Rules of Thumb for Estimating Road and Utilities Installation Costs?

Question

I am considering buying a 50 acre, rolling to hilly parcel with lake views near Knoxville, TN for a proposed subdivision of 1 acre lots.  I need a good short hand method to estimate the cost of building a curb and gutter road along with trenching and installation of gas, water, sewer, and electric. Everyone I consult says it depends and that I must hire an engineer and do soil testing, etc. in order to get an accurate number.  Also people seem not to want to give me rough estimates because I might "hold them to it,"  or because there are "a million factors." I know all that, but I look at a lot of land and I need a back of the envelope evaluation method that gives me a sense of rough feasibility to know if this is worth my time financially.  I realize there are unexpected things that come up and a dizzying amount of variables that affect the cost, but I need to start somewhere and don't want to pay for engineering and other studies for every property that I review. I also realize that prices vary a lot state to state and county to county, given the local standards for building. All that aside, does anyone have a generic range for these components, for example say $x/ linear foot for a 20-ft wide, standard roadway with extruded curb & gutter, say doubling that if your grades are more than Y degrees, or tripling if more than Z degrees? Or 10X the whole thing if you have to blast through rock? Also, $X per linear ft for a 6" water line, including trenching, pipe, and installation labor? And the same rough linear foot benchmark for gas, underground electric, and sewer trunk extensions (not lateral lines to individual homes, but extensions of the utility main lines into the new community). Any references to cost estimation algorithms or instructional education would be most helpful too. Thank you!

Henry Clark · Answer

What are you expecting on the sales side?   50 acres.  1acre lots.  With set backs and road ways.  Let’s say 40 lots.  At let’s say $150,000 per lot or $6mm.

Add sales commission to your list at 7%. Or $420,000

Survey cost. $30,000

Fire hydrants at $10,000 per.  Assume a 300 foot direct distance requirement, not as the crow flies.    Let’s use 4,000 feet for all linear it utility discussions. 4,000/600= say 7. X $10,000= $70,000 for installed hydrants

Roads with curbs. We are required 24 foot widths plus the curbs. So 4,000 x say 26. At 7inch with rebar, mesh, fiberglass threads or nothing?  Ask you local road person for a per square foot at 7 inches.

Sidewalks?  Same as above. Get dimensions from city or county. Say 4 inches thick.  Ask your road guy.

Storm drains needed? Go with $180,000 per 800 feet.  At 4,000 feet that would be $900,000.

Water and sewer pipe along drives.  Say $150,000 each per 1,000 feet. Assuming no rock.  $1,200,000 total.

Are utilities at the front entrance to the property or down the road?  Add that.

Electric don’t know  ask for 4,000 buried.  Plus 40 lots/2 for shared box.  Ask how much per transformer box.  $$$$$$

No driveway entrances for house lots.???!

Signage and landscaping $50,000

Perimeter fence?  Say $50,000 per 1,000 feet.  Don’t know if you’re just doing the entrance.  This is just black metal   Not decorative brick etc.

Construction insurance? $30,000

GC 15% of say $6mm or $900k

Site prep for roads and 40 lots   Assume 0 dirt on or off property.  $100,000

Tree brush waste   Assume you haul and don’t burn.  100 truckloads at $300  or $30,000.  Does not include any dump fees.  Recommend you grind on site and use for mulch.

Legal fees-  $20,000

Soil compaction test.  $10,000

Percolation test. $5,000

Silt, erosion measures. $30,000

Engineer firm support for county, city, soil district, Corp of engineer filings and support. Inventory of aquatic habitat and Bat habitat.  SWPP plan monitoring. Say $30,000What was missed?????

Forgot. Building permits- $50,000

Property tax as commercial versus residential $30,000 during project

Bonding??? Cost

Now we get to Profit?????

All of the above figures are wrong.  They are directional in concept.

The $5mm I mentioned before was not for the total cost of the development.  That is your portion you would need to pony up front for the banks.

Henry Clark · Answer

Please lookup my name and subdivision. Journeys End and Silver Springs. These are country subdivisions so they don’t go into the utility details you need.  But we also do Selfstorage that require those utilities

People don’t like being told they can’t do something, but without getting into the weeds you can’t do this.  Unless you have $5mm cash you are not going to get financing.  Plus this is the wrong time to do a subdivision even though we are developing one.    .   With that said no one can help you.  Plus they would have to do all your work.

I’ll try to help you but you have to do the work.  Make a list on this post of every cost component.  Let’s identify the universe of costs before worrying about how to calculate them.

I’ll give you the first one.  Engineering. $250,000.

Another.  Construction interest and Rent up Phase interest. $1,500,000.

Another sewer lift stations  $80,000.

Keep adding to the list.

Recommend you do a small project first, and scale.

Or find a developer who will buy from you.

Henry Clark · Answer

If you put the time into analyzing. Always make an offer based on your risk reward.

Without details. This is a good project just it has more risk to mitigate than your former project.

Most of our team is committed for the next 4 to 6 months.  I use them on all of our projects thus they are committed to us.  But they are still backed up.  Your project even if you bought today will be at least 6 months into zoning, engineering, soil conservation. Thus it is a winter project.  Which might be okay where you are at and the ground doesn’t freeze to deep.  My point is actually Interest or carrying costs.  If you buy the land you might ask pay 1/2 down now.  1/2 down a year later.

Also you might sell the easy lots undeveloped just subdivided off.  Then develop the rest.  This will reduce your exposure.

Love all the angles in REI.

Matt Castle · Answer

Please don't think I'm trying to be negative or troll-y, but if any developer has an algorithm for this, I would wager that developer would be reluctant to publish such proprietary information on the web so they can have more competition.

The Knoxville market, and probably most/all of its sub-markets, have cooled substantially due to affordability and lots of other factors. And every major new development I've seen in Knoxville for the last 2 years seems to get public protest(s), negative publicity out the wazoo due to increased traffic flows and/or destroying the natural land and all that kind of stuff. Local banks are also beginning to get much tougher on commercial deals for various asset classes.

Not saying it's impossible, but Knoxville area 2023 isn't Knoxville area 2021.

Best paths could be:

1) start top down and meet with the governing municipality. Maybe they would welcome another development if your sub-market really needs more housing and be a help versus hindrance. You'll be dealing with them anyway, so maybe a sit down is a good place to start. But you're wanting to subdivide for more space to build 500k+ homes, you might not get the best responses.

2) start bottom up driving around a new subdivision to see what the local gov made them do, then go talk with soil scientists, excavators and the companies that put in the basic infrastructure to get multiple quotes.

I might be wrong, but I don't see an easy button for such a detailed project.

De Rasche · Answer

If you have potential lots with existing road frontage, cheaper to do them first phase and test today's market.  As and if they sell, use that money to push inland.

Presale interest from a billboard may help you test the market.

If no one is framing home there, obviously not a good sign already existing under construction are selling.

I see housing being finished here in west Tn., but little new framing.

Alicia Prokos · Answer

Yes, there are some lots with frontage that I could sell off initially just subdivided off. That is a great idea.  You're right there's a lot to do here with a lot of risk to work to mitigate. Yes, we can do this as a winter project. I've had a great general contractor for a while now but he will not follow me to Tennessee, so I've got to find someone new, and that's another big big risk. Thank you so much for your help, Henry Clark,you have some awesome advice that's so valuable coming from someone with your experience. I really appreciate it.

Scott Mac · Answer

You will also need a rock solid A/P for vendors (and for the contractors, how, where and how often will this take place).

Scott Mac · Answer

And when all of the local road graders are being used somewhere else, and the one your guy uses just died, or your guy just died and the road cannot be graded for an extra 6 weeks to 10, when you can get another grader in there--unforeseen cost over runs.

Stack a few of these back to back over the project and your pockets better be pretty deep and your construction lender pretty flexible.

You should have some allowance for things like this, and if you do not exceed it you come in under budget.

How much, it would be based on you experience over time with your contractors and supply chain issues or non issues.

Are you big enough to order rail cars of lumber? Or will you expect the contractors to supply this on a home by home bases?

Things like that will color your numbers for this allowance.

Good Luck!

Alicia Prokos · Answer

Yes, I would agree, a best case-worst case is what I'm after. Thanks for helping me to clarify my thinking.

Scott Mac · Answer

The local companies are telling you they cannot estimate on the fly with any amount of accuracy.

Yet you want a plug figure for this widely ranging number.

Maybe think about using a best case worst case scenario and come up with two numbers.

Budget for worst case (because it seems logical to do this), and if it is less, come in under budget.

As to the soil engineer, this may be a reasonable person to get some percentage increases from. Such as soil x add 3%, etc...

And the cost in Tempe Arizona to surface over coliche may not be the same as Tennessee in a hillside.

Maybe what you really need is a best case worst case number.

Maybe paying the soil engineer is going to have to be a cost of doing business to get a feasibility decision?

Good Luck!

Rules of Thumb for Estimating Road and Utilities Installation Costs?

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