Question

If a cost estimate indicates that a residential design is significantly over budget, what changes would you consider to reduce the cost of the project?

Answer 1

Changes considered to reduce the cost of the project:

Cost Estimates of a Residential Design have the following elements:

1) Quantity Takeoff

2) Labor Hours

3) Labor Rates

4) Material Prices

5) Equipment Costs

6) Subcontractor Quotes

7) Indirect Costs

8) Profit Margin

Quantity Takeoff is the very basic element required in Residential Building. Labor hours and rates depends on the location, work difficulty, market value, and other extrinsic factors. Material prices and Subcontractor Quotes again depends on location, supply and demand. Equipment Costs depends on the location, place of purchase, transportation cost, size of equipment, etc. Indirect costs are overheads for labor and contractors.

As we can check the above elements, we cannot change Quantity takeoff, as no one wants to compromise in the quality. However, we can try to slightly negotiate with Labor rates and Subcontractor Quotes. Again, as mentioned the budget is significantly high, so we need to work on reducing 2 costs, which are Equipment Costs and Material Prices.