OVERVIEW

An accurate construction estimate is absolutely essential when it comes to planning a new home. The sheer number of details, different components, construction phases and areas of expense are staggering. This planning step assures a smooth running project, while minimizing delays and surprises. The estimating process also brings a level of reality to the dream, and helps to keep it a dream instead of letting it become an out of control nightmare.

This Sample represent a very simple estimate. You will note it includes not only items included in our log package, but items that are not furnished. Your estimate may be much more complex, but should include at least all the basic elements of the home. If you are having a contractor build your home, make sure all areas are covered. If you are an owner-builder, your labor costs in some areas may be quite low. Other items should be let out to bid, or a realistic cost developed before construction begins. Many lenders will also require a construction estimate along with the plans.

GENERAL CONTRACTOR

A general contractor is hired to control, build and oversee a project. This individual typically does very little hands on work, and will sub-contract most of the build. The contractor often provides a hired crew to perform some of the construction.

The general contractor will profit by providing the labor, and by marking up construction materials, typically from 10% to 20%. For example, if the log package, labor and balance of the building materials costs $100,000.00, the contractor will add $10-$20,000.00 (or more) for profit and overhead. The general contractor is thus compensated for the risk of building the structure, and for warrantee expenses later on should something go wrong.

This is how most homes are built, and is the format Banks prefer you take. It's typically the most expensive route, but it is also the safest and most conservative approach.

---

OWNER BUILDER ACTING AS GENERAL CONTRACTOR

This very common method is one in which the home owner acts as his own contractor. The owner actually does very little physical work and acts more as a construction manager. The owner builder receives bids from sub-contractors, chooses the contractors he wishes to use, and coordinates the project and building calendar. Savings are realized by the lack of overhead and profit margin that would otherwise go to a general contractor.

Other benefits include personal control over who does the work and at what price. Furthermore, the owner builder can jump in at any time and do some of the labor personally, thereby saving even more. An owner builder acting as contractor can expect about a 10% savings over hiring a general contractor.

---

OWNER BUILDER ACTUALLY BUILDING THE STRUCTURE

As a true owner builder, you personally do any amount of the labor you choose - usually most of it. The figures below are based on the owner doing all the labor, so the costs are strictly for materials. This of course is the least expensive way to go, however the owner has to devote a tremendous amount of time to the project. Banks do not usually encourage this format.

The same $100,000.00 structure above could conceivably be done for $65-$75,000, because now all costs are for materials or incidental labor only.

Sample Construction Estimate

Owner: Joe and Rose Clark
Lender: Midwestern Bank of Indiana

Project Description:
    Single Family Dwelling - Log Construction Main Level
    Main Floor 900 sq. ft.,  Second Floor 900 sq. ft., Total: 1800 sq. ft.