A unit mix change construction cost is almost never proportionate to the change on the drawing. Turning four one bedroom units into three two bedroom units looks like moving two walls. It is moving two walls, four plumbing stacks, a panel schedule and a load path.
Why the mix gets revisited at all
Unit mix is a leasing decision, not a construction one. It is set early from a market study, and the market study is eighteen months old by the time the building is priced.
Things move in eighteen months. A submarket that wanted studios wants two bedrooms. A lender asks for a different absorption profile. A partner reads a competing project and forms a view.
So the request arrives, usually reasonably, usually late, and usually from somebody who is looking at a floor plan rather than at a plumbing riser.
On the plan it looks contained. Two walls move on six floors. Everything else about the building is unchanged.
On the building it is not contained, because a residential floor plate is a stack of coordinated systems that all reference the same wall lines, and moving one line moves everything that was hung on it.
This note is about what actually moves, and about when in the calendar the answer changes from expensive to unaffordable.
What a unit mix change construction cost actually contains
Plumbing stacks. Kitchens and bathrooms are stacked vertically so the waste and supply runs are shared. Change the mix on one floor and the stack alignment breaks, which means either new stacks through every floor below or a horizontal offset that consumes ceiling space and needs coordination.
Electrical distribution. Unit panels, feeders and the riser are sized and located against a unit count. A different mix changes the connected load, the panel schedule and sometimes the service size.
Mechanical. Equipment is sized per unit type. A different mix changes equipment quantities, duct routing and, on some systems, the roof or corridor equipment.
Structure. On timber and light gauge buildings, apartment demising walls are frequently bearing. Moving one is a structural change that runs to the foundation.
Fire and acoustic separation. Demising assemblies are rated. New wall lines mean new rated assemblies, new penetration details and a revised life safety plan.
Permit. Any of the above may require a revised submission, and the review period is outside anybody control.
The calendar decides the price
The same change costs three quite different amounts depending on when it is asked for.
Before the drawings are issued for construction. It is a design revision. The design team absorbs some of it, the trades price the final set rather than repricing a changed one, and the cost is close to the difference in material and labor.
After the drawings are issued but before the stacks are built. It is a change order on design and a change order on construction, plus a coordination cycle. Typically two to four times the first case.
After the floor cycle has started. It is demolition, rework, a revised permit, a resequenced floor cycle and a delay on every floor above. There is no useful multiplier here because the schedule cost usually exceeds the construction cost.
Owners tend to assume the first case applies and receive the second or the third. The single most valuable thing an owner can do about unit mix is to fix the date after which it is closed, and to write that date in the schedule where everybody can see it.
The general form of this problem is set out in the cause written on a change order, because a mix change is an owner directed change and it is priced as one.
A worked example
Illustrative figures. Not taken from any client project and not a quotation.
A 184 unit building. In month seven the sponsor asks to convert twelve one bedroom units into eight two bedroom units across four floors, reducing the count to 180.
On the plan: sixteen walls move. The apparent saving is four fewer kitchens and four fewer bathrooms.
What it costs. Plumbing stack realignment through nine floors, $420,000. Electrical panel and feeder revisions, $180,000. Mechanical equipment change and duct rerouting, $160,000. Structural revision where two demising walls were bearing, $210,000. Design fees for the revision, $140,000. Permit revision and resubmission, $60,000. Floor cycle interruption on four floors, valued at $230,000 in extended general conditions.
Total $1.4 million against an apparent construction saving of roughly $260,000 from four fewer units worth of fixtures and finishes.
The rent from eight two bedroom units may well justify it. That is a real calculation and it might come out in favor. What is not real is the assumption that the construction cost is the difference between the two unit schedules.
How to make the decision properly
If the mix question is genuinely open, it deserves a proper comparison rather than a drawing markup, and the comparison has four terms.
The rent difference over the hold period, which is what motivates the request and is usually the only number in the room.
The full construction cost of the change, priced as above rather than as a unit schedule difference.
The schedule cost, expressed as days on the floor cycle multiplied by the daily carrying cost, plus any effect on the delivery obligations already promised to a lender.
And the risk cost, which is the probability that a change of this kind produces a second change later, because a revised floor plate is a floor plate somebody will want to revise again.
Four terms, one page. On many projects the comparison still favors the change, and it favors it for reasons everybody can see rather than because one of the four terms was missing from the meeting.
Where the comparison is close, timing decides it. The same change in month three is frequently worth making and in month nine is frequently not.
What to do before you sign
- Fix the date after which the unit mix is closed, and put it in the schedule as a milestone.
- Establish which demising walls are bearing, because those are the expensive ones to move.
- Establish whether the plumbing stacks are aligned floor to floor, and where the offsets already are.
- Ask what a representative mix change would cost at three points in the schedule, in writing.
- Confirm the permit revision process and the review period in your jurisdiction.
- Agree the markup treatment for owner directed changes before signature rather than after.
- Carry a figure in owner contingency for one mix change, because on most jobs there is one.
Item one is worth more than the other six combined and costs a conversation. A date that everybody has seen changes the behavior of the people who would otherwise ask in month nine, because the question stops being open.
Item four is the one that makes item one persuasive. A partner who has seen the three prices for the same change agrees to the deadline without an argument, and the three prices are an hour of the contractor time before signature.
Item seven is the realistic one. Most residential projects change the mix at least once, and carrying nothing for it means the first change consumes contingency intended for something else. The scope options for this reading sit in the review packages.
What we do
We price the change mechanism rather than the change: which walls are bearing, where the stacks align, what the panel schedule depends on, and what each of those is worth at three points in the schedule. The output is a one page comparison the sponsor can put next to the rent difference. We do not design the revision, which belongs to your architect. The work is part of the cost and change exposure assessment.
Questions people ask
Why does moving a wall cost so much on a residential building?
Because the wall is not just a wall. Demising walls carry rated assemblies, they are frequently bearing on timber and light gauge structures, and the plumbing stacks, electrical feeders and mechanical equipment were all located against them. Moving the line moves everything hung on it.
When is the last sensible moment to change the unit mix?
Before the drawings are issued for construction, which is usually well before anybody thinks the question is closed. After that the change costs several times more, and once the floor cycle has started the schedule cost typically exceeds the construction cost by itself.
Should the budget carry money for a mix change?
On most residential projects, yes. The mix is a leasing decision made from a market study that ages, and the request arrives on the majority of jobs. Carrying nothing for it means the first change consumes contingency that was set aside for something else entirely.
This is general information about construction contracts and is not legal advice.