Budget blow out: Top things to look out for
When building a new home so many things have the potential to blow out your budget. Understanding the costs and being prepared is the key to staying on track.
Building a new home is simultaneously one of the most exciting and nerve-racking things you can do in life. One of the biggest perceived risks of building a new home is going over budget. Taking time to properly understand and plan for the risks involved is the first step towards making your build run on time and on budget. Below we’ve compiled a list of the top things to look out for that can potentially blow your budget.
1. Not engaging a custom home builder early in the process
One of the biggest causes of budget blow out that we see time and time again is not engaging a builder early on in the design process. A builder is often better equipped than an architect or designer to inform you on materials cost and project budget. They will be able to tell you wether your design is achievable within your allocated budget. A way to navigate this is to engage a custom builder from the outset. Either to design and construct your new home or in tandem with an architect and designer.
Ultimately a home builder or knock down rebuild specialist is in the business of building homes. It is in their best interest to see that your design proceeds to construction. They are going to do everything within their power to make your dream home achievable within your budget. The best home builders will listen to your needs and budget and from there create a realistic proposal for you. Be honest and upfront with your builder from the outset. Let them know exactly what you want and how much you can afford. This will make it easier for them prioritise and build within your allocated budget.
2. Ask the right questions
Do your research before selecting the builder to build your dream home. You want to choose a reputable and experienced builder who is a familiar with your local area and a specialist in their field. Before engaging a home builder review their portfolio and body of previous work. When you meet with them have a list of questions ready to go so you don’t forget anything. To help you with this Homes by Howe have compiled a list of ‘’19 Questions to ask your Builder’’.
Engage your builder in the design stage. Whilst most builders charge a fee for this, it is going to save you money in the long run. The best builders in Canberra will be able to advise you on the kind of home you can build within your budget and how to maximise it for your lifestyle.
3. Establish project scope and budget exclusions early on
When first discussing your dream home with your builder it is critical you are aware of what is and isn’t included in your builders quote. Some builders may have exclusions in the small print of their contracts. If you are not aware of this from the start it can end up costing your significantly further down the line. It is important to budget for these exclusions from the outset. Whilst a super low quote may look good on paper you want to check for exclusions and hidden costs that can blow your budget over time.
A building quote should include everything you and your builder have discussed and agreed upon. For example the only things not fixed in Homes by Howe’s all-inclusive quote is rock excavation, traffic control and underground water. If anything cannot be included in the initial quote there should be a detailed outline of how much it may cost you. It can be tempting to hurry the process and get started on constructing your dream home as quickly as possible. However you won’t regret taking that bit of extra time to analyse your quote and establish the scope of services provided. Your budget will thank you in the long run.
4. Not budgeting for prime cost and provisional sum allowance
A prime cost is an item that has not been selected or whose value is unknown at the time of contract signing. A provisional sum is the estimate of the cost to carry out a particular work. Initially when signing your building contract you may not be able to choose every item in your new home. Prime cost and provisional sum allowance allow you to make these choices whilst construction is ongoing. Before signing your contract make sure a reasonable amount is included for these items to avoid budget blow out further down the track.
5. Budget for the unexpected
Sometimes the unexpected happens. As with everything, there are sometimes things out of you and your builder’s control. Even after all the preliminary tests unexpected things may still come up once your home builder breaks earth on your block. This can range from soil and drainage issues to rocks found in the excavation process that can be costly to remove. If you are embarking on a knock down rebuild things may come up in the demolition process. Build a buffer for extraneous circumstances into your budget; this will save you money in the long run.
Variations are changes made to the scope of your project after the building contract has been signed. Once you get started on the construction of your home and the skeleton starts taking shape it can be tempting to throw in additions during the process. The best builders in Canberra will always try to accommodate your wishes. However any changes made or additions to the design once the build is already underway can end up costing quite a bit. To avoid this take time at the start to plan and properly specify the project.
7. Budget blowout and extensions of time
Sometimes a build may take longer than initially hoped. This can be due to a number of extenuating factors such as bad weather, material delays, unexpected finds or even a global pandemic. An extension of time in a building contract is a delay that could not have reasonably been foreseen at the time of signing. Making changes to your project scope, as the build is ongoing can also cause delays. Delays can result in increases to other costs associated with the building process. These can include alternate living expenses and interest mounting on loans. Whilst the weather and unforseen circumstances are predominantly out of your control, to avoid budget blowout you want to factor in a 15-20% buffer. This is going to save you budget stress in the future.
8. Opting for expensive fittings and finishes
One of the most common causes we see for budget blowouts is opting for top-of-the-range fittings and inclusions. Take time during the selection process to make sure you are happy with every detail of your new home. Making design choices at the beginning of your project can save you from making rushed decisions later on. Talk to your builder as the best home builders will be able to suggest ways to better utilise your budget. For instance only tiling three quarters of the way up the wall or spending more on fittings that people are more likely to notice. The best way to save money and your budget is to make a plan at the start and stick to it.
Whilst you can’t plan for every conceivable circumstance, making choices early, being realistic about your budget and planning ahead can significantly reduce the risk of budget blowout. If you’re ready to start work on your new home get in contact with the best builders in Canberra, Homes by Howe, to start your stress-free build process today!
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