Originally written: Jan 2004
O.K. Here it is, I’m jumping in with both feet and will hopefully make just about everyone angry. I believe that dealing with this question first demands that we look at the construction costs of conventional residential buildings, this way, we will discover the variables normally at work. We may then substitute SIPs and see how this effects things. Sound reasonable?
Let us also first determine what this animal is that we are setting out to price. Most often we are speaking of a one-off custom residence. This means that the house is a “prototype,” with novice Owners technically in charge of the process (because they are paying for this) guided by a Professional Builder. The set up is just about as ripe for “fun and games” as can be. Much of the time, miraculously, all goes well. That is to say, that the final product meets or exceeds the undocumented expectations of the Owners, that it is completed more or less on time and on budget, and that the Professional Builder received his payments for the full amounts invoiced within a week of their issuance.
Mostly.
At the start, either consciously or unconsciously, both parties extend Trust to the other. The Owners trust that the Builder will produce the best product he knows how at the lowest possible cost (plus his modest fee) and that the Builder will strive to do so as quickly as possible, that his full attention will be brought to bear so that at least three quotes are obtained for all subs and suppliers and that his constant presence at the job site will insure that only the highest level of craftsmanship is delivered. The Builder trusts the Owners to appreciate his efforts and respond immediately to his invoices without question. Their agreement, arrived at proceeding commencement of the work, usually consists of a permit set or plan service set of plans without specified finishes or with changes to those specified, and a one page proposal drafted by the builder that has a bottom line cost with perhaps a disclaimer or clause describing some provision for “extras.” This weak documentation really relies very heavily on the Trust that each party extends toward the other.
Most likely the Builder will have arrived at his costs in the following manner:
1. He will develop or have developed for him a material take-off
2. He will secure prices for these materials.
3. He will approach his favorite subs for prices for their work.
4. He will derive his own estimates for several line items – both large and small – based upon his data bank of recent experiences, like cutting in an access road, electric service, etc.
5. He will “temper” much of the above after assessing the attributes of the site.
6. He will “adjust” much of the above reflecting on his judgements about the nature of the Owner – his partners for the project who are responsible to furnish him with the information he needs in order to proceed in a timely fashion.
7. He will finally submit a total cost which is the result of all the above PLUS whatever fee he hopes to realize out of the project.
Of all of this, the cost of framing usually accounts for 10 % of the final cost off the project, that is to say for a move-in-ready $300,000 home, we are talking about $30,000. This does not include dealing with access issues for large trucks and structural members or insulation. It does include all interior floors and walls as well as the exterior ones. The rule of thumb around here is that more than half of this is for labor, say two thirds, and the remaining third for material – framing members and sheathing.
Now for the SIPification. What changes? How does this impact the cost? Essentially we always hear the same old stuff:
1. SIPs cost more than traditional framing materials. True.
2. SIPs take less time to erect than the materials they replace. True by a great deal.
3. SIPs include exterior insulation. Obviously true, therefore --
4. SIPs allow for the down-sizing and/or redesign of the HVAC system.
So where does this get us? Two important observations follow, distilled out of years and years of experience in the building world.
Observation One:
Talking about all these procedures in a general fashion gets us nowhere. Don’t forget about the Statistician who drowned in a lake with an average depth of only two feet! Each custom house is just that – a unique case, the particulars are what govern the outcome. Each site is different. Access may be a problem, maybe not. The design of the structure may have innately buried in it all kinds of difficulties – or – more likely, the difficulties may be more numerous for SIPs than sticks or visa versa. The stick framer uses (or doesn’t use) pneumatic nailers, the SIP manufacturer requires a 2x4 spline at all panel joints. The electrician can’t get the special order rough-in kits until after the contract completion date!
Observation Two:
Decisions about finish materials take precedence over almost anything else. Granite countertops and plumbing fixtures and fittings are not justified by their “payback,” the same is true of electrical fixtures and appliances. Even the ordinary HVAC equipment selection is not subjected to analysis and engineering. No one ever asks, “What’s the payback on this sofa?” The upgrading that a house goes through in it’s finish-selection-and-verification stage always more than offset what incremental upcharge that may have resulted from utilizing SIPs.
LCA (life cycle assessment) is never utilized to properly validate an envelope upgrade because it can’t be used to justify almost all the other decisions about a home, from where it is sited to what the locksets will be.
So, finally, after all the dust settles where are we?
A $3000 upcharge ( 1% of the project cost) that may be directly attributable to the SIP package will not be priced against the $4000 upcharge from fabric to leather for the living room seating. Savings in the HVAC equipment will not be credited. Increased thermal comfort will not be appreciated or valued, neither will be a smaller environmental footprint. The philosophy of the Owner will drive all the aspects and attributes of the project. The Builder will look to see that everything (the process) goes smoothly so that a decent profit is realized and that the Owners are satisfied so that a recommendation may be counted upon.
SIPs cost less and make sense. Who cares? Not most Owners or Builders. You can’t go out and force your client to use SIPs. But those who come to you looking for the advantages will be happily rewarded. The advantages of SIPs are real and large in both number and value. Their use in an integrated design which fully exploits their properties may also cost less at the outset. Much less.
Originally written: Jan 2004
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