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New Construction is Predictable. Or is it?

In fact, new construction is anything but predictable. However, we often make that ASSUMPTION. In fact, we make a lot of assumptions about new construction. That’s what this article is about, ASSUMPTIONS. By the way, the following applies equally well to renovation projects.

If you are considering having a new home built, how many of the following assumptions have you made? You may have made some of these assumptions consciously whereas others may be unconscious; you just never thought about them. Making any of the following assumptions will typically lead to unsatisfactory results and, even worse, legal disputes that could go on for a long time and consume significant financial resources. These are some of the more significant assumptions:

  1. Assuming that you are capable of effectively managing the project.
  2. Assuming that you know enough about building homes to produce the desired result.
  3. Assuming your builder knows what he or she is doing.
  4. Assuming your builder will comply with a universal standard of good construction practice.
  5. Assuming that there is only one way to build a quality home.
  6. Assuming that building code compliance will produce a quality home.
  7. Assuming your local code enforcement is effective.
  8. Assuming that your builder actually knows what you want to have built.
  9. Assuming that you actually know what you want to have built.
  10. Assuming that paying more means you will get a better product.
  11. Assuming that you will get a weathertight, low-maintenance home.

The list is nearly endless. The number of projects we see that have developed into disputes between the owner and the builder as a result of assumptions is equally endless. One builder we know, in response to criticism about the quality of his homes, said, "Every one is a prototype. Some maintenance should be expected." However, when he first sold the home to his customer, the limitation of being a "prototype" was certainly not disclosed. Further, does a unique design (this builder’s hallmark) justify compromises in the function and weathertightness of a home?

More and more, in our diverse culture, you cannot assume that there is a universal understanding about what is required to build a good home or even what a good home is! Many factors drive the process, including cost, availability of skilled labor, and clear communication between the builder and owner.

Some of the important elements of a successful project are:

  1. Clear and frequent communication between the builder and the owner, both before the project starts and as it progresses.
  2. Clear definition of the intended product, including plans and specifications, established and agreed to before the project starts.
  3. A clearly written agreement between the builder and the owner defining the scope of work and the respective responsibilities.
  4. A clear definition of how problems will be solved when they arise. Problems will occur in any new construction project. What is important is the commitment of the team (both owner and builder) to effectively and efficiently resolve problems.
  5. That the owner makes a commitment to be on site regularly, at least weekly. The owner’s presence conveys a concern and interest in the outcome.
  6. Everything should be in writing. A weekly meeting on site, with discussions and agreement summarized in writing, is imperative. Any change in the scope, budget, or schedule MUST be in writing.
  7. Payments should be based on demonstration of work completed, not percentages of the total contract. Some payment retainage (5-10%) is recommended until you, the owner, are satisfied that you have received the product you expected, ASSUMING you have clearly defined your expectations.

A construction agreement, like any sound business agreement, is no longer just a "handshake" deal in which everyone assumes that everyone else understands what is involved. There are simply too many variables. The time invested in clear documentation is critical and will pay dividends. It may seem bothersome to take the time to define the project and agreement on paper, but that will be much more satisfying than the time spent later resolving disputes, possibly while living in the middle of a construction project that is way behind schedule.

More and more, a third-party consultant is valuable in this process. An engineer with residential construction experience can be invaluable to both the builder and owner. An engineer can help to define the project, develop appropriate construction documents, and act as a liaison between the builder and the owner. Throughout the project, an engineer can assure the owner that the desired product is being produced while also assuring the builder that the practical limitations of residential construction will be kept in perspective.

If a third-party consultant is to be used, he or she should be brought in at the beginning, when the agreements are still being established. Otherwise, it will be difficult for that person to be effective.

For a successful project, there should be no ASSUMPTIONS.

 

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