As a teenager learning construction, I worked for a builder
who did both remodeling and new construction. The crew were
skilled in a variety of tasks and did quality work, but the
company was never as successful as it could have been had the
contractor concentrated on one type of construction or the
other. Years later, after my wife and I started our own general
contracting company, we faced the same dilemma — to
preserve the success we had achieved working exclusively as a
remodeling company or risk expanding into new construction.
It’s easy to see the common threads that run
through these two types of work. Both use many of the same
technologies and products, although remodeling is easier to get
into, because the projects can be small. New construction is
not constrained by an existing structure, but it lacks the
built-in point of reference remodeling enjoys.
After making a successful transition from remodeling to new
construction, however, it’s obvious to me that there
is also one big difference between them: New construction is
riskier. Over the years, my experience has taught me that
limiting and managing that risk is the key to success. Here are
some of the more important lessons I learned along the way.
For several years in the mid- to late 1970s, I did side jobs
as a carpenter before becoming a full-time remodeler. The San
Francisco Bay Area at that time was filled with people who
wanted to try new things and take chances, and I enjoyed the
people I worked for and the variety of projects I was faced
with. In 1978, a happy remodeling client referred me to a new
construction project for a couple I’ll call Tom and
Tom and Mary had hired an architect who designed
"deconstructed" buildings. By "deconstructed," I mean a
building whose structure was not always covered by finishes
(but, as I found out, was still expensive to finish). I had
never built a new house before, but I figured it was worth the
risk, because I had always wanted to expand my business to new
construction. The clients and the architect were decent people,
and I thought the job would be a dream come true.
Forming the foundation adjusted my dream to reality. I had
never done so much concrete work before. I designed a
foundation forming system that kept all wood out of the footing
and allowed me to pour the foundation wall and footing
together. Unfortunately, I built and braced both sides of the
forms before realizing that I hadn’t installed the
reinforcing steel. I worked 14 days straight, leaning into the
3-foot-deep forms to tie about a mile of steel, and going way
over my cost and time estimate.
Lesson #1: Hire others to do what
you don’t know how to do.
turned out remarkably well considering it was my first, but it
would have been done better and with less risk to my company if
I had hired an experienced concrete sub. Plus, I would have
been able to run the project with less stress. Being a slow
learner, this was not the last time I tried to do concrete work
on such a large scale, but each time, I would have been better
off if I had subbed it out.
After the foundation, everything went well
until the final inspection, when the building inspector
couldn’t find any "combustion air" ducts in the
heating system. He explained that to keep the "free" air in the
house from being burned, the building code required high and
low air ducts running from the furnace to the exterior. It was
a fine time to learn this, and I couldn’t help
wondering why the inspector hadn’t brought it up
during the rough inspection when it would have been much easier
to deal with. What kept running through my mind was that the
HVAC was in a closet far from the exterior wall, and that all
the finishes were in place. After much head-scratching with the
architect, we came up with a way to build an unobtrusive
ducting soffit. Needless to say, we did the extra work for
Lesson #2: If you’ve never
done it before, plan on missing something.
preparing my estimate for Tom and Mary’s job, I tried
to anticipate all the costs. The combustion air experience
pointed out, however, the need to incorporate a contingency.
Even though new construction is supposedly more predictable
than remodeling, I’ve learned that you can’t
anticipate everything. My new construction estimates now
include a contingency of between 2.5% and 5% of direct costs,
depending on what I can sell my client.
In 1986, we built a home for an architect and her husband,
Ellen and Bill. Ellen’s dad, Ed, was the construction
manager. Ed had helped all of his children build their own
homes, and he knew how to get things done as efficiently as
possible. If material was needed in a hurry, for example, Ed
saved construction time by picking it up in his Pinto. (It
turns out that a whole house can be delivered with a
I contracted to provide the labor for the foundation and the
rough structure. Ed, in conjunction with Ellen and Bill,
supplied all the materials and secured all the subcontracts. Ed
worked hard at getting as many bids as possible for every phase
of the project. He used his considerable experience to sign on
subs and suppliers who could provide a reasonable product at a
Lesson #3: Shop all
Working with Ed taught me how important it
was to bid the work seriously. By carefully comparing
sub’s bids, he was able to lower costs without risking
the "health" of the project. This was different from the
comfortable approach I was familiar with in our remodeling
work, where I worked regularly with a proven team of subs.
Lesson #4: Supervise so it gets
done right the first time.
I also saw that to work
successfully with many new subs required an exceptional amount
of supervision time on the part of the general contractor, or
the equivalent of Ed. "Subbing it all out" worked only because
Ed was around the job a lot. When Ed wasn’t picking up
supplies in his Pinto, he was at the job answering questions
and making sure the subs were there and doing the job right the
first time. I call the technique he used "managing by walking
around." His availability made it more likely that the problems
that are an inevitable part of new working relationships could
be identified and resolved as soon as possible.
I recommend that you include four hours per day for
coordination and supervision on a detail-oriented custom home.
Based on our new construction experiences, we also include two
hours per day supervision time for our remodeling projects.