FAQ - Frequently Asked Questions

Frequently Asked Questions

You may wonder at the start of a project, what is bonding versus insurance and do I need it?  Bonding is like insurance, but a different type.  General liability insurance and workman’s’ compensation is what most general contractors carry.  However, only certain contractors carry bonding.  To have or require bonding on a project is typically more expensive, about 1-3% more.   To put it simply, it gives a guarantee that a clients’ project will be completed, regardless if the contractor goes out of business.  Bonding is usually required on most public projects over $50,000.  Contractors with bonding, carry different bonding capacities $100,000-10+ million.  A bonded contractor is also required to meet certain financial requirements to be able to get any type of bonding.

General Liability insurance or builders risk policies only cover physical damages, if they occur.  So if a contractor skips out on a project or goes out of business, it leaves the owner “holding the bag” to finish the project.  There are also various types of bonding such as bid bonds, payment and performance bonds.  All giving some degree of an “insurance” for a projects completion.

There is a common belief among people that they should get 3 construction bids.  That only works when you have a stamped set of drawings and everyone is bidding apples to apples.  If you do bid out a project, I would ask the architect for a contractor recommendation and probably get two others that you have found.

This would not be our recommendation for first time building clients.  We take a more hands on approach and help guide them throughout the whole process and work with them and their architect before that final bid.  So once the city approves the drawings, the costs are fairly known upfront and you would not have to go back through it, changing items to get it back into the original budget, before you start.  Some say you can save money bidding it out.  However, we know from experience that this is not the case, most of the time.  Dealing with a good honest reputable contractor from the beginning will most likely save clients money in the long run.

Unless you are familiar with building projects, you might know the difference in a budget number and an actual bid.  A budget bid is not an actual bid, it is for budgeting purposes with the loan and finances.  Most lenders require a budget bid which shows estimated costs for the project.  The actual bid can change from a budget bid in many ways.  The city approved project drawings could have added several things that the budget bid did not include.  Then the client or architect could add certain changes to materials in the actual drawings from what was budgeted off of.

Most general contractors budget bids are done with minimal drawings and usually no actual product details.  Which can greatly affect the cost when you get to the build phase.  It is always in the details and that is what tends to separate a budget bid from an actual bid.  A bid number is typically taken off an actual set of architecturally stamped drawings and permit approved.

Typically, the time of year is not necessarily a determining factor in starting a construction project.  Of course though, it depends on what you are building.  Generally the worst months for exterior building work are during the late winter and spring times.  The summer and fall are ideal, because the rainfall is usually less and you don’t have to worry about temperature til mid fall.  Indoor projects are most generally done year round without major weather delays.

Once the lender approves the loan, most of the time it does not matter on the time of year.  Mainly, the client needs to build as quickly as possible to avoid paying additional interest on the loan or paying for a lease when they are not open.  Starting a house building project in winter or spring will generally setup the project for weather delays.  Sometimes it cannot be helped, with all the studying and analyzing of a project before it starts, it is what it is.   Then you just have to adjust to make it work.

A building lot carries several factors relating to the cost of a new building.  You need to factor in what you are building on the lot you are building it.  If the lot has a ton of trees, they will have to be removed, costing money.  If the lot is on the side of a hill or mountain.  There is most likely going to be rock breaking involved, which is not cheap.  If the lot is in a low lying area, it will probably need to be built up on fill dirt.  Which tends to cost more than cutting the topsoil off and building off of that.

Nine times out of ten, the lots’ excavation is the last thing on ones mind, it is usually the location or cost of the lot.  Prime building lots and location lots are generally more expensive.  It is recommended that building on any lot, should have some type of evaluation done before buying the lot.

Most people that want to have a project built do not know if they need an architectural drawing or not.  Depending where the project is located and what you are building has a determining factor in deciding what you will need.  Commercial buildings or commercial projects typically require an architect or engineers stamped drawing.  Residential tends to be more lenient on drawing requirements.  Regardless, having a drawing is a benefit for everyone involved.  It keeps everyone on the same page and what you are wanting.  The less detailed the drawings, the more room for interpretation.

However, drawings are not cheap and do not add to the buildings actual value.  If this cost is a concern, it would be recommended to talk with a general contractor or the city/county building department where the project is located.  Then discuss the requirements, to see what is the most cost efficient solution to move forward.

Constructing a new building is always appealing.  It is just like buying a new car or truck versus a used vehicle with a lot of features for less.  Everyone likes brand new things, but they are not in everyone’s budget.  Building new, typically costs more than buying an existing building and remodeling.  Mainly because of the additional ‘overhead’.  Such as city site planning, utility connection fees, stormwater fees, and then the possibility of unsuitable soil, rock breaking, additional items cities require to bring up to code.  Whereas, if you have an existing building, that you can modify.  You typically do not run into those issues.

Either way, you will probably need an architect and plans put together.  It tends to come down to the location, the client’s needs, and money.  Sometimes it is more efficient to build new for expansion, utility savings, location, location, location, etc.  It is recommended to all clients to research their needs and see if there are any properties available, that they like and can afford to modify.  If not, then they should consider building new.

It is the most common belief to get an architect before the contractor.  However, it can be beneficial either way for a client.  Both ways have pros and cons and it is generally up to the client.  For instance a pro benefit for choosing an architect first.  They will have quite a bit of knowledge on the inner workings of what the city or county might and might not allow.  Where as the contractor only has limited knowledge of the process, because the plan reviewers deal mainly with architects.

One pro benefit for choosing a general contractor first.  For instance, they can give you budget numbers closer to what you are needing and on par with your needed budget range and work with you throughout the project.  This is very beneficial for first time building clients.  Also, the lenders rely on budget numbers and the clients building scope is a serious reflection on the clients finances.  Typically contractors do not charge for some additional guidance on what tends to be the most cost effective solution with a project.

There are many pro’s and con’s for either side.  However, if you are dealing with a budget and need to stay near to it.  A contractor would probably be the best choice.  That is to say, you will still need an architect most likely, but the contractor should be able to help discuss ideas to keep the project in the budget.

It is our experience that we can complete a project on time and budget much easier than if the project were run by unqualified, unlicensed and uninsured ‘construction people’.

We have found the timeline for a construction project that is managed inexperienced is often conflicted by “paralysis analysis” or bogged down by on the job training. When those managing a project ‘understand’ each construction trade, without the proven skills of an experienced, tested, proven, and licensed General Contractor…often there is a tenancy to focus upon smaller details at the expense of the delivery timeline.

Years ago, we discovered that the best policy is to do business with people that are skilled and resourceful in their respective trade, and trust their informed advice while balancing each team members input with the ultimate project timeline, budget, materials, weather, and logistical realities.

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