Tips and Articles

Staying Within the Building Budget

Home building is a costly process, filled with umpteen purchase decisions about everything from square footage to floor coverings. The trick to completing your home on time, and on budget is to avoid hidden expenditures. Costs mount every time you make changes to the original house plans.

Hidden expenditures creep up slowly - a dollar here, a dollar there - every time you authorize a change or upgrade. Seemingly insignificant decisions, like choosing a different light fixture or paying $1 per foot more for upgraded flooring, can quickly add thousands. Here are some areas where costs can rise.

Clean-Up and Dumping
Disposing of construction materials left behind can be costly. Review your contract to ensure the general contractor has allotted sufficient money for clean-up and dumping fees. Speak to the contractor about ensuring sub-contractors take their excess material to the dump.

Outside Forces
The cost of labor and materials can vary substantially depending on the time of the year you build and the availability of workers and supplies. It takes just one significant event - like a shortage of lumber or a disaster that drains qualified workers - to send costs soaring. Local building codes, zoning and covenants can also affect costs.

Bad Timing
Coordination problems between trades can increase costs and extend the project length, especially if a particular trade is in demand. Workers may be ready to pour the foundation, for instance, but wait days for the concrete truck to arrive.

Costly Rooms and Features
Bathrooms and kitchens tend to be the most expensive rooms to build, so resist the urge to underestimate costs in this area. Lighting and fixtures are another area where costs invariably rise. Builders say it is common for homeowners to approve an allowance for lighting and fixtures, then upgrade when they see what that money actually buys.

Building Small but Estimating Big
Calculating the cost per square foot may be inaccurate if you base the calculation on a large house plan but build a smaller house. This is because the cost of expensive items (such as the furnace, plumbing, ventilation and the kitchen) will be spread over less square footage.

Unplanned Changes
Homes generally cost more to build than the estimate. Although proper planning can reduce cost overruns, it is wise to build in an additional 10% to cover unexpected costs.

Inflation and Market Conditions
Build the cost of inflation into your budget, especially if it will be several years before building actually begins. Home building costs tends to increase 3% to 6% each year.

Price Fluctuations
The price of materials such as lumber can change dramatically based on demand, imports, logging restrictions and the distance the wood needs to be shipped.

While no one said home building would be easy, there is nothing more satisfying than moving into a home built just for you. Stick to your original home design, plan for small cost overruns and you’ll be popping the cork on that celebratory bottle of champagne in no time.