The Laughing Crow is a moniker whose voice I borrow: a rascal who is abrasive but honest, curious, and outgoing.
When you look at those home-building programs, you see that almost every one of them runs out of budget. The typical strategy used by the family that are prospective home builders is to have more money than budgeted, essentially throwing more money at the problem. While a simple and valid strategy, there are numerous ways in which you can keep control of your expenses during a build.
In this article I will illustrate five such simple techniques that are commonly used and very effective at controlling your home building budget from the costs on up.
An exciting way of keeping the budget under control while still having all of the happy thoughts of the little details you will put on is by using a technique known as "Greenbooking".
When you build a house, you have a long list of things that need to be bought, built and decided. Some of those decisions need to be set very early (like what kind of foundation you want, or the overall style of the house) while others can be delayed until further down the line.
Normally that's a bad strategy, because almost always that would constitute a change order, and that means paying extra to the contractors.
With greenbooking, however, you make decisions based on the state of the budget beforehand. You should have several check-ins anyway, and at each meeting you should get an update on the budget. When certain decisions need to be made, if you are below a certain threshold, it means adding in certain items or features as a reward to yourself for staying on point.
These should be nonstructural items, and the decision to add them or not shouldn't affect the overall build. A good example are wooden window shutters. They are affixed to the outside of the house, so you could hold off on ordering them and placing them until well into the build. If your numbers are green, you get to order them and have them added to the house.
An outside deck, deciding to have a garage rather than a carport, or deciding on landscaping the garden better are all good examples of things that can be greenbooked. You won't miss them if you did not add them, but they will really make you feel good and add value to the house.
If you don't make the cut, it means not adding them. But that's not a tragedy, because as non-structural items, these could be added on at any later time as a separate improvement project.
The opposite of Greenbooking, this strategy relies around deciding on a number of features that could easily be removed from the build without affecting the outcome. Rather than downgrading the quality, these are things that you simply don't need to do.
An upper floor may need to be built for the structure to be complete, but that doesn't mean it needs flooring or wallpaper. You might want a cellar, and as that is a foundation it means you can't really skip it, but you can decide not to do any work to it once it's waterproof and the walls have their sealant on. It might mean not putting in a set of stairs to the attic, but a removable ladder instead. A deck around the house could simply be removed from the plan entirely.
The key here is that if a checkpoint reveals that you are over budget, these items are sacrificed to make the budget back in line. While they are on the budget, they provide a buffer which will prevent you from spending a lot extra, but if unforeseen circumstances force you to spend more money, they can be removed to provide breathing room.
As with Greenbooking, these must be nonstructural items. You don't want to skip spending on critical items that would require massive renovations or expenses later on. Structural engineering, plumbing and electricity are a few examples of items that should be firmly entrenched in the budget.
Sometimes you can save a lot of money by being willing to do more yourself. This means investing your own time directly, rather than your money. This strategy might end up costing you more money, but by spreading it out further it means you can cover future changes with future time and income. This strategy is different from greybooking in that you can't take these things away, really, but you can decide to play with the quality to focus your money where it has greatest value.
What is core to this strategy is deciding which of the features of the house must be of high quality and spent the most money on. At the very least this will be the foundation, framing and roof structure. But you could decide to go for a very cheap roof covering that is serviceable but will need replacing in five years. You might decide to go with wooden windows rather than aluminum, which means a lower cost in most cases, but you need to perform more maintenance.
By spending more on one aspect, it means it will be of better quality or lower maintenance. Then, you spend less on other things which are not directly critical to the function of the house, knowing that they will need more work or a replacement sooner down the line.
Not all houses can be made into a dream house right from the get-go. Your budget may simply not allow for it. In this case you can decide to adopt a "growth strategy", where you create a rather minimal but complete living space for yourself, and either add more to the structure as is demanded as time progresses, or add additional buildings to the lot for specific functions.
A good example of this is a garage, which could be made part of the house from the start, but a carport or freestanding garage could easily be added later. If your budget needs stretching, you might be able to delay building that garage into the house, and instead build a garage later on and connect it to the house with a covered patio.
The core of this strategy relies on deciding what constitutes a "core living experience" for you and making sure that your main, finished building has all of this.
For most people, this will be living room, bedroom, kitchen, and bathroom. But if you work from home it might include an office, or a workroom if you work with your hands.
Things you don't really need are relegated to the side; a second bedroom, separate pantry or washroom could be added later on by extending the house, or by adding separate buildings to cover those functions.
Minimizing Change Orders
When you change something in the design of the house, this costs time and money. Changes to structural aspects need to be recalculated, materials need to be changed, maybe some work already done has to be reworked.
But don't underestimate the cascading effects of a change order. When you change the material of the kitchen workspace, you might discover that the backsplash no longer matches, or the kitchen cabinets. Now you need to change those too!
When this happens, you can get caught in a spiral of changes and those add up very fast. Before you know it, you are over budget with the house not even standing up.
Countering this effect requires foresight and discipline. Before you break ground, you must have a picture in your mind of every aspect of your house, so that any changes will also give you an idea of what would change along with them. You might decide to accept that then, with full knowledge of the results, or you may decide to wait with the changes, and instead chalk it up as a future improvement project.
To do this, it makes sense to make a catalog for yourself of every material, wallpaper, furnishing and flooring you intend to use in your house, sorted by their respective rooms. Add the pricing for this if you know it, and also at least one alternate brand that is cheaper or has a different but compatible look, in case that the first choice becomes unavailable.
This allows you to keep a running overview of what your place should look like, and if something is about to change, you can compare it with samples and pictures of the materials related to it to "re-adjust" your mental image. If it doesn't seem right for the price, that means looking for alternatives.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2019 Lolcrow