Pointers to success with building projects; Sticking to budget on a new build
Saturday, January 09th, 2016
The first piece of advice on sticking to budget on a new build would be to make sure that your initial budget is as realistic and comprehensive as possible.
Make sure that not only do you properly account for the physical build costs, but that you allow for all of the hidden expenses. The legal fees, site surveys and stamp duty not to mention local authority charges, insurance, site accommodation and security. These ALL have to be paid for from somewhere so you MUST include them in your budget in addition to the actual construction costs. Of course you need to make sure you’re covered for those unexpected costs, particularly foundations and groundworks, for example the additional cost of excavating foundations and removing the spoil from site.
According to Mark Brinkley, author of The House Builders Bible only around 50% of your budget is actually construction costs with the other 50% split between design fees, plot costs, finance costs and preliminaries.
Square foot or m2 figures
Secondly don’t base your budget on basic square footage prices. Cost per square foot or metre rates can be misleading because they may not take account of problem sites, architectural details that are inherently expensive to build or your quality of specification. (If you do go down this route you need to carefully consider whether the “magic” square foot/metre cost takes into account garaging, external works, NHBC fees and so on. Also make sure that you properly understand what the actual square footage/meterage of your build is. Does the square footage/meterage rule of thumb you use take into account the gross area of the house or the internal dimensions? This is crucial as it can make 10 to 11 % difference in your guestimate).
While on the subject of setting your budget, make sure that you specify your budgetary constraints to your designer before they begin so that the scheme they develop really does match your financial resources. In my experience many architects don’t consider the cost implications of their decisions. They may specify “plain handmade clay tiles” or other expensive details without a thought to the cost. (Plain hand made clay tiles could virtually treble the cost of your roof!)
Once you have your plans, you need to produce a detailed estimate of your costs, phase by phase, so that you can compare your estimated costs versus actual costs and tailor your spending accordingly once your build is underway. You could employ a quantity surveyor to do this or use a software package, such as HBXL’s EstimatorXpress – the beauty of this package is the all-inclusive cost of the software. Or there’s the HBXL Estimating Service which you can call upon as and when you need a costing, take off etc.
Preparing to build
The next part of the jigsaw puzzle is to have developed a build programme with realistic targets that you can work to. This is probably one of the most difficult aspects of the project.
Finding reliable sub-contractors (assuming you need them) has become a bit of a nightmare even for established builders. The old adage that all the good tradesmen are already busy has never been truer. What this means in programme terms is that you may have to plan months ahead to even secure their skills, and then, because of the somewhat variable nature of their other work, it is perfectly possibly that they may not be able to get to you at the agreed time. This inevitably leads to delays which will have knock on effects to other trades you employ. You therefore need to build in sufficient contingency into your programme or be prepared to bribe tradesmen with bonuses to meet your deadlines.
Armed with your programme you next need to create a materials schedule so you can timetable and co-ordinate what materials are required and when. It is not uncommon for some items to be on 8 –12 week lead times… so you need to plan well ahead for these and to keep chasing the suppliers to ensure your order is being progressed. You’ll know that one phone call is never enough to a merchant – you need to be on the case at all times!
As mentioned labour is an expensive resource to have on site so it is crucial to remain one step ahead by checking your local supplier’s delivery. There is no point whatsoever in saving a few quid on materials if they arrive late and leave your programme in tatters…and you with a fat labour bill because your tradesmen could not get on with the job!
On this theme, there are many on-site decisions that need to be made before your team can get on. Have a really good look at the drawings with the various trades… send them advance copies asking them to comment on any problem areas. It’s always worth collaborating with the subbies as they can sometimes spot issues before they become one – catch a problem early enough will save on delays later. Problems “presolved” is the way to go!
It could be anything from brickies talking about brick sizes and problems with coursing, corbel details and “what sand or mortar are you proposing to use”? Plumbers questioning you about boiler positions and motorised valves, trimming round soil stacks, shower tray levels and the position of the toilets. Roofers getting excited about flashings around chimneys and so on. As the project develops electricians will want to know about the positioning of consumer units, sockets and light switches. This means you need to have planned ahead and designed your kitchen and bathroom layout as well as a layout for the lounge and bedrooms (such as where will the TV or telephone aerial will be positioned). All of these are real issues that will cost time and money, if you don’t sort them out well ahead. If you have a buyer for the property you can revert to them of course – but it still needs sorting.
Having a realistic timetable for the job is also useful when it comes to estimating the cost of finance and other onsite costs. You will be surprised how quickly finance costs can eat into your budget (running into thousands of pounds) if your project extends beyond your completion date not to mention the additional costs of renting onsite toilets, containers, mixers and forklifts.
Buying your materials
In order to obtain competitive prices for your materials firstly prepare a comprehensive schedule of all materials required right down to nails, screws, mastic and paint. Then select two or three merchants to price for the entire project- all merchants are more likely to give good discounts to reward you for loyalty.
Once materials start to be delivered, it is very important to check your receipts and invoices. This will a) allow you to spot any discrepancies between what you thought you ordered and what was delivered, and b) always check for damage – once signed for it’s often too late to make a valid claim for a replacement.
You should then create a ledger or spreadsheet so that you can monitor your actual costs versus your budget for both labour and material for the various phases of the Job.
Stick to your spec’
It may sound obvious but stick to your specification! Altering your spec’ can have a huge impact on your budget given that materials equates to something like 40% of your overall construction budget. You can easily spend between £500 and £1000 per 1000 on your bricks, £10 to £40 per m2 for roof tiles, and £5000 to £25000 (at least!) on your kitchens.
Avoid making changes to your plans
You should avoid making changes as far as is humanly possibly as changes nearly always have knock on consequences and costs. Sometimes however there are unexpected costs such as with groundworks and you just have to bite the bullet and pay for the extra costs… but if you have your schedule of rates at least you know where you are!
Hopefully this piece has given a few pointers and tips to help you control your budget. If some of your costs are creeping out of control, providing you are closely monitoring your budget, you will be able to take evasive action. Firstly you could consider deferring non-essential items such as landscaping and the garage or you could consider doing some of the work yourself to avoid the additional sub-contractor costs but this has to be weighed against your own valuable time, and what else you should be doing.
Alternatively you could get started straight away by downloading a free trial of EstimatorXpress here.