How much is your project going to cost?
Sometimes it’s a chicken or egg problem: How do you know you can get what you want for your budget? Is your budget enough? What should or shouldn’t be included in your budget?
Many homeowners will try to answer this with the chicken… they get something designed and then get it priced.
But there’s a better way… the egg solution – otherwise known as YOUR COST PLAN.
It includes EVERYTHING you are likely to encounter in your design-build project, grouped together into what are called Control Accounts which are groups of similar line items. A line item is a distinct cost required to complete the project. If you think of each Control Account as a “budget within your budget”, they can help you plan your project and to control costs. By grouping similar items into Control Accounts, you just have to ask: “Are we above or below the Cost Plan for this Control Account?”.
Your Control Accounts are:
- GENERAL REQUIREMENTS: design, engineering, permits, etc.
- WISH LIST / CONTINGENCY: contingency reserve for unknowns and upgrades
- SITE REQUIREMENTS: demolition, site supervision, etc.
- GROUNDWORK: excavation, foundation, landscaping, etc.
- FRAME: wall and floor material, trusses, labour, etc.
- ENVELOPE: roofing, insulation, windows, etc.
- UTILITIES: electrical, plumbing, security, etc.
- FINISHES: drywall, flooring, trim, etc.
- FIXTURES: lighting, appliances, window coverings, etc.
When designers and builders talk about cost it’s usually about the construction costs. But this is only part of the cost of your project (typically 65-80%). Builder’s estimates usually won’t include things like Design, Permits, or Course of Construction Insurance. These are known as soft costs – It’s up to the owner to plan and manage these costs. Estimates also often don’t include Landscaping and many Fixtures like Blinds, BBQs, etc that are very much part of completing your home.
And what about a contingency?
Any Cost Plan must include a contingency. Every homebuilding project is unique; everything is a prototype. Unknowns are unavoidable and a contingency is necessary if you are going to budget for the uncertainty and avoid the stress of overages.
But builder estimates won’t include a contingency because it would make them look more expensive and risky than other builders. So it’s up to you the owner to establish and strategically use your contingency reserve.
Read more here about how to use your Wish-list/Contingency to stay on budget.
Your Cost Plan is created before design and can help you plan a project that is realistically achievable and affordable. It’s important to remember that your Cost Plan is not an accurate estimate – but it doesn’t need to be. It just needs to provide a baseline, a comparison point.
Here’s how you use your Cost Plan with YourBuildCoach.com to run your project like a pro:
- Step 0: Activate your YBC account
- Step 1: Select the appropriate line items in the Cost Plan that will be part of your project and adjust numbers based on what is most important to you
- Step 2: Communicate your Cost Plan to designers to ensure they design to your budget
- Step 3: Compare builder estimates to your Cost Plan and use some of your Wishlist / Contingency for items which exceed your plan
- Step 4: Track each month how much has been spent against each Control Account
- Step 5: Ensure that contractual obligations for all Control Accounts are completed
Activate your account now and get started for free with your personalized Cost Plan.