Take a 3000- to 5000- square-foot (living area) 2-story home; of the total construction cost, what would be a good initial estimate of the cost of labor vs. the cost of materials?
I may be wrong, but your question may be a little lacking in details.
I’m not a builder, but I’ve done a bit of remodeling and helping out on house building, and yeah, that’s a hard question to answer. Are you talking a vanilla house, or one with a lot of fine trim, crown molding and custom carpentry? Wall to wall carpeting on plywood or hardwood with inlays?
However, if you want a guess – nowadays, stuff is cheap and labor is expensive. A lot of the stuff that goes into housebuilding – drywall, framing lumber, plaster, paint, pipes and wires are not terribly expensive. The labor to install them is.
I’m guessing for the cruder aspects of home building – foundation, framing, and roofing – all of which go very quickly, labor and materials might run pretty much even (or only slightly in favor of labor). For the skilled components – wiring, plumbing, and trim work – you’ll be paying much more for labor.
OK, here’s the story: I am doing design work for a couple, and right now the house is around 4000 square feet of living area. Based on my experience, I told them this house would cost around $100.00 per square foot to build. That is a price that three of my customers, who are builders, quote their clients as a ballpark figure. This couple has friends who are in the building materials business, and they claim that they can get 10-20% discounts on stuff like windows, drywall, etc. They think that this will substantially reduce the cost of the house. I do not agree. If labor turns out to be 80% of the total cost and materials 20%, then a 20% discount on the materials is only a 4% savings of the total cost. I am afraid these people are planning a house that is more than they can afford.
Yeah, cutting costs on building materials can help, but you’re right, that ain’t gonna drop the price all that much. Your ‘back-o-the-napkin math’ is right, it’s just going to be a small percentage of the overall cost of the house. Labor is going to eat up quite a bit of it–and that’s if everything goes as well as planned (can we say “unforseen site conditions”?)
I don’t know where you are, but I’ve often figured between $150-200 per SF, but then again that was commercial/government construction. YMMV. . .
Tripler
Yeah, it sucks when you find an old foundation under the dirt where you want to put yours.
My house framing crew of five guys pays out about $10,000 just in salaries to the workers in the time it takes to frame a house. More if your house is more complicated, with arched ceilings or lots of windows.
Materials are cheap. My father who spent most of his adult life in charge of construction of large buildings used to say that concrete is cheap, it’s the labor to pour it that costs money.
This one reason why 50 years ago houses used to be 1400-1500 square feet, and now they are 4000-6000 square feet. After the war, material was expensive and labor was cheap. It does not raise the price of the house by 3X to go from 1500 square feet to 4500 square feet.
Why is this? Start at the bottom, let’s say that it takes 4 hours for a backhoe to dig the foundation out for a 1500 square foot house. It might only take 8 hours for the bigger house, as the trenches are longer (a backhoe can dig a straight line real quick, it’s the moving for the small connecting walls that take the time.
Again framing a 30 foot long wall only takes minutes more than framing a 15 foot long wall. If you are using 16" stud spacing, you have to nail in 11 extra studs. BFD.
If I had to make a SWAG I would say that your owners might save $20,000.
Really depends on where you live. In my area, $100 a foot is your bare minimum starter home or condo. I think most people wanting to live in a 4,000 sq ft home are not going to be satisfied with the finishes (minimal trim and cabinets, linoleum, laminate, cheap carpet, bottom tiered windows, appliances, mechanicals,) that come with a starter home. The percentage of money you are going to save by 20% discounts on some of the components is minimal; labor makes up much more of a percentage of the cost than material.
A VERY rough guide, and an opinion I would not want to be held to, is about 1/3 materials, 2/3 labor. There really are too many variables.
Another problem that exists with homeowners like these, is that they buy the windows and save $2,000 from their discount, and then look at that 2,000 as extra money. They then proceed to spend it on in floor heat and towel warmers in their bathroom. They never actually save the 2,000, and typically end up spending more.
Is that really a problem though? I’d be thrilled to save something here if it means I can get something extra there.
Yes, and no.
Firstly, if you are scrimping on the “bones” of the house, the important components for the structure–like putting in cheap windows, using poor construction methods, or scrimping on the mechanicals in order to put a granite countertop in the kitchen, that is pound foolish.
Secondly, pretty much every time you change something, or add something, it costs more. Your schedule gets off, you have to redo stuff to accommodate your changes, and one thing leads to another.
I’m not explaining the thought process well, let me try again.
You have a budget of $100,000. You save $5000 on going with a lesser grade of carpet, a simpler type of shingles, and pergo instead of hardwood in one room. You’ve now decided that you’d like tile instead of linoleum in the kitchen. You get a bid for 6,000, but decide that the upgrade is worth the extra grand, tile is so much nicer. Your builder then says that the underlayment in the kitchen needs to be redone, because the height is wrong for tile. It’ll only be approx another $750, but now you feel like you’re committed to tile, so you ok it. In the meantime your wife went to the tile store, and decided that the plain jane tile at a buck a foot isn’t really what she likes, now that she saw all her other options. She wants the $8 a foot tile, but you make her come to her senses and you both compromise on the $4 a foot tile.
Now, you did end up with a nice tile floor instead of linoleum, and it does make the house more liveable and valuable. But the house didn’t end up cheaper, you didn’t end up saving any money, in fact you actually spent more than $100,000.
Building houses is an experience unto itself.
Most of the other posters have given the same answer I would. I’m not sure where you’re located, but I was quoted about $150 per square foot for construction for our house. I managed to find a contractor through the “good-ol-boy” network that only charged me $100 a square foot for the new construction but $135 sq/ft for rennovating the existing framing.
Just off the cuff figuring from what I know about the builders that did my place. He paid his crew about $3k in salary every week. Job took about 6 months. So there’s $72K right there…he paid himself about $5K a month…so that takes it up to about $102K. Total cost of the project was around $250K. So figure that while about $15-20K was for his profit at the end, the rest of that was all materials. Sub-contractors cost a lot…HVAC/Plumbing/Electircal…all those are things your client probably won’t be able to save money on. Not only that, but his general contractor may not want him to buy the materials. A lot of contractors get better prices because they work with local building suppliers on a regular basis. Plus unless your client knows what they’re buying, they may substitute materials without knowing why the architect or builder is specing a particular material. Unless he’s going to act as his own general contractor, and sub out all the work…with the pain that is involved with being on the job site just about every day…he’s probably better off not counting on saving that money.
edited to add Oh, and I agree with dahfisheroo…they really need to make sure they think of every single thing they want in the house. It’s a huge pain to add on, and you will end up spending more than you realize in those little add-ons. We got a bill for $25K for all the little ‘extras’ we put into our house.
And they make some of thier money by marking it up…so if you cut that out, then they are going increase thier labor rates.
Also consider if there is a problem down the road. If the owner buys the material, the contractor might claim the material was defective, or ill suited for the application, and of course the material supplier will claim it was improperly installed. If the contractor buys it, he is on the hook to make things right regardless…and that is what justifies the contractor marking up the materials.