The Regulatory Minefield
Government red tape takes time, money and skill to navigate. That's why you need a professional.
Some people don't realize how highly regulated the construction business has become. According to the National Association of Home Builders, the costs of complying with federal, state and local government regulations now account for nearly a quarter (24.3%) of newly constructed or remodeled home prices—30% more than just five years ago.
Some of these regulations are specific to the direct construction of the project and noted in the job cost summary, while other planning fees occur prior, during the preconstruction phase. Navigating them and staying in compliance requires time, effort and knowledge.
Plans and permits. To protect public health and safety, building departments want to make sure that homes are built to comply with all applicable codes—the building code, mechanical code, electrical code and others. These codes are becoming more comprehensive and restrictive, especially in areas such as energy conservation, air quality and fire prevention.
Preparing, submitting and getting plans approved by the local municipalities has become more complex and requires input from a number of trade professionals including soils, civil, structural and mechanical engineers. In addition, plans need to be approved by not only the building department, but other agencies like fire, air quality, roads, community development, homeowner's associations and environmental regulators. All this adds additional cost.
Inspecting the work. Once work gets underway, inspectors must sign off on it at various stages. There may be separate inspections of the foundation, framing, wiring, plumbing and insulation. The municipality and environmental agencies will also conduct a final inspection before issuing an occupancy permit.
Inspections impact the job schedule. A crucial part of the builder's job is to continually maintain quality control, work with subcontractors to make sure the home is ready for each inspection at each stage, and to properly schedule inspections to prevent delays. And of course, each inspection generally has a fee associated with it.
Other regulations. Depending on the project and the municipality, more red tape can come into play. The builder might have to apply for zoning variances or work with the planning, conservation, and environmental agencies before and during construction. Homeowners' associations also have their own rules and time can be consumed in dealing with the concerns of neighbors.
Some regulatory costs are hidden. Recently passed Occupational and Safety Health Administration (OSHA) safety rules include time-consuming recordkeeping burdens. A new Department of Labor rule mandates overtime pay for a wider range of employees. Some states have training, licensing and insurance requirements that cost time and money. Product manufacturers, distributors and suppliers also must comply with an increasing array of government mandates.
The combined impact of permits, inspections and other regulations raises the cost of materials, labor and project management.
None of the above is meant to minimize the need for regulation. All professional builders want to pay their employees fair wages and provide them with the training needed to do quality work. All aim to maintain safe, well-insured jobsites and strive to maintain a high level of compliance. All appreciate code inspections that protect their customers and reduce their liability.
But the truth is that the regulatory landscape is a minefield. It's important for owners to understand the costs involved, as well as the time and know-how required to navigate that landscape without incident. It's one of the many reasons for hiring an experienced professional builder to plan and construct your home.
Brink Custom Homes
P.O. Box 1902
Tahoe City, CA 96145
(530) 583-2005 – phone
(530) 583-4405 – fax