A detailed set of construction drawings and specifications can help.

Understatement of the year. If you can't describe what needs to happen, and with what specific materials, and to what industry standard, then no meaningful estimates can ever happen. Apples oranges and kumquats will be what some estimate.

I'm confused by the question. Are you planning to be your own GC or are you going to hire a builder?

I'm not an owner/builder so I'll leave it to others to answer your question about process.

I would, however, like to correct some misinformation from another poster--a non-builder-- who stated how builders price projects: "To protect themselves, builders always pad these contracts with an additional 15% to 20% in the bid." Hog wash.

According to a study of single-family builders conducted by the National Association of Home Builders, for fiscal year 2014 (which was made public in March 2016), the average gross profit (selling price less all direct and indirect costs of construction) was 18.9% After subtracting operating costs, finance charges, general and administrative expense, and owner's compensation, the net profit was 6.4% If builders, in fact, added 15% to 20% to everything, the gross profit would need to be closer to 40% than the 18.9% reported in the study.

Readers of this forum would be well served to remember the Edgar Alan Poe quote "Believe nothing that you hear and only one half that you see."

From what you posted, it seems the non-builder was right on in estimating a 15%-20% gross profit. BTW, excluding "owner's compensation" or draw as part of the profit may be correct from an accounting point of view, but it is always a bit misleading when you're looking at a small operation.

Overall, however, sub-division builders often do terribly, with even the best publicly traded ones posting 9% free cash flow on sales.

The last fixed-price homes I built I aimed for 25% gross profit--not counting all my "free" labour. In that sense, you're really doing little more than buying yourself a job. (But who else would hire me!)

Of course, many posters here assume there is a tremendous unearned profit in homebuilding that they are certain they can capture by bargain hunting on E*Bay and foregoing architectural services.

>What process did you take to try to narrow down your total budget?

Get the exact amount of gov fees, and utilities connection cost. Next exact estimate for the foundation [including cost of steel beam install and level], rough framing [per sq ft] everything under black paper. Next generate material list for framing or give the floorplan to supply house. Find roof contractors find cost per square. Next siding cost per square, mechanicals/systems, and finishes. Don't forget garage, road etc.

>Did
you get bids for every part of the process before beginning
construction?

Every single one. At least price per sq [ft] or rft.

>The last fixed-price homes I built I aimed for 25% gross profit--not counting all my "free" labor.

The issue you will be facing that contractors/supply houses will inflate the price vs what big builders are paying.

It is very messy and nasty job, you will be dealing with crooks and felons. And just because your contractor is a Mexican don't assume you got a good deal. I had fellow who suggested $3800, labor only, for soffits and proceeded to tell me what a good deal I got; and he accepted $1000 for soffits and trim.

Indeed, it is very difficult for the homeowner jumping in and playing contractor to know the appropriate prices for the truly skilled. When I was in it for decades, I would still get subs thinking I was fresh off the boat. Materials are another matter. But likewise there will be few discounts for a single home being built by a million question newbie.

IF a HO can even get a very busy trade to respond to an unknown materials and specs wish washy timeline one off quote, the pita factor he factored in just ate up any ''savings'' that they might have seen over using a GC who offers repeat business and right timeline. And if they find the mythical readily available low priced guy, that lack of ability to understand why they are available, and quality control eats them alive. With the delays factored in, I don't know how anyone who has a bank involved ever manages to come out without actually going over what a GC would charge. Self labor, sure. You only have to look at the in progress threads from the last 15 hears to see how those with hands on skills manage to live their lives working on a project. But that is If the municipality will allow a build to go 3-4 years beyond breaking ground.

We are pulling permits as owner builder. We have a GC assisting us and performing hands on such as framing, installing windows, etc. I got bids for materials, windows, doors, etc. I also received bids from other subcontractors for concrete foundation and block walls, trusses, roofing, foam spray, septic, plumbing and other areas. I tried to put together a budget based on bids to the best of my ability, but have some unknowns as well. Just wanted to see what other owner builders did to try to narrow down a budget.

Better have your lawyer proof that contract with your Project Manager. Any GC that isn't hired as a GC will have little real world control over any other workers on site. It's also a BIG RED FLAG that any GC would agree to that arrangement. 1K that you spend on a lawyer now could save you 100K in grief later.

Any GC that isn't hired as a GC will have little real world control over any other workers on site. It's also a BIG RED FLAG that any GC would agree to that arrangement.

This is complete BS... Construction managers are not new, owners can actually benefit more from a construction manager than a typical G.C., and many contractors will happily enter into the arrangement as they can make money for a lot less effort. I have also known framers to do this several times. It is not a new arrangement at all. In fact, the modern idea of a general contractor began as a modification of construction managers.

Construction managers will have the EXACT SAME control over the subs as a General Contractor would. The kicker is the law that governs this type of relationship is actually a lot more established than the laws regarding General Contractors so contract deficiencies are actually a bit less troublesome in this type of arrangement. Your contract doesn't have to be as explicit, there is an implicit duty when you agree to "assist someone" for a fee.

Before someone comes in to note that the OP didn't say they were a construction manager... It doesn't matter what they call themselves, if you have expertise and you charge a fee (no matter how small) to help someone in their construction then the agency laws kick in and you become a construction manager for all intents and purposes.

Edit: You should still have your contract looked at but, frankly, all contracts should be looked at by someone who is knowledgeable.

To answer your original question - There are really two types of owner/builder arrangements. Both of these things work on the same principle - you trade significant amounts of your time for savings. If you are doing it for purely financial reasons then personally I suggest you get a second job and even working 20 hours a week at a second job you will probably come out ahead financially. However, I believe you can build a better house this way because it forces you to really learn about the trade-offs and make informed decisions.

The more rare is the complete DIYer where you do as much of the work as possible on your own. For this type of arrangement prepare to spend a whole lot of time. If this is what you are doing you should ask mushcreek for some tips, I will be of no real help.

The more common is acting as your own G.C. and I have done this a couple of times. I do have family in construction and contacts that let me do this fairly painlessly but getting help from someone who has the experience can work too. Everything I say here will be about acting as your own G.C.

In these arrangements, planning is everything. Your bids are worthless unless you and the subcontractor are on the same page. I think you need a fully developed budget for these arrangements, and not for financial reasons. Everything that you send out to bid needs to be specced as fully as you can get it (that doesn't really mean you have to tell the plumber what size pipe to use, but exact fixtures and locations are needed). That means that your fixtures should be selected, your cabinets planned, your flooring selected, etc. G.C.'s have enough experience to make some of these decisions on the fly - you probably don't. You will get behind trying to make all of these decisions as they arise and it will cost you money. Actually it will probably cost you money in corrections and in time. You need to be very informed before you start.

Plan, plan and plan some more BEFORE you start building. Part of planning is getting bids. Have plans and specs with as much detail as you can and get at least 3 bids from each sub before construction. You'll have to make lots of decisions no matter how you slice it. Better to make the decisions BEFORE you break ground so you know what you're in for. That way you can make adjustments and changes on paper instead of during construction, which can be expensive.

Quick tip (and anther reason to get bids on every part of construction before beginning construction): Ask your subs during the bid process to look over your plans and make suggestions about what changes could be made that would improve the look, function or cost savings for your house. And specifically, what you can do to save money without sacrificing quality.

If you educate yourself and put in your due diligence before you start construction, you'll be just fine. I wish you all the best.

I recently did a bit of a hybrid- a fixed costs bid for all major infrastructure/systems/labor/materials, plus a great idea of costs/bids for allocation of allowances on all finish materials. A great, line-by-line bid from a GC that showed me "all". It was up to the builder to hold the line on 2/3rds of the build (his part), up to me to hold the line/allocate on all the rest. I never spent one day wondering/worry about subs- that was his deal.

It was the most awesome document I've ever seen. I was never lost, always knew that, no matter what our crazy market threw out, I was protect against the nuttiest things, which (at the time) included people jacking their labor costs by up to 2ce what they built.

I also had a contractor who led me by the hand into the best finish material subs possible, who were also great within budget. They all work in concert, all the time, and their continued relationship needs were very protective to me.

All of it led to a beautiful, upgraded, ground-up build that came in less than 5% of our projected costs. The only overages were my choice. Whatevdr my contractor had to do to hold his own lines? Up to him.

His fee was 10%. He had some "efficiencies", and we embraced that, as small business owners who have our own in our industry. I'm assuming he made at least another 5% of that- totally fair, given all the rest that he offered.

The point? I confidently took on a build where 67% of the costs were fixed, in Austin TX, during a year when 1% of all housing starts in the US were in this city. CRAZY things happened to so many in the market, within costs, but not to me.

You do have to be able to hold your own line, though, within this sort of bid. Are you the type who will, finish material after finish material, go for the most expensive you can? Might not work.

But if you have the stamina and patience, maybe you'll be like me.

Start to finish-buy the city lot, remove the house, demo, build- around 16 months. In that time, land value increased by 15%. Through careful, wonderful planning? We made nearly 40% in 2 years, due to improvements/sweat equity- thanks to a great architectural plan and the careful planning of a great contractor.

Unless the CM also writes the checks, there isn't much authority to back up the job site supervisory role. A large part of the point of a GC is the trades relationships that they have. And the consequential economic leverage that has developed from that continued mutually beneficial relationship with good subs.

When the building market is up, and contractors of all varieties are in high demand, having any contractor be too cheap or readily available should cause a lot of pause. Why? When someone could have 100K of gross off of 3 26 simultaneous week builds, what incentive does an arrangement like being a CM on a DIY site hold for him? For a longer period and less money? Something is NOT RIGHT with that picture.