What to consider when first putting the numbers together
Building a budget for a construction project can seem like an overwhelming task. No matter if it’s a dream home or a new hotel, budgeting can quickly become a project in itself, one that drains you of enthusiasm and energy for your new endeavor. Such is the nature of the budgeting beast.
But before your task turns into a project rivaling the project itself, there are a few steps to help keep you and your build grounded, on time, and within bounds.
Know before you go
Before embarking on the budget journey, it’s a good idea to do some preliminary research on other projects of similar scope and size. At the very least, this will provide you with a good starting point, and often the framework for planning the build.
Location, location, location
It’s estimated that land eats up between 10% and 60% of project costs, and where that land is located can greatly swell this number. When considering land for your project, there’s a big difference between downtown Miami and downtown Rapid City. In addition to land value, it’s important to also consider the other costs attached to real estate, such as financing costs, taxes, materials, inspections, and realty expenditures.
Not only does the cost of square footage change with location, it also changes with its usage. The cost of space within a retail project vs. a residential project vs. a hotel project varies greatly. It’s important, then, to research similar projects in that sector and market in order to get a better idea of cost per square foot.
You’re going to need help
The bigger the project, the more complex the budgeting process becomes. As a result, its typically best to work with a knowledgeable team that can tie up all of the loose ends. If there is a disparate team of professionals or a full-service firm, any salaries or fees will also have to be considered in the overall cost of the project.
You can also turn to professionals, such as architects, estimators, and contractors. While some of these professionals do not actually produce budgets, they will be able to provide an estimate of costs for the individual components involved.
Speaking of professional help …
Of course, as you seek help from professionals, there will be fees – and these also need to be considered as part of your overall budget. Similarly, you will be contracting with additional professionals as your project moves into future phases. These costs are often referred to as “soft costs” for architectural, engineering, financing, and legal fees.
The other stuff
Depending on the scope of your project, you may also have to consider furniture, fixture, and equipment costs. Vendors can help supply this information, which is especially helpful when purchasing these items in bulk. Large-scale purchases often come with a discount to individual prices.
The rainy day fund
Inevitably, surprises will surface over the course of the project – so it’s imperative to have contingency funds figured into the budget. For example, if there is an added requirement requested by an inspector, coordination issues, or a hurricane delaying delivery of goods to the job site, you do not want to scramble for funds. That causes further delays, and delays cost more money. It’s better to plan ahead.
The budget is never finished
As a result of the construction process, the budget should be accurate, but it is never set in stone. Therefore, it’s important to revisit and review it at regular intervals to meet any of the changing needs and costs. The project may have to be tweaked in order to remain within the overall budget.
There’s always Plan B: The design-build advantage
If the whole process seems overwhelming, there’s always another option – to work with a design-build firm that has an in-house team that completes all phases of the project, from architecture and design to general contracting and subcontracting. Telesco Construction is one such firm, and we pride ourselves in working with clients to ensure their project stays within a realistic budget. We also provide our clients with detailed budgeting for all aspects of a project, at all phases – and our collaborative, multi-disciplinary approach ensures that any changes or unforeseen costs will be handled efficiently and economically.
If you would like to discuss your budget or your project, whether it’s a government building, an upscale residence, or a luxury hotel, please call us at 305.390.0250 or get in touch through our online form for a free consultation.