Creating a Practical Financial Plan for Home Building Projects

Bishop Construction LLLC has partnered with Virteom to engage our customers and users about our construction processes and services. In our video series, Jacqui and Dan talk about some tips to keeping a realistic budget for residential construction projects. This video is all about helping you keep a realistic budget for your construction project. Watch or read the transcription below!

Today we’re going to talk about setting a realistic budget for your residential construction project. Whether it’s for your home maybe in an inside or outside whatever when you’re getting ready to figure out your budget or you’re getting your quotes, these tips will be very useful to you.

What should you consider when budgeting a residential construction project as a homeowner?

The Cost of the Contractor

The cost of a contractor is an important factor when trying to stay on budget for residential construction projects. Typically, when homeowners get the final quote from their contractor they’re nice, understanding, and after seeing the costs they decide to cut back on a few things. A lot of times customers will eliminate the extra bells and whistles to get the project into the dollar amount that they want. 

Since homeowners come in with an expectation on how much they want to spend on their residential construction project, contractors always seem to find that they cut back on the bells and whistles. Well, at least at first. As the project gets going these bells and whistles all get added back in, and usually add a little bit more to the project. In the end you’ll have a project that can quite easily jump 20 to 25 percent over the original cost.

The Unexpected in Residential Construction Projects

You can never predict what your contractor may find when starting your residential construction project. Once the project starts, your contractor may find you have a foundation, structural issues, or problems with your roof. 

These are things that you don’t know till you get started or till you unearth it. If you have a good contractor that’s really trying to do a nice project for you and keeps you abreast of all the situations you really run into you’re going to have a more expensive project and through no one’s fault in particular.

Now you’ve got a project that’s escalated from adding back in your bells and whistles you initially wanted and the unexpected. What you really want to do is take your time to construct a plan ahead of time and try to add in all those bells and whistles that you want and be a realistic in that sense. Sometimes you just have to downsize the entire project or put it off for a couple more years until you have adequate funds.

But if you know what you’re going into ahead of time you may be able to avoid that extension of the project if you’re able to you think about putting those bells and whistles up.

What are some things that may potentially get added to a residential construction project or that you may run into that would add to the cost of the project?

Residential Construction Project by Bishop LLCLet’s take a look at an example of one of the residential construction projects we’ve completed recently. This construction project was to put on an addition to a home. 

During this particular addition (pictured right) the customer decided that they wanted to add some stonework to the front of the house. As they were picking out siding, they started to use their imagination a little bit and they came up with a really good idea to dress the house up with stonework. The stonework continued on the interior, they spread some into the bathroom a little bit, added some trim features in the bedrooms and little knick knacks here and there. They even added some goodies into the garage.

What are some areas that get big price increases?

Two of the biggest price increases on this particular project came from the electrician and the HVAC company.

When the electrician came into the house he noticed that a lot of the wiring in the original house wasn’t up to code. They decided to hire him on the side once we got done. He did a lot of extra work in there too probably to the tune of another $8,000.

Then the HVAC people came in and told them their existing units needed replaced. They all needed replaced, and if the homeowners did it right then, the HVAC company could give them a deal. That was an extra $6,000 on top of those original numbers there. So that project, even though we were able to keep the cost down for them, by the time we added everything in that that we did or their contractors did, it was another 20 percent. As we said earlier, you there are many unknowns in residential construction projects, but when you work with a contractor that keeps open communication – you’re more likely to stay on track.

Start Your Residential Construction Project with Bishop LLC

If you’re looking for that right budget or you’re looking for the right advice upfront before you get a construction project started, give Dan Bishop at Bishop Construction LLC a call or contact us today.