Budgeting for Major Construction Projects
Maybe you’re adding an expansion onto your home, constructing a standalone storage building in the back yard, or undertaking some other major construction project. Whatever it is that you’re building, you likely already know that big construction jobs can carry big costs. If you haven’t budgeted for the job correctly, though, you might end up surprised at how big some of these costs can be.
Sticker shock for construction projects can be a problem, but it doesn’t have to be. With a little bit of thought and planning you can make sure that you’ve got all your expenses covered in your budget before the job begins. While some of the costs involved will be very specific to the details of your construction project and where you live, these budgeting tips will help you to keep an eye out for things that can drive the price tag up, so you can account for everything.
Some of the costs of major construction projects are obvious: You’re going to need money to cover things like lumber, siding, wiring, and other materials. You’re also going to have to pay your contractors and laborers for the work that they put into actually doing the construction. If you aren’t paying attention, however, these costs can get away from you and leave you with a bit of a surprise when the bills come due.
Many material costs fluctuate based on supply and other factors and may be affected by things like transportation costs as well. Lumber prices in particular are prone to fluctuation and can increase significantly if supplies are disrupted. If possible, get in a purchase order or otherwise get some sort of pricing guarantee before work starts so that you can lock in a price and protect yourself from price shifts down the road.
Easily Overlooked Costs
While changes to your material costs can be an issue, one problem many people have when budgeting for construction is that they forget to account for all of the smaller costs associated with this sort of project. Some of these costs (like getting a construction permit) may seem obvious, but they can be easy to overlook when looking at the significant costs of materials and other aspects of the job. These costs can also be significantly higher for large projects than they are for the sorts of projects you’ve tackled in the past, so keep that in mind.
A few aspects of the job that you might not consider which can significantly increase your expenses include things like putting down a slab or foundation, installing a roof on a finished building or expansion, renting a dumpster for the construction crew, and interior materials such as fixtures and appliances once the project is done. Even landscaping costs and a bit of extra funding to cover incidentals or unexpected situations should be considered. The last thing you want to do is to budget things precisely and then realize that a portion of your yard has to be dug up to replace some pipes or some of your existing wiring will have to be ripped out to get everything up to code.
Managing Your Project
There are a lot of moving pieces in any major construction project, and hiring a project manager can go a long way toward managing all of them. In some cases your general contractor may act as a project manager as well, but many times they’re there to do the job they’re hired for and the rest of the details are squarely on your shoulders. Consider bringing in a project manager or ensuring that you’ve picked a contractor who will manage the project as well will help with budgeting and cost tracking, while also making sure that you don’t forget some important part of the project that might otherwise come back to haunt you.