We've all read the horror stories about custom homes being completed significantly above the original quote. Controlling costs is a common obstacle when it comes to custom home construction. Exceeding your budget and seeing your costs grow to a higher level than you expected can be emotionally and financially draining.
The traditional advice to put aside a contingency fund of ~10% of your budget can help to overcome cost-overruns. But ideally you can save that money and put it to better use elsewhere. We've used our extensive home construction experience to put together a list of several strategies that you can leverage to keep your building costs in check during construction.
Tip #1: Draw up a custom construction gameplan to avoid scheduling uncertainty.
This shouldn’t have to be said, but you would be surprised how many building projects break ground before critical decisions are mapped out and finalized. Whether you’re dealing with interior finishes, exterior design, or even timetables, you’ve got to have a plan in place before starting construction. With the lack of a clear path forward, including a work schedule, materials sourcing, and blueprints, you are likely to find yourself making hasty decisions that can cost you time and money-thus exceeding your budget.
Changes “on the fly” can waste significant amounts of time and money. Having a concrete plan to which you’re committed is perhaps the single largest factor contributing to your budget staying on track from the start. You want to have a clear understanding of what you want, and your end goal, before you think of taking any subsequent steps.
Tip #2: Avoid making change orders at all costs.
Some less than scrupulous general contractors will underbid on a project, only to turn around and upcharge you on any change orders. This is another reason why you want to take the time to really plan out your project beforehand. Change orders are going to be expensive either way, but if it’s a profit center for your general contractor it is going to cost you even more. This brings us to our next point:
There are a few ways that you can avoid change orders BEFORE the project is underway, including:
Ensuring your design documents are accurate:
Knowing is half the battle. Well-planned design documents should capture all aspects of the build. Before breaking ground, you want to investigate any site elements that may result in change orders. Try to minimize these where possible. Additionally, have a plan in place for if and when a change order might take place- it’ll save you time and money and will considerably reduce any change order-related anxiety.
Making sure that the bid scope matches what’s outlined in the construction contract documents:
A scope of work, also known as a statement of work, is a section within the building contract documents that describes any work that is to be performed over the course of a construction project. Ideally, you want to have a scope of work that sets clear expectations for both parties, including each party’s responsibilities as well as any technical details and milestones that are relevant to the completion of the job. Making sure that both the bid scope and construction contract documents are in alignment can prevent problems before they start, and as the old saying goes, an ounce of prevention is worth a pound of cure.
Tip #3: Hire the right team for the job.
Whether you’re talking about an electrician, interior designer, or general contractor, you need to hire a team that shares your vision. You should seek out professionals that understand and place value on your non-negotiables. Additionally, you want to make sure they’ll respect your budget constraints and do everything in their power to ensure the job gets done the right way, and on time.
You want to treat the hiring process like a job interview, and you’re the hiring manager. Don’t be afraid to ask questions if something is unclear. It’s important that you’re clear and upfront with your needs before you hire someone. Remember, you’ll be working intimately with many of these people for the length of the project- so a personal rapport is always nice to have.
The key to every successful build is to foster a strong working relationship with your general contractor.
Once you’ve found your perfect general contractor, you’ve got to take steps to build that relationship. You’re placing your faith in trust in someone that is shepherding what is likely the biggest single purchase in your life- so like we mentioned above, a personal rapport with them can work wonders. However, fostering that strong working relationship takes time and effort. Being too pushy or nitpicky can quickly cause that relationship to sour- so be realistic in your asks. Additionally, communication is key- so don’t be afraid to make your requests known, but try to put yourself in their shoes at the same time.
Tip #4: Build when there is seasonally low demand.
Like many other industries, the building sector operates in a cyclical manner. There are high points and low points during the year, largely influenced by the weather and building material seasonality. By avoiding the high season, you can secure better bids from subcontractors and arrange for better scheduling with less wasted time and cost. The latter point is especially relevant due to ongoing supply chain issues within the broader markets and particularly in the building sector. Typically, around October is the best time to break ground, but that is highly dependent on where you’re planning to build.
There are numerous reasons why you might want to build during the low season, including:
- Mild temperatures
- Lower building material costs
- Alignment with big life changes, like school
- Builders and other construction professionals will be less busy
- Permits may be faster due to reduced demand for government-related building services