Fitting the Bill

An estimate came in at more than double what the client had planned — but, in the end, reworked the project to fit a price range they could afford. By itemizing the estimate and broadening design and finish choices, the clients were able to pick and choose priorities and make other adjustments to bring the project within budget.

May 31, 2006

Sidebars:
The Financials
Snapshot

The last time Ron and Paula Myers remodeled their Cary, N.C., house, the project took five years. It was a sunroom they built themselves.

When they decided to update their 1974 house with a master bedroom suite expansion and other projects, they wanted the remodel to go faster. So they hired a pro, David Mackowski of Quality Design & Construction in Raleigh, N.C.

They had a particular price in mind, too. "We had refinanced and hoped that $90,000 would be enough" to cover almost everything, says Paula. But the Myerses' understanding of remodeling costs had fallen far behind the times. Mackowski delivered this bad news — and an estimate more than double what the Myerses planned — but, in the end, reworked the project to fit a price range the Myerses could afford.

The old bedroom was cramped and claustrophobic. In the new bedroom, the patio door - set at an eye-catching angle in the bedroom extension - brings light into the enlarged room and provides access to a private deck.  
After photography by Strawbridge Photography

Reshaping the plan

The process began in January 2005, when the Myerses signed a design contract with Quality. Top priority for the Myerses was enlarging the master bedroom, closet and bath. Before the remodel, "We had a narrow, long bedroom, a very narrow closet, not even 5 by 8," and a bathroom so small, "I described it as a closet," says Paula. The only bathroom cabinet was a tiny unit under the single sink. The shower was an acrylic insert. "We put up with that for 25 years," she says. The Myerses were ready for a change.

Although the couple had their wish list, it took three rounds to finalize the plan. The first design included everything on the clients' wish list: a master bedroom extension and spacious master bathroom addition plus a new front porch, roof, electrical system, HVAC system, hot water tank, and siding and trim repairs. The price tag topped $200,000. "I cut the estimate into pieces so they could pick and choose" what to do, Mackowski says.

The second plan deferred much of the miscellaneous work — a new front door and porch canopy, reframed storage shed, new roof and leaf-guard gutters — and trimmed costs to $143,000. Eliminating the 3- by17-foot bedroom extension and shrinking the master bathroom addition from 18 feet by 11 feet to 13 feet by 11 feet further reduced the price to $117,282. About $7,000 of that savings came because the septic tank and leech field would not have to be moved to make room for the bathroom addition.

In the third plan — a $129,532 design they approved in June — Ron and Paula opted to add a 4- by 17-foot bedroom extension and deck back into the plan. They offset that $11,950 expense with modifications that trimmed costs without compromising comfort and aesthetics.

Production began in mid-July. The bedroom extension Mackowski added broke open the narrow, boxy space. He used roof trusses to frame the roof over the extension, with girder trusses to support the tails of the trusses above the existing room; that saved 15 man hours. The hardwood flooring in the new section feathers into the existing bedroom flooring; an all new floor would have cost $750 more. Set at an appealing angle, a patio door opens to a small, private deck. Mackowski used treated pine for the deck rather than a synthetic product, saving another $740.

By relocating the bathroom to an addition, Mackowski was able to absorb the old bathroom space into a much larger, more functional master closet. Adding a laundry area in the closet was a wish list item that proved "cost prohibitive," says Paula, but Mackowski installed the pipes and wiring behind the wall anyway. When the Myerses install a stacked washer/dryer later, it will be economical to hook up. "All they'll have to do is run a dryer vent," Mackowski says.

The 1974 master suite was skimpy and narrow, but now a 4-foot-deep extension brings breathing room and outdoor access to the bedroom. The new bath, is almost double the size of the old one, and the enlarged closet multiplies the storage capacity.

Budget balancing act

Putting together the bright, stylish new bathroom was a process of creative give-and-take. To make some expensive must-haves possible, Mackowski found ways to save money in other areas. Paula's jetted tub was one of the big-ticket luxuries. "It cost a lot," she says, "so we went with ceramic instead of porcelain tile" on the floor and wall, saving $1,000. Switching to faucets that resemble expensive ones saved another $1,300.

The other big-ticket indulgence was the granite counters. Paula had planned to use tile but couldn't find any in the color she wanted. When she went to an open house at another Mackowski project and saw the granite counter there, "I really fell for it," she says. The color was perfect, but the granite was an expensive grade.

Several decisions worked to offset that extra cost. Mackowski specified a simple pencil edge instead of a more ornate ogee edge on the granite, thus saving $500 in production cost. He guided the Myerses toward maple cabinetry with a classy taupe stain and ivory glaze instead of cherry cabinets — a 5 percent savings in cabinetry. During the design phase he had already cut cabinetry costs by scaling back from a continuous run of cabinets to his and hers units at each sink, plus a linen closet.

The shower's design cut costs too. Planned to be a 4- by 5-foot curbless shower when the room was going to be larger, Mackowski reduced the enclosure to 3 feet by 5 feet. He put in a curb so the floor system would not have to be changed to accommodate the drainage slope of a curbless unit. That saved 10 man hours. And instead of making the enclosure totally frameless, he butt-glazed the glass corner while framing the door and perimeter. Savings: $1,600.

Ron wanted a hydraulically heated floor in the bathroom, but the house did not have the boiler system for it. Instead Mackowski installed an electrical radiant heat system, which was one third the cost. The couple compounded the savings by replacing the rusty water tank with a high-efficiency tankless water heater system.

For 25 years, the Myerses made do with a tiny, scantily equipped bathroom. The new one, featuring his-and-her vanities, a linen closet, a jetted tub, a custom shower enclosure and large windows, is "very spa-like" says Paula. Glass accent tiles add color and style.

A change in the window plan not only saved money but also "enhanced the room," says Mackowski. Paula had wanted a circle-top window near the peak of the cathedral ceiling but changed her mind. "It looked out of place," explains Mackowski. Instead, he enlarged the picture window by the tub, and the Myerses still saved $1,200.

Smart sweat equity

Ron's good work on the sunroom paid off in $8,000 worth of sweat equity on the master suite. "I'm comfortable with homeowners doing some of the work when they show they can handle it," says Mackowski. "I'll write up a contract at full price but let them know what the cost savings are if they do the work themselves. I'll suggest what I feel is available for the client to do."

For Ron, it was demolition, insulation and interior and exterior painting. Quality's crew took down the structural walls, but lead carpenter Brad Williams oversaw Ron's demo and other work. "Brad would identify things I could do to stay ahead of [the crew] and not get in their way," Ron says. "I took the brick and fascia off the bedroom before they started the job and demolished the closet while they were doing other things."

To assure the quality of the painting, "we give homeowners painting specifications" that state "what their responsibilities are," says Mackowski. This includes "making sure all nail holes are puttied, joints caulked, sheetrock defects identified" so Quality's drywall contractor can fix them.

The insulation phase took three weekends — longer than expected — because the Myerses added foam board as well as fiberglass batts to boost R-values in the bedroom. "We had other jobs going on" though, says Williams, so the crew worked on those while the insulation was being done. "I told Mr. Myers, 'Call me whenever you get it done," says Williams. "We stayed in touch. Mr. Myers did his work well," says Williams. "He was a motivated individual."

With Mackowski's cost reductions and Ron's sweat equity, the Myerses got a beautiful master suite, luxuries included, for only $4,000 more than what they expected to pay, says Ron. Says Paula: "We're ecstatic."

Budget History
Initial estimate: $206,100
Contract price: $129,532
Add-ons: $9,296
Additional insulation: $2,124
Additional work (electrical, plumbing and drywall): $4,746
Upgrade allowance items: (wrote change order for granite and plumbing selections to show that they exceeded the allowance in the budget) $2,426
Total Credits: $19,337
Removing one window from plan and reducing size of picture window: $1,184
Demolition and exterior painting by homeowner: $4,148
Insulation installation and interior painting by homeowner: $4,220
Drop new HVAC system from plan: $8,101
Survey not requested by inspector: $350
Allowance credits: $1,334
Final price of job: $119,491
Cost to produce: $68,094
Gross profit: $51,397
Budgeted gross profit: 40%
Actual gross profit: 43%
Final estimate: $189,911
Initial estimate: $166,420
Changes: $24,491


 

The Financials

Quality Design & Construction's astute cost controls benefit the company as much as its clients. David Mackowski budgeted a 40 percent gross profit on the Myers remodel — the standard markup for Quality Design & Construction projects — and picked up a few extra points by job's end.

The main reason for the profit gain was that "some efficiencies developed," Mackowski says. To guard against labor cost overages, "we plan for more disruption when homeowners are involved" in a sweat equity role, he explains. Because Ron Myers kept close to schedule on his demolition and painting work, "we didn't have to keep setting up."

During production, Mackowski shares job cost reports with the crews. "We do a biweekly report to project teams, including lead carpenters and carpenters, on estimate versus actual project costs," he says. "If man-hour expenses show slippage, they know to pick up" the pace to bring costs back into line. On the Myerses' job, for example, exterior trim labor ran $1,400 over budget, but efficiencies in interior trim "helped us catch this up a little."

Another cost-control strategy: Mackowski's books large allowance overages. Any product selections that run $500 or more beyond the allowance figure, such as the granite counters and jetted tub in the Myerses' project, get written up as change orders. The benefits are twofold, says Mackowski: the clients confirm the buying decision, and Quality Design & Construction is compensated for the extra expense upfront. "Change orders are pay-as-you-go," he says. On most change orders (but not allowance selections), clients are assessed a $50 processing fee plus an hourly rate of $40 for working up the estimate. "This ensures that the clients are serious about the change order," Mackowski says.

Snapshot

David J. Mackowski, president
Peggy Ann Mackowski, vice president Quality Design & Construction
Location: Raleigh, N.C.
Type of Company: Design-build general contractor
Staff model: 4 office, 6 field
Years in Business: 12
Sales History:

2002 $1,015,032
2003 $1,140,605
2004 $1,312,096
2005 $1,180,319
2006* (projected) $1,400,000


Annual jobs: 24
Workweek: 40 hours
Software: 20/20, SoftPlan, Microsoft Office, QuickBooks Pro
Contact: 919/779-3964, www.qdcinc.com

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