For owners who are custom-building a house, a new home designed exactly to their specifications is a prospect filled with possibilities. But while wish lists can be limitless, most budgets aren’t. That’s why it’s crucial to put some reasonable parameters around what you want to spend early on in the process.

You’ve already had a conversation with your architect about your space needs. You’ve participated in development of a program and have an estimated size for your new home. Now, it’s time to zero in on a budget.

But maybe you’ve never done this before. Where to start? What line items will demand the most from your budget? And how can an architect help you contain and track those costs?

Crafting a budget isn't just about crunching numbers; it's about aligning your vision with financial reality. Read on for my advice on setting a sensible home design and construction budget that captures all your needs and most of your wants without breaking the bank.

1. Consider what spaces, finishes, and materials are important to you

   
   

   While your actual budget will have a lot to do with your means, you can start to get an idea of actual costs by thinking through the spaces, finishes, and materials that are important to you.

   
   

   Exterior materials and high-quality interior finishes are items that tend to have a significant impact on budgets. So, for example, if you are set on having an all-brick or all-stone house, this is something to earmark as you start to document the highest-ticket items for your project.

   
   

   Space types that cost the most? Kitchens and bathrooms, which come with higher costs related to electrical, plumbing, appliances, and specialized fixtures and fittings.

   
   

   Finally, as the size of your house increases, raw construction and labor costs can also account for a large part of the budget.

   
   

   These are the general high-impact budget line items to keep in mind. But your architect can help give you a clearer picture of actual costs, drawn from their own experience and also through partnering with the right resources.

   
   

   For my clients, I will often work with a local GC after MEP and schematic design are finished to obtain a budget up to drywall, exclusive of all interior finishes. I will share this number with the client and that helps us start to isolate and focus on selection of interior finishes in light of remaining budget.

   
   

   By understanding which spaces, materials, and finishes matter most to you, you will be able to allocate dollars toward those key elements, while seeking cost-saving measure for other areas.

   
   

2. Set appropriate contingencies based on the phase of the project

   
   

   Whatever total number you have in mind as a budget for your new home, it’s a good rule of thumb to allow for a 20% contingency from the start. As the design evolves, you can adjust this contingency and move it to actual cost.

   
   

   When you’re ready to go into construction, you can reduce the contingency to 8 to 10% contingency when building a new home. But for a renovation project, it’s a good idea to set aside 12 to 15% for unexpected costs. Renovation projects come with more unknowns and therefore, allowing for some extra room in the budget is wise.  

   
   

   The fact is, no design or construction professional can foresee every possible challenge or market fluctuation. Minds also change as projects evolve. Allowing adequate room for contingencies will give you the cushion you need to pivot or absorb changes to the budget.

   
   

3. Work with an architect who can provide construction administration

   
   

   The general role of the architect, apart from design, is to help protect all parties and keep communication flowing – from the homeowner to the GC and relevant subcontractors. As part of this responsibility, it benefits all parties for the architect to provide construction administration (CA) services

   
   

   This means the architect is in charge of reviewing payout requests, managing change orders, and tracking deviations from the budget. With the architect serving as the conduit for change orders, this means that costs will be tracked properly and that changes will go through the proper approval channels. Otherwise, because GCs are generally eager to please the homeowner,  they may make recommend changes without considering the budget implications, potentially resulting in surprise charges.

   
   

   With the architect in place to maintain communication and document charge orders formally, this positions the homeowner to make more budget-informed decisions throughout the construction phase. Engaging your architect to provide CA as part of their basic scope of services is ultimately a time and money saver, guaranteeing better quality construction that adheres to the original design, as well as a closely managed budget.

Budgeting Wisely

Budgeting for your home design and construction project doesn’t have to be intimidating or stressful. By understanding what line items typically require the most funding, you can quickly get a handle on what your project may cost. Setting appropriate contingencies will prepare you for the unexpected. But most importantly, by working with a resourceful architect throughout the process – from inception through construction, you will have not only an advocate for the design, but also a valuable guardian for your budget.

Space, size, and budget are all critical components of a home design and construction process. But what about style, look, and feel? Homeowners often either have strong opinions or are eager for guidance. Stay tuned for our next post about adopting a cohesive design for your new home.

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Hire an architect who can provide construction administration services. This saves time and money, ensuring high quality construction that adheres to both the original design and your budget.