Reading a custom home budget
Two numbers.
Two different houses?
One estimate is lower. Before that becomes good news, find out what it contains. The windows may be different. The site work may be an allowance. The terrace may be outside the price altogether.
A custom home estimate is a description of a proposed building written in quantities, assumptions and money. Read the description before comparing the total.
The first reconciliation
Give each number
a boundary.
Construction
Ask what the construction figure includes: the building, site work, supervision, builder’s fee, specified equipment and any agreed exterior work. Have exclusions written alongside it, not left in an email from an earlier meeting.
The wider project
Design and consultant fees, surveys, approvals, owner purchases, furnishing and land costs may sit elsewhere. Their position depends on the proposal. A construction estimate should not quietly become the owner’s all-in project budget.
Unresolved work
An allowance is an amount carried for a stated scope that is not fully selected or priced. A contingency addresses identified uncertainty. Ask what each covers and whether it is already inside the reported total.
The square foot
is not self-explanatory.
In Super Houses, Scott Hobbs describes how different area definitions can distort a comparison. Heated living area, exterior-wall measurements, unfinished space and porches are not interchangeable. His examples explain a method of discussion, not a current rate card.1
Request an area schedule and a scope list with the estimate. If one proposal includes a finished lower level and another does not, a headline cost per square foot can make the comparison less clear.
The same issue appears in a beautiful entrance. A small area can contain substantial stonework, glazing and overhead construction. Dividing the total by floor area cannot tell you how those elements were specified.
Your figures / a scope check
Compare the
same work.
Enter two proposals and only the documented adjustments needed to put them on the same scope. The tool does arithmetic. It cannot tell whether the specifications or contract terms are equivalent.
Enter both quoted totals to begin.
Adjusted total = quoted total + additions − deductions. No automatic contingency or market pricing is added. Values stay in this browser session and are not submitted.
A specification
makes the price useful.
An allowance for “windows” leaves many questions open. Which units open? What are the sizes, frame materials and hardware? Who supplies the installation accessories, and who installs them? What is included in the finish?
The same discipline applies to cabinetry, stone and lighting. Ask whether a price includes measuring, shop drawings, fabrication, delivery, installation and protection. A supply-only quotation and an installed price can both be correct and still be unsuitable for direct comparison.
The Whole Building Design Guide calls for an estimate narrative that records assumptions, allowances, documents used and contingencies. It also describes how estimates gain detail as design information develops. The owner should be able to see that progression.2
As the design develops
Keep the previous version.
A revised total needs a short explanation of what moved. Separate a change in the owner’s brief from a corrected quantity, a newly resolved detail or a fresh subcontractor quotation. Otherwise every increase looks like the same problem.
Ask for a dated estimate, a list of the drawings it uses and a record of the major decisions still open. A lower number obtained by removing work should show exactly what was removed. A saving that shifts cost to an owner purchase is a transfer, not necessarily a reduction.
Before placing an order
Follow the cash as well.
A budget describes anticipated cost. A payment schedule describes when money is needed. Long-lead purchases may involve deposits before the corresponding work is visible on site. Ask for the order dates, payment milestones and the evidence required at each stage.
Scott’s 2021 discussion describes this distinction through a window order. The percentages in that conversation belong to his example. The actual supplier terms and construction agreement govern a new project.1
A good estimate
supports a decision.
The point is not to make every line feel certain before the design exists. It is to know which parts are defined and which remain open. That lets the owner decide whether to proceed, simplify, investigate or wait for a selection.
For the architect and builder, the estimate becomes a working document alongside the drawings. For the owner, it becomes a way to ask a precise question: if this is the house we want, what is still missing from our understanding of its cost?
Builders, since 1954.
More About Hobbs
Hobbs, Inc. has been building and renovating homes since 1954. The Journal draws on that work and on conversations with architects and craftspeople about the decisions behind a finished home.
Discover HobbsSources and conversation
For a closer look
- Hobbs Conversations: Super Houses
Scott Hobbs and Robert Cardello, April 16, 2021. Checked against the supplied full transcript. Speakers are sources, not authors; historical prices are not current allowances.
- Whole Building Design Guide: Cost Estimating
Scope narratives, estimate development, quantities and documented assumptions. General estimating guidance, not a custom-home price database.
A few practical questions
What should be included in a custom home budget?
Define construction scope first, then separately identify design and consultant fees, approvals, land, owner purchases and other project costs as applicable. Clarify allowances and contingencies so they are neither omitted nor counted twice.
Is cost per square foot useful?
It can help early discussion when scope, area definitions, location and quality are comparable. It is not a substitute for a project-specific estimate based on drawings and specifications.
Does the comparison tool estimate what my home will cost?
No. It adds and subtracts figures you provide. It does not price work, assess bids or verify whether two proposals cover equivalent work.
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