Case Study: Construction Craig Constructions, Inc.: A Home Improvement Project Home improvement, home remodeling, or home renovation is making additions to a home as well as improving or renovating lawns, gardens, and any outdoor structure around a house. Besides additions, indoor home improvement usually includes:

• Upgrading heating, ventilation, and air conditioning (HVAC);
• Changing hot water, cold water, potable water, and natural gas plumbing and plumbing accessories layout;
• Adding electrical outlets and lighting fixtures;
• Renovation of landscaping and gardens; and
• Adding fire protection and fire retardant systems.

There are three ways of improving homes: using a general contractor to implement the entire job, hiring specialized contractors while managing the improvement, and doing the job oneself. Americans spent $116 billion on improvements to owner-occupied units in 2010, down from a peak of $146 billion in 2006. The key drivers that increase remodeling expenditures include aging houses, increasing interest in improving home efficiency, and green remodeling. In the United States, the most popular remodeling jobs are:

• Bathroom remodeling,
• Kitchen remodeling,
• Windows/doors replacement,
• Room additions,
• Whole house remodeling,
• Decks,
• Insurance repair,
• Roofing,
• Finished basements,
• Siding,
• Enclosed/added porch, and
• Handyman services.

Introduction It was springtime, and the scent of new flowers filled the air around Nash's home in the Midwest. Nash Nathan was discussing with his wife how to improve their kitchen and dinette area. Their house overlooked a lake in a beautiful wooded setting. Nash's wife, Myra, was a fantastic interior decorator and landscape artist. Myra told her husband that a room addition to the dinette area of their house would enlarge the living area as well as maintain the lake view from the addition. This was appealing to Nash as the benefits would be huge: a new area to host friends and family, a larger kitchen and dinette area for utility purposes, and added value to the house.

Myra and Nash wanted to go ahead with this construction project and decided that they should contract this out to a general construction company. Nash had prior dealings with Craig Daemon, a construction company owner. But before discussing this new project with Craig, Nash talked to one of his neighbors who had actually built an addition a few years back. The neighbor advised Nash with the following:

• Room additions are complex and pricey. Make sure that you really want this addition before starting on this project;
• Get a good contractor;
• Take a home equity loan;
• Get the best estimate;
• Find out if the addition would increase your home value, and discuss the proposed addition with a realtor; and
• Because this is like a new house construction, you need permits, foundation, footers, framing, HVAC, flooring, plumbing, electrical, new windows, and so on.

Benefits and Keys Issues with Room Addition Projects Home additions can be a great investment. However, before embarking on building a home addition or other large home remodeling projects, there are a number of important items that should be considered. These items include: neighboring home market values, home addition costs, architectural plans, financing, personal disruption threshold, and sweat equity commitment level. Sweat equity is a term used to describe the contribution made to a project by the homeowners who contribute their time and effort.

This project is certainly an exciting decision, yet it requires thorough planning due to the consequences involved. Therefore, Nash and Myra decided to come to an understanding of the pros and cons that might influence their quality of life. After discussing with friends and family and researching on the web, they found that the following are advantages:

• Cheaper than buying a new property or building a new house;
• Have a say and have full control over the design and building; and
• Uninterrupted personal life as they are going to live with their neighbors and friends as opposed to moving to a new place.

Although making a home addition is more sensible than relocating in many cases, it has some drawbacks, such as the following:

• Cost may dig into a huge percentage of savings reserves;
• Increases monthly expenditures like utilities, taxes, and so on; and
• Eats up some remaining space.

Case Questions

1. What are the different phases in the lifespan in this type project?
2. What are the key issues in this project?
3. How would you classify this project?
4. What are this project's success factors? How does each one of these factors affect other factors?