When embarking on a custom home project, one of the first questions homeowners often ask is how close the final cost will be to the original estimate. It's a valid concern, and the truth is that construction costs rarely remain exactly the same from estimate to final invoice. While estimates are a crucial part of the building process, several factors can lead to changes in the final cost. In this article, we’ll explain the common causes of cost changes in custom home construction and how Darco Construction works to keep costs in check.
Why Construction Estimates Aren’t Set in Stone
A construction estimate provides an initial approximation of the costs associated with a project. It’s based on a variety of factors including materials, labor, and the overall scope of the work. However, in construction, there’s always the potential for changes to arise as the project progresses. These changes can be caused by several different factors, all of which can affect the final cost of the home.
At Darco Construction, we’ve seen how managing these changes proactively can help keep a project within budget, and we’ve developed strategies to minimize unexpected costs for our clients.
The Three Types of Changes That Affect Construction Costs
There are three primary types of changes that can affect a construction project’s final cost: changes initiated by the homeowner, changes required by the city or local inspector, and changes resulting from missing scope by the builder. Let’s dive into each one.
1. Changes by the Homeowner
Sometimes, after the initial design and budget have been finalized, homeowners may decide they want something different. This could be a change in materials, like choosing a more expensive stone or upgrading to a higher-end appliance. While these changes are often made with the best intentions, they can add additional costs to the overall budget.
These types of changes are typically handled through what’s called a change order, which is an official document that outlines the change and its associated cost. While it’s important for homeowners to feel confident and satisfied with their decisions, it’s equally important to understand that these changes can impact the final price of the project.
2. Changes by the City or Inspector
During the construction process, city inspectors may visit the site and request changes to meet local building codes or safety regulations. These changes are often beyond the control of both the homeowner and the builder but must be addressed to keep the project moving forward.
While some of these changes can be anticipated, others may arise unexpectedly, leading to additional costs. For example, an inspector might require a different structural design to meet seismic safety standards or request adjustments to plumbing or electrical systems.
Again, these changes are documented in a change order, which will outline the new requirements and any associated costs. Unfortunately, these types of changes are part of the process, and homeowners should be prepared for them, especially in areas with strict regulations like San Jose.
3. Changes Due to Missing Scope by the Builder
One of the most common causes of changes in the final cost is what we call "missing scope"—this occurs when the builder overlooks certain elements during the estimation process. Construction projects are complex, and sometimes there are details that are inadvertently left out of the original plan.
This can happen if the builder doesn’t take enough time to thoroughly review the set of plans or fails to factor in certain costs when estimating the budget. These missing elements might include things like unexpected foundation work, structural adjustments, or additional materials needed for the construction.
While these changes are often due to human error, they can have a significant impact on the final cost. That’s why we make sure to put extra effort into thoroughly reviewing every set of plans to minimize the likelihood of this happening.
How Darco Construction Manages Changes to Keep Projects on Budget
At Darco Construction, we understand the importance of staying within budget and the role that change orders play in this process. To help our clients manage costs, we use a design-build approach. This method involves collaboration between the design and construction teams from the outset of the project, ensuring that estimates are as accurate as possible before the construction phase begins.
By taking the time to carefully plan and estimate the project during the design phase, we are able to provide a more precise construction budget and reduce the chances of surprises down the road. This design-build method also enables us to work closely with the homeowner throughout the process, ensuring that any changes they wish to make are handled in a way that minimizes their impact on the budget.
In fact, over the past few years, we’ve been very successful in handling projects with little to no change orders—unless they were due to the homeowner’s preferences or a city-required adjustment. By keeping the communication lines open and clearly outlining potential changes at the outset, we help our clients avoid unexpected costs.
Why Accurate Estimates Matter
The more accurate the initial estimate, the less likely it is that a project will go over budget. While some changes are inevitable, Darco Construction’s approach minimizes unexpected costs by being proactive about every phase of the project. We focus on creating comprehensive designs, detailed estimates, and an open line of communication between the homeowner, builder, and any third parties involved, like inspectors.
It’s also important to note that not all change orders are negative. Homeowners may decide they want to upgrade certain elements of the home, and that’s completely fine—provided they understand that it could come with additional costs.
Final Thoughts: Managing Your Custom Home Budget
Building a custom home is an exciting journey, but it’s important to understand that construction costs can change throughout the process. By working with an experienced builder who uses a design-build approach and thoroughly reviews the project plans, you can ensure that your final costs are as close as possible to your original estimate.
At Darco Construction, we’re committed to providing accurate estimates and clear communication to ensure that your project stays on track. We’ve successfully completed numerous projects where the final cost remained very close to the original estimate—thanks to our careful planning and proactive approach to managing change orders.
If you’re ready to start your custom home project in San Jose, get in touch with Darco Construction today to learn how we can help you build your dream home while keeping costs under control.