Make a project schedule to plan the orderly progress of the work. This can be a bar chart that shows the time period of activity by each trade.Maybe you can’t wait to bang the first nail. Or you may be just as happy leaving town until the windows are cleaned. The extent of your involvement with the construction phase is up to you. Your time, interests, and abilities can help you decide how to get the project from lines on paper to reality. But building a house requires more than putting pieces together. Whoever is in charge of the process must competently manage people as well as supplies, materials, and construction. He or she will have to:
Make a project schedule to plan the orderly progress of the work. This can be a bar chart that shows the time period of activity by each trade.
Establish a budget for each category of work, such as foundation, framing, and finish carpentry.
Arrange for a source of construction financing.
Get a building permit and post it conspicuously at the construction site.
Line up supply sources and order materials.
Find subcontractors and negotiate their contracts.
Coordinate the work so that it progresses smoothly with the fewest conflicts.
Notify inspectors at the appropriate milestones.
Make payments to suppliers and subcontractors.
You’ll have to take care of every logistical detail yourself if you decide to act as your own builder or general contractor. But along with the responsibilities of managing the project, you gain the flexibility to do as much of your own work as you want and subcontract out the rest. Before taking this path, however, be sure you have the time and capabilities. Do you also have the time and ability to schedule the work, hire and coordinate subs, order materials, and keep ahead of the accounting required to manage the project successfully? If you do, you stand to save the amount that a general contractor would charge to take on these responsibilities, normally 15 to 30 percent of the construction cost. If you take this responsibility on but mismanage the project, the potential savings will erode and may even cost you more than if you had hired a builder in the first place. A subcontractor might charge extra for having to return to the site to complete work that was originally scheduled for an earlier date. Or perhaps because you didn’t order the windows at the beginning, you now have to pay for a recent cost increase. (If you had hired a builder in the first place he or she would absorb the increase.)
Acting as the builder, requires the ability to hire and manage subcontractors.
Building a home, includes the need to schedule building inspections at the appropriate milestones.
A builder or general contractor will manage every aspect of the construction process. Your role after signing the construction contract will be to make regular progress payments and ensure that the work for which you are paying has been completed. You will also consult with the builder and agree to any changes that may have to be made along the way.
Leads for finding builders might come from friends or neighbors who have had contractors build, remodel, or add to their homes. Real-estate agents and bankers may have some names handy but are more likely familiar with the builder’s ability to complete projects on time and budget than the quality of the work itself.
The next step is to narrow your list of candidates to three or four who you think can do a quality job and work harmoniously with you. Phone each builder to see whether he or she is interested in being considered for your project. If so, invite the builder to an interview at your home. The meeting will serve two purposes. You’ll be able to ask the candidate about his or her experience, and you'll be able to see whether or not your personalities are compatible. Go over the plans with the builder to make certain that he or she understands the scope of the project. Ask if they have constructed similar houses. Get references, and check the builder’s standing with the Better Business Bureau. Develop a short list of builders, say three, and ask them to submit bids for the project.
A lump-sum, or fixed-fee, contract lets you know from the beginning just what the project will cost, barring any changes made because of your requests or unforeseen conditions. This form works well for projects that promise few surprises and are well defined from the outset by a complete set of contract documents. You can enter into a fixed-price contract by negotiating with a single builder on your short list or by obtaining bids from three or four builders. If you go the latter route, give each bidder a set of documents and allow at least two weeks for them to submit their bids. When you get the bids, decide who you want and call the others to thank them for their efforts. You don’t have to accept the lowest bid, but it probably makes sense to do so since you have already honed the list to builders you trust. Inform this builder of your intentions to finalize a contract.
Under a cost-plus-fee contract, you agree to pay the builder for the costs of labor and materials, as verified by receipts, plus a fee that represents the builder's overhead and profit. This arrangement is sometimes referred to as “time and materials.” The fee can range between 15 and 30 percent of the incurred costs. Because you ultimately pick up the tab — whatever the costs — the contractor is never at risk, as he is with a lump-sum contract. You won’t know the final total cost of a cost-plus-fee contract until the project is built and paid for. If you can live with that uncertainty, there are offsetting advantages. First, this form allows you to accommodate unknown conditions much more easily than does a lump-sum contract. And rather than being tied down by the project documents, you will be free to make changes at any point along the way. This can be a trap, though. Watching the project take shape will spark the desire to add something or do something differently. Each change costs more, and the accumulation can easily exceed your budget. Because of the uncertainty of the final tab and the built-in advantage to the contractor, you should think twice before entering into this form of contract.
The conditions of your agreement should be spelled out thoroughly in writing and signed by both parties, whatever contractual arrangement you make with your builder. Your contract should include provisions for the following:
The names and addresses of the owner and builder.
A description of the work to be included (“As described in the plans and specifications dated . . .”).
The date that the work will be completed if time is of the essence.
The contract price for lump-sum contracts and the builder's allowed profit and overhead costs for changes.
The builder’s fee for cost-plus-fee contracts and the method of accounting and requesting payment.
The criteria for progress payments (monthly, by project milestones) and the conditions of final payment.
A list of each drawing and specification section that is to be included as part of the contract.
Requirements for guarantees. (One year is the standard period for which contractors guarantee the entire project, but you may require specific guarantees on certain parts of the project, such as a 20-year guarantee on the roofing.)
When submitting bids, all of the builders should base their estimates on the same specifications. Once the work begins, communicate with your builder to keep the work proceeding smoothly.
Provisions for insurance.
A description of how changes in the work orders will be handled.
The builder may have a standard contract that you can tailor to the specifics of your project. These contain complete specific conditions with blanks that you can fill in to fit your project and a set of “general conditions” that cover a host of issues from insurance to termination provisions. It’s always a good idea to have an attorney review the draft of your completed contract before signing it.
Inspect your newly built home, if possible, before the builder closes it up and finishes it.
The construction phase officially begins when you have a signed copy of the contract and copies of any insurance required from the builder. It’s not unheard of for a builder to request an initial payment of 10 to 20 percent of the total cost to cover mobilization costs, those costs associated with obtaining permits and getting set up to begin the actual construction. If you agree to this, keep a careful eye on the progress of the work to ensure that the total paid out at any one time doesn’t get too far out of sync with the actual work completed.
What about changes? From here on, it’s up to you and your builder to proceed in good faith and to keep the channels of communication open. Even so, changes of one sort or another beset every project, and they usually add to its cost.
Light at the End of the Tunnel.
The builder’s request for a final inspection marks the end of the construction phase — almost. At the final inspection meeting, you and the builder will inspect the work, noting any defects or incomplete items on a “punch list.” When the builder tidies up the punch list items, you should reinspect. Sometimes, builders go on to another job and take forever to clean up the last few details, so only after all items on the list have been completed satisfactorily should you release the final payment, which often accounts for the builder’s profit.
Having a positive attitude is important when undertaking a project as large as building a home. A positive attitude can help you ride out the rigors and stress of the construction process.
Stay Flexible. Expect problems, because they certainly will occur. Weather can upset the schedule you have established for subcontractors. A supplier may get behind on deliveries, which also affects the schedule. An unexpected pipe may surprise you during excavation. Just as certain, every problem that comes along has a solution if you are open to it.
Be Patient. The extra days it may take to resolve a construction problem will be forgotten once the project is completed.
Express Yourself. If what you see isn’t exactly what you thought you were getting, don’t be afraid to look into changing it. Or you may spot an unforeseen opportunity for an improvement. Changes usually cost more money, though, so don’t make frivolous decisions.
Finally, watching your home go up is exciting, so stay upbeat. Get away from your project from time to time. Dine out. Take time to relax. A positive attitude will make for smoother relations with your builder. An optimistic outlook will yield better-quality work if you are doing your own construction. And though the project might seem endless while it is under way, keep in mind that all the planning and construction will fade to a faint memory at some time in the future, and you will be getting a lifetime of pleasure from a home that is just right for you.