Developing a construction project budget, and don’t know where to start? Such a hard thing to develop as it is so personal, also a very difficult decision on what to spend where. Not to mention how are you supposed to know what to spend where, and does it make sense? In my opinion, it comes down to two points; what’s important to you and what is the purpose of spending the money.
Let’s start with the second question first, as it will create a baseline for the first question. What is important is to define why you are creating this budget, is this your ‘Forever Home’ that you are going to be creating your family in and setting down roots in the neighbourhood or area? Is it a stepping stone in your final real estate goal? Do you just want to spruce it up because it’s looking tired and you just want to give it a facelift? Give some good thought to those questions, as it creates the framework to move forward.
Let’s go with the forever home framework as the ‘flip-home’ is complicated and just a facelift isn’t very exciting. If you want to discuss either, however, by all means, shoot me a note and I’ll offer some framework for those as well, now is not the time. At this point, you will decide how much you could possibly want/afford to spend. Once you have that number, reduce it by 20-25%. This is your contingency fund for when you open walls and things are not they way you and your contractor thought they were, or you decide you’d like something nicer while the project proceeds (this happens more than you might think, even with a very well thought out plan). Once you have that number, you can start prioritizing what you want to work through, and what space is most important to you (this is where it ties into question one, see what I did there?).
Consider how you use your home, this is what shapes the framework you use to create your budget. If it’s your kitchen and you love to cook and use your space to entertain guests and family, you will push more resources towards this aspect. If there are aspects that are less important, such as a guest bathroom that may not get used as much, perhaps you are using decent quality items but not the high-quality items you may choose for your ensuite or the main bath that is used daily. At this point you’ll want to get a quote from a trusted contractor. If you don’t have one, find a minimum of three contractors who you vet based on my previous blog to quote on your project based on your budget.
By doing this you will qualify your budget and determine if you should/can move some of the budgeted amounts around to the various buckets to make the overall project manageable. If you are coming up short, remove some scope, remove some quality or push the project altogether. Don’t be afraid to push the project for a year until you can afford to properly commit to it and the financial commitment. Remember, this is your dream home, don’t rush it.
Be honest with your construction project budget, I can’t stress this enough, don’t over commit and don’t lie to your trusted contractor about what you are willing to spend. They will make budget-conscious decisions and offer solutions on what you tell him you are willing to spend. There isn’t too much more frustrating than finding out that if you were more open about your ability to spend you could have had a better renovation. You could have had heated floors or pocket doors where you have swinging doors now, as well as changes to how you view the space and how you use it. Many people are concerned they will be taken advantage of by giving their actual budget, however, in the end, you’ll likely end up spending more having to redo certain areas or have to live without something you could have otherwise had.
So you now have your construction project budget, a plan as to what you are doing and how it’s getting done, and a contractor that you trust and believe will do the best job for you. Now time to firm up this plan with your contractor! Next, you need to get the blueprints done so you and your contractor have a firm, clear understanding of what your project will look like when complete. We’ll touch on this in another post but I recommend using a lot of visuals as you go through this process and would include your contractor so they can offer insight on your plans. Make sure you, your contractor and your architect/designer work as a team to build your plans. Not everyone will agree with me, but I feel those involved in executing your project should be involved in the design. That gives everyone a better understanding of your intent and purpose. I feel this is critical for clear communication and a clear insight of your expectations of the project..
You are on to the next step of your project with your building team in place. Much more to discuss! Remember, our team is here to answer any questions you may have along the way. Good luck and talk soon!