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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.

Unfamiliar Territory

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 Mary.

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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.

The foundation 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.

What’s missing?

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 free.

Lesson #2: If you’ve never done it before, plan on missing something.

In 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.

Sub Supervision

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 Pinto.) 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 reasonable price.

Lesson #3: Shop all bids.

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.