.
Every job has a schedule. Even if a customer says they are not in a rush, we eventually find they do in fact have a schedule when they evaluate the cost of money and how it affects a job that drags on forever. How long a home will take to build depends on the difficulty of the land development, the complexity of the structure of the home, its size, and the level of finishing that will go into the final home.
The schedule is also driven by the owner’s cooperation in making selections in a timely fashion so the product can be on-site when needed for installation. As a rule of thumb, on a reasonable lot with reasonable design, you should figure a minimum of 7 to 9 months to finish a custom home that is under 3,500 finished square feet. For every thousand square feet over 3,500, you should add about a month to the construction schedule. The schedule should be specifically addressed in the contract, as well as the duties of the owner, contractor, and other team players so a schedule can be established and adhered to by all parties.
At John Piazza Jr. Construction, we also include a start and finish schedule with our contract and if your selections are on time, we will not deliver the home late. (Check references). We also include a selection schedule in our contract so you know upfront when your decisions will be needed.
Many customers are not aware of what the warranty is they are getting until the end of the project. We think that it is irresponsible for any builder not to discuss the warranty at the initial stages of negotiations and to include the warranty in the contract documents. A warranty, however, is only a piece of paper and is only as good as the builder who is behind it. Many of the warranty heartaches we hear about in the industry are the direct function of the owner choosing an inexperienced contractor who has a poor track record of building a true quality home and an even worse track record of honoring their commitments to fix the legitimate complaints of their customers. In choosing your contractor, you should focus carefully on the builder’s reputation of honoring their commitments to the owner once they have paid and the owners have occupied the home. John Piazza Jr builds to a minimum of the residential construction Performance guidelines, produced by NAHB (The National Association of Home Builders).
Change Orders are unfortunately looked on by many as the “dirty words” of the construction business. This should not be the case. A true custom builder should be willing to customize the home as the building progress.
At John Piazza Jr. Construction, we are willing to customize the home at the initial stages of the design or any time during the construction progress as long as we are reasonably compensated for efforts. If we can move a closet from one side of a bedroom to the other with a pencil (on the plans) before it is built then there is little or no charge for this service. If however, we have to move the closet from one side of the bedroom to another with a sled hammer after it has been framed, drywalled, and painted, then there will be a charge commensurate with the amount effort the workman has to extend and how the change delays the project.
As a result of the step by step process, we use to guide our clients, tearing things out is a rare occurrence at John Piazza Jr. Construction. We pride ourselves in educating our customers in the whole process as we proceed so that they can make sound decisions in a timely fashion so that everything goes in right the first time. The change order process and the associated cost should be clearly defined in the contract with unit prices agreed upon upfront so that there are no disagreements between the parties when a change order occurs. Most of our change orders are revenue neutral. When a customer makes a selection decisions or changes such a shifting from GE refrigerator to one that costs essentially the same, a customer should not be penalized for this kind of change if it is made early enough prior to the orders being placed.
The contract documents serve as the road map for the construction process once the budget is agreed upon and the design is complete. A competent custom home builder who has been in business for a period of time should be able to provide you with a fair contract that will accurately direct the course of events throughout the construction process. You should expect the contract to be one-sided in favor of the builder. This is because; the owner is usually a neophyte at this process, but the builder should be an expert in the home building trade. The builder should be held responsible for all that accrue in the construction of the home. We at John Piazza Jr. Construction pride ourselves in having a contract that we have refined since 1973 that is clear, concise, and fair to all parties. Once we finalize our contract with you we encourage you to take it to your attorney and get their opinion. In many cases, our customer’s attorneys advise their clients that if we are as professional in our construction as we are in our contract presentation they have made the decision in a contractor. When you come to John Piazza Jr. Construction, do not ask for our “boilerplate” contract, because we do not have one. We have a multiple selection contract basis which is customized for each owner and which is driven by their lot, the type of home, and the finishing.
There are several forms of Cost-Plus Contracts. The most common form of a Cost-Plus Contract is where we give you an estimate of the cost of the home based on a set of specifications much like a fixed price contract. Much like a fixed priced contract, if the home were to be built per those specifications the cost of the home would come in at the estimated price. In a cost-plus scenario you would pay only the exact invoice costs plus either an agreed-upon fixed overhead and profit and labor or an agreed-upon percentage of the costs. This contract type is best suited to the client that will make numerous changes or is undecided in their selections and wants the flexibility to make those changes. The disadvantages of the Cost-Plus Contract are the schedule is a continually moving target plus the end budget is also a continually moving target.
Hopefully, this outline has made you more comfortable with the overall custom home process. I will repeat what I said initially in that there is no way the entire process can be explained in a short space and time. Your best key to a successful custom home process is to do your homework and check references so you choose a competent and experienced custom home builder who you have a good repour with to guarantee your dreams will become a reality in a cost-effective, timely enjoyable fashion. We are available to go over your plans and lot or to start from scratch – give us a call and let us get started.
