Do you have a plan to build your dream home or renovate your home?
Home is one of the most important things. Having a comfortable dream home is certainly everyone’s hope.
Building a house certainly requires a lot of money. If you want to build a house, of course. You have to pay close attention to the funds you have and the costs you will incur, you must be able to manage your finances well. In addition, sometimes you also need to renovate your home to increase comfort or fix things that are not working well.
We can build or renovate our home by ourselves, but of course, if we have a lot of experience and time, right?
Most people prefer to use construction services in building or renovating their homes. Because we simply explain the concept we want and prepare the budget.
In the contracting industry, there are commercial contractors and residential contractors. The two construction services have differences based on the use of materials, project deadlines, equipment needed, codes & permits, and also different costs.
Residential construction refers to buildings that are designed to be lived in, such as a home renovation project or home building.
Commercial construction is carried out for businesses that may require new office buildings, additional establishments, or industrial facilities.
When you will building a new home or renovating your home, you have to prepare your construction budget and estimating all the cost you expenses.
Budgeting plays a role in the success of your project. Good budgeting will help you to makes your home dream come true at a realistic and logical cost. Knowing your spending limits and developing your custom home building budget helps you avoid unwanted financial events in the future.
Things should be included in the home construction budget
- Name of the person
- Description of the home construction
- Contractor name
- Contact information
- Detail amount and cost of construction material and labor
There are two kinds of cost, hard cost (direct cost) and soft cost (indirect cost).
1. Direct costs are costs and expenses that are accountable directly for a specific activity in construction work e.g materials, labor, etc
2. Indirect costs are expenses of items that are not allocated directly for specific construction activities. These are called overhead costs e.g administrative cost, quality control, etc
Estimating your project expenses and make them reasonable is a thing you have to do when creating a budget. There is a lot of methods that can be used to estimating your project. The most method used in the construction budget is Parametric estimation.
The parametric estimation method uses historical data and statistical modeling to estimate the costs required for a project. This is much more accurate than analog estimates but requires more initial data to accurately assess costs.
The accuracy of this method depends on the available data and whether the model is scalable or not for different conditions.
If you want to know about the other estimation method, you can read this article about Project Budget.
How to create a realistic budget and staying on your budget when building your home
You Have to be Detailed in Your Plans
You should be able to describe each part of the building that you want to build or renovate. Detailed plans and information about your building will help you and the constructor to list what materials you need and in what quantities.
Calculate the Square Footage of Your Home
You should measure the square footage of your property on which you want to construct a house. Make two separate measurements for cover areas and uncovered areas
Work with The Right Party
When you are going to build a house or renovate it, sometimes you need someone to carry out your project. Work with construction or architect who can understand your plans, concepts and work according to your expectations.
To get this information, you can look for references from your friends or relatives who have used their services or learn about the projects they have worked on. This is important because to use construction services or architects you need a lot of money, so optimize the funds and information you have.
Determine Your Budgeted Cost or Cost Range.
You need to determine how much funding you have for your project. This figure does not need to be detailed, you can explain it based on the range of funds you have. With this information, then you and the construction or architect will think more realistically in determining the time or material and inferior for your project.
When you do not have enough money to spend on construction, it is better to choose a very simple and easy plan for your home.
You must be wise to adjust the funds you have for your home.
You can use simpler materials of good quality. you are not advised to use materials that have a price that is too high or buy inferior that is not so important. you must be able to distribute your funds properly for other purposes.
Here you must be able to ensure that the funds you have can be used to produce an optimal home according to your wishes
Determine the Timeline
You must determine when your project takes place and ends. Having a clear timeline will help you and the architect or construction company in preparing the budget
Budgeting Your Project
Make sure your budget includes a breakdown of each stage of construction and line-item costs in that stage and is as close to actual costs as possible.
There are some variables you must consider when creating your home construction budget:
- Your site conditions
- The design and layout
- The structural design of the dwelling
- Council and state design requirements specific to the site
- Availability of essential services
- Scope of works
- Material and finishes specifications
You can look for cost information to make or renovate a house for reference. But you must be aware that each region or each service can have different fees.
You can do cost reference comparisons around your location and then compare them to get a minimal cost.
At this stage, you have to make sure that all costs, both hard costs, and soft costs have been fully listed. you can ask the constructor to help you estimate the costs you incur. You also can use your free printable template constructor budgeting and create your budget together.
Here put a margin for everything because it is possible that by the time you make the expense, the prices are went up.
Controlling Your Home Construction Budget
A project that overbudget budget indicates that the controls carried out is not appropriate. Due to additional costing, there will be changes in profit margins, changes in productivity due to opportunity costs, and financial stability due to decreased liquidity.
Check the Project Status Regularly and Make Sure There is No Problem
This activity is an important part of project maintenance that should be practiced by project managers. Receive every update systematically during the project phase, from project initiation to project closure.
This activity is done to see if spending is in line with trends and can help identify problems quickly. If a cost increase is found, it is important to address it and fix it as soon as possible.
Tracking Your Home Construction Budget
You need to keep an eye on every expense you make and track it. In addition, you also need to organize the receipts that you get. Each of these receipts can help you to track every expense you make and confirm it with the budget you have previously made.
After reading this article, you may get an idea of how to create your home construction budget. Here you can use Home Construction Cost Template to make it easier when creating your budget. If you need a monthly budget to manage and control your home construction expenses you can improve our monthly project management budget template.