Ask an Expert: Predicting Costs When it Comes to Home Construction Projects
For most people, a construction project is a unique, exciting and yet terrifying experience. It’s terrifying for a number of reasons, but most importantly because it is your home and it is going to cost a decent amount of money.
Outside of student loans, a home purchase, and maybe a nice car, a large home renovation will be one of the biggest expenses you undertake. But unlike tuition, homes and cars, the cost is largely somewhat of a mystery from the outset.
While the architect and contractor can give some ideas from experience, inevitably large amounts of the construction project are not known until the project gets underway. Let’s look at a couple of the unknown items that make construction costs hard to predict.
When excavating for a new home, whether it be for footings or for a basement, the soil conditions can play a dramatic impact on the cost of a home. If the water table is higher than expected or the soil is not suitable for the foundation additional costs will be incurred.
Furthermore, the site often has existing utilities such as the sewer line and water line. These utilities depending on condition and location can potentially cause an additional cost if they are not in good condition or they need to be relocated.
Even if you are completely leveling the house, the condition of the existing home could play an impact on the costs most notably related to the age of the home. If the home is older, it may have hazardous materials that will require costly experts to remove properly.
Alternatively, if you plan to keep the house, the expectation of the materials behind walls, underneath floors, etc. can bring up unexpected challenges that need additional engineering or work that was not initially considered when the project was budgeted.
A large opportunity for additional costs in a project is the decision to include items that were not initially included in the initial budget. You just have to have that wine fridge or the bathroom needs that frameless shower door. It’s okay, these things always happen. But do keep in mind, every time you want to change the initial scope of work, you see a better product and the contractor sees additional dollar signs.
In order to try to minimize additional costs, try to include all items you want in the project before it gets underway. This is hard, really hard, but it will save you a lot of money.
This is similar to Change Requests, but perhaps the biggest unknown when starting a project is the costs of the materials you are looking to install. Have you picked out all tile? All the appliances? The paint? While your eyes say $10/sf tile, your budget may say $2/sf tile. Getting this all straight before the project starts will help prevent those eyes seeing beauty feeling tears.
Knowing exactly what you want (and ideally already having it purchased and in a warehouse) will minimize unforeseen costs and delays extensively.
Some amount of testing and planning can help reduce the unknowns when starting a construction budget. And keeping to your budget is the number one way to keep it under control. That said, I would recommend starting with a contingency budget of 10% when you start the project and if you make it through close-in(when the walls get hung) without any major surprises, you can begin to splurge without regret on the final material selections and light fixtures.