Pontifications: Delays, design creep, cost overruns–nope, it’s not an airplane program

By Scott Hamilton

March 11, 2019, © Leeham News: It’s late. There have been creeping delays. There’s been design creep. There were unknown unknowns. It’s way over budget.

No, it’s not a new airplane program, though the parallels are quite apparent.

It’s our new house.

After a three year process, including changing builders, going through the city twice, hitting expensive unknowns and facing rising costs, today is finally, finally, moving day.

It’s been a horrible experience I wouldn’t wish on anyone.

This will sound familiar to Airbus, Boeing, Bombardier, Mitsubishi, Rolls-Royce, Pratt & Whitney and, to a lesser extent, GE and CFM. Only Embraer can say it finished on time and on budget.

Time to move

My wife and I lived in an Eastern Seattle suburb for 16 years. We had a 3,350sf house on 1.12 acres with a large pond and tall cedar trees. It was often called an oasis in the suburbs by our friends. It was.

But along about year 13, we knew the time was coming when we wanted to move. The suburb is in King County, which is dominated by Seattle. The regional system, Sound Transit, included this suburb.

King County taxes had been going up constantly, driven in part by Seattle demands. Sound Transit was adding taxes in its tri-county area to pay for a new network of rail and bus service. Soon, Sound Transit would propose $27bn in new taxes to fund a $54bn orgasm of growth. This tax bill alone would add $1,500 a year to our household. Adding insult to injury, ST would reduce transit to our suburb.

Our town, which had grown from 24,000 in 1996 to 60,000 by the time we left in 2016, was facing road and budget shortfalls. Drivers were being choked with congestion.

Finally, it was just the two of us. We didn’t need a house or yard this big. It was time to downsize.

Choosing a new home

My wife had wanted for more than 30 years to move to Bainbridge Island, a 35 minute ferry ride west of Seattle. I’ve been with her 21 years. (She’s very tolerant, by the way. Every other year I spend our anniversary at the Farnborough Air Show.)

My story is, there just comes a time when you say, “yes, dear,” and move on. (She hates this story, but I’m sticking to it.)

She had been checking the Internet for three years and would find nice homes, but didn’t like the kitchen or family room and would want to remodel. Having done this at our house, I didn’t relish living in a remodel for months, so I said (pardon the language, but it’s apt here) the stupidest fucking thing I’ve ever said in my life:

“Let just build and get what we want.”

(By the way, in this context the word above is an adjective, not a verb.)

If we only knew what was ahead.

Choosing land

We spent months looking for a lot on Bainbridge, which didn’t have a lot of good choices. We did our due diligence on cost comparables, location, geology, locating earthquake faults and sensitive soils. We found a beautiful piece of property that was 0.82 acres, only half of which being buildable, that was heavily treed and on three sides had permanent, forested open space. It was the highest point in the neighborhood, 10 minutes from the ferry and 50 yards from a trail head.

It was also 50 yards from the same earthquake fault line we were 10 blocks from in our Seattle suburb.

Avoiding fault lines in Puget Sound is really tough to do. Current building codes have come a long way toward earthquake “protection,” for the lack of a better word. Soon, however, one of those unknown unknowns popped up.

After breaking ground, we struck clay. Unlike striking oil, this isn’t a good thing. We also learned there is “bad” clay and “really bad” clay. We hit really bad clay, called expansive clay. When it’s dry, it’s like cement. When it’s wet, well, the technical term is it’s like snot. (The Geotech we had consulted didn’t warn us about this.)

There were two choices: to pin piles pounded into bed rock or dig all the clay out down to the bed rock 15-20 feet below. We called the latter option the Big Dig, like the infamous Boston tunnel project.

My wife asked the engineers which option was better in an earthquake (see above). The Big Dig would hold up our little mountain. The pin piles meant the house would still be standing if our little mountain fell away. We’d need a 20 ft extension ladder to get to the front door (which we already had).

Ninety six thousand dollars and 46 pin piles later (which was $20k cheaper than the Big Dig), we continued with the foundation.

Designing the home

Designing the home was a process in itself. We chose a mountain lodge style and chose an architect who specialized in this.

As noted, we wanted to downsize from 3,350 sf to about 2,700 sf. The architect started out with a 4,500 sf design, to which my wife said, “nice house. Whose is it?” It’s all part of the process, he said. He takes our “wants” and designs a house, then ratchets it back.

Never mind that my wife kept telling him throughout the process don’t give her a design we can’t use. The design include six foot wide hallways and a 25 ft long master closet. These, along with similar design creeps, were nixed.

The main floor is 2,400 sf. But the need for two home offices (over the garage) meant that by the time we were done, we downsized from 3,350 sf to 3,100 sf.

Doubling in cost

Our cost target was blown up pretty early, not helped by the snot clay find.

As we went to bid, we were faced with the fact that building in the Puget Sound had taken off like the proverbial rocket. There was a supply-demand imbalance in favor of builders that could and did increase their materials and sub-contractor rates.

Material costs went up along with the labor costs—substantially. Concrete costs more than doubled. Right when we went to bid on wood, Donald Trump was elected president and the first thing he did was slap a 20% tariff on Canadian wood, where—being in the Puget Sound—where home construction wood is sourced. (This is one of many reasons why I dislike Trump.)

All that snot clay from the foundation dig and grading by local ordinance has to be trucked off the island. It’s no good for anything, so it can’t be repurposed on island.

On and on.

Then there is what we call the “island tax.” Everything is more expensive on Bainbridge Island (except taxes). Access is either by ferry on the south end or by a bridge on the north end. (The Kitsap Peninsula, as it’s called, however, is accessed by ferry from Seattle’s far north suburbs, so in one way or another, many supplies come by ferry.)

Change orders

Inevitably, there are change orders that add to the cost. In aviation terms, this is design creep.

Because we didn’t do the Big Dig, the contour of the land provided the opportunity to create a partial basement. Since unlike our previous home, this one has no attic space, we decided to do a partial basement. More money. We elected to enlarge it and concrete the floor. More money.

We ended up with 550 sf feet of basement, enough for a small apartment to rent out, reserve for guests or potentially live-in help as we aged in place. We drew the line at this expense; the estimate just going up and up, with unknowns still to come.

Holding the line

There’s a book by actor Richard Karn, who played Al Borland on the comedy series Home Improvement entitled, House Broken: How I Remodeled My Home for Just Under Three Times the Original Bid.

I thought of this often during this project.

My wife did all she could to keep costs on target, but when tariffs, snot clay, change orders, etc., occur, these are out of control.

She beat up the builder and a couple of vendors for grossly underbidding some things, making it appear some costs would be lower than they were. I liken it to our version of Boeing’s infamous Partnering for Success (aka Preparing for Sacrifice). She spent hours (months, really) Internet shopping to get the best value for lighting and plumbing fixtures that would have easily cost thousands more through the vendor.

When it was all done, we were more than a year behind schedule and double the budget. It’s a result that anyone in the aviation industry can understand.

Was it worth it?

People often said, as we told of our trials, that when we were done, it would be “worth it.”

The lodge-style home that, like an airplane program, was delayed, subject to design creep and over budget,. But it’s beautiful. We’re moving in today.

We certainly have a gorgeous house on a beautiful piece of property. We love the home, the forest surroundings and the neighborhood. We love the lodge design with all the wood, exposed beams and big windows that give us an expansive view of the forest.

Would we do it again?

Not on your life. We would have purchased and remodeled (though one of our friends who did so bought a home for less and spent more remodeling and expanding than we did for our new-build; they must have read Richard Karn’s book).

But today is moving day and we couldn’t wait to get in, get settled and finally feel at home.

Now it’s about the unpacking and finishing the landscaping.

But, wait! as they say on those infomercials, there’s more. My wife has to finish getting the window treatments, furnishings and decorating.

The cash outflow isn’t over.

Airbus, Boeing, Bombardier, Mitsubishi, Rolls-Royce, Pratt & Whitney and, to a lesser extent, GE and CFM can relate.

29 Comments on “Pontifications: Delays, design creep, cost overruns–nope, it’s not an airplane program

  1. Hello Scott
    It could also have been an airport.

    Next time call me for geohazard 😉

    Hope you’ll enjoy your new home
    (piling is certainly wise)

    Don’t let the soil around your house go dry (or the contrary if easier)

  2. Congrats!

    But 3,650 sq feet for two of you? ‘Murica!

    We are in 1,300 sq ft, downsizing to 600 sq ft, because (1) who wants to clean that much (2) we are near hotels if people want to come and stay and (3) lifestyle here is much more publically focused – people socialise outside the home.

    • @Richard: 3,150 sf. It’s the need for two home offices. In my case, I now have to continue to work to pay for this damn thing…

      • Sorry Scott (well not really(), I am laughing in my butt off.

        Thank you for that. Humor always helps (or mostly)

      • Ah – OK, I double counted the basement… thought that wasn’t in the 3,100.

  3. Congrats to your new home!

    Does the Bitpipe from the internet to your new home
    have adequate capacity ?

    • Getting Comcast to install the line, transfer phones, etc. was a nightmare in itself. This is an entirely different column.

      • Oh god, not Concast, doomed, I say doomed.

        Titanic and the Hidenberg are nothing in comparison (my mod hate their guts)

  4. Great article. Very relatable. And funny. You even make PFS sound funny. That’s not very easy! Congrats on the house.

  5. Congratulations, done this a couple of times and still unsure whether the mental ordeal is worth it…. I look outside from my favourite room in the house and quietly thank the spirits for my good fortune.

    As always the wife is the Chairman and the husband the CEO, I hope you have many happy years enjoying the fruits of your labour

  6. Just don’t make the mistake of holding your house warming party in a half built empty shell just becuase the date sounds cool.

    • Where is the laughing-so-hard-coffee-just-shot-out-my-nose emoji?

  7. Similar story for me, although it was rebuilding the family cottage.

    the Family cottage had been built from a kit (like sears kit, but not) back in 1910 by my grandmother’s grandfather. it was (originally) a 24×24 square that had had a kitchen, 2 porches and a bathroom added over the years (we didn’t have an indoor toilet until the mid ’60s or a shower until ’85), bare stud walls, no insulation, only really usable 12 weeks a year.

    anyway, it had gotten to the point where it needed an awful lot of work just to be usable at all, and that work would not improve the value $1 (the value was in the lake lot it was on, any buyer’s first action would involve a bulldozer)

    I proposed to my family a $150k budget for a teardown and build of a similarly modest (although 4 season) cottage. The family was all in. They liked my design, we lined up a builder who thought my numbers were reasonable, balanced needs and wants and started the permitting process…

    YAY! Non-conforming lot and zoning changes meant that the town wouldn’t let me rebuild to the same footprint, (which was roughly 35×35 after all the additions over the years) so we had to redesign to a 2 storey, flood regs meant the ground floor had to be raised 3.5 feet (Cha-Ching$$$) then my Mom and Dad decided they wanted to contribute some money in exchange for some design changes including a second bathroom (Cha-Ching$$$) then my Sister with expensive taste wanted custom cabinets, Brazilian Koa floors, cable deck railings, expensive tile (x2 bathrooms now) yadda yadda cha ching $$$.

    then the septic engineer’s report came back which meant reusing our old septic system was out and our leach field instead of being a couple gravel filled trenches and 100′ of perforated pipe was something more like the pyramids of Giza….

    at the end of the day we went from a ~1000sf/3br/1Ba/single story/crawlspace/1 porch modest cottage to a ~1800sf/3br/2ba/2 storey/full basement/big loft & 3 porches (2 storey lakeside, and one roadside) showpiece.
    We are at about $350k into it, but it is done (mostly, some paving and landscaping over the next couple years will add another $15k or so…)

    moral of the story: joint ownership is expensive

  8. I hope you have many happy and healthy years in your beautiful new home.

  9. Thanks Scott (& Bilbo) for sharing.

    I’m a kind of in the architect phase, and your stories confirm a lot of my worries.

    So thank you again

    😀

  10. Good luck Scott –
    I’m a fellow Puget Sounder – but up north of Everett… a bit.
    I also am moving into a new home. Have almost a years worth of mortgage under my belt – but I have yet to spend one night in the new place (Double mortgages are fun – NOT). Yes, remodeling is a wonderful thing. LOL. Glad we are about 95% complete now. Good luck to you and your new place. Looks very nice – BI is a wonderful place. Close – but not ‘that’ close. 🙂

  11. Enjoy your home, Scott. Currently doing a building project. Builder underbid, ended up threatening him with criminal charges to get things back to reasonable.

  12. Congratulations for having gone through all the stages of such a complex program without cancellations! 🙂

    Enjoy the new home ! It does look pretty.

  13. Scott, Congratulations on this accomplishment. Done Done ! But I must say : I feel for you. Your story reminds me of the remodeling we had to do to convert our home into temporary medical care sites. Love for the family will get you to accomplish the task. Now you have a beautiful house in time to enjoy the beautiful summer weather of the Pacific Northwest.

  14. My sympathies.

    What you describe sounds awfully similar to our extensive remodel. It has had many faults and missteps, cost over runs, and is still not ready for us to move in, after 7.5 months.

    The contracting industry is a mess.

  15. First it really is a nice looking place, well done there.

    The term you are looking for with that thar clay is Soil Liquefaction (it turns to something a lot less cohesive than snot) – fault lines, don’t worry about them.

    The piles are definitely the right idea though you may need an elevator budget when the big one hits down there (grin) – the view will get even better as all your neighbor slide into the lake and you are on your new fire tower.

    Our already down size 1300 sq ft house survived the 64 and 2018 7.1 quake (a few miles North of us) – you are good to go.

    Now I feel better about being poor.

    My brother build a house in the 70s, the only thing that saved him was I was out of work and we built his house (his contractor bugged out pretty much as well as stole from the build fund for his own two houses)

    We too plan on hunkering down in place. One level more better.

    ps: I worked building house for a number of years, no way was I going to try to build – did I say being poor helps? .

    The one that some to mind is John Baluchi playing a Japanese pilot about to attack Pearl Harbor and the diatribe by his fearless leader about if you are shot up and can’t make it back crash into an American ship

    Where JB stand up and says “Are you out of your freaking mind?”

    My brother in a fit of ? just moved into a semi custom hose.

    He still is trying to find his stuff, best of luck.

    Dear Boeing: I am sorry for all the comments, I finally realized its not so easy.

  16. Congrats Scott, that’s a beautiful home. But I certainly understand the headaches and the want to get away from King County and ST! But my wife and I live near Dash Point state park (King County) 1900 SQ and decided to just remodel and stay put for awhile. You didn’t mention much about permitting and inspection buyoffs? How did that go? I have a brother and sister inlaw that built a nice place on 5 acres in Port Orchard near Southworth… put in geo-thermal heat and that is very cool, but not cheap. Ahh the joys of home ownership! Enjoy Bainbridge.

    • @Chris: We found Bainbridge to be pretty reasonable on permitting rules, and flexible on some but quite strict on others. Inspections, across several agencies, went smoothly.

  17. Congratulations.

    So how long do you think it will take you to recover the deferred production costs of your new house? 🙂

    • @Vab: I certainly hope it won’t be the 20 years it will take Boeing on the 787….

  18. Although I do not speak English I want to express myself, just to wish Mr. Scott and his family to good happiness in their new residence. Congratulations!

  19. So take her to Farnborough, at least once.

    (I have the impression she’d need an insider pass as the public is no longer welcome.
    She must have many skills to label her as necessary, perhaps like keeping you on track. 🙂

Leave a Reply

Your email address will not be published.