Mission Accomplished

JG Development of Blue Mounds, Wis., builds and remodels timberframe, post-and-beam, panelized and log homes. It belongs to Wisconsin's Energy Star Homes program and has "grown to be the company out in this area that will do anything," no matter how daunting, says owner Jeff Grundahl. "Usually I'm the first one to tell customers not to tear down," says Grundahl.

December 31, 2005

The Financials
Products List

JG Development of Blue Mounds, Wis., builds and remodels timberframe, post-and-beam, panelized and log homes. It belongs to Wisconsin's Energy Star Homes program and has "grown to be the company out in this area that will do anything," no matter how daunting, says owner Jeff Grundahl.

"Usually I'm the first one to tell customers not to tear down," says Grundahl. The first time he recommended that someone "burn or bulldoze" their home was the day he set eyes on the Wolf-Saylor house in Mt. Horeb.

JG Development attached the new "skin" of the house to the reinforced frame, sandwiching insulation and house wrap between old and new exteriors. Grundahl removed two ugly bays - the homeowners called them "warts" - along the bedroom wing and replaced them with large picture windows.

Built in 1982, the original 20- by 31-foot structure had never been sided. The prior owner — also the builder — had cobbled together uneven walls from mortar, cordwood and bottles. Exposure to the elements had caused them to deteriorate. The upright posts were not connected to the rafters and the loft, so the structure had started to shift and separate. The roof sagged. Many of the cedar roof shakes had rotted so badly they were moldy. Structural timbers and rafters were rotten. The wood windows had severely deteriorated jambs and sills.

It "was the worst condition building I've ever been in," says Grundahl.

House of horrors

When Dave Wolf and Rhonda Saylor first saw the place, they thought it was a dream come true. Cooped up in an apartment, they had been searching for a country house with both acreage and charm. As they drove up to the house, the rustic log structure "seemed cozy," says Saylor.


The old part of the residence housed the kitchen and a great room with a loft. A 21- by 38-foot bedroom wing with rough-sawn barn board siding had been added in 1993. An unfinished basement contributed another 1,400 square feet. The location — hard by a stream on 17 wooded acres — was fantastic.

She and Wolf knew the house needed to be exterminated and that the original structure required siding. "The inspector said [the house] needed work," recalls Saylor. It seemed manageable, though. The report stated that the roof and basement didn't leak, and made no mention of rot or boiler problems. They paid $273,000 and became homeowners in February 2003.

Their happy homeowner honeymoon ended the first night in the house.

"We could see light through the log walls," says Saylor. "The house had essentially no insulation."

More trouble followed. The boiler was shot and needed to be replaced. When it rained, water poured into the hosue. Gallon jugs under the bay windows "filled up in no time," she says. The skylights were almost as bad.

"It was kind of a nightmare," says Saylor. "One night there was a tornado warning, and we were thinking it would be cool if it hit."

Alas, it did not. Saylor and Wolf tried to sue the previous owner, but he had vanished. The inspector's contract protected him. Calling a contractor remained the only course of action.

The cedar siding and decks were stained on site to obtain a better finish and to minimize touch-ups.

Enter the hero

Grundahl came out to take a look in spring 2003. The addition, he says, seemed basically OK. He recommended tearing down the older structure and rebuilding on the existing foundation to avoid zoning problems caused by proximity to the stream. Good idea but, at an estimated $92,000, too expensive for Saylor and Wolf

They wanted to make it work, though. "Our gut reaction was that he was great," says Saylor. "He seemed honest, and told us the issues with the house. We decided to go with him and not call any other remodeling companies."

So Grundahl went into Mission Impossible mode. His brainstorm: "Frame a house around a house." In addition to wrapping a new exterior around the house, JG Development would finish the interior, rebuild the basement stairs, replace the existing decks and add a deck off the master bedroom to capture more views.

This approach would cost far less and still accomplish Saylor and Wolf's goals: making the house waterproof, vermin-free and energy-efficient (the first year's heating bill was $4,000) while retaining its character and charm.

A dirty job

A close look revealed nonexistent insulation, gaping cracks in the cordwood-and-bottle walls and large gable-end holes.

The seven-month job began in August 2003. From the start, the scope of the pest infestation nearly overwhelmed the crew. The raccoons vacated the attic when construction began, but the other critters persisted. The workers chased hordes of mice out of the roof, then continued to find dead rodents from the basement to the rafters.

The pounding of hammers eventually drove out some 150 bats. Grundahl's crew carried spray in their tool belts to combat the constantly swarming hornets. When the workers removed the ceiling, they discovered the source: a 2- by 5-foot hornets' nest pressed into the rafters.

While fending off the pests, Grundahl also faced significant construction challenges. The first was to stabilize the mortise-and-tenon structure, as the builder had not used fasteners to secure the joints.

"The posts were starting to tilt," says Grundahl. He and his crew identified where the house was separating and attached heavy, custom-made structural steel brackets to the opposing sides. Then they framed over the structure and added insulation and sheathing.

"My experience told me that it would work," says Grundahl, "but it was a liability issue, so I put in my contract that we were unable to guarantee the structural integrity of the home even after the work was completed."

Next up: the roof. When the crew opened it, they discovered extensive rot, including rafters and a perimeter beam. Neither skylight had been installed properly — one was simply sitting on the roof — and there was no flashing around the chimney or roof connections. The crew replaced the rotten members, through-bolting a new beam and sistering new rafters onto inadequate old ones. JG Development eliminated the skylights and installed new asphalt roofing shingles. As part of his plan to tighten the building envelope, Grundahl created a "hot roof" with rigid insulation.

Then he turned his attention to the walls, which were 2 to 3 inches out of level in each 8-foot span and bowed inward up to 8 inches from end to end.

"The biggest challenge was to make the building straight enough that it would not look horrible when it was done," says Grundahl. The crew cut off the ends of the random-length cordwood logs to even them out, then they shot a laser line down the side of the house to establish a constant. Even so, "it was a trick," Grundahl says, to place the lap siding horizontally.

The next challenge was to fix the overhang soffit and fascia. "We had to work with the existing rafter ends," says Grundahl, "scabbing on the rafters using string lines to make it uniform, all the while fighting bats and wasps." Because the exterior was so crooked, the windowsills varied 2 to 3 inches end to end. Grundahl replaced many of the windows with insulated double-pane units and made custom, angled sills for every window opening.

This wide angled stairway to the basement replaced a narrow, open, spiral stairway. The handrail and custom cast-iron railing at the head of the stairs also improved safety.

He replaced the rotten entry door with an insulated steel unit, flashed around a wood chute that had allowed the basement to fill with water, and ran a custom-made strip of aluminum flashing around the base of the new walls "as a rodent proofer." After his crew installed new windows in place of the bedroom bays, completed the interior finishes and built new decks, Grundahl's mission was accomplished.

After such a bad start, "we feel very lucky," Saylor says. "Instead of being a shack, [the house] is a unique, custom-made little place." Even the mailman "can't believe it's the same house," she quips. Tight and energy efficient, it now stays warm and dry; heating bills are less than a quarter of what they were that first year. Living in this cozy house in the woods "is like being on vacation," says Saylor.

For insurance purposes "we had the house reappraised after the job," she adds. "The appraiser said if we ever sold it, she would buy it."


The Financials

Jeff Grundahl budgets a 30 percent gross profit on most JG Development jobs, but he added another percent to cover the unexpected on the tricky Wolf-Saylor project.

"With more risk we will add a contingency to cover the risks," explains Grundahl. The idea is "to increase the bottom line if it turns out that way, and if not to maintain our original margin."

JG Development wants a minimum estimated net of 10 percent. "We seek to net in the 10 to 12 percent range on a real tough job." Grundahl says.

Painstaking budget analysis keeps change orders to a minimum and protects the company's margin. "We use an itemized estimator that shows all pertinent 'projected' costs on the job and includes our margins," explains Grundahl. "It is done in a customer-friendly format, [so it can be used] in sales and negotiations."

Despite its many challenges, the Wolf-Saylor project went mostly as planned. There were only two change orders, both due to new decisions by the homeowners.

The work, however, did take longer than Grundahl had estimated, and the added labor costs shaved 2 percent off the gross profit.

Budget History
Initial estimate: $43,503
Final estimate: $41,710
Change order - shingle balance of roof on front building: $3,000
Change order - stain existing cedar shake roof on bedroom wing, install chinking, other: $1,786
Final price of job: $46,496
Cost to produce: $32,973
Gross profit: $13,523
Budgeted gross profit: 31%
Actual gross profit: 29%


Jeff Grundahl
JG Development Inc.
Location: Blue Mounds, Wis.
Type of company: Design/build remodeling and new home construction
Staff model: 5 office, 8 field
Years in business: 15
Sales history:
2001: $719,885
2002: $1,731,127
2003: $1,883,874
2004: $2,863,067
2005 (projected): $3,000,000

Annual jobs: 15 to 25
Average job size: $125,000
Workweek: 40 to 55 hours
Software: ArchiCAD 9, QuickBooks Premier Contractor Edition 2004, Microsoft Office
Contact: jeff@jgdevelopment.com

Products List

Cedar siding: Weyerhauser. Deck spindles: Deckorator. Decking sealant: TWP. Doors: Taylor. House wrap: DuPont Tyvek. Insulation: Dow Styrofoam. Log sealant: Perma-Chink. Paint: Hallman Lindsay. Roofing: GAF. Soffit and fascia: Rollex. Storm doors and windows: Larson. Windows: Andersen, Semco.

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