How to Establish a Construction Budget for Your Home Project, both renovation and new construction
When people reach out to our custom home design company, Amy Dutton Home, one of the first questions that we ask is what their construction budget is. While Amy’s fees are only loosely related to the cost of construction, she asks the question to make sure that the scope of the project and size of the project aligns with her workload. While you may not be going down the custom construction route, it’s still important to understand all of the different factors that go into establishing your budget.
Maximum Budget. Everyone has a budget and it’s usually answered in: what are you willing and able to spend on this project? Construction always costs more than imaginable so it’s best to know going into a project that it will absolutely cost more than you ever dreamed, and you will likely hit that max. budget.
Square Footage Price. Most people do have a sense of budget, but it might not necessarily align with the scope of work of their home design project. For example, in the Seacoast of New Hampshire and Maine where we primarily work, your budget might be $500k for a custom 2,800 sf + two-car garage home. While this might sound reasonable, unfortunately, this is more along the lines of a low-end builder home with very low-end building and finish materials. We are currently working with a $300/ sf price so in this scenario, the cost of construction would be around $840k. Now, these numbers do not include the cost of the land or site work.
Scope of Work. When defining your scope of work it is best to be extremely clear about square footage and what your expectations will be for the home. For example, a lot of people would like the following on the first floor: kitchen, dining, and living to be an open concept, primary suite, office, staircase, and mudroom. That’s hard to get in under 1500 sf and the second floor then will most likely be smaller with 2-3 bedrooms and a bathroom or two. If this is your goal, the budget needs to reasonably respond to that.
Expectations. Always set reasonable expectations when undertaking a construction project. Staying as flexible as humanly possible is always going to help your state of mind
Location. Geographic location always matters. If the cost of living is high in your area, this is also where the contractors live and the cost of not only land but also construction materials and labor, will reflect that price. During the pandemic is when we actively saw a state of reference from where people were moving. People from California took one look at property in Maine and thought it was on “sale,” but locals are struggling to find an affordable home. Long and short, expect the housing prices to basically stay consistent with your local geographic area.
Materials. The finish building materials are a significant driving factor for the price of your construction. For example, just appliances alone can range from $15k to $50k which are real numbers that translate into your final number. Some things you will splurge on and some things you can be more conservative with but make your selections wisely and educated.
Start with Priorities. Set your priorities for your project so that you make sure you are absolutely getting the 1-3 main things that you want then be ready to negotiate and be flexible on other items. If a farmer’s porch was your dream, make absolutely sure that your house plans have a farmer’s porch otherwise, there will always be a sense of regret, and no one wants that for you!
How can Abrigo help? For homeowners, by purchasing plans online versus the traditional custom architectural route, you’re simply paying for the plans themselves versus the back-and-forth time with the architect. Based on what we see with our custom clients, this is cutting at least 75% of architectural costs! Having a clearly defined construction drawing set and material and finish collection plan will give your builder a very confined scope to start pricing out, so you’ll have clear budget expectations from the beginning.