the importance of contingency funds

[We have 59 draft posts in the cue that we worked on over the past year but never posted for one reason or another, and this is one of them {an important one at that}.]

Our first architect wasn't too keen on contingency funds. He thought we needed to invest those funds in the house because if we found ourselves at the end of the project with our contingency funds intact, we'd be upset. I disagreed and told him that we'd be elated if we had extra money at the end of the project. More moola for margaritas! And who wouldn't want a contingency fund? Based on what I've read, a little more than 99 times out of 100, you're going to dip into those funds (hopefully just a few toes and not a full-on belly flop).

Why have contingency funds? To be ready for the unexpected glitches and opportunities that invariably arise. If you are completely cashed out and leveraged to the gills to build your house, you could find yourself in a bad financial situation (an expensive unexpected glitch you can't pay for, such as finding King Tut's little brother's grave where your foundation is supposed to go) or not able to take advantage of an unexpected opportunity ("Look at that extra space... Let's put three toilets in the master suite!"). Oftentimes "contingency funds" and "landscaping budget" are interchangeable terms, and certainly the landscaping budget is there to dip into if absolutely needed. But if you want your house to be landscaped at the end of the project, it's good to have a different pot of gold to ladle coins out of.

It's difficult to estimate how much you need for contingency since you are planning for the unexpected. One of the builders we interviewed used a probabilistic approach for defining the contingency fund. Basically, he assigned a probability of certainty to budget categories based on experience and then added up those probabilities (extended to the associated budgets) to calculate the contingency, something we, as a scientist and engineer, loved him for. (Not-so-brief aside: When we got married, we used a probabilistic approach to invite folks to our wedding. We aimed for 100 attendees at the wedding and reception. For each person we invited, we assigned a probability [100 percent chance of attendance for mom = 1 attendee; 10 percent chance of attendance for Uncle Sammy = 0.1 attendee] and then added up the probabilistic attendees until we had 100 total folks "attending". Using that approach, we invited about 250 people and ultimately had 102 come! Geek love, baybee, geek love!).

We chose to set aside five percent of the construction budget as contingency, and thank goodness we did. We've had some minor building glitches ka-ching our budget, but nothing like the highway robbery of the change orders for the electric. Having the contingency also allowed us to upgrade or add some additional features to the house (many of which are in those electric change orders). For example, we're looking at not only wooding the ceiling and soffits in the living room area, but also for the back entry areas as well, a real nice upgrade that made a lot of sense once we saw the house go up.

There are always opportunities to upgrade, but you need to remember to pace yourself. Adding the heliport during the first week of construction may wipe out your contingency funds. Not good if you need those funds later. And if you do set up a contingency fund, it's best not to virtually spend it before the end of the build. It's a lot more painful (and emotionally traumatic) to let those funds go if you've already spent the money in your mind on a new television set. Assume that they will be gone. And if they're not, margaritas are on me!

Postnote: We set aside 5 percent of our build budget for contingency (which is a lot of money...) and also had the landscaping, rainwater harvesting, and solar budgets to fall back on, all outside the construction loan with the bank (which, in total, is even more money...). Total contingency charges amounted to 7.3 percent of the total construction budget; however, this included voluntary upgrades focused on the landscaping. If we just look at paying for the surprises that needed to be dealt with during the build, our contingency payments amounted to 4.1 percent of the total build budget. This drops to 2.6 percent if we factor in the credits we received from some of the changes we made. Friends, that ain't bad. Better attention to bidding details on the front end (by us and the builder) might have reduced that to 1.2 percent.

Bottom line: Have a contingency. It hard to know how big one should be since it will vary from project to project and builder to builder, but I'd recommend at least 5 percent.

week 43.7143: plants, grasscrete, gated, LEDs, in hot water

Lots of progress, but still a ways to go...

a planting

They've started planting trees and working up the landscaping on the front:

The palm tree behind the hot tub...

Piles of mulch in the front yard.

Texas Mountain Laurel in the back yard.

Texas Mountain Laurel in the front yard.

One of the Mexican Sycamores in the front yard (the other one is planted as well).

grasscrete

...has started to go in along with an unexpected charge: no one thought about how to shore up the ends.

the gate

The skeleton of the gate is in. The latch is sooper freakin cool...

LEDs

The LEDs are in!

In the laundry/buds-n-suds room. Those solid shelves will be replaced with glass shelves.

In the kitchen.

In the top shelf of the bookshelves.

Ironically, we went with the more expensive white backed LEDs in the kitchen (where it turns out you can't see them unless you really, really try) and went with the less expensive black-backed LEDs in the bookshelves (where you can't help but see them). We were planning all along to put some flavor of lip along there anyway, so no biggie. Funny, though...

primered rail

how hot is that water?

The hot water heater controller is now installed:

week 29: limestone, tape and float, cedar or cypress, Grumpy Cat

Progress continues: Limestone, taping and floating, cedar or cypress?, tile choices, curb shock, a gift, and Grumpy Cat.

limestoned

Whelp, the limestone is (nearly) finished on the front of the house, and it looks awesome.There's some fill-in work to do next to the window, and they still need to grout the panels. After a brief discussion, we're going to grout with grout that's the same color as the panels but leave it an inch back from the front plane to keep a nice strong shadow line. The setback of the grout line is called the "rake". We be getting a deep rake.

This photo shows the how they did the corner:

I was hoping that they would do a miter joint such that the line would be exactly on the corner, but it doesn't surprise me they didn't: Much less room for error both in cutting and in cutting correctly. However, this looks pretty good to me.

taping and floating

With the drywall in, the sub has started taping and floating: Taping to cover the drywall joints and floating (slapping down drywall goo and goo-smoothing) to cover the tape and the nail and screw holes. They've also been installing metal edging on corners (which then requires floating).

Looking up the stairwell.

An oddly cubist corner that covers ductwork into the pantry.

Looking toward the fridge inset.

Looking from the kitchen into the dining/living room.

Looking out the big-ole window at the top of the stairwell.

Looking toward the bookshelves.

Looking toward the media wall. Top part taped and floated; the bottom part not.

Looking toward the kitchen.

Metal edging on one of the corner windows.

Looking down the stairwell (gotta be careful: no guardrails!)

Guest bathroom.

Window above the bed in the master bedroom.

Another angle in the master bedroom.

cedar or cypress?

The architects spec'd the ceiling in the entry and living room and the soffits as cedar. It needs to be a wood that works both indoors and outdoors because the architects designed the ceiling to seamlessly extend from the inside of the house to the outside of the house (an important tenet of Modernism and the whole reason for all the engineering and framing acrobatics). 

We've been in love with cypress since we saw it on a house on the AIA tour last year, so we really wanted to investigate that as an option. The photos below show cypress on the left and cedar on the right. The lower bits are raw wood, and the upper bits are sealed with no dye. 

They'd both be fine, but the finer grain of the cypress is quieter and makes for a denser and perhaps more stable wood (the cedar sample is slightly cupped). We'd get the cypress without the v-notch up the middle.

Note grain difference and cupping in the cedar.

Cost, you say? Good question. Indeed, the cypress costs more than the cedar, but only 14 percent more.

Cypress it is.

final tile choices

We've (nearly) made final tile choices. One last thing we needed to choose was tile for the bathroom walls. What we would have loved is glossy-and-bright-as-a-librarian-in-the-morning-after-a-triple-shot-espresso marble, but it is darn expensive, especially on top of our backsplash choice. Two large format (12" by 24") tiles we looked at were white ceramic and marble:

Ceramic = $3 a square foot; marble = $15 a square foot. 

Ceramic it is.

One last choice we need to make is for the backsplash for the buds-n-suds (laundry-bar) room. Same as in the kitchen? Or something different (and less expensive)?

curb shock

If you recall, we had to tear out and replace the approach and curb at our driveway (the city made us do it). The good news is that replacing the curb made it all look better by not mixing two vintages of concrete. The bad news? That all cost all of 3,400 dollars that were not in the budget. Contingency funds...

a gift!

Our sweet green neighbors around the corner gave us a magazine from the Frank Lloyd Wright inspired (he consulted) Biltmore Hotel. Sweet!

We already had the cat, in case you are wondering...

new neighbors

Speaking of neighbors, the house two lots down is going up with amazing speed. Not as green as our house (and certainly not as modern!), there it is in the distance and from the street. 

It will prolly go for a mint since the housing market here is going great googly-eyed gangbusters. Our house is starting to look like a brilliant financial move...

we saw grumpy cat!

SXSW is going on now in Austin, which allows opportunities to partake in various shades of goofiness. For example, here's a photo we took of a bunnymobile rolling about town:

We're big fans of Grumpy Cat, a nearly one-year old kittycat named Tardar Sauce or Tard for short. Tard, truly a sweetheart, was born with a permanent frown on her face. She became an internet phenomenon (a meme in webspeak) last fall when people began captioning her photos with grumpy sayings. For example, here's one I made at memegenerator.net:

For the record, we're having a (mostly) good time!

Anyway, she's in town for SXSW! So we went down and waited (wait for it...) two and half hours to meet her in all her feline (dozing) glory:

Quite frankly, she looked a little grumpy from all the attention.

Afterwards we went to the Paul Qui curated trailer food court nearby. Yum!

The Qui is arguably a neighbor as he lives in the same building as us (and we see him from time to time).

week 19: holidaze...

I figured that nothing much would happen this past week with the holidays and all, but I figured wrong!

we have door (frames)

The front and back store-front doors arrived (although we haven't seen them yet...), which apparently allows the store-front men to install the frames. No glass, no doors, but still coo as poo to see entry level progress!

an electrifying meeting

Had a sit down with the builder and the electric sub to go over the sub's (shocking) cost proposal on changes to the electrical plan. Several of the items that had me the most miffed were simple mis-understandings and went away and the builder assumed responsibility for several items, but there's still a big (additional) bill to pay at the end of the day for change orders. It is what it is.

One goofy thing was that the sub was working off the old electrical plans, the ones with the words "NOT FOR CONSTRUCTION" on them. So a sizable chunk of change orders was related to differences between the final and draft plans (something the builder is going to take care of). Then there's change orders due to changes to meet code (a number of additional plugs [including one in the stairwell!] and additional smoke detectors).

Other charges were due to honest-to-goodness change orders we asked for such as adding lights to the top shelf of the bookcase (to perhaps hi-lite my antique electric fan collection...), adding a recessed plug for the flatscreen tv, installing a data cabinet, moving a light fixture in the master bath (too close to the tub spout), changing phone lines to CAT5e, dealing with can locations at the rear entry, adding a plug below one of the counters in the laundry room (builder: "Why do you want a plug under there?" me: "So the cat can see when he's pooping." [uncomfortably long silence] sub to builder: "Don't ask questions you don't really want to know the answer to."), and moving the wires for the main service from the back of the house to the side. We were able to talk this latter cost down substantially when we noted that none of the home runs (long lines that go to the main electrical box) would have to be pulled and rerun.

One interesting discussion was the cost to change out the single-junction electrical boxes for the smoke detectors to double-junction boxes. The specs list the smoke detector, which requires double junction boxes, but the sub doesn't look at the specs. Essentially, according to the sub, if it's not on the electrical plan, then they are going to assume it's just like everything else they've ever done. I kinda find this amazing, but the plumbing sub (and to a small degree the framing sub) were the same way. The other item of note was that if the electrical plan doesn't show exact measures of where electrical stuff is supposed to go, then the electric sub is not obligated to put it there (makes certain amount of sense: they'll place stuff like plugs to the nearest stud).

lessons learned: Spend time on the electric plan to make sure it is exactly what you want, call out anything non-standard on the plan, include measurements on items you really want in a certain place, show where you want the electric box to go, and insist on a walk-through with the builder and the sub to discuss the electric before the sub begins work. This all will (hopefully) minimize change orders. Trust me: This will save you thousands of dollars...

electric (work ) back on!

With the sit down done, the electric sub is back on the job finishing the work. Regardless of the wee bit of drama, it feels good to have it resolved and be moving forward!

Electrical work is not terribly photogenic, but here's a photo of the moved electrical service:

Riveting!

sound and security

Our wee bit of sweat equity is to install the sound and security wiring, something we did this past weekend. I would say we ran about 500 feet of speaker wire and 350 feet of CAT5e wire in addition to  installing speaker guides.

Here's a neat resource on installing speaker wire. The key is installing in-wall wire, which meets fire code requirements (and is quite a hefty wire, thicker than coax!).

Media wall:

Kitchen ceiling:

Looking up at the kitchen ceiling:

Looking up at the master bathroom ceiling:

Looking up at the master bedroom ceiling:

Aimed to center the speakers on stuff they could be centered to.

memories...

It was rather chilly this past weekend. Whilst working at the house, the cold and working-at-the-house bit brought back a memory from when my folks were building a house back in northwestern Illinois (in John Deere country). It was the dead of winter and cold as popsicle. Ma and pa were inside working (no heat in the house at that time), so they left my two brothers and I in the International Harvester Travelall (example below) to stay warm. One of us was playing "Drive the Travelall" when someone disengaged the parking brake, which sent the IH rolling backwards down the hill and into (and across) the neighbor's fence.

We didn't destroy any fences today!