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Technical Note (National Research Council of Canada. Division of Building Research), 1968-05-01
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DIVISION OF BUILDING RESEARCH
No.
NATIONAL RESEARCH COUNCIL OF CANADA
522
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PREPARED BY A. T. Hansen CHECKED BY APPROVED BY R. ｆｾ L.
ｾ May 1968
PREPARED FOR Inquiry and Rec ord Purpos es
SUBJECT HOUSE COSTS - A THREE YEAR COMPARISON
In 1965 and 1966 the Division of Building Research, in co-operation with the National House Builders' Association, undertook a cost study of two bungalows in the Ottawa area. The study, known as the Mark V research project, was carried out on two houses. The first house was a typical three-bedroom bungalow built in 1965 using the builder's usual construction practice. A second house of the same plan and appearance but incorporating a number of cost saving changes was built the following year. The results of this study are reported in NRC 9590, "A Cost Study of Two Wood-frame Bungalows".
In NRC 9590, labour was assumed to average $3.50/ hr for all trades. This figure was based on the average hourly wage
of eight building trades in the Ottawa area for the year 1965 and includes a 25 per cent allowance for additional payroll burden charges due to holiday pay, unemployment insurance, workmen's compensation and other fringe benefits. It also includes an element of what would normally be considered subcontractor's overhead.
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-For this Technical Note a further refinement on the calculationH wat> made. The Labour costs were recalculated using the prevailing labour rate for the particular trades in-volved in each operation ｲ｡ｴｨＨｾｲ than an average wage. These labour rates were increased hy 10 per cent rather than 25 per cent to represent more accurately the additional "payroll burden" due to the employer's contributions to unemployment insurance, workmen's compensation, pension plan, holiday pay, public liability and damage insurance. It does not contain an additional element for overhead or profit.
These labour and material cost calculations were made for the first house studied in the Mark V project. This was the house built according to the builder's usual construction methods. Costs were calculated for the years 1965, 1966 and 1967 using the appropriate labour and material rates for each year. A
summary of the results of these calculations are shown in Table I. Ratio of labour and material
Over the three-year period, the proportion of on-site cost due to labour plus rental equipment increased from 21.4 per cent in 1965 to 24.0 per cent in 1967 (Table I), while the proportion of cost due to materials decreased from 78. 6 per cent to 76.0 per cent.
The calculated rise in on-site cost of this house from 1965 to 1967 was about $1195 of which $645 was due to increases in material costs and $531 due to increases in labour cost. The re-maining $19 was due to equipment rental rate increase.
It is important to note that the direct on-site costs represent only 53 to 55 per cent of the selling price (Table II). Of the
remaining 45 to 47 per cent the cost of serviced land is by far the most important single item. Also included in this 45 to 47 per cent is the subcontractors' and builder's overhead and profit, mortgage insurance, permit fees and other financial charges. The increase in the cost of land and interest rates as well as the increase in over-head expenses, therefore, have an important effect on the final selling price. This is illustrated by the fact that, during the same period, the selling price increased by $2700 while the on-site costs increased by only $1195.
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TABLE I
THREE-YEAR SUMMARY OF ON-5ITE COSTS
Operation 1965 1966 1967
(On-site costs = $10,044) (On-site costs = $10,787) (On- site costs = $11, 239) Labour Material Per Cent Labour Material Per Cent Labour Material Per Cent
0/0 % of % % of % % of
On-Site Cost On-Site Cost On-Site Cost Earthwork, ext. steps, walks, 51.4* 48.6 5. 1 50.2* 49.8 5.0 49.2* 50.8 5.5 drive, landscaping
Basement walls, floor, footings, 21, 8 78.2 9.2 22.9 77.1 9.2 26.2 73.8 9.1 drainage, damp proofing
Rough carpentry 13.8 86.2 15.8 14.4 85.6 15.6 15.0 85.0 16.5 Insulation, roofing, ext. 10.9 89.1 12.2 11, 0 89.0 11,7 13.0 87.0 10.5 door s, windows
Phunbing, heating 13.8 86.2 15. 1 12.2 87.8 17.0 14.3 85.7 16.4 and electrical
Gypswn wallboard 35.8 64.2 6.1 37.6 62.4 5.7 39.9 60.1 5.9 and ceramic wall tile
Interior finish 12.8 87.2 12.2 13.7 86.3 11,9 15.0 85.0 11, 9 carpentry
Finish flooring 18.7 81, 3 5.3 19. 1 80.9 5.4 23.3 76.7 4.9 Exterior finish and
fireplace 24.0 76.0 15.5 25.6 74.4 14.9 27.6 72.4 15.3 Painting 68.4 31, 6 2.1 69.6 30.4 2.1 73.9 26.1 2.3 Mis c ellaneous 89.6 10.4 1,5 89.9 10.1 1.5 90.2 9.8 1,7 Totals: 21.4* 78.6 100% 21.7* 78.3 100% 24.0 76.0 100% *includes equipment rental costs (approx. 2% of total on-site cost. )
TABLE 11
RELATIONSHIP OF ON-SITE COSTS TO SELLING PRICE
Year Selling Price (approx. ) Total On-Site Cost On-5ite Cost as Per Cent of Selling Price 1965 $18,500 $10, 044 54.3 1966 $19,700 $10,786 54.8 1967 $21,200 $11,239 53.0
