Think about your phone.
Imagine you run the manufacturing company that made the phone.
Imagine your company is going to create a new phone and sell millions of these phones to people all over the world. So before making millions of these phones, you’re probably going to want to make just one to be sure it works flawlessly.
This is called a prototype.
A prototype is created, tested, revised, tested again, etc until it’s perfected enough to produce en masse. In every manufacturing industry, this is how things are done.
Construction is the only manufacturing industry where there is no prototyping or testing. We just build. Given the size and the fact that every build is unique, there is no prototyping.
Every build is a prototype.
Even if the design is the same as a previous project, the site and conditions are different.
So what? What does this have to do with you and your budget?
Because every construction project is different, some degree of uncertainty necessarily exists. This uncertainty translates into risk. And this risk costs money.
Who has to pay this risk? You, the owner.
For example, say you plan to dig for a basement. How can this cost be estimated exactly? What if you hit rock? Does the rock break up easily or will it require a lot of blasting? Or what if you find an old oil tank when excavating? Who pays to remove it?
Or what about a reno? Do materials contain asbestos? If they do, how does that change the cost of demolition? Or what if part of the structure is rotten or infested?
Under most contract structures, these costs are the responsibility of the owner.
If you don’t plan and manage your contingency appropriately, you will go over budget. Few designers and builders coach homeowners through this and it leads to a lot of stress.
The best strategy is to plan a large contingency into your budget and instead of using it only for “risks” you can also use it for “Wishlist” items. So as your project progresses and you move past high risk activities (like demolition and excavation) you can start to use remaining contingency not for risks but things like an upgraded fridge, those fancy countertops you were hoping for, maybe a hot tub, or perhaps you have enough left to create a really magical landscape.
Most people go to designers with a list of “Must-haves” and “Wants” and incorporate as many of these into the design without a Cost Plan and without a Wishlist/Contingency. Then unknowns happen, they go over budget, and get stressed out.
YourBuildCoach.com wants to help you avoid this pitfall.
For a new build, a contingency reserve should be at least 5-10% of construction costs.
For a renovation, your contingency reserve should be at least 10-20% of construction costs.
YourBuildCoach.com calculates this for you and includes it in your personalized Cost Plan. It also coaches you how and when to use it judiciously throughout the project to avoid stress and get what you want.
Activate your free account now to get your Cost Plan and run your project like a pro.