Greenbuild Articles

A Guide to Budgeting for Your Construction Project

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.

The Tale of the Project Management Triangle and Why Sad Susie Sodermeyer Can’t Have it All? Or Can she?

It was a crisp fall day and Sad Susie Sodermeyer was newly appointed to manage her office renovation and was under time and budget constraints and needed this project done efficiently and yesterday! She quickly realized that she needed to find a contractor that could deliver a quick, quality project for a lot less.

I interrupt this riveting adaptation of Sad Susie Sodermeyer to introduce…

“The Project Triangle”

“What is The Project Triangle and how does it work?”

The project management triangle is a model of the constraints of project management.  While its origins are unclear, it has been used since at least the 1950s.


  1. The QUALITY of work is constrained by the project’s budget, deadlines and scope (features of what is included in your project).
  2. The project manager can trade between constraints. The Keyword here is Trade.
  3. Changes in one constraint involves changes in others to compensate or quality will suffer. Susie did not like the word suffer!

In a nutshell, a project can be completed FASTER by increasing budget ($$) or by removing SCOPE. Similarly, increasing SCOPE may require increases in budget and TIME added to your schedule. Cutting the budget without adjusting the schedule or scope will lead to Dun Dun Dunnnnnn LOWER QUALITY. Sad Susie just got a little sadder.

Some Say, “Good, fast, cheap. Choose two.” and similar statements are often used to encapsulate the triangle’s constraints concisely.

In practice, however, trading between constraints is not always possible. For example, throwing money (and people) at a fully staffed project can slow it down. Especially in small spaces. In poorly run projects, it is often impossible to improve the budget, schedule or scope without adversely affecting quality.

A Solution for Susie!! – A knowledgeable seasoned Contractor will Value Engineer your Scope. Value engineering refers to a systematic process aimed at increasing the value of a product. It focuses on improving functionality while keeping costs low. Sometimes referred to as “value analysis,” they will analyze every step of a project to ensure maximum value.

Sad Susie Sodermeyer made smart choices, worked with her General Contractor and got the maximum value in her project. She met her deadlines and budgets and was an office hero! She is happy now, confident, and more knowledgeable. She has changed her name to Sassy Susie Sodermeyer. Yeah, she sassy.

The “C” Word And Why Quote Transparency Is Important

Go Honest or go Home…

Clients don’t want to hear the C Word. Decent Contractors don’t want to say it unless it’s a client requesting change or an unforeseen occurrence. CHANGE ORDER. There I said it. For those unfamiliar, a change order is an additional cost to the client that comes up during the project. There are many legitimate Change Orders. But it’s important to be able to spot the difference.

When a project is priced properly there is a lot to be taken into consideration. Construction is much like math. There are drawings that specify calculated detail including materials. The project should have a walk through and always be physically seen as well. There is always much to be discovered that can’t be inferred from the drawings.

With all of this, the Contractor should be able to come up with a FAIR estimate that encompasses potential changes , add alternates, allowances and note any potential unforeseen challenges that they may see.

Sounds simple, easy peasy right?! Not so fast ….Here is where your eyes should begin to squint….

Many General Contractors will not price the project accurately (you don’t say?) and not identify potential add-alternates or unforeseen challenges, allowances and present an incomplete and much lower estimate (GASP!).

Let me say that again, in case you missed it,

“Many General Contractors will not price the project accurately and not identify potential add-alternates or unforeseen challenges and present an incomplete and much lower estimate.”

Let’s let that sink in, the GC appears to have the lowest and best quote and promises the same completion schedule. Suddenly the complete and accurate quote looks high and expensive ?!?!!! This is where the “C” word rears its head….

CHANGE ORDER TIME IS ON THE WAY!! In the spirit of Oprah, you get a change order, you get a change order, you get the idea.

I have seen it time and time again. The project gets under way and the client is hit over the head with change orders. Often, times the project ends up exceeding the “The expensive (yet accurate) quote” and the clients find themselves in a contentious relationship with their contractor which makes the entire project run sour. This is an unfortunate occurrence that can be avoided. Many larger renovation projects are lengthy in time and fighting with your GC is not a place you want to be. This is an exciting time and should be spent smiling.

Your General Contractor should be your ally that advocates for you. They should sit with you and review the drawings and pricing and potential hiccups. They can help identify what may be missing from the low bidders numbers for clarification. There can always be unforeseen occurrences but the important thing is the trust you have with the General Contractor you choose.

The Importance of a Healthy Relationship with your General Contractor

Picking The Right General Contractor Should Not Only Be Given More Thought, But the RIGHT Thought!

Renovating your home is a very exciting time and also brings many challenges. The primary role of your General Contractor is to bring your vision to life by managing, essentially … everything!

Your General Contractor should be attentive to your wants and needs and should help by –

Listening – Novel thought right? Well it happens less than you think! Your GC needs to convey everything to your architect and make sure the drawings are within your budget and are drawn to your specifications. The only way to properly convey what someone wants is to listen. In some cases, the drawings are already complete when the General Contractor is introduced. In this case, the GC should carefully review these drawings with you, not only for budget and accuracy, but for TIME!

Championing for You – Time is always of the essence, because your time is not only precious, but Time is always Money! Your General Contractor will make a schedule outlining the entire project for subcontractors, material lead times, unforeseen developments and likely changes. The GC uses this schedule throughout the entire process to move your project in the right direction. This is done by not only managing your Subcontractors and the Architect but by rallying them and making sure that Your project is a success.

Knowledge – Managing the Subcontractors is very timely and intricate. Your General Contractor needs to not only know all of the trades but how to perform them. The GC needs to make sure that each Subcontractor is doing the correct job and doing it well and on Time. There will likely be organic Hiccups along the way. Your GC needs to be swift, clever and communicative. Which leads us to … … …

RELATIONSHIP, RELATIONSHIP, HEALTHY RELATIONSHIP – We all want one ! Throughout this lengthy process your GC will be at your side, Listening, Championing, Managing and Caring for the success of your Project. Choose someone you want by your side. This is a partnership with interest sharing and teamwork. Don’t just choose a GC, Choose the right GC!