Leveraging Design for Cost Management in Home Building

Rising material costs in construction are impacting the homebuilding industry in significant ways. Labor shortages and supply chain disruptions have caused building material costs to soar. Lumber, in particular, has been hard hit. Soft lumber inventory shortages and increased demand have driven up home prices by as much as $36,000 on average, according to the National Association of Home Builders. 

It’s a challenging time to build new homes, and cost management in construction is a top priority from the board room to the job site. As architects, we have the privilege of collaborating in the earliest phases of new-home development. There’s a real opportunity to mitigate some of these uncontrollable cost increases during the design stage to maximize value and sustain a level of affordability. Here are some of the ways we collaborate with our clients to create cost effective design solutions for home building through architecture.

Re-evaluate Standardization Practices

There’s never been a better time to step back and systemize your product assortment. Adopting lean building principles identifies value points from the client perspective to align them with improved processes and workflow. 

Normalize Replication

Do more of what works! Collaborate with the construction team to establish a shortlist of design features that are proven winners in aesthetics, functionality, customer satisfaction, and value. There’s an economy in repetition, and reinventing the wheel for each new community can be time-consuming and costly. Work with an agreed-upon set of products for each architectural style at varying price points. 

Material Size Matters

An important byproduct of designing for replication is more uniform material sizing. Optimize product procurement with volume purchasing and pricing. Start at the home’s exterior and work inward—siding, garage door, front door, windows, and drywall sheets are a few examples. Standard sizing requires fewer shipments and reduces transportation costs. It also requires less cutting and creates less waste. For example, if standard soffit material comes in 16-inch increments, it doesn’t make sense for the overhang to be 12 inches or 18 inches. Designing the overhang to work with the standard sizing eliminates the need for cutting and throwing a portion of the material in the scrap pile.

Reign in Finishes

Finishes and finish packages can often become the deciding factor for homebuyers on their builder and community choice. Builders who are sensitive to this have done a fantastic job offering incredible and varied product selections. The downside to this is that all of this customizing can eat through your margins. 

Tiered and standard finishes can offer that delicate balance between designing for the senses and designing for cost management. Your design studio or interior design team can help reduce complexity while maintaining good design. Re-establish a budget for finishes and stick to it. 

Get Systems Straight

Home Systems

Centralization of mechanical systems makes for more responsive homes with improved access and functionality. Design for ease and comfort with high-performing HVAC and electrical systems, water heating and filtration, and home automation. Extra credit—standardize these items across your product collections to realize even more costs savings. 

Solar power requirements will become the new reality for many homebuilders, which also impact construction costs and home pricing. California was the first state to require solar power with all new construction homes beginning January 2020. A handful of other states are expected to enact similar mandates in the next couple of years. 

Windows should not be overlooked and are also part of a home’s system. Consider both size and placement to maximize interior natural light, passive heating opportunities, and cost savings. 

Synergize Back Office Systems

Streamlining systems extends to office procedures and how you approach collaborations. Cost overruns happen when there’s a communication breakdown that results in inconsistencies between architectural, engineering, and landscape plans. Develop a procedural playbook to maintain ownership over this process to save headaches, time, and money. Improving office systems will positively impact everything from scheduling and purchasing to invoicing and warranty servicing. 

Simple and efficient designs that go vertical instead of horizontal, such as this 3-story paired home, are good cost effective design solutions for home building.
Think about size and placement of windows to maximize natural light, passive heating opportunities and architectural appeal.

Simple and Efficient Design

Another consideration when addressing cost control measures is to reduce design complexity in your home plans. Cost effective design solutions for home building often come in the form of simple and efficient design. Keep in mind the principles of considered design with a focus on delivering maximum value. Complexity usually takes more time to design and build, which translates to increased labor and time on site. Time is money, after all! 

Go Vertical

When designing for cost control, two is often better than one. Economize by opting for more two-story house plans. Going vertical instead of horizontal reduces money and labor for the foundation and roofing. It also requires less land on which to build, which is at a premium in our current market. Add square footage on the second floor by eliminating two-story entryways and vaulted ceilings on the first floor. Align or remove interior walls to simplify and open up the interior. Another benefit—homebuyers appreciate open-concept layouts and clear sightlines. 

Perhaps it’s also time to take another look at your product assortment and consider other housing types, like missing middle housing and urban infill opportunities. A simpler home design also reduces the opportunities for costly mistakes in the field and future warranty service. 

2-story home designs are good way to leverage design for cost management in home building. 2-story homes are more cost effective to build, since they require a smaller foundation and less land for the same amount of livable square footage.
2-story homes are more cost effective to build, since they require a smaller foundation and less land for the same amount of livable square footage inside.

Reconsider the Structure

Reducing design complexity in your home plans impacts cost savings in the design phase and downstream in materials and labor. A home’s structural integrity is crucial for safety and longevity. Still, it’s not typically top of mind for buyers when home shopping because it’s considered a given—a new home’s going to have good bones.

Buyers, however, are more interested in spending money on sensory design features, items they can see and touch like countertops, tile, and trim. A tradeoff to better manage costs is to simplify the structure without sacrificing integrity and style. The simplest, most economical structure for a home is a box—start there and use cantilevers, plate height variations, and the front porch to add interest to the elevation. This strategy helps free up your budget for the design features that appeal most to buyers. 

Sustainable Building Practices

Homebuyers are interested in more sustainable and healthier homes as long as they’re within their budget. When you design for efficiency and less waste, homes will require less material and embodied energy to build, which represents cost savings for you and your buyers. Communicate the benefits of improved systems and construction methods to buyers as a more sustainable way of living. Energy recovery ventilation, passive design elements, and healthier materials create improved living environments and long-term cost savings for the homebuyer. 

Small Steps to Big Leaps

Incremental optimization at the home design phase can pay dividends in cost savings for you to maintain a degree of affordability for buyers. We continue collaborating with our clients to create cost effective design solutions for building homes during these challenging times. 

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