The design process is one of the most exciting and rewarding steps in the custom home construction process. It is also on of the most important steps. Your home's design is an expression of your unique tastes and it also has the biggest influence on what you will pay to build your new home. The labor and material costs will vary based on the choices you make along the way.

If you are considering building a custom home, it is essential to have a builder on board before you start the design process. Your builder is your advocate, and the best home builders partner with your architect to value engineer your home's design. But what does it really mean to value engineer a homes design? And what can you do to maximize your space and your investment?

Kim Hibbs, founder and president at Hibbs Homes, sat down with one of our building partners, St Louis architect Jeff Day, to answer your questions about value engineering. In this video they shared tips and tricks to get the most from your construction investment.

This Facebook Live event was recorded at Jeff Day & Associates Architecture in St Louis, MO on July 7, 2021.

Transcript

Kim Hibbs: Thanks everyone for joining us for another edition of The Art of Custom. Last time we got together we were talking about construction financing. This time, we're going to take a look at a different path but along the same lines of that conversation. We're going to be talking about value engineering. And how this really is a good time to build as long as you work hard with your architect partner, your builder partner, and really pay attention to the design of the house and what we call value engineering.

And the reason I said we is because seated over to my left is Jeff Day. Not only a really good friend of mine, but he's also an exceptional architect here in the St. Louis area. Jeff and I have known each other for close to 15 years and done some wonderful projects together, some high-profile projects together, and I don't think there's a person who is better to have as part of this conversation than Jeff because he understands the importance of communicating with clients and helping them understand how to value engineer the plans. So whether your budget is $500,000 or $5 million, you can go ahead and build. Jeff it's nice to have you with us.

Jeff Day: Yeah, thanks for the invite.  

Kim: I have to ask you to pause for one moment because Melody Meiners is behind the camera, but you'll hear us refer to her occasionally and she might even pop in with a question or two. So Melody, come around this side of the camera real quick and just say hi to everybody. That's Melody.

So, if we do refer to Melody, or if she throws us some questions, I want to put a face with the name. And we would, we would welcome your questions as we go along, so feel free to ask them.

But, Jeff, when I say value engineering what does that mean to you as an architect?

Jeff: I think the long and short for me is trying to get everything that a client needs and wants into a simpler package. And one would hope package then adds value by reducing cost.

Kim: So I'm going to write down the word simple because I think if there's one takeaway from today, if you can simplify your design it is absolutely going to help the cost. But Jeff, I don't want to scare people away that might think I've got a million dollars or I've got $800,000 or whatever the budget might be, and I don't want to build a simple box. Can you can you build a beautiful home on a budget through value engineering?

Jeff: Absolutely. So, I think where people get lost is in all the weeds of dimensions of lumber, dimensions of building products. You know, everything works kind of in a 2-foot increment. So, a lot of these homes you'll design them 41 feet 6 inches wide or something ridiculous like that and you're not thinking through, okay would 42 feet make more sense or 40 foot make more sense? So that's step one of all of this, to think through wasted 2-by material, wasted sheet goods of plywood, drywall, even siding. But then beyond that, it's a matter of apendages on the house. You can build a simple box and then put a creative appendage for the garage or a creative appendage or a side porch front and rear porch.

And then you get to the upper level, whether that's an actual second floor where you can maybe introduce some cantilevers, again in these two foot dimensions. Or push and pull the roof structure itself. If it's just a ranch, we've done simple boxes where you take a ranch home, push and pull some of the roof trusses, and it doesn't add excessive cost. Certainly not as simple as just a basic big triangle or pyramid on the top of the house. But you can push a pull that and find creativity in that.

And then there's areas where we've done added trusses on a million houses, if it depended on one. Those are areas where you can get a little more creative, as well, and not only reduce the primary footprint of a home and move these bedrooms upstairs, but now maybe there's a little bit steeper pitch to the roof and monies saved are still in existence, you'll spend a little bit more on a steeper roof, but you're still saving money by movings things upstairs and reducing the footprint of not only the foundation, but the walls and the roof structure. So there's there's so many things that people just kind of, don't think about in that design process.

Kim: And that's why if you come to the table with the Builder, and with the architect, which is what we recommend especially with value engineering. But quite frankly, to have a better, a better project, a better experience along the way. You mentioned added trusses, just real quickly for the audience, it's where you actually build your rooms, your second floor rooms into the trusses. So, instead of having to build exterior walls, raise them and put the roof, trusses on top, you can actually manipulate the trusses themselves and and build attic trusses so you then don't have to build the walls. You come in and you can you can finish the space around it, much more economically

Jeff: And those are built in a factory. already with the room inside shipped to the site trained in place, so that the labor and everything else is just greatly reduced. That's a huge deal.

Kim: It is, and there's a lot of other ways we call them tricks to the trade even when it comes to the foundation and then you follow the second floor. But some of the things that I look for is a builder, when we start thinking about budgets and we're very budget-conscious, I know that the Jeff and I when we work together with our various teams, we always want to know where the budget is. What is your budget? Be realistic with your Builder and architect because we truly can plan a home around that budget and kind of work our way backward. But we want to know what the budget is up front because it helps us understand where the starting point is and then we can design the home accordingly.

Full disclosure, it's been very difficult and we talked about this before we went Live. This past year has been much more difficult though, primarily because of the pandemic and what the pandemic has done to the construction industry year-over-year, our prices, and the National Association of Home Builders recently did a study saying that the construction prices year over year are up, depending upon where you live, a minimum of 20% and a maximum of 49% per year, which is mind-boggling. We've been building for 18. You've been designing for about that same amount of time. We've never experienced anything like this. So we are having a much more difficult time when it truly comes to understanding where these prices are going, we know they're going to back off eventually. But I guess the point is that right now is a critical time to try to truly value engineer a home. And that's that's what you strive for with every client work with yeah.

Jeff: You mentioned, we want to know what the price of the home wants to be with a client and you know it doesn't always work out that way these past two years have been so crazy that if you don't approach it with an ideal of not only budget but making this as simple as possible, still attractive, you know, I don't want to put my sign out the front yard while it's being built and so we're pretty touchy about that. But if you can show people a more creative way to play Tetris. Really? I like to use that as a reference, the old Nintendo game. You're, you're taking these rooms and your fitting them inside of this box, but you can do it in a creative way. We have that most recent project where we were given kind of a base plan of what the client kind of wanted. And once we saw the plan knowing it was over budget, we knew we could creatively simplify it and we've done that and this is a simple rectangle home now. But when you walk in this home, the way it's all going to be laid out inside is going to be super creative. The outside we're going to push and pull the roof and whatnot, you know, as we're flushing out the final design on that. It's on my desk for review. You know, this is going to be a really attractive craftsman-style home and the homeowner never saw it as this simple box, but once it was all put together as a simple box, it's starting to take shape in his mind and made more sense. And probably cut. What would you guess? Fifteen, twenty percent off the budget. Maybe,

Kim: Probably 20, and what just referring to is a project that we've been working on now, for quite a while, in the West St. Louis County area and the homeowner had been working with an architect and we just couldn't control cost with the one design. And so the homeowner was looking for a set of fresh eyes. And so we, of course, communicated with Jeff and Jeff. Very quickly was able to sketch up some floorplans that immediately fit with what the homeowner was looking at before and then greatly simplified the, the build cost. So sometimes it does take a second set of eyes. I know that over the past few years, we've had several clients come to us kind of devastated that the original plans, they designed with the architect were way over budget and they needed our help and value engineering.

Now, we were able to do it for them and I don't want to say that we've never run into the bend of the issue of over designing ourself, because we've been a part of it. But what we always try to be very proactive on is okay, we're high, but lets them work together as a team, just like we're doing with, with our one client, and value engineer the project. So, I tell people this that, if you've had a bad experience, don't give up be persistent, you know, shoot for your dreams and get with either your current Builder or maybe you need to find another Builder or architect. But just just don't give up on your dream because truly through what we call the value engineering, you can make that come true and I think too many times people get discouraged, upfront and walk away.

Jeff: Yeah, some of the some of the easiest changes that we've seen over the past year, we've had a handful of clients that have come to us wanting a new home and they want all the bedrooms on the main floor. They want a ranch-style when you start to just sprawl these things it's morer foundation. It's more roof you know and so some ways shapes and forms. It's more exterior walls, which means more windows, which means more siding and insulation and so on and so forth.

And you know, what example, we have in Chesterfield right now in West County was these folks wanted a ranch home and we were like well, we can, we can drop that way and price it that way. But if you'd be willing to take the additional secondary bedrooms, keep your main-floor master, take the secondary bedrooms and move them up, there's a great opportunity to save money. We don't know what that number is but you could absolutely save money. When we do it first one and then we do it the second way, you know, like you said, come back to the table and comes revisit it, have the hard conversations and the bulk of everything you want, will still be there. It's just that you maybe move your kids upstairs.

And, I'll be honest with you, I've got four kids and when they're teenagers they don't want to be near you. You know they want to be able to stay up and

Kim: Absolutely and then when they're gone you can zone that area off.

Jeff: So it's you know, your heating and cooling. Bbut the delta between the first design and then moving the bedrooms up, there was the same things almost $40,000

Kim: That's significant.

Jeff: It is so you could buy nicer things or not borrow that money or go buy a car to put in your new garage I mean there's all these options.

Kim: All these options to spend that money. Hey since we're talking pricing and since we're talking design, especially with a lot of the homes that we are building out in Northern Utah right now, people are really looking for more contemporary designs. Whether it's Mountain contemporary or here kind of a almost like a Frank Lloyd Wright contemporary-looking.

Yeah, but those homes do actually cost a little bit more to build what are your thoughts?

Jeff:  Well, okay, there's a number of reasons. First off, there's a lot of contractors out there that are used to residential construction. Okay. And when they see an ultra-modern building, they think this is a commercial project and so labor costs and things are maybe estimated a little bit higher. The other side of that though is the reality is when you're doing these contemporary homes, a lot of times you want the thinner framed windows and you want higher-end exterior finishes. You're not going to put horizontal vinyl siding that you would put on a Colonial Home on this Contemporary home, right? So now you're almost obligated to start looking at a lot of these fiber cements substitutes to real wood. Like Redwood siding that might be used heavily on the west coast, we've got a fake version of that, it's fiber cement. You know it's like you start moving into those kinds of sidings. You move into the lower profile windows and they have to be built stronger because the frames are so thin. All of those things start to add cost. And then, you know, I think as contemporary architecture picks up momentum here in the Midwest, you know, as it moves from east and west coast to the middle, the volume will go down or if I should say for volume will go up in the costs will go down, which is what we've seen with you know, all kinds of different things. I mean Craftsman style was a big deal when I started my company 15 years ago.

Kim: We built many of your Craftsman-style homes

Jeff: Absolutely and and we saw over time the products, you know, the prefabricated columns that you might put on there and the the divided light windows and maybe they're three over one or there four over one and whatnot, all of those started to reduce and cost a little bit as the volume of those houses started going up. So I don't think they'll ever be, I don't think contemporary homes will ever be the least expensive way to build, but I think, I think in the Midwest, anyway, we'll start seeing that come down just a little bit.

Kim: So again we invite you, if you we're going to be on the Live a few more minutes and if you have any questions, feel free to ask us. We did have a very interesting question and the question Jeff that we as builders get asked a lot and I'm sure you as an architect would probably get asked the same question occasionally is, if you're going to build a house and you know that there are an endless number of plans online that you can look through and fall in love with. The question is, is it better to start by purchasing those plans online  and can you do it that way or do you need to go through an architect to have them design the home?

Jeff: Sure. So, we have a lot of clients come to us with those plans. Okay.

Kim: So they purchased them online $1,000 bucks, $2,000 bucks. Something like

Jeff: Right thinking, maybe that'll save them money and what they find and like there are there are cities in and around St. Louis right, St. Louis County I'll say, that don't require a licensed architect. Okay.

Kim: And that's the case with with municipalities all around the country too.

Jeff: Yeah, I mean, there's places where you absolutely cannot get it approved without an architect. And there's areas where they say you only need it for a septic or for a well.

And so we've had clients come to us that have bought these on online. But they were designed by a company out of, you know, Northeast lets say, of the Northeast United States. Well, they build totally differently than we do, right? And down south, they don't totally different than we do. We love our basements in Missouri, right? Texas, not so much. Dry land, expands and contracts. They don't want basements. Now it would great to have one down there, because temperature be cooler, but not a big deal to them, right?

In most Southern states are using more concrete block foundations and doing a slab on grade. Well, they come to us with this set of plans and say, well our builder says he can't build these. And then I go through and I explain why. The problem with that is it's kind of a total redraw for us, right? The other thing we have found is that we've had clients that will pay extra and by the AutoCAD files. well, the

Kim: AutoCAD is a program that you use drafting software

Jeff: Science right to draw the plans and literally every single one of those we've had the plans, do not match the elevations of the house and so there's a redraw. But then it's exacerbated by the idea that sometimes they use, just one layer, you can pick an electrical layer and all the electrical parts are drawn on that. You can draw a structural layer with only structural, you turn these off and on. Well we've gotten these sets of plans where all of that is on one layer. It's all on the same layer so you can turn anything off. And so now, we've got to spend the time to not only put everything on the right layer, but then probably correct and coordinate. So there's a lot of challenges that come with it.

I think the most important challenge though, is that if it's not drawn the way you build it in St. Louis, you're not going to get a solid price from a builder. He's going to guess on everything and then you just have to deal with the aftermath of that, you know.

Kim: Yeah. You also mentioned Structural Engineering because that's a very important component that changes all across the country depending upon snow load and wind and earthquake and all sorts of things.

So, I think to Jeff's point, what we found the most most successful way of doing it is not purchasing the plans, but using the plans that you see online is inspiration. Print them off. Bring them to builder. Bring them to the architect and say this is what we want to build. We want to start with this floor plan. We want to tweak it this way. We like this elevation. That will save you time because the way that you all work most Architects work is. It's an hourly rate up front during the design phase, right? Right. So if you're going to save them time by saying this is the house we want to build, that's where you're going to save your money because you'll end up spending more in the long run because of the structure and to manipulate the plans that you you purchased online to meet the local codes, whether you're building here, Utah, California, Washington, it doesn't matter. Everybody has local codes that have to be met. That's why the plans online are more difficult to make work. I'm not saying you can't do it, but it's been our experience that it's, it's more difficult to make that work, right?

Jeff: Yeah. And the other reality that need to be understood is that those are copyrighted designs, right? And so when you come to your Builder or architect, you can't use those verbatim. We'd love to have a conversation about how they think they're going to live in the house and how are other past 200 clients this past year are living in their homes so that they get a kind of a full understanding of what's possible with the home.

So you really want to look at it for room adjacencies and things like that. Sometimes you're going to find a house online with a west-facing dining room. That's not a good idea because you don't want to eat dinner when the sun's blasting through. So you want to have that full conversation about how you're going to live in that home and it may very well make the new plan dissimilar to the one you brought in, right. But it's absolutely great for talking purposes

Kim: And then that really was a great question. We thank you very much for that. It will be here, just a couple more minutes if any other questions come up.

Since we're talking pricing, the last time we were, we did our Art of Custom Live, we talked with Trisha McConkey who's one of our lenders from the St. Louis area. We were talking about why now is a good time to build despite the fact that every time you turn on the nightly news, you hear about lumber prices spiking and construction costs going up and the cost to build a new home between that 20 and 49 percent.

I want to kind of circle back around, because we've had a few changes since then. For example, you and I were talking here just a few minutes ago, lumber prices, lumber futures, meaning lumber that will be purchased in the future, those prices are way down from where they were.

Lumber is measured in 1,000 feet of. They stack technically what they would do is they would just measure a thousand lineal feet of lumber and then establish a value for that lumber. Before the pandemic, it was somewhere in the $300-$400 price range per thousand feet at its peak, back, just a couple of months ago, it was at $1,700 per thousand board feet which is just mind-boggling.

So the futures recently came out showing the lumber futures down in that $900 range. So, as you can see, there's been a pretty big step back in. Lumber prices, that will be passed on in the future, we hope someday that will settle closer to that 4,5,6,7 range. Again, we don't know.

Copper is another one that really shot up quickly, we're seeing that was because of a supply and demand issue that started to ease off. So our electricians are saying that that running of your electrical wires is going to, the cost of that is going to come down a little bit. But we talked about this that most other trades, like, there's been foofing, there's been concrete, there's been steel, there's good, you know, drywall, everything is up in the construction industry. And it's kind of setting, according to my trades, this is the new norm. So they don't really expect to see many pricing decreases with some of these other construction specific material.

So from our conversation earlier, if lumber prices are backing off and some of these other prices are going to kind of stay where they are, that to me, would prompt somebody say, okay with low interest rates, now's a good time to build and you agree with that.

Jeff: I do you know some of the things that I think are going to happen is as we start to ease out of, you know, the unemployment and everything and people start getting back to work, production is going to go up, right? They'll be able to handle larger volumes which means pricing can come downsome. And I think that ultimately what you have to be thinking in terms of is one, if the numbers are coming down on the value of, you know, goods, but then the interest rates are going up. You got to strike in the right location. But then I think the other reality is is, if you're waiting and everybody else isn't? Your Builder might not have time for you, right?

Kim: Yeah, valid point.

Jeff: Yeah, and so you have to think in terms of what will wait for things to go down, but then if interest rates are going up and all these other people are still packing in projects into, you know, the Hibbs pipeline, in this case. You may say, well, we're 18 months out before we can start. And who knows what it looks like in 18 months if they come to you in six months. And you say, we're 18 months out that's two years from today, what does it look like? We don't know.

Kim: According to the National Association of Home Builders interest rates are going to ease their way up over the next year to year and a half. But they think by 2023 is really when the the largest uptick might occur. So my personal opinion is, you know, you have that window that if you want to start planning a home, allow yourself three to four months design time. Then you have a month of budgeted permit. So you decide to build a home today. Not only that you have to find a lot and you have to, you know, so there's a lot of things that go into it.

So we typically tell everybody four to six months up front by the time you find a lot, get designed, the home permit, it budgeted, get ready to build. And then depending upon the size of the home, it can take anywhere from 8 to 12 months for the actual construction. So if you're thinking about building before interest rates pop up, and while we see some sort of easy on some of our construction costs, and now is a perfect time to contact a builder in your area.

I always give people are looking for Builders and Architects I always say a great way to do that, I know that every local Home Builders Association has kind of drop down menus and they have members that are on those menus. I think it's a great way to find a builder. Those Builders are committed to the industry, they're committed to continuing education, they're committed to, you know, their community and and giving back to their community. So I always recommend starting with your local Home Builders Association. Find their drop-down list and find a builder that way. What's great way to find an architect?

Jeff: Well, let me add to that, just as important, there are also Builders from the Home Builders Association are committed to pushing the pricing down. They're fighting tarriffs and all of these kinds of things, which helps all the consumers, so

Best way to find an architect. You know, the most of our work comes word of mouth which is certainly a great way, a great way to find a builder to. But I think with with Google you can actually make a list of the things you want in an architect. Architect, sustainable design, craftsman-style, modern, whatever and search those things in your area and see comes up, you know, don't don't just go for the one that shows up at the top of Google because they're paying for Adwords, right? Do the homework and find the guys

Kim: Though I might brag on Melody for a couple of minutes here, because we don't pay and Melody has Hibbs Homes ranked pretty darn High.

Jeff: Well, yeah, but you chained to the desk and you don't let her go home.

Kim: That is not true. She's blushing. Another real question came along and it's right up our alley. The questions about whether you should consider build a SIPs home versus a traditionally built stick home. We built the Active House project in Webster Groves, and it was exclusively a SIPs home.

So sips costs more no doubt about it, but there are some benefits. You're a high-performance, your green sustainable, designer architect. Give me your take on it.

Jeff: Candidly, I think the biggest benefit is how quickly they go together. Okay. So you're given a roadmap of paint-by-number roadmap and you drop these panels in place and you bolt it all together, which it saves you quite a bit of time.

They're also prepared in a factory. When you means, they're going to be a lot more durable. They're going to be a lot more straight right than just.

Kim: Let me just get something that you have to be extremely well-planned because they're planning the plumbing chases, windows. And if you miss something, it's hard toodifying the field

Jeff: In Dogtown here in St. Louis City, we did a SIPs home right next to a framed home. And you're going to have errors in the field. And it was way easier to correct a field framed home that it, it was the same exact mirrored, but you know it's way easier to correct the field frame home. So you absolutely are right you have to be on point with everything.

Kim: And by the way SIPs stands for structural insulated panels. You basically have two layers of sheathing on the outside in the inside with a thick core of foam on the inside. And it's a stud wall. So what what, where do you come down on this whole pricing issue? Yes, it goes together more quickly. So you're saving financing costs but it's been our experience that SIPs while they perform exceptionally well from a standpoint of efficiency from the standpoint of acoustics, everything that goes along with them. It's been our experience that they do cost more, is it worth an extra cost?

Jeff: Not my opinion. Okay, I think that flash and bat which you 

Kim: By the way falsh and bat is using a combination of foam and traditional insulation on a house

Jeff: fiberglass bags. You and I have built I would vet every building envelope type except hay bale Not real popular in St. Louis. Maybe a little too granola for the Midwest but you know we have found that the flash and bat actually performs at just a fraction less than the SIPs. And the other reality is with the SIPs, you've got to come back out and seal everything, anyway, so there's an insulator subcontractor involved in some capacity anyway. So for my money, I think flash and bat would probably be the way to go unless you need to be under roof quickly because of weather or whatever.

Kim: But you could also, which I agree with you on that assessment. But you could also have your your wall panels. I'm sorry. You could also panelize your walls and bring them out. It's like framing framing, them in the field, only that's done in the factory as well. So, I agree with you a hundred percent on that we've done SIPs, but I like your assessment of some sort of upgraded installation package, which reminds me, these are great questions.

And if you're looking for Builders and designers, architects, who understand high performance and green, if you will, it makes a difference, make sure you interview your builder, make sure you interview your architect. It's a science to what we do and how these homes go together.

Just because someone puts in, you know, high-efficiency lights or high-efficiency, you know, or you know, cost savings appliances doesn't make them a green Builder. So just understand that. I know, Melody's giving us the rap. But before we go Melody, I have to mention real quick. Chris Pedigo is our director of construction, and he reminded me that Jeff day. Truly is a full-service. Architect, we have a client building in Lake St. Louis and tell him real quick, the story.

Jeff: Well, I've got a lot of friends. But we showed up for a site meeting. Chris and the client, and I. And then we decided we go fight some air conditioning, start sketching out the road map for the house. But in route from the lot to a restaurant on the lake, we texted my, my buddy, that lives there and he came and picked us up. Mike Miller shut out to Mike came picked us up into pontoon boat and let the client. See their lot from the Lakeside which they had not seen yet, which is kind of fun.

Kim: That is a full-service, architect, thank you guys very much. It's been a pleasure, by the way, I need to to let everybody know that if you if you're looking for ways to simplify your house or looking for some ideas or when all we do on our website, hibbshomesusa.com have a document called "9 Ways to Simplify Your Home Design and Save" look that up

Jeff Day your your website address, Jeffdayllc.com. So it's jeffdayllc.com

Melody - thank you, for coordinating this. Thank you everyone for for joining us and look for another scheduled of Art of Custom Live coming up next month. Not sure of the topic yet but it will be an interesting one and we hope you'll join us then.