Pursuing a construction project is exciting. As you embark on your project, it’s normal to feel excited about the results. Yet, before you even meet with a general contractor, the first step you’ll want to take is to establish a budget. Here’s why a budget is so important and how to determine yours.
Why Is It Important to Have a Construction Budget?
Budgeting serves several critical purposes for construction projects. For one, it forces you to look at what you can realistically spend on your project based on your funding. You won’t have to worry about overspending with a plan in place.
Beyond that, your budget provides a roadmap for your general contractor. With the knowledge of what you can comfortably spend, they can present options for materials within your price range. Your general contractor will also discuss the estimate with you so that you understand precisely where your money is going. They may also incorporate a contingency element into the budget, which will help cover unexpected issues, such as weather-related delays or material upgrades.
Finally, setting a construction budget allows you to understand the “big picture” of your project. After all, the construction of the building itself will only be one element of the cost.
What Are the Considerations for Creating a Budget?
Here are just a few of the costs to consider when creating a comprehensive construction budget.
- The Site: Unless you’ve already purchased property, you’ll need to factor in the cost of the land when determining your budget.
- Fees & Services: Plan to set aside money for professional fees and services, such as architectural services, permits, site surveying, engineering costs, and banking and real estate fees.
- Materials: Consider the cost of the materials for landscaping elements, the building, and its interior.
- Labor: While labor will cost a lot in any construction project, it’s a critical factor since the quality of work is well worth the expense.
- Taxes and Utilities: Inquire with local utility companies to estimate hookup fees and consider your tax responsibility at the local, state, and federal levels.