From: Norm Gauss (
Date: Mon, 26 Jul 2004 10:59:04 -0700 (PDT)
Without a developer, in our design phase, we were presented with designs by
our landscape architect and building architect, but neither architects were
able to give us reliable costing information.  Since we had no developer and
no reliably determined target selling prices and no costing guidelines,
there was no strict control over what was to be included in the designs.
Initially the landscape architect designed a layout with an expensive
underground garage served by an elevator but we had no reliable idea of how
much this was going to cost.  The building architect presented us with 5
basic floor plans, A, B, C, D, and E.  Then recommendations for changes of
each floor plan were submitted by special teams formed for each floor plan
with the idea of micromanaging the architectural process.  By the time we
had finished, we had an A, B, B', B alternate, C2, C3, D, E3, and E4 for a
total of nine floor plans, and nobody had any idea how much this was going
to cost.  Without a reliable estimate for costing the entire project and no
overall control, we were wandering all over the place.  Initially we asked
for a two-story common house with about 5500 sq. ft. of floor space.  Also,
because nobody understood the implications of building on a ridge top,
additional retaining walls had to be added, further increasing the cost.

It was only after we began working with a general contractor that we began
to get a feeling for how much all this was going to cost.  Then we started
worrying about whether the living units would be too expensive for the
market.  That was when we started pruning back with a serious value
engineering effort. The common house was reduced to a single story
structure.  We had to go back to the architects several times for revisions
of their plans, resulting in surcharges on our original architectural
contracts.  Thus, without strict control from the beginning, the architects
were not sure what we wanted, and nobody knew how much the extra features we
added were going to cost.

We hired an excellent project manager early on to help us.  He lives in the
community, is a civil engineer and has close ties with city officials and
our site engineering firm.  He helped us in negotiating terms regarding
sewer hookups, installing traffic signals, street repairs, parking
requirements, setting up a bus shelter, acted as a liaison with the
contractor, the city, and the engineering firm, and handled a number of
items requiring expertise.

Later we finally hired a developer to help us finance and market the project
and guide us in the construction phase.  Both the contractor and the
developer assumed that the construction drawings and specifications were
correct.  But nobody had made a detailed check of the drawings to ensure
that there were no mistakes and nothing had been left out.  As a result,
later on mistakes were discovered and frequent change orders had to be
issued to the contractor, all at extra cost.  In addition, some people
requested changes in the original plans that were thought to be justified.
Of course, the construction schedule was impacted, delaying completion of
the project and increasing the cost.

In the end, the costs of the living units were within the constraints of the
local market, but only because the final price of the units was set about 16
months before the units were sold, and in the meantime prices in the local
market had increased enough so that we were able to sell all the units.

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