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New Builder Contracted for the 100K House Project

by Chad Ludeman on September 3, 2008 · 6 comments

in 100k project,Construction Updates,Development

The original team for the 100K House project consisted of a developer, an architect, a builder and a bank. Since then we have added many other partners (as seen in the left column of the site) and dropped some as well along the way. This is not an easy project to be involved with. The goals are approaching unreasonable, the hours are long and the pay is little if at all. Frankly, I’m surprised any of our partners want to be involved with our crazy ideas. Some of our best marketing to date has been offline to our partners, somehow convincing them that this is something they want and even need to be involved in.

Back to the topic at hand. We are now down to two original members of the team. In the end, Build It Green or Level 5 decided that this was a project they could just not afford to do on our strict budget. We totally understand where they are coming from and wish them success on future projects.

Our new builder is a company called Manor Hill Contracting Services, LLC and owned by Brian Pearce.  Brian recently started his own business with his brother, but has worked in Philadelphia for over a dozen years with Ryan Homes. While Ryan Homes is not my favorite home builder out there, they do a better job than many big builders and they also use a panelized system of building very similar to our SIPs construction. This experience along with a wealth of local subcontractors that do fantastic work, reliably for a very reasonable rate are two big pluses on Brian’s side that convinced us he would be a perfect fit for our project. Brian also has very low overhead which allows him to provide more flexibility and lower overall cost to the project which is ideal for our situation.

Brian and Manor Hill are offering us a unique opportunity to be involved as little or as much as we like during the construction process in order to cut labor costs in areas like painting, cabinet assembly and landscaping that we have the time and ability to do ourselves. Brian will be meeting with us weekly to review the budget and make sure we are still on track. This will be invaluable for the blog, case study and our bottome line.

Postgreen will also consider becoming certified to install the Solar Thermal system we have spec’ed out ourselves with the help of the contracted plumber and HVAC sub. This will save us a few thousand on each house and is a strategy that we could use for the flashier green systems going forward. There is no reason we couldn’t do the same thing with green roofs in the future. A couple days of manual labor on each house to save a few grand and get real green building experience is something we would really enjoy at this stage in our business. Getting out of the office and away from our glowing computer screens in exchange for fresh air and manual labor will do us good now and then…

Lastly, a new GC means a new budget. I haven’t had time to post yet and probably won’t until we have our detailed meetings with each subcontractor but the new figure is $97,500.  That number is also without any of the cuts we made in the last few weeks trying to hit our target! This number will most likely change in the next few weeks as we fine tune but we intend to make up any increases with our own manual labor. In order to keep the case study valid, Brian is going to tally the labor we contributed over the entire process and convert that into what it would’ve cost us if we had used the appropriate subs for those tasks. He is even going to convert our hours into professional hours, so if it took us two days to assemble and install the kitchen cabinets, he will convert that into half a day for an experienced finish carpenter.

We are excited to welcome Brian and Manor Hill to the team and finally move forward with ground breaking. We don’t have an exact schedule nailed down, but it looks like 3-4 weeks may be a realistic timeframe. Stay tuned.

If you enjoyed reading this post I can promise you'll love our new writing over at Postgreen Homes. Yeah, we know that's the same thing your favorite band said and their new album is nowhere near as good as their early stuff, but seriously, we are actually still getting better.

There also isn't much conversation to be had here . . . at least not with us. So come on over to the Postgreen Homes Blog and tell us what you think of our new(ish) digs and crazy ideas. We will be sure to tell you what we think of your opinion.

{ 6 comments… read them below or add one }

1 Joe B September 3, 2008 at 5:49 pm

You are now officially the hardest working developer in the lower 48. Of course, there’s no better way to know your design inside out. Stay safe.

2 Scott Sanders September 3, 2008 at 6:35 pm

As a builder myself, I have been watching, reading, and wondering if overhead and profit (for both the builder and you the developer) were included in each line item of the budget or if O/H and profit will be added to the “total cost”. I still don’t think that it is very clear where it is and if you guys as developers are not including your O/H and profit to try and keep the budget under 100K, I think you are short changing yourself in the long run.

3 chad September 3, 2008 at 6:44 pm

Very good points Scott. The developer profit is certainly not included in the construction budget of $100K.

In the previous budget, some of the profit and overhead for the builder was in the budget and the supervision portion was included in the soft costs (outside of $100K).

In the new budget, only the hard costs and exact subcontractor fees are included in the $100K Budget. The General Contractor fee for managing the project is outside of the $100K budget and will be included in the soft costs.

To say yet another way, if you wanted to be your own GC, you could build the house for roughly $100K in Philly. If you wanted to hire a GC to do everything, it would run you more depending on the area and the GC. Hopefully this clears things up a bit.

4 Tim September 4, 2008 at 3:07 am

Reading through about you – as developers – putting your resource into the build process, I wondered if you’d considered that people buying a home like this might want to do the same thing? I’d certainly be very keen to get involved in having some “input” into a new home that I was buying.

5 Scott Sanders September 4, 2008 at 1:05 pm

Chad,

That definitely makes sense, especially the last paragraph. I was only concerned because I’ve seen a number of builders and developers get into big financial trouble because they didn’t have a good grip on what their actual overhead costs were. These guys (and girls) were also bidding projects with little or no profit and actually loosing money on each project because their additional O/H ate up what profit they had and more.

You guys seem to have a pretty good grip on all things financial, but if you have any questions, just let me know.

6 chad September 4, 2008 at 1:19 pm

Tim,

We have definitely considered people putting in their own sweat equity. One concept we actually had was simply building an envelope for a home buyer that would be able to get a Certificate of Occupancy from the city. The homeowner could then fit out the rest of the interiors including the kitchen, bath and all flooring. This would save them a decent chunk of change and they could sub out anything themselves that made them nervous.

We also plan to make these house plans available for sale in the future so that someone could buy them and act as their own GC in building one and put as much of their own sweat equity in it as they desired.

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