Most delays in custom homes do not occur as a result of one dramatic failure on the builder’s part. Rather, there are typically a series of incremental delays, many of which have their root cause in decisions made 3 months prior. For example, a 2 week delay in selection of tile, a late arriving survey, the excavator not being on site on time, structural changes made by the owner that impact the mechanical rough-in.
When you’re building a home, staying on track has a lot to do with making all of the necessary decisions early on and then setting up your contract so that there are cost and time-related incentives that are working in your favor. As problems arise, it is best that they occur early on in the building process, as the problems will be more pronounced and harder to fix the later it is in the process.
Where schedules actually break down
The sequencing of trades on site is generally not a problem for builders who run quality sites. Decision latency (the time it takes for owners to make decisions and for builders to make decisions) causes problems on site. For example, a framing crew being delayed does not matter, but a window order being placed four weeks late will not get recovered because of the independent lead times for all the items that go into a finished room.
Build a decision calendar, not a wish list
Decision Calendar, By creating a “Calendar of Decisions” that begins with the procurement date for long-lead items, such as cabinetry and windows, owners can create a list of decisions that must be made prior to the owner’s procurement of these products. It is ideal to create a decision date for each of these long-lead items at least two weeks prior to the owner’s procurement date for these items.
Selecting a builder on evidence rather than impression
A supplier failing on a mid-project point, or an unusually wet spring, will affect your company in exactly the same way that a schedule variance of -8% or worse on the last three finished homes affects your company today. The number of change orders and who was on site every week to deal with the issues, in addition to the owner, will give you all the information you need.
Questions that produce useful answers
- Which trades are employed directly and which are subcontracted?
- How are allowances established, and against what supplier quotes?
- What is the process when a subcontractor misses a scheduled window?
- Who signs off on rough-in before drywall closes the walls?
- How is warranty work handled after occupancy?
Better are references from finished homes (i.e. Homes that finished 18 months ago) than references from newlywed homes in the newlywed stage of completion.
Contract structure and the cost risk it distributes
The pricing model affects the behavior of the contractor throughout the project. Selecting a pricing model casually will prove to be the costliest shortcut of all.
| Structure | Who carries cost risk | Best suited to | Watch for |
| Fixed price | Builder | Complete drawings, settled specifications | Padded contingency, resistance to any change |
| Cost plus fee | Owner | Complex sites, evolving scope | Weak incentive to control spend, invoice review burden |
| Guaranteed maximum price | Shared above the cap | Design nearly complete, owner wants visibility | How savings below the cap are split |
There are two pricing models, and as long as the owner allowances are set up as separate line items which reference specific quotes from suppliers for corresponding allowances, then either model can work. Owner allowances with no corresponding supplier quotes for corresponding allowances end up being a deferred overage.
Budget discipline that survives contact with the site
A contingency fund is used to manage construction related unknowns as well as site conditions that become apparent after the contract has been signed. These other unknowns that relate to site conditions such as rock, high water tables, poor soil bearing and costly utility routing would typically require a separate contingency fund.
Site work deserves its own investigation
Finally, test the site and make a topographic survey of the land before pricing out the home. Most homes are built on clay soils in the Akron, Ohio area, and have to withstand the freeze/thaw cycles of the season. If you intend to build a custom home near Akron, it is worth working with a builder who prices foundation design and backfill against real soil data rather than assumptions, since those two line items move the final cost of the home more than almost anything else below grade.
Verifying quality while correction is still inexpensive
Verify quality of construction for a custom home in construction by inspecting the work under construction a handful of times when visible and accessible. Later verifying quality in construction can be costly and end up in demolition of already completed work.
- Footing and foundation, before backfill, checking dimensions, reinforcement, and waterproofing.
- Framing complete, before mechanical rough-in, checking bearing, headers, and squareness.
- Rough-in complete, before insulation, checking penetrations, fire blocking, and duct sealing.
- Insulation and air sealing, before drywall, checking continuity at rim joists and top plates.
- Pre-drywall walkthrough with the owner, documenting locations of blocking and utilities.
Independent review pays for itself
Third-party inspectors can verify quality at points in time where work is visible and can be inspected. Typically, such verification is needed at a handful of points in time throughout a project’s duration. This service costs a few fixed dollars for each point in time and is typically a few tenths of a percent of the cost of the typical home. It is not intended to show lack of trust in the home builder. Rather, it is intended to be of value to the home builder by having a third-party (i.e., “neutral”) verify that work has been completed in accordance with the contract documents for the major assemblies of the home that will be sealed up for 50 years. This would be especially important in the event of a future dispute.
Communication cadence and change control
Have a fixed weekly meeting with a standing agenda to review completed work, make decisions, list out all open change orders, and review current status vs. The baseline schedule for the project. Ensure all changes are priced and signed off by the owner prior to implementation, regardless of how minor the owner believes the change to be. Verbal approval is the biggest cause of end-of-project disagreement and is completely avoidable.
