Developing realistic build cost estimates and controlling the actual costs are essential for the success of your project and for keeping your budget intact. Two sets of build costs are advisable for your project. The first is a rough build cost calculation which can be used at the beginning of your project to determine what sort of house you can build within your budget, how much you can afford to spend on a plot of land, how much you need to borrow and indeed whether it is feasible to go ahead at all!

As your house design gets underway, an accurate set of costs should be produced. There is plenty of estimating software and books available to assist with this but it is possible to do a good job with a spreadsheet and a bit of time and effort. In addition to budget estimates for materials, labour and equipment it is important to take account of every other cost item that will arise during your build. These could include purchase costs, mortgage costs, insurance and structural warranty costs, temporary accommodation and any applicable taxes. Don’t forget to add a healthy contingency (10-15%) for those inevitable unforeseen problems.

When the design package is completed and approved and the construction phase commences, your comprehensive set of build costs become a useful project management tool for controlling cash flow, payments and your entire budget. As the build develops and payments are made you can input actual costs and compare them to the corresponding budget costs providing an early warning system for you project finances. If costs are overrunning, decisions can be taken to make savings later in the project or to utilise the contingency. If the project is under budget, you could start considering those extra luxury finishes!

The build route you choose for your self build home will have a bearing on your involvement in the financial management but however hands on you decide to get or whatever method you use to assemble your cost estimates, keeping a tight rein on the finances of your build is essential. There is a reason you set a budget in the first place.

Tags: Build Develops, Build Home, Finances

This entry was posted on August 18, 2010 at 1:11 am and is filed under Homeowner Associations. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.