Cost of a 310 square foot guest house in Berkeley, CA

The cost of a recently completed super small guest house in Berkeley, CA was $130,695.  The full costs are detailed in the line item budget here.

A summary of the costs are:

$1,200: Survey

$3,312: Planning (Zoning) permits

$3,650: Structural Engineering

$550: Energy efficiency report

$2,830: Building permit

$563: Mechanical, electrical and plumbing permit

$20,854: Hourly architecture fees

$97,736: Construction Costs ($315 per square foot)

Here is a summary of the plans:

Berkeley Front 235 Square Feet Berkeley Side - 235 Square Foot Guest House Berkeley Back - 235 Square Foot Guest House Berkeley Floor Plan - 235 Square Foot Floor +75 Loft Berkeley Floor Plan - 75 square foot loft

The full line item budget is here: budget 310 square foot detached cottage

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3 Essential & Free Tools Every Addition, Remodel or Custom Home Needs: A Design Agreement, Construction Agreement and Budget

Every project needs a Design Agreement, Construction Agreement and Budget.

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.  Without this expectations are almost 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

Every project should use these forms.  Project are easier to manage, more efficient, and more affordable when the team has a clear understanding of the work to do.  The owner, architect and contractor will be happier during the design/build and upon completion.

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

For Architects: How to Fire a Client

We have worked with several hundred homeowners in the past few years and roughly one out of one hundred have been just downright mean. When I say mean, that includes behavior honest people can’t imagine.  I asked a lawyer friend of mine if he ever has to fire a client.  He said he does it all the time.  He stressed that it is just not worth the personal stress that a bad client causes you and their behavior can really hurt the rest of you your business too.

Here is how he fires a client:

“I have a very busy practice with many clients who I truly care for.  You, unfortunately are not one of them.”

That’s it.  You’re done.

I’ve never said this though. I don’t have the courage. We’ve also been good enough to consistently note that we charge for the services provided and that weeds out quite a few people right at the start.

Every professional service person such as an architect, contractor, engineer, electricians, plumbers, carpenters, painters, landscapers learn early in their careers that avoiding a problem client.  In order to survive they do so very early in their careers.  According to one electrician he “has very good antennae for the problem clients”

Here are the tactics that more polite people use to avoid challenging people before they even get started:

The polite ways that we have seen architects and contractors effectively fire people include:

  1. ” I am booked for the next year and can’t fit this in my schedule. I’d be happy to work with you next year”
  2. “Who referred you to me? I’m busy working for the children and relatives of previous clients.  Sorry:
  3. Provide a proposal that is two or three times more than they are charging a comparable, but nice client.  Note to owners: When someone bids way too much this is their “walk away price”.
  4. Don’t return phone calls or emails.  This works and may be the most common tactic but it doesn’t reflect very well on the professional.

Here are a few “fireable” actions:

  1. Throwing a proposal back at the designer saying it’s too expensive “fix it”.
  2. Refusing to pay for the services offered.
  3. Negotiating to reduce fees below what the professional needs to earn to run a successful practice.
  4. Fighting other projects in the neighborhood.
  5. A bad relationship with previous professionals, contractors, tradespeople.
  6. Claiming they can’t afford the professional services while magically finding money when it’s time to buy nice gadgets and finishes.

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3 Reasons Why We Recommend You Hire an Architect

At New Avenue we are all about great value.  In design and construction the hard way is usually the right way and that means the best value is often the more difficult and more expensive way.

This applies to architecture as much as any other part of the process.

Many people cut out an architect and trust the design to their own capabilities or to a contractor.  The hope that you will save time and money is a shortsighted decision that can sound like a good idea at first, but it will typically make your project more costly and painful in the long run.  This is a big mistake.

When hiring and architect for the first time, we recommend you consider these three reasons for hiring a professional designer or architect:

Reason #1:  You want your home to be amazing.  An architect with 10, 20 or even 30 years of experience and a creative ability is critical to creating a truly great design.  An architect can make a good design great.

Reason #2: You studied anything other than architecture.  Exposure to hundreds of photos on and Pinterest makes you a more informed and better client, it does not make you an architect.  The skill required to manage the design, permitting and construction process starts with formal training, involves rigorous licensing and requires years or experience.   An architect will typically require at least 100 hours of work to get a design and permits together.  It may be 300+ hours of work if your project is larger and more complex.  If you were to try this on your own it can easily take five or ten times as long. An experienced person can pull from decades of experience to create a better design and they can do it all in a fraction of the time it will take you.

Reason #3: You will probably make at least one big design mistake that you will see every time you look at your new space or new home.   Even if you design something amazing on your own, one design mistake is something that will be built into the home and it may never go away.  It is worth a few thousand dollars to avoid how a mistake like this will reduce the enjoyment of your home.

The super pragmatic perspective is to acknowledge that having an architect should save you from at least one major mistake and that alone will justify their entire fee.

At New Avenue our standard practice to incorporate an architect in all of our projects because of these three reasons.  We mapped 300+ key steps in any residential addition, remodel, accessory dwelling or new home.  Not all steps are essential but each step is a potential pitfall and an ally who can navigate and resolve the design challenges effectively creates a ton of value.   You can review the New Avenue Design Agreement and specific role of an architect Here

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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

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How to hire an architect & what to expect in your first design session/meeting

Unless you are a Rockefeller you probably didn’t grow up watching your family hire architects.

The best way to start any major project of approximately $50,000 or more is to talk to an architect.  Architects have the ability to solve design and permitting challenges, they have the talent to create something beautiful, and they can be your trusted ally throughout the project.

But what is the first step to hiring an Architect?

At New Avenue we make it easy to get started.  We provide a free Goals & Ideas form that asks you the right questions to get you thinking about the what you want to do.  Then all of our projects start with a free call to review your goals and introduce the best architect from our stable of vetted architects.  If you choose to have a Design Session in your home, we will introduce one of architect who is a vetted partner in our network.

The Goals & Ideas questionnaire is based on 25+ years of experience and lessons from hundreds of projects we managed in the past few years.  Our questionnaire may remind you of just one thing that you want to incorporate in your design and that alone can save you a major headache and thousands or even tens of thousands of dollars during construction.

This is because realizing important design elements during construction is expensive!

When a New Avenue pro comes to work for you they will prepare beforehand, typically for 3-5 hours.  They will discuss the following:

  • Goals and Ideas: Homeowner’s answers to the online questionnaire.
  • Design ideas: Homeowner and architect’s ideas saved to the Project Page.
  • Roadmap: The 300 design/build steps in the project Roadmap.
  • Permit risks: Preliminary discussion of the permitting process.
  • Design Proposal: A detailed line item proposal will be posted to the Project Page after your meeting.

    Most importantly, they will show up ready to work, not to sell.  They will start talking to you about your program and they will create a lot of value in this first meeting. 

    We charge $250 for this Design Session.

You can use New Avenue with one of our partner architects and you can add any architect that you find on your own. That’s the beauty of a free software platform!

After your Design Session, the architect will provide a detailed proposal that is broken down by line item.  You can accept this to hire that architect or you can use this as a format to compare to other proposals.  You’re not obligated to continue with New Avenue or the architect you met. Of course, we hope you do, and we’re eager to address any questions you may have.

The deliverables for the initial Design Session are spelled out in our Design Agreement. You can read that here, or Get Started and use it for free on New Avenue. 

Top 10 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.

Be very careful when reviewing a bid. Anywhere you see something you don’t understand you should expect to be surprised by a cost that you didn’t anticipate.

Here are 10 common communication issues that cause change orders that you can easily avoid:

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.

“TNG” or “T&G”: Abbreviation for “Tongue and Groove” wood.  This is typically 1″x4″ or 1″x6″ finish wood that can be used for wainscoting in the bath or exposed ceilings.  The tongue and groove fit together when the boards are placed side by side.   It often has a small beveled corner so you see a little V where the boards meet but it can be smooth.

 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.

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How to Interview an Architect

Architects are flexible and can work in any number of styles, shapes, styles or cities.  That is part of the practice of architecture.  The challenge is finding the right design for you and your home.  The best way to start is to define your Goals and Ideas so that you can define both the design problem you are trying to solve and the needs or goals you want to meet.   New Avenue provides a list of “Goals and Ideas” that you can fill out to start your “Program Development”.  This will guide your discussion.
When meeting with the architect, try walking through these questions:
– Ask for his or her ideas about your project
– Ask what the biggest challenges for this job will be
-Get a feel for how receptive he or she is to your ideas
Find out how involved he would be as the building progresses 
-Confirm what is included in the fee.  Are the following included:
  • Permit forms
  • Responding to city “plan check comments”
  • Recruiting sub-consultants such as engineers and surveyors
  • Reviewing contractor bids
  • Reviewing contractor bills
  • Approving/denying contractor change orders
  • Picking out finishes: Flooring, tile, paint colors, cabinets, counters etc..
-Confirm who will actually do the designing
– Ask for clarification about anything you don’t understand
– Ask if they can provide three dimensional drawings
– You’d want to see previous work
– Talk to clients 
Anyone who is part of New Avenue has the skills to get the job done.   So this is mostly about your feelings about who you want to work with. Ideally like him or her very much and when you are talking it becomes quickly obvious that you are on the same page. 
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A Fixed Price Construction Agreement Is The Only Way To Stay On Budget

A client recently asked one of our architect partners the following question:
“Could you ask to see the receipts so we know they aren’t cheating me on the purchases? They are not supposed to make a profit on the purchases, but they do make a profit where it says profit in the budget”
If you want to compare a project budget to the actual cost, you will need a simple table like New Avenue uses in our Budget Page.   Anyone on your team can look at the budget tab on your project page by signing into
To give an example of how budgeting works, I have attached two pictures.  One is for a roof.  This shows an original budget of $4,500.  In this example, the roof is already on.  The budget for the roof has not changed, it is now 100% complete and you can see that the client paid $4,500.  That is completed “on budget”.
 Shingles and Shakes Budget - Roof
The second shows the windows and doors.  This changed via a change order the client approved.  The client ended up selecting nicer quality windows that cost more than was budgeted for the windows shown in the architectural plans.   In this example, the bid was $4,700.  The windows selected were $7,914.58.  The contractor provided a “Change Order” on the New Avenue budget page and the client reviewed this and approved it. In this case, the contractor was under contract to purchase and install the windows in the architectural plans for the $4,700 bid. The owner shopped around and chose nicer windows that cost $3,214.58 more than the specified windows.  The owner chose nicer windows, the contractor bought them and installed them. No one was surprised and everyone was happy:)   This is fairly common.
Windows and Doors Budget
You can review every line item in a budget.  To do so is a matter of reviewing the budget line by line to see what has changed.  Using our system, there isn’t any way for a contractor to charge you more than was budgeted unless the client approves a change.
Auditing receipts is not something that we expect any architect or client to bother with.  We realized years ago that tracking receipts is not helpful in getting fair pricing or managing a budget.  A “time and materials” contract is one where the client pays for all labor and materials plus a markup for overhead and profit.  You do see all receipts in this type of contract. This markup is typically 15%.  We don’t do that type of contract because it consistently leads to 100% overages.
A “Time and Materials” contract shifts the responsibility to track expenses and manage the budget from the contractor to you – the homeowner.
Every contractor marks up portions of the materials and labor, that is simply how the industry works.  For example, a Time & Materials contract may have the contractor showing laborers at $35/hour when they actually pay them $20/hour.  The difference is a markup that goes towards overhead, profit, insurance or anything else that the general contractor has to pay for.   Even in a Time & Materials contract, clients do not see this markup.
Auditing the materials purchased is nearly impossible.  Some materials are supplied by subcontractors, some are bought directly by the contractors.  If a contractor wants to cheat they can always buy extra materials and return some of it. It’s impractical and even impossible to follow this. Your best strategy is to hire someone you trust and pay them what they bid.  Then leave it at that.
We have found that the best practice in the industry is a fixed price budget and that is what we insist on for any project where the owner has a budget in mind… and that’s almost every project.
Now, even if you’re a Silicon Valley or Hedge Fund billionaire that has no budget, and you want to create a work of art, and you want Time & Materials then we still insist on starting with a fixed price budget and then approving change orderes for any changes.  It’s better for us too when we have a process, a contract and expectations set at the start.
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Harvard Study Shows Healthy Homes + Indoor Air Quality Have Massive Impact on Intelligence

A Harvard study just reported a 101% increase in cognitive function in greed buildings with fresh air that is piped in. This is the most significant green building insight we have ever seen – it simply blows everything else out of the water.

In the world of green building and sustainable design there is a way too much noise to make much sense of what really matters.

In this study the researchers compared three buildings:

  1. A typical office building
  2. A building made with healthier products (less off-gasing)
  3. A building made with healthier products that had fresh air piped in.

They then had people work in the buiding for a day and tested their cognitive function at the end of the day.  People in the healthy building with fresh air tested 101% better.

Put another way – a healthy buildings and fresh air make you twice as smart.

Or another way – the vast majority of buildings make you dumb.

We exchanged a few messages with one of the researchers and he noted the following:

“As far as homes, the research was conducted in an office environment with office workers, but the exposures are not unique to offices. Homes often have worse air quality in terms of ventilation and VOCs than offices, and we don’t have reason to believe that similar effects wouldn’t be found in those environments. We have done other research with a focus on homes concerning harmful chemicals, such as flame retardants, which has led to our university banning these substances in dorms.

I recommend reading the full paper, which you can download here: There are a lot of important takeaways when it comes to designing and operating buildings.

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