If there is one area where a residential construction project manager or consultant can be of huge assistance, it is in vetting the build price that you are given by your custom home builder. But, if you choose to go the route of not hiring someone to do the dirty work for you, you are going to have to figure out if you are getting accurate pricing or you are just getting a price to land the big, then get hit with add-on pricing when you are waist-deep in the project.
The biggest challenge you have when doing a custom home budget is that there is nothing to compare it to. If you are getting a truly unique home built, there I no mold for other cookie-cutter homes for you to sit your budget side-by-side. In today’s market, even if there were, supply chain issues could dramatically impact the pricing.
The budget will also largely depend on the choices you made that do not enable the builder to use a proven model. For instance, you are having a custom staircase put in that is more unique than a traditional staircase so the builder will have to use an assumption when pricing this out. That is a pretty vanilla example, but I am sure you get the meaning. So, if all that holds true, how can you possibly figure out if the budget is correct or not?
Bids and Data
The best way to learn if your budget is in line is to use multiple bids and historical data. This will take considerable effort on your part, however, so the idea of bringing in a consultant to help really starts to look attractive here. Catching a single error could recover the cost of the consultant, otherwise, you better prepare to spend a lot of time crunching numbers in front of the computer.
If your builder is using a third party to generate their budget, this is a major red flag. Honestly, I would probably not even look at it and disqualify the builder right out of the gate.
Presenting the Budget
When the builder finally has the budget together, this should be a face-to-face presentation to go over every time, not just an email with a “check this out” header. The builder needs to explain line items and how they can about that number.
Some Questions to Ask…
Did the builder go over your architectural plans? Let’s hope so or the budget has no chance of being realistic.
Did the builder share their assumptions with you? Not every detail is going to be so cut and dry, so the builder is going to have to make some assumptions when creating the budget, and you need to know what those assumptions are.
Were multiple bids from reliable subcontractors obtained? This is a must, as you simply never go with one bid or the first bid. This will also give you a hint as to just how deep the builder’s network goes in terms of contractors they can work with during a project. It is also up to the builder to scrutinize every bid received to make sure the pricing is exact.
Did they use high-quality contractors? This is the oldest trick in the book… using a low-quality contractor with a low price to secure the job, then changing out and raising the price down the road. You will get an excuse that the contractor was not available or they backed out, something ridiculous, but you will wind up paying far more than expected.
Did the builder give you options? By this, we mean when you were looking at specialty areas or features, was this marked as something where alternatives were given to bring the price down or even up? If you wanted statement cabinets, for instance, were you presented with several different options? The same can be said for countertops unless you were very specific.
So, as you can see, this gets very involved, which is why we recommend having another set of eyes with experience in the field. If you are throwing up the white flag, give us a call today at 888-402-4180 to discuss how a consultant or project manager can help you.