Woe Is Me

Now, "whoa!" is me…

Just as labor pains are a part of childbirth, cost overruns are a part of the construction process.

It’s inevitable.

Guaranteed.

A promise you can count on.

If you don’t expect them, baby, you’re going to be in a world of hurt.

I used to be in the trades. I used to build houses. I knew these truths to be self evident. We knew overruns were coming, and we attempted to budget for them. But sometimes all the planning in the world won’t save your hide.

My tale of "whoa!"

If you’ve been following this blog for any length of time, you’re probably aware of the "fun" we’ve had during the process. (Fun, here, translates to extra $$)

1) We had to apply for an unexpected variance when it turned out our house had been sited too close (10 FEET! too close) to the property line. This resulted in a 6 month delay. We were supposed to start work in October of 2003. But, due to typical winter weather, we didn’t get to start the job until late March of 2004.

2) During excavation we found a large vein of granite where our basement was supposed to go. (Say this now, quietly, with terror in your voice. BIG EXPENSIVE ROCK BREAKING MACHINES. Scared yet?)

3) Because of the granite, the excavation was less than perfect, which translates to more concrete.

4) In August, our framers had a partnership split and… disappeared. Besides the time delay (three months), imagine how much fun (and how expensive) it was to find someone to start the job again.

5) The nearly new boiler we were planning on reusing was somehow damaged, rendering it useless for reuse.

 The stars align, or not…

All by themselves these would have been irritations, but nothing that didn’t fall within the realm of "normal" for a major remodeling project. That is, except for a certain confluence of events.

If you happened to have started any kind of building project between the end of 2003 and the beginning of 2004 you’re sure to have made note of a certain ugly trend that began somewhere around the middle of January 2004: Lumber prices nearly doubled. And other building materials, such as copper pipe, sheetrock, steel, and the like ALL jumped in price. You’ll also note that a certain variance cost us roughly 6 months. The difference between the fall of 2003 and the spring of 2004.

You feelin’ me here?

Now, let’s have a little reality check, just to give you some insight into what this means in the real world. It’ll take one nail to drive this point home…

In the late summer / early fall of 2003 I was given a quote for lumber, including all my siding and exterior trim, of $52,000. Present actual cost? $83,000. No, we did not order enough lumber to build another house. That’s just the difference in price of lumber between the fall of 2003 and the spring of 2004.

If you’d like to throw up, you can borrow the bucket I have right here.

 Herein lies the woe…

The fact of the matter is this, once you’ve begun the process, no matter how the stars align, there’s really no turning back. You can’t redesign the house. You can’t really try to wait the price increase out, because it’s not really going to come down that much. You can’t call off the demolition crew once your house has been taken away in dumpsters. You just have to go with the flow, and hope it all shakes out in the end.

But here’s where the problem lies…

While the bank that’s handling the end loan has no problem changing the total of the end loan to reflect the actual construction cost of the house—fortunately the original construction price wasn’t at the upper limit of what we could afford—the construction loan, which is based on the quotes you have from before the price increase that happened as you were building the house, IS FIXED. There are check points that you have to reach. When you reach those points you’re handed a check, not for the amount that you’ve actually had to expend, but for the amount set down in the draw schedule.

Know what I’m sayin’ here?

I do understand the reasoning behind this. It keeps unscrupulous individuals from running out and buying a new Mercedes with funds that are meant to be spent on building a house. But, when a home owner/builder can provide you with documentation detailing exactly what has taken place and why. And when the whole world knows that one sheet of plywood has doubled in price. And it’s perfectly clear this cat isn’t walking around showing off his **boucoup bling**, isn’t there some way to cut him some slack and give him some of the cash he needs to proceed with finishing the house? (I mean honestly, isn’t this really the goal here?)

The answer, at least to me, seems obvious. But obvious to me and reality apparently aren’t driving down the same highway.