Cohousing-L Mailing List: Re: Projected costs vs. actual cost

[Rob Sandelin (robsan]

 Mark Frauenglass  Mentioned in a post:

 >Our 2 bedroom projected cost went from $96K to $131K by the time
>escalating construction costs and an enclosed remote garage were added (no
>carports were allowed).

I have noticed that so in all the figures I have seen so far, not one 
group has come in at the projected cost.  In the case above, more than 
30% off.  So I wonder why projections are so far off in this case, and 
in others.  I can understand why costs escalate.  What I wonder is why 
initial projections often are very low.

1. Are initial projections, often used for marketing, low because that 
is what people want to hear and believe?

2.  Are initial projections done by people who have no experience?

One thing I have noticed, is that the initial volunteers and 
visionaries which form cohousing groups often want to beleive they are 
going to do affordable housing because that is what they have to do to 
be able to live there.

Then there are the folks who stay in the project, long after the costs 
have gone over their budgets because, quite reasonablely, the longer 
and harder you work on the project, the less you want to give it up 
because you can not afford it.  Part of what really sucks about this is 
that a great deal of your monthly payment is interest, not principal.  
Too bad some immensely rich communitarian can't form a less capitalist 
solution to lending to cooperative housing.

Once the plans and specs are done, and the builders give bids and 
appraisals happen it is very very late in the cycle and then people are 
faced with the realization that they can not afford what they have 
created.  I wonder if there is some way to get better information, 
earlier in the cycle about the real costs?  And I wonder, if the real 
costs were known, how would people deal with it?

Rob Sandelin
Sharingwood