Avoid a Build Budget Blowout with These Practical Tips
Budget blowouts have become so common that they are almost an expected part of the building process. However, this really should not be the case. While there will always be unexpected issues, and some changes are unavoidable, good budgeting should account for any potential problems.
Thankfully, there are a few simple things that anyone can do to plan and track costs successfully. Here we provide our top 10 tips for getting your build budget right.
Tip #1: Know how much you can comfortably spend
When planning your build, how much you can reasonably afford should be one of the first things you work out. This will give you a sense of how much you can spend and will help shape your design. It will also help you work out whether building your dream home is remotely realistic.
Just like when you buy an existing property, your total budget will be based on your savings and potential borrowing power. It is the maximum you can spend and will need to cover all your build costs, including any budget overrun. As such, it is best to plan for a smaller build budget and leave yourself some extra funds, in case of an emergency.
Tip #2: Do your research
The better you understand the build process, the better you will be able to plan for it. As such, you should spend some time making sure you understand what is involved and what to expect.
Good news is, there is no shortage of materials available to help you. From the major real estate sites to architect and builder blogs, there are plenty of places to find useful information. This research could even help you to figure out the companies you want to work with.
Also, make sure you thoroughly research any unique materials or features you are considering including in your design. Before committing to them, investigate the installation process (and costs), any planning requirements, and the ongoing maintenance.
Tip #3: Carefully calculate your budget
Failing to plan is planning to fail. That may be a cliché, but it is true – particularly when it comes to budgeting. If you do not have a clear view of your likely expenses, it will be impossible to contain your costs.
When you’re calculating your budget, it is important to think about every element of your build. Everything from major costs (like your builder’s fees and materials) to smaller expenses (like tapware and door furniture) should be included. And if you do not know the exact price, do some research, and include an indicative cost.
This will give you a better sense of what you should expect to pay throughout your build. It will also allow you to track your actual spending against your budget and make any adjustments as you go. This reduces your risk of running short and should help you avoid a budget crunch at the end of your build.
Tip #4: Build in a contingency
It is impossible to know the exact cost of your build upfront. Building is a long process, and things will invariably go wrong. Chances are, you will also need to make several decisions that have a direct impact on your build costs.
As such, to make sure you are not left short, it is best to add a little extra padding to your budget. Hopefully, everything will go to plan, and you will not need to use this contingency. However, it is much better to have it and not need it than not have it and be left struggling to finish.
Tip #5: Secure some of your costs with a fixed-price contract
One of the best ways to contain the highest costs is to set up a fixed-price contract with your builder. This gives you more budget certainty and will mean you have an agreed price for the lion’s share of your build. It also minimises the risk of contention with your builder over additional costs or changes to their quote.
A few important things to note about fixed-price contracts:
The exact terms will vary from builder to builder, and some companies may not offer such an arrangement.
They will not cover every element of your build. As such, it is important to understand what is included and what is not.
Generally speaking, any changes to the design made after the contract has been signed will be treated as a variation. These will usually incur an extra cost.
Tip #6: Finalise your design before you begin building
One of the quickest ways to blow out your budget is to change your design mid build. Even simple changes can have a significant impact on your build costs as they often require rework or extra materials. They can also blow out your build timeline, which will invariably have a knock-on effect on your budget.
With this in mind, it is important to carefully consider all design elements before you sign contracts and start building. As part of this, you should consider how you will live in the space and make sure your design suits. You should also make sure your design takes into account any issues you want to avoid in your new home.
This can be a little difficult to do, particularly if you have not built before. Often, the picture you have in your mind is different from how it will be in real life. This is where working with an experienced team throughout both the design and build process can be invaluable.
Tip #7: Seek out design expertise
While you may know what you want – and what you do not! – it can be hard to fit it all together. Most people struggle to picture what a floorplan will actually look like and can easily miss obvious design flaws. This can lead to mid-build changes, as the property takes form and practicality issues become painfully clear.
However, when you work with experienced design professionals (architects, builders, etc.), they can point out any potential problems. They can also provide advice on any features you would like to incorporate or issues you need to work around.
The best architects and builders will also understand the challenges of working within a budget. As such, they should be able to recommend ways to keep the costs down. They may even be able to help you negotiate contracts and identify cost-effective alternatives.
Tip #8: Choose your builder carefully
This almost goes without saying, but choosing the right builder is critical – particularly for a custom build. You want someone who understands the specifics of your build and has specialised experience in any unique elements. Not only will they know what needs to be done, and how, they can offer advice if anything goes wrong.
An experienced builder can also help you to avoid, or minimise the impact of, any mid-build changes. If an issue does arise, they will be able to spot it early and work with you to assess your options. They should also be able to recommend the best course of action and advise any potential flow-on effects.
Also, beware of ‘free quotes’ – these are usually more marketing material than genuine quote, and are notoriously inaccurate. If you are considering a particular builder, it is better to bite the bullet and pay for a detailed quote. This will be much more accurate as they will have taken the time to properly scope the job.
Tip #9: Be flexible with your finishes
For most people, picking fixtures and fittings is one of the best parts of the design process. These are the things you see and touch every day, and they will help make the property feel like home. They are also a great opportunity to express your personal style and can really help to personalise the space.
With all this in mind, it is only natural you will get attached to certain materials and choices. However, being too focused on specific finishes could create issues with your build. As such, when it comes to fixtures and fittings,,, it pays to be flexible.
If materials are not available when your builder is ready for them, work may stop until they arrive. This can quickly blow out your timeline and budget, as each lost day adds to your build cost. However, choosing an alternative finish could keep your builders moving and avoid any extra time and expense.
Tip #10: Consider what you are willing to compromise on
If the worst happens and you find yourself significantly over budget, you may need to make some tough decisions. This could include choosing to prioritise some parts of your build and leaving other parts to be finished later.
Sometimes there will be an obvious sacrifice – pools, tennis courts, and separate studios are easy to remove from your plans. Other times, it will be harder, and you may need to consider leaving specific rooms unfinished.
While you obviously hope it will not come to this, sometimes it is unavoidable. As such, before you start building, it is worth having a clear view of what you can compromise on. This can take a lot of emotion out of the decision and will mean you are prepared if things do not go as planned.
The Carmel Homes Difference
Carmel Homes is a price-competitive and service-focused family business, operating primarily in the eastern suburbs of Melbourne. We pride ourselves on working closely with our clients to achieve a common goal: building beautiful craftsman homes that breathe quality - your dream home. Every project we undertake has a company director present, and we are always contactable.
To discuss your new home, duplex, or townhouse build, we invite you to contact us today.