Budgeting is a vital part of a construction project. It is concerned with estimating the costs of the different resources and elements of the project and coming up with an overall estimated cost. Proper budgeting is essential to ensure the success of the project. If you don’t have a budget or develop a poor one, you will likely have problems implementing and completing the project successfully.
Construction Budget Defined
A construction budget is the summary of all projected costs of a construction project. It features labor, materials, and equipment for a construction project. Overall, your homebuilding construction budget should provide a reasonable estimate of all expenditures in the project from beginning to completion.
How to Budget
There is no universal way to budget for your home building project. The process will vary depending on various factors, including your experience level or whether you employ professionals to do it for you. Either way, you need to know what budgeting means and entails.
First, you need to identify all potential costs of the project. You can rely on previous experience, brainstorming, and personal needs here. For example, the size of your home building will determine how much sand or cement you’ll need. List all costs without necessarily categorizing them in any way.
Second, after listing all potential project costs, categorize them into either hard or soft costs. All costs associated directly with the physical element of the construction will fall under the hard costs. Examples include materials, tools, and equipment. All other expenses that are not directly related to the physical element of the project will be under the soft costs, such as labor.
Finally, set a contingency budget to cater for unforeseen costs such as accidents or machine breakdowns. A reasonable contingency budget should be around 10 percent of the total budget. Therefore, calculate 10 percent of the total to find your contingency budget after summing up the hard and soft costs.