Trust us! Seriously. Use These 3 Essential & Free Tools Every Addition, Remodel or Custom Home Needs: A Design Agreement, Construction Agreement and Budget

If you are planning an addition, remodel, or custom home then save this message.  Seriously. Save it and use these three documents.

This is the most important article we can share with you.

Communication is always stressful and challenging.  Every remodel or new construction project has questions that need to be answered or changes that an owner, inspector, architect or contractor want to make. Some of these changes are great improvements, some are in response to discoveries, some are just part of the creative process (picking, kitchen pulls, paint colors etc…)

Anyone who promises not to make mistakes and not to have changes is over-promising. Sometimes over-promising is caused by optimism and enthusiasm while other times people may just outright lie to you.

Every project needs a Design Agreement, Construction Agreement and Budget. These three documents help the owner, architect and contractor communicate expectations.  That’s it.  That’s the goal!

Owners, architects and contractors use New Avenue’s innovative system to manage projects that cost between $50,000 to over $2,000,000.  Current projects are located from California to New York.  Our software system collects insights throughout the design, permitting and construction process. In one year we see more transactions, proposals, and changes than most most architects and contractors see in a lifetime.   We incorporate those lessons in the industry’s best agreements and budgets and we provide these to you for free.

We are genuinely afraid of any project that does not have a clear agreement and budget in place.  In fact, we won’t work with anyone who doesn’t want to use these.  Without this expectations are guaranteed to be wrong.  We recommend that every project use these three agreements to set the right expectations and establish a healthy working relationship:

New Avenue Construction Agreement

New Avenue Design Agreement

New Avenue Example Budget Format For $100,000 – $5,000,000

Project are easier to manage, more efficient, and more affordable when the team has a clear understanding of the work to do.

  • This saves you time and headaches.
  • When you save the architect time, you save money.
  • When you save the contractor time you save money.
  • When mistakes go down the owner, architect and contractor will have fewer mistakes and this improves quality.

Everyone is happier as a result!

Following the guidelines set forth in these agreements requires discipline and the New Avenue project management system makes that part easy.

You can sign up and use the New Avenue system for free here: Get Started

Have any questions? We are available to discuss your goals & ideas. There’s no fee or commitment. To request a time for a call, just click here and tell us when to call you.

9 Construction Communication Gaps – How to Talk to a Contractor

Construction lingo can lead to confusion before your job even begins. This often creates cost overruns and frustration.

This article tells you what to look for in a construction bid so you can avoid surprises.

Anywhere you see something you don’t understand you should expect to be surprised by a cost that you didn’t anticipate. If you don’t know an acronym or brand name or word in the bid, just ask. That’s the goal of reviewing the bid with a contractor.

Here are 9 common communication issues that can cause you pain that is easily avoided:

Allowance: This is a dollar value that a contractor has noted for something in your project.  For example, your allowance for your bathroom tile is $2,000.00.  If the cost of the tile goes up or down then you pay or save the difference.   A large number of allowances means that the contractor is shifting the responsibility of getting certain products for a specified price to you.    Be careful of more than 5 allowances in any bid and make sure you know how to buy something for the allowance price noted.   Often times an allowance for windows is just a small fraction of the windows that you probably want to buy.

OPCI:  Owner Provided Contractor Installed.  You will be paying for these products and storing them on site for the contractor to install.   The contractor is responsible for installation costs. This can be a great way to save money, but you certainly want to be aware of what you have to buy. If you buy the wrong thing or too little then the contractor is justified in charging you hourly to go out shopping for you.

PBO: Purchased by Owner.  This is the same as OPCI.

NIC: Not in Contract.  This is work that the contractor is not responsible for.  You will have to accept a change order and pay additional money to get this work completed

By Owner: This is the same as NIC.  You are responsible for all materials and labor to complete this work.

TBD:  To Be Determined.  There will invariably be something needed that costs you money.  TBD should rarely if ever be part of a construction bid.  The point of a contractor is to eliminate TBD.

Verify in Field or VIF: Danger!  The contractor will verify if some work needs to be completed after he or she starts and it will then be your responsibility to pay for it.  It’s better to pay them hourly to remove any VIF conditions before you sign a contract and before they start work.  Be very clear that the site slope, soil conditions, plumbing, underground utilities, electrical are all included in the bid.  We’ve heard contractors complain that the dirt was heavier than they expected.  While possibly true, it’s their job to deal with that.

Existing Condition: The current condition of anything such as underground utilities, underground rock/soil issues, mold, asbestos, dry rot.  These should almost all be determined prior to accepting a bid.   For example many roofers will say that dry rot (which is a visible fungus) is an existing condition and is not part of their bid but they could easily look at rafters from outside and see that dry rot is an issue.

 T&M: Time and Materials.  The contractor will work by the hour and will bill you for their hours plus their materials and then will typically mark it all up by 15%.  This puts all the risk on you as the customer and gives them an incentive to take their sweet time while running up both labor and material charges.   There’s no reason to use T&M for anything other than a small job that takes just a few days.

Sign up to see example budgets, example floor plans, or to use the New Avenue system for free here: Get Started

Have any questions? We are available to discuss your goals & ideas. There’s no fee or commitment. To request a time for a call, just click here and tell us when to call you.

 

How Long To Build a Custom Home or Remodel a Home

We reviewed all of our completed projects and found the following timeframe for construction:

  • The maximum construction time was 13 months
  • The fastest build was four months (this was during the 2010 recession and everyone was ready to work at a moment’s notice) 
  • The average time to build a project is 8 months.

This includes projects that cost between $100,000 and $500,000. 

Screen Shot 2016-10-21 at 9.55.16 AM

Sign up to see more example budgets, example floor plans, or to use the New Avenue system for free here: Get Started

Have any questions? We are available to discuss your goals & ideas. There’s no fee or commitment. To request a time for a call, just click here and tell us when to call you.

18 Common Budget Busting Construction “Change Orders” That Occur During Additions, Remodels and New Construction

The New Avenue online project management system reviews hundreds of projects at any given time.  We track all of the change orders submitted by contractors in these projects.

This post highlights the 18 most common change orders.  These are changes that may be called “surprises” on your project and often times they shouldn’t be surprises at all.  You should be planning on these changes.

You can review this checklist and check if your project budget includes them.  Do this and you can be prepared to review any bid.   You can make sure the full scope of work is included in the price you are quoted.

First, a note on what a “Change Order” is.”Change Ordering” is a verb used in the construction industry and it’s something that many owners are completely unaware of.  One of the unfortunate facts of many remodels is blown budgets. One cause of this is that unscrupulous contractors use change orders in a strategic and deceitful way to offer low bids.  They then make your project a miserable experience as they introduce additional hidden costs.  Some (and certainly not all) contractors make all of their profit off of these “Change Orders”.  This is true for projects ranging from small $1,000 projects to billion dollar bridges.  The good news is that many contractors have noble motivations.  They became contractors because they want to build beautiful homes – and they want you to be happy.  Even a perfect project can have 20+ change orders that you willingly choose to make.   In fact, you can have 20 or more change orders and still complete the work on budget.  With a well prepared bid the changes can be fun ways to add things that you love. Use this list to improve your next or only remodeling experience.

In our review, 13 of the 18 most expensive change orders were “discretionary”.  Discretionary change orders are changes the customer asked for. This was not part of the original bid.  It is an add that the customer requested. We consider those good change orders. They often pop up as a project is progressing on budget and the customer had a little reserve money socked away and they decided to add something nice.

However, five of these change orders were “non-discretionary”. These are the unpleasant changes. These changes are difficult to manage because sometimes the cause is beyond the owner’s or builder’s control. A building inspector may exercise their authority and request something that is not in the plan or the budget. In this case disagreeing with the inspector is an issue of fighting City Hall.  From what we have seen, City Hall never loses that battle. Other times, a designer, engineer or contractor overlooked something. Again, in a complex project this if common and a little leeway is fair.  But if this happens too often then it becomes a real question of competence or even integrity. This varies wildly by professional and most professionals are very fair and honest. However the bad apples are also very good at figuring out how to get you. It might be that you didn’t read the plans or it may be that you love custom woodwork… or both.

A well run project will stay within 10% of the bid.  If an invoice is 25%, 50% or even 100% over budget then you should tell your contractor these two things: 1) “I’m paying what was in the bid, I’m sure you can make it up on the rest of the project” or 2) “I’m canceling the contract and going back to bid with different contractors”.

Here is the list of top 18 Change Orders. This list is from all of the projects reviewed not just one project! The average of 8% increase from the original construction bid to the final completed project cost with the 8% split evenly between discretionary and non discretionary changes.

1-13 Discretionary Change Orders: 

1) Add a new bay window to the home.  Since windows were being added in the addition, it made sense to add a bay window to the existing living room at the same time.  Amount: $5,684

2) Upgrade window quality Marvin windows and Velux skylights.  Amount: $4,086

3) Landscaping:  Install a fenced in trash area and stone flatwork in the yard. Amount: $3,393

4) Add a gas line to a backyard cottage to upgrade from electric stove to gas:  $3,000

5) Change siding from Hardi board concrete to wood board and batten.  Amount: $2,325

6) Add tile to main home entry stoop.  Amount: $1,880

7) Add crown molding to living room and kitchen.  Amount: $1,761

8) Install a new skylight in a loft.  Amount: $1,487

9) Additional tile wainscoting in bathroom and tile nook in shower.  Amount: $1,050

10) Change from stained concrete floor to tile floor throughout 610 square foot space.  Amount: $1,050

11) Add false wood beams to living room.  Amount: $996

12) Addition of extra lighting fixtures throughout house.  Amount: $835

13) Provide and install 8’x4′ fence and lattice made of redwood for trash cans.  Amount: $771

Non Discretionary: 

14)  Foundation improvement: Excavate an additional two feet for foundation improvements, fill with compacted gravel, additional concrete.  Amount: $6,042

15) Fire proofing of laundry room.  Amount: $2,151

16) New water line from the street to the main home in order to increase capacity for fire sprinklers. Amount $5,505

17) Add fire sprinklers due to a new building code requirements. Amount $4,360

18) Replace electrical panel in main home with a new 200 amp service, including a wire from the street, new panel and all breakers.  Amount $3,272

Sign up to see example budgets, example floor plans, or to use the New Avenue system for free here: Get Started

Have any questions? We are available to discuss your goals & ideas. There’s no fee or commitment. To request a time for a call, just click here and tell us when to call you.

Speed, Quality or Money: Be Wary of Fast Growing Websites That Are Overrun by Shady Contractors

NBC just investigated a contractor matching service and found that 60% of the contractors providing bids are unlicensed. Many ripped off clients by running away with the deposit money or not completing the work.  At New Avenue we are not surprised. We built a project management system the eliminates the risk of these scams happening.  Then we recruited a network of architects and builders who we can trust. We work with our partners for years to create efficient processes and verify that the trust we put in our architects and contractors is well placed.

Matchmaking sites don’t help with the significant risks of quality, licensing and payments.  New Avenue protects owners from all three of those risks.  The nightmares and theft noted in this piece by NBC won’t happen on New Avenue.

These three lessons are critical to remember:

  1. If you focus on speed you sacrifice quality
  2. If you focus on large numbers of vendors you lose the personal standards of licensing, insurance, and integrity.
  3. If you focus on just matching people you overlook managing the project and managing payments and people get ripped off.

New Avenue makes all three of these risks go away.  We replace them with a quality experience, proven contractors we’ve learned to trust over years, and a payment processing platform that makes sure you only pay for the work after it is done.

http://www.nbcbayarea.com/news/local/Popular-Website-Allows-Unlicensed-Contractor-to-Solicit-Business-423198104.html?_osource=SocialFlowFB_BAYBrand

The reporters sum it up well.  Take your time, check their license and by law contractors can only charge up to $1,000 or 10% of the total job up front. The rest is paid as the work is completed.

Sign up to see example budgets, example floor plans, or to use the New Avenue system for free here: Get Started

Have any questions? We are available to discuss your goals & ideas. There’s no fee or commitment. To request a time for a call, just click here and tell us when to call you.

Cost of a two story office, bathroom, mudroom addition

This story addition with an office, master bath, laundry and storage/mudroom.  This is about 300 square feet and it is costing just under $200,000.
This ground floor will be an office:
Addition of a ground floor office
Addition of a ground floor office

The second floor will be a utility, mud, bathroom and storage.

Second floor mudroom bath and storage

Sign up to see example budgets, example floor plans, or to use the New Avenue system for free here: Get Started

Have any questions? We are available to discuss your goals & ideas. There’s no fee or commitment. To request a time for a call, just click here and tell us when to call you.

5 things you might find in a new $1,000,000 home

We recently bid a 3,000 square foot custom home in the heart of Silicon Valley.  I grew up in a 1910 Sears Catalog home that would sell for $180,000 today.  $1,000,000 is an insane amount of money. Except it’s quite common today.
At $333 per square foot I have to admit, I was surprised this wasn’t more expensive…
Because this home is in the most expensive real estate market in the country. People can spend $1,000+ per square foot in this town.
Because it is designed with magazine quality, fantasy finishes.
So, let’s see what kind of goodies techies drop their money on:)
These are the five big purchases that I find most interesting:
– Fancy staircase
– Special cut hardwood flooring
– 4 exquisite bathrooms (in a three bedroom home)
– Custom kitchen cabinets
– A 10 piece wall of windows and sliding doors.
Here are some details about these finishes:
–  A special order $38,000 staircase.  This is the kind you’ll see in Dwell Magazine.  The staircase has floating wooden steps, a structural steel stringer, steel supports, and a metal wire railing.
Inline image 2
– 35,000 hardwood flooring that is “rift sawn”.  Rift sawn is the most expensive way to harvest wood from a tree trunk, it’s also the hardest and most durable.
Inline image 3
Rift Sawn
– $5,600 in glass shower doors, tile everywhere, waterproof floors throughout.
– $36,000 in custom kitchen cabinets

– 10 part glass doors running the full length of the kitchen and living area.  A truly open living area like this, in earthquake country, with another story above requires that you build the walls like building a steel skyscraper vs. a traditional wood framed house.
Inline image 4
To see some of the design of this home, and the full budget, you can read another post here.
Sign up to see example budgets, example floor plans, or to use the New Avenue system for free here: Get Started

Have any questions? We are available to discuss your goals & ideas. There’s no fee or commitment. To request a time for a call, just click here and tell us when to call you.

Cost of a custom home in Silicon Valley

We recently completed a bid for a 2,886 square foot custom home in Los Altos, CA.  This is the heart of Silicon Valley.

This is a just under $1,000,000 for just under 3,000 square feet.  That budget does not include the architecture, engineering and permitting which can be another $250,000.

You can review the full bid 2886 Los Altos Bid

The home was a small ranch home that is being torn down and rebuilt as a 3-bed, 4-bath plus an office.

An elevation, or the exterior view of the home:

Los Altos Elevation

An elevation of the front of the home: Los Altos Elevation 2

The first floor plan:

Los Altos Ground Floor Jpeg

The second floor master bedroom, master bath and office:

Second Floor Master Suite

A quick rendering to get a sense of the size and look – details are intentionally left out of this:

2,886 Square Foot Los Altos Home

Sign up to see example budgets, example floor plans, or to use the New Avenue system for free here: Get Started

Have any questions? We are available to discuss your goals & ideas. There’s no fee or commitment. To request a time for a call, just click here and tell us when to call you.

3 Easy Steps to Get A Construction Estimate or A Fixed Price Construction Bid

If you are an owner or architect you can get a contractor bid in three easy steps.

Keep in mind, a good bid for a remodel or new build can easily take 30-40 hours of work – so while it’s easy for you to ask for one, you are asking for a lot from the contractor.

Here are the steps:

1) Load your plans, pictures and notes.
2) Click the button “ask a New Avenue admin for help”
3) We will follow up with you to set up an initial call.  A proven New Avenue contractor will meet with you and then enter their fixed price bid on your project page.
It’s simple and transparent.  We won’t send your information to anyone other than our local vetted partner.
First load the plans and/or pictures you want estimated to the timeline and click “make visible to bidders”.

Inline image 2

2) Contact us.  We have contractors in almost every major city. If we don’t have a proven partner already, we are really good at finding a new one and we will invest 10-20 hours of our own time to find one.

To add your own contractor sign into your New Avenue project page, click on the Proposals & Bids tab, and then select the blue button for + “Invite my own pros” then enter your contractor’s email.  They will get an invitation to see the information you loaded. They don’t see anything else.

Inline image 1

3) Review your bids.   The estimate or bid will be posted in New Avenue’s standard format. The team who is on the project page gets an email. This is usually an architect, and the owners.  All of you can sign in and can see the bids or download them.
Inline image 3
This is the bid format.
Don’t be intimidated by all those rows.  Even a $2,000,000 home only uses about 1/3 of them.  For example, you can view or download this expensive custom home Bid Example.  You will most likely have about 40 line items in your bid.
The rest will be left blank.  We show you all of these lines because it’s really  useful to see what you are not getting!  You don’t want to be surprised that landscaping, a driveway or a deck isn’t included!

 

You can sign up and use the New Avenue system for free here: Get Started

Have any questions? We are available to discuss your goals & ideas. There’s no fee or commitment. To request a time for a call, just click here and tell us when to call you.

Should I create an addition, backyard cottage, or remodel?

New Avenue starts every project with our 30 questions. You can skim these questions and answer a few of them in five minutes or you can spend an hour.  We recommend you spend about 15 minutes.

These questions are based on thousands of past client meetings. We also collect feedback during construction changes and figure out what we have to ask early on in the process so we can avoid making the same costly mistakes in the future.

A client recently contacted us with some questions about what to do with their home. They are in their 60s and want to make a long term plan for how to use their home.

Here are a few of our questions and their answers.  Their full design proposal is below too:

Q: What do you want to do?

A: We would like to add a rental unit to our existing two story & 5 bedroom & 3.5 bath home.  We really do not know if we should do an addition or add a cottage/tiny house to the backyard, so we need help.

Q: What are you using this new space for?

A: We would like to rent it out either as a sublet or airbnb for extra income.

Q: If applicable, what is the 25-50 year plan for your project? For example, you may be renting out an inlaw unit and will eventually move in later.

A: We are not really sure. We could move into the new unit eventually.   We are in our 60’s so we hope it’s a 50 year plan. (:-)).

After reviewing all of the answers and questions they submitted in their Goals & Ideas questionnaire on www.newavenuehomes.com, one of our local designers met with them and provide this Design Proposal.

We’re excited that they quickly approved the proposal and design is beginning this summer.

To get this project started the owners:

  1. Filled out the Goals & Ideas survey on Newavenuehomes.com
  2. Set up a call with a New Avenue project admin to review the design/build process
  3. Paid $250 to have a Design Session with a vetted New Avenue designer
  4. Met with the designer
  5. Received a Design Proposal and clicked approve.

You can read or download the Design Proposal here: Cost of Oakland Basement Conversion to Accessory Dwelling Desig

You can sign up and use the New Avenue system for free here: Get Started

Have any questions? We are available to discuss your goals & ideas. There’s no fee or commitment. To request a time for a call, just click here and tell us when to call you.