PRELIMINARY BUDGETING

In This Article
Design to Your Budget
Cost-Cutting Strategies
Build for Expansion
Scale Back the Design                 View all ESTIMATING articles

Your lender, your bank account, and, if you’re lucky, a rich uncle can tell you how much you can spend on a building project. How much you can build for X dollars sounds like a simple enough question, but rarely is.

DESIGN TO YOUR BUDGET
It is important to start with a realistic budget, whether you are designing the project yourself or working with a professional designer. I recommend that you start with your own rough estimate for the size and type of project you have in mind  before you start a detailed design. It’s best to use multiple approaches for ballpark estimates. Throw them all in a pot, stir, and you’ll come up with a good “guesstimate.”  This number is a good starting place for establishing what you can build.

If you are working with a professional designer, share your budget numbers with the designer or architect so they can start off working in the realm of the possible. Find a designer familiar with residential construction costs, and make it clear that you cannot exceed X dollars in total project costs. With clear budget guidelines, you will reduce your chances of getting a design that is so over budget that it will never get built. Unfortunately, this is the fate of many ambitious designs.

Even with clear budget guidelines, many architecturally designed projects come in over budget, sometimes by as much as 50%, when put out to bid. In my experience, many architects are overly optimistic when it comes to estimating. Few have the hands-on construction experience and estimating skills of a contractor. Also, by training and temperament, they are more motivated to create the perfect space in form and function, than to make it affordable. A design-build contractor may be a better choice for designing withing a specific budget.

COST-CUTTING STRATEGIES
If your find that your preliminary plans are significantly over budget, you’ll need to cut costs (or find more money). You can

  • Scale back the size of your project.
  • Choose less expensive windows, doors, cabinets, flooring, siding, and other finishes.
  • Cut out luxury items such as jetted tubs or granite counters.
  • Hold off on the deck, porch, garage, or other components that can be added later.
  • Leave parts of the building such as basements and attics ready to finish later.
  • Create an expandable design that is easy to add to later.
  • Depending on your skills and time, do some of the finish work yourself such as interior trim, painting, and landscaping.

BUILD FOR EXPANSION
There are easy, low-cost steps you can take during design and construction that will make it easy to add on later or to finish additional space already built – for example, run rough wiring and plumbing into an unfinished attic or basement for completing later. Or frame the openings for future doors into an addition, porch, or garage, and bury the pipe and wire runs you’ll need later (and remember to keep a set of plans that show where the openings are).

SCALE BACK THE DESIGN
If, despite your best efforts, you end up with a completed design that is drastically over budget, you may end up paying for a design that never gets built. Hopefully, you can salvage it. Sometimes, the design is quickly, and perhaps crudely, scaled back — often by the contractor who informs you that the project cannot be built within your budget. Assuming the builder has a decent eye for design, the project may come out OK, but it would have made a lot more sense to design something affordable in the first place – or to just pay the architect for the conceptual or  schematic design, and let you and the builder work out the details.

See also:  What’s Your Budget?          Why Jobs Come in Over Budget

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Comments

  1. Brenda Intini says:

    Cost to Build Up vs. Build Out

    I am adding an inlaw suite. Is it more cost efficient to add a second story to my bungalow, or to build new on beside?

    • buildingadvisor says:

      There are many factors to consider and each project is unique, but in general it is cheaper to add a ground-floor addition than to build up. Exceptions would be:

      • if you have a roof that is high enough and steep enough to add living space with one or more dormers
      • if you can add space over the garage

      Building up usually requires more extensive changes to the existing interior to make room for a new stairway. Finding space for a stairway in your existing floor plan can also be a challenge. Building up vs. out will require more disruption to the existing house for plumbing and heating, and may require structural changes to the framing and foundation to handle the greater load. In addition, you will need to remove the roof at some point, causing disruptions to your home (you may need to move out for a while) and exposing your house to potential damage.

      Building out is usually easier from a design standpoint as you are starting with new space and do not need to fit in a stairway, which takes a lot more space than most people realize. When building out, you can often use an existing doorway or convert a window to a door with minimal disruption. Foundations for additions are usually pretty straightforward, using a slab or crawlspace depending on local conditions.

      One downside of building out is that you will lose yard space, and may also lose some windows reducing ventilation and daylighting. You may run into issues with zoning regulations if you need to build closer to the property line than allowed by “setback” rules. Zoning also limits the “lot coverage,” that is, how much of your lot is taken up by structures and pavement.

      Zoning also imposes height restrictions, but adding a second story to a bungalow should not be a problem. In any case, you should check with your local zoning official about local regulations before getting to far with your planning.

      In new construction, however, the opposite is true: it’s generally cheaper to add space with a second floor than to spread out with a single-story home.

      Best of luck with your expansion plans!

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