An estimated replacement cost reflects those costs that the contractor incurs during the period of construction of the residence. Land and the cost of development are not included in any residence cost. Subdivision and Yard Improvement costs can be obtained from Section C of the Residential Cost Handbook. The following is a more specific listing of what the residence costs do and do not include:
The actual costs used are final costs to the owner and will include average architect's fees and engineer's fees. These in turn include plans, plan check and building permits, and survey to establish building lines and grades.
Normal interest on only the actual building funds during the period of construction, and processing fee or service charge. Typically, this will average half of the going rate over the time period plus the service fee.
Appropriate local, state and federal sales taxes or GST, etc. on material and/or labor costs.
Normal site preparation including finish, grading and excavation for foundation and backfill for the structures only.
Utilities from structure to lot line figured for typical setback.
Contractors’ overhead and profit, including job supervision, workmen’s compensation, fire and liability insurance, unemployment insurance, equipment, temporary facilities, security, etc., are included.
Costs of buying or assembling land, such as escrow fees, legal fees, property taxes, right of way, demolition, storm drains or rough grading, are considered costs of doing business or land improvement costs.
Pilings or hillside foundations are priced separately and are considered improvements to the land. This also refers to soil compaction and vibration, terracing, etc.
Costs of land planning or preliminary concept and layout for large developments inclusive of entrepreneurial incentives or developers’ overhead and profit are not included, nor are interest or taxes on the land, feasibility studies, certificate of need, environmental impact reports, hazardous material testing, appraisal or consulting fees, etc.
Discounts or bonuses paid for financing are considered a cost of doing business, as are funds for operating start up, project bond issues, permanent financing, developmental overhead or fixture and equipment purchases, etc.
Yard improvements including signs, landscaping, paving, walls, yard lighting, pools or other recreational facilities, etc., which can be priced separately.
Off–site costs including roads, utilities, park fees, jurisdictional hookup, tap–in, impact or entitlement fees or assessments, etc.
Furnishings and fixtures, usually not found in the general contract, that are peculiar to a definite tenant, such as seating or kitchen equipment, etc.
Marketing costs to create the first occupancy including model or advertising expenses, leasing or brokers’ commissions, or temporary operation of property owners’ associations.