With housing inventory still lagging, sellers continue to have the upper hand.
What is a construction budget?
The construction budget is the amount of money allotted for a specific building or remodeling project. Construction budgets are used to anticipate all costs and expenses of the building process. A budget is usually tracked through a form or spreadsheet.
Although most construction budgets may appear strict, planners often leave room for emergencies or unexpected building costs that arise during the project.
To be sure, the best starting point for these costs is the project plans or blueprints, which address possible materials that will be used throughout construction.
Both residential and commercial construction budgets include site prep costs. Site preparation, as listed in the early stages of budget planning, refers to costs such as demolition, equipment rental, and permit and inspection costs.
When it comes to the project itself, the costs cover areas such as safety for all on-site workers as well as transportation to and from the site.
There may be additional budgeting issues to address concerning commercial projects. Those issues involve architectural and subcontractor costs that can boost the final total.
Construction budget example
Janet and Bob are planning to remodel their kitchen and put together a construction budget that includes:
- Permits and design costs — This area covers any code regulated permits as well as architectural blueprints of the design.
- Demolition — Demolition includes the removal of cabinets and fixtures that are not needed in the area being remodeled.
- Waste disposal — Before construction, a waste disposal plan must be set. Companies that deal with waste removal offer several options.
- Portable restrooms — Workers need bathroom facilities, and portable units serve the purpose. They are available for long-term and short-term rental.
- Materials — Everything from granite countertops to nails are covered in this category.
- New appliance installation — New appliances need to be professionally installed. Delivery also may be included in this expense.
- Water and sewer lines — When dealing with a kitchen, plumbers may be needed to handle line installation and possible removal of old lines.
Once Janet and Bob outlined what was needed, they did research on estimated costs to reach their budget total. That way, they could determine if they can afford the construction project.