How to Tell Your Builder He is Spending Too Much Money

Posted by Bob Wiedenmann

You set a budget, hired a highly recommended builder, and hoped for the best. Except suddenly, the costs seem to be piling up disproportionately, and you are concerned that you might need to have a talk to your builder about budgets and cash flow.

Before you do, you need to take the time to establish whether he is really overspending, or whether it is just the peaks and troughs that come with every build. Let’s take a closer look at when spending is likely to increase dramatically, and what you can do if you are still concerned.

Project Startup

You may be wondering why a big chunk of your budget has been spent before any real construction has even started. Don’t worry. It is perfectly normal for mobilization, site establishment, initial earthworks, and clearing to cost around 10% of the total construction budget. If your site is particularly tricky or inaccessible, this could be even higher. Even the best builders have higher costs at the beginning of a build.

Purchasing Structural Materials

The next big spending round on your build will be when the materials for the structure, framing, insulation, and related materials are purchased. Once they are on site though, you will see the work take off and the structure will go up quickly. This part of the build could cost 15 to 20% of the remaining budget for your build, depending how complex the building is.

Cladding, Windows, and Doors

The next big wave of spending comes when cladding, windows, doors, and exterior finishes arrive. Expect another 15% of the remaining budget (give or take) to be spent at this point in the build.

Plumbing, Electrical and Finishing

Once the structure of the building is up, work will begin on plumbing, electrical, and interior finishing. This will take up most of the remaining budget, but the individual amounts will probably not be too dramatic, unless you are using slate imported from Spain or Italian marble flooring!

Landscaping and Final Touches

Landscaping, decks, and fences are the last things that will happen on your build, since your builder will need access to the work site with vehicles and machines throughout the build. This part of the process will actually cost much less than the rest of the build.

Construction Happens in Waves

Even though you may think that there are big expenses from time to time on a build, most construction projects happen in waves, and it is completely normal to have big expenses followed by more moderate periods of spending. If this is how your project has been going, then you might not have to have that conversation after all.

When Should You Worry?

Construction spending should always make sense in relation to productivity. If your builder has already spent a large proportion of the budget before work has even begun, then you might have cause for concern. On the other hand, he may have opted to purchase most of the materials for the project up front, in which case, the expense is still reasonable.

If you do feel that there is excessive spending happening on your project, document why you feel this way, then set up a meeting with your homebuilder, and discuss it with them. If you are working with a reputable company, and you approach them with reasonable questions, they will be happy to provide answers.

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Tags: Scope Creep, Finance & Budgeting


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