FAQs About the Building Process - Part 3
With over thirty five years of experience in constructing luxury custom homes, TM Grady Builders has encountered nearly every conceivable question regarding home construction. In light of this extensive knowledge, we aim to address some of the most frequently asked questions to provide clarity and enhance the confidence of homeowners during their building experience.
In Part One of this series, we covered topics such as deadlines, timelines, allowances, guarantees, escalation clauses, and punch lists. Part Two delved into the roles of the site superintendent and managers, clarifying responsibilities regarding subcontractors and quality assurance. In this article, we will explore value engineering, materials, loan draws, purchase orders, and more.
Q: How do you cut costs without cutting quality?
A: The answer is that a little creativity will go a long way. For instance, you could keep those custom kitchen cabinets but purchase fewer of them and add a pantry closet. Or you could design a simpler roof line that costs less to build but doesn't reduce the interior living space. There are many ways to save money while still getting a home you love.
Q: What is value engineering?
A: Value engineering means looking for ways to lower project costs while keeping the features the homeowners really want. A builder who knows how to value engineer may suggest changes to the floor plans and elevations or use different materials or types of systems. It's one reason why you should choose a builder before starting the design process.
Q: How durable are today's homes?
A: New or newly remodeled homes can be as durable as older ones, but they must be correctly detailed. There is less room for error than in the past, thanks to code-mandated insulation and air sealing for new buildings and remodels. This reduced tolerance is one reason great contractors have clear standards for quality assurance.
Q: Why do so many products need to be ordered ahead of time?
A: Manufacturers and pro dealers keep fewer products in stock than they once did. There are various reasons for this — including just-in-time manufacturing and inventory management — but the bottom line is that many items can't just be picked up at the store. The order-to-deliver time can range from a day to many months, depending on the product and the manufacturer. That makes timely selections crucial.
Q: Do building materials follow the downward trend of home prices?
A: Unfortunately, no. When the housing downturn first hit in 2008, building materials suppliers were left with a large surplus and production capacities (much like their builders), so they dropped prices to sell off inventory. Since then, they have slowed their production and lowered their inventories to serve a much smaller building demand - allowing them to raise product prices. At the same time, they have been hit with greater transportation costs (gas prices), more government regulation, and other costs that also affect pricing.
Q: How are loan draws figured?
A: A good draw schedule balances the contractor's need to get paid for work done and materials purchased with the homeowners' and the bank's desire to not pay too far ahead of what has been completed. On a new home, payments are usually matched to completion (or "substantial completion") of a particular phase: foundation, frame, drywall, etc. On a remodel, payments often depend on the percentage of completion. It's important that the homeowner communicate with the contractor to ensure there are no misunderstandings about how and when funds will be disbursed.
Q: How are purchase orders used?
A: A purchase order (PO) is basically a price agreement between a builder and a subcontractor. With a PO system, subs and suppliers who find they need to do something on the job that will incur extra cost have to clear it with the builder first. Although POs take time to create (up to a week for a large custom home), most professional builders insist on them. POs provide a valuable level of predictability.
Q: What's a “change order”?
A: A change order is a request to alter or substitute a product or design feature already approved, delivered, or installed. When you request a change, your builder will likely have a process in place to confirm the request and make sure it is done to your satisfaction. The farther along the construction path, the more costly a change order is likely to be in terms of actual dollars and time, so it’s best to make informed decisions early and try to stick to them during the building process.
The home building process can be a complex journey, filled with a myriad of decisions, timelines, and challenges. Homeowners often find that their comfort level throughout this intricate process increases significantly when they are informed and actively involved. If you have another question about the home building process, reach out to our team at TM Grady Builders. We are happy to answer any inquiries you may have regarding custom home construction in Orange County, California.
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