We all have our dream house, but the question is whether we can afford to build it. Once you have a design in mind, you will also have to have a budget to see if both parts can fit. If your dreams are too big for your budget, even the smallest tweaks can bring the price down and still let you have the house of your dreams. An experienced residential construction project manager is a great place to start to help you work out these details.
What Are the Components of a Construction Budget?
Generally speaking, a construction budget will have five components:
- Hard Costs
- General Conditions
- Soft Costs
- Permits and Fees
Hard Costs are going to be your actual costs for construction, such as equipment, supplies, and labor. The general contractor will supply most of these costs during the bidding process.
General Conditions will be non-trade costs, such as dumping services, printing, trailer rental (if needed), project supervision, and temporary utilities.
Soft Costs are costs tied to the project but not necessarily part of the construction process, such as architect fees, bonds, legal, and accounting fees.
Permits and Fees are pretty self-explanatory and will be set by local jurisdictions.
Contingency is money you will want to set aside for those “uh oh” moments that pop up during projects. This would include costs of delays, unforeseen conditions, and possibly updating the design of the building.
Project Budget Influencers
You may have a project that seems similar to a friend’s, but even one variable can significantly influence the overall budget. These influencers are:
- Project Scope
- Project Size
- Materials and Equipment
- Quality of Design
- Project Schedule
- Owner Requirements
How to Develop Your Construction Budget
Now that you know the different components of a budget, let’s start working on putting one together:
- Measure the square footage of the project. You can get a very rough estimate of how much the project will cost simply by knowing this number.
- While looking at the plans, list all trades and scopes needed. Estimating software will help work out the expected budget for the project.
- Once the scopes are listed, you can start looking at the project’s scheduling aspect. This will help you figure out some of the general condition costs, such as supervision.
- With an overall schedule in place, you can start to work on costs for temporary power, supervision, etc., that will be needed for the project.
- At this point, you will want to double-check all quantities to ensure your figures are correct.
- Review all estimates to ensure they align with the project’s expected scope. You will also want to review all inclusions and exclusions on the bids with your contract project manager and have contractors revise as needed.
- Once you have the final bids, you can choose your contractors and enter their pricing into the estimator programming.
- When you have all final pricing entered, you can see if the project is at least in the neighborhood of your working budget. If the price is significantly over what you were planning, you can start to make adjustments to bring the cost down. (Be sure to review these changes with your project manager so the pricing is accurate and the changes are workable with the other aspects of the project.)
As you can see, this entire process has a lot of moving parts and can benefit from experience and programming you are unlikely to have. For that reason, we recommend, at the very least, consulting with a construction project services manager to see how we can help with your project. For more information about our services or to schedule a consultation, call us at 888-402-4180.