All you need to know about Developing a Residential Building
The Building Design Process
While every building is unique and every building development project presents its own set of challenges. There are certain steps that just about everyone has to go through. Here is an outline of those steps.
1. Funding: Ensure that you have ready access to sufficient monies.
2. With a rough budget in mind, brainstorm project scope.
3. Talk to a city planner to determine feasibility. Read up on municipal / zoning building codes.
4. Uncover any major property specific design / cost red flag issues, including:
• A buried oil tank or cess-pool. These systems may have to be removed if they are close to where a foundation will be placed.
• Poor sewer line. If the existing sewer line is in a state of deferred maintenance, the building could trigger the need to update it. Sewer work in the public right of way is notoriously expensive.
• Depending on the location and deed of the property, there may be special restrictions that go beyond the restrictions listed in the standard municipal / zoning building code. These may include, but are not limited to deed restrictions, homeowners associations with Covenants, Conditions & Restrictions, historic design overlays, conservation or wetland overlay district.
5. Rough sketch ideas for site plans.
6. Talk to neighbors for early feedback, identify objections or potential conflicts.
7. Interview architects or designers. Optimally, select professionals who have a passion for, or knowledge about residential design or have experience with building design.
8. The architect or designer will provide building plans.
9. The architect or designer will and get the plans approved by the city to obtain a building permit.
10. The architect or designer can help owner find a reputable builders or general contractors and subs. If owner is acting as the builder / contractor, identify a licensed plumber, mechanical, electrical subcontractor. You may base your assessment of them on costs, references, and communication skills.
11. Access financing as needed for the design and permitting phase.
Types of Construction Contract
The relationship you have with your builder will become one of the most important relationships you have in this period of your life. And the basis for that relationship is the contract you sign with him. There are myriad contract types, and on the pages ahead we detail different forms of fixed-price contracts.
Lump Sum
With this kind of contract the engineer and/or contractor agrees to do the a described and specified project for a fixed price. Also named "Fixed Fee Contract". Often used in engineering contracts.
A Fixed Fee or Lump Sum Contract is suitable if the scope and schedule of the project are sufficiently defined to allow the consulting engineer to estimate project costs.
Unit Price Contract
This kind of contract is based on estimated quantities of items included in the project and their unit prices. The final price of the project is dependent on the quantities needed to carry out the work.
In general this contract is only suitable for construction and supplier projects where the different types of items, but not their numbers, can be accurately identified in the contract documents.
It is not unusual to combine a Unit Price Contract for parts of the project with a Lump Sum Contract or other types of contracts.
Cost Plus Contract
A contract agreement wherein the purchaser agrees to pay the cost of all labor and materials plus an amount for contractor overhead and profit (usually as a percentage of the labor and material cost). The contracts may be specified as
Cost + Fixed Percentage ContractCost + Fixed Fee Contract
Cost + Fixed Fee with Guaranteed Maximum Price Contract
Cost + Fixed Fee with Bonus Contract
Cost + Fixed Fee with Guaranteed Maximum Price and Bonus Contract
Cost + Fixed Fee with Agreement for Sharing Any Cost Savings Contract
This types of contracts are favored where the scope of the work is indeterminate or highly uncertain and the kinds of labor, material and equipment needed are also uncertain. Under this arrangement complete records of all time and materials spent by the contractor on the work must be maintained.
Cost + Fixed Percentage Contract
Compensation is based on a percentage of the cost.
Cost + Fixed Fee Contract
Compensation is based on a fixed sum independent the final project cost. The customer agrees to reimburse the contractor's actual costs, regardless of amount, and in addition pay a negotiated fee independent of the amount of the actual costs.
Cost + Fixed Fee with Guaranteed Maximum Price Contract
Compensation is based on a fixed sum of money. The total project cost will not exceed an agreed upper limit.
Cost + Fixed Fee with Bonus Contract
Compensation is based on a fixed sum of money. A bonus is given if the project finish below budget, ahead of schedule etc.
Cost + Fixed Fee with Guaranteed Maximum Price and Bonus Contract
Compensation is based on a fixed sum of money. The total project cost will not exceed an agreed upper limit and a bonus is given if the project is finished below budget, ahead of schedule etc.
Cost + Fixed Fee with Agreement for Sharing Any Cost Savings Contract
Compensation is based on a fixed sum of money. Any cost savings are shared with the buyer and the contractor.
Incentive Contracts
Compensation is based on the engineering and/or contracting performance according an agreed target - budget, schedule and/or quality.
The two basic categories of incentive contracts are
• Fixed Price Incentive Contracts
• Cost Reimbursement Incentive Contracts
Fixed Price Incentive Contracts are preferred when contract costs and performance requirements are reasonably certain.
Cost Reimbursement Contract provides the initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. This type of contract specifies a target cost, a target fee, minimum and maximum fees, and a fee adjustment formula. After project performance, the fee payable to the contractor is determined in accordance with the formula.