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Cost Per Square Foot: Inaccurate and Dangerous

Homeowners are constantly asking us the price per square foot for finishing a basement, building a custom home, or adding an addition to their house.  Every week we get these calls from homeowners in the Greater Toronto Area.  We like these call.  We love talking to people. We like helping people.

Our answer always is consistent.  “It depends.”

Many factors affect the cost of a custom home, house addition, or a home renovation project.

It depends on size, design, type of finish, and site considerations, to name a few.

 

Size Matters

Lets compare a 10×10 room (100 square feet) to a 14×14 room (196 square feet).  The 14×14 room is double the size, yet only takes 50% more drywall to finish.  Double in size, but only 50% more paint.  Double in size, but only 40% more baseboard.  The bigger room will cost more to finish, but will cost less per square foot.

Still not convinced?  Let’s look at a 30′ x 40′ bungalow, 1200 square feet.  Now let’s compare it to a 40′ x 60′ bungalow, 2,400.   The smaller house has 140 linear feet of exterior wall.  The larger house has 200 linear feet of exterior wall.  The 2,400 square foot bungalow is double the size, right?  But it has only 43% more brick and siding.  Double the size, but only 43% more aluminum soffit.  The larger house will cost more to build.  But it will cost less per square foot!

 

Design Impacts on Cost

The design of a custom home, a house addition, or even a finished basement will affect the cost of the project.  Consider two houses: the first is 30 feet by 40 feet in size, the second is 24 feet by 50 feet in size.  Both are 1,200 square feet in size.  However, the first has 140 linear feet of exterior wall, the second has 148 linear feet of exterior wall.  More wall means more foundation, more brick on the exterior walls, more eavestrough, etc.  Assuming the exact same materials are used to build the house, the same brick, the same flooring, etc, the 2nd house will cost more to build per square foot.  Even though it is exactly the same size.

Now add more corners on a home.  A steeper roof.  Roof gables.  10 foot ceilings on the main floor.  The house is still the same square footage.  But it will cost much more per square foot to build.

 

Finishes Affect Material and Labour Costs

Finishes have a significant impact on cost, both with material and with labour.  Kitchens, bathrooms, and flooring are areas where finishes can add significant amount to the cost.  And labour rates can vary by the type of material that is being installed.

Consider porcelain tile vs. travertine tile. Not only is the cost of travertine tile higher, it will cost at least 50% more to install than a porcelain tile.  Site finished hardwood will cost more than pre-finished hardwood.  8″ hardwood flooring will cost more to install than 4″ hardwood flooring.

Add some crown mouldings, soffit pot lights, heated floors in the master ensuite, and the cost per square foot goes up.

 

Site Conditions

The location of the project will affect cost.  Factors such as parking, material storage, and waste disposal all contribute to cost.  A bathroom renovation on the 20th floor of a downtown Toronto condo building will cost more than on the main floor of a suburban Mississauga home.

 

Cost PSF is Inaccurate

The bottom line is, cost per square foot is inaccurate.  Any contractor that prices per square foot, and any computer program that suggests it can price solely on square footage will more often than not produce an inaccurate figure.

So why should you care?  The contractor said he can finish the basement for $40 SF, and he’s given you his price in writing …

 

Cost PSF is Dangerous

So you’ve hired a contractor that is pricing the work per square foot.  If the contractor underestimated the cost of doing the work, the contractor may end up asking you for more money.  Or walking away from the job.  Either way, it’s going to cost you more money.  And probably delay the completion of the project.

If you’ve started designing your house addition or custom home case on a square foot cost, you may find you can’t build it at the price you thought it could be done.

 

How Can Homeowners Protect Themselves?

First and foremost, don’t ask what the price per square foot is.  The number you are going to get is probably wrong.

Secondly, ask the builder or contractor how they price their projects.  If they tell you it’s per square foot, they’re obviously not putting much thought into your project.

Finally, if they go to their truck and come back in five minutes with a price, they’re probably calculating based on a square foot cost.  Contractors such as window companies and roofing companies can often price on the spot because they are dealing with a single product.  A larger project such as basement finishing or a kitchen renovation can’t be priced that quickly.