The name of the game is to be prepared. You can budget as much your heart desires but you are NEVER going to think of everything or get everything perfectly right. With that said, challenge yourself to get as close as you can, prepare for the worst and get a little more accurate every time. I make it a game to see how close I can get and recently I have made 3% my benchmark. If I am 3% off the mark from my original estimate based on the ORIGINAL scope of work then I am pumped.
Why do I say original scope of work? Because changes happen. Decisions have to be made that are going to change the budget. Do we go for the $4000 professional range in the kitchen or stick with the original plan to spend $1200 on the standard range?
I have to say the thing I feel everyone neglects is taking time to really nail down a true budget. It takes a TON of time and there are always items in the budget that are still “unknowns” so it can be nerve racking. Are we sure there is no termite damage? Is that septic going to be a standard gravity system or do I need to pay for a chamber system? (difference of about $25,000!)
The point is you have to be flexible and more importantly you have to set the budget at the beginning to give yourself enough margin to go either way. If the market gets soft you will be fine because you gave yourself enough cushion and didn’t go nuts on finishes. If the market gets hot you will now have the funds in your budget to pay for some of those upgrades and take a calculated risk with a higher price point.
The market may change - Real estate value is a constant moving target. The way I approach it is to start the project with a reasonable finish and a realistic level of potential changes. This way if the market is good and you want to push the envelope on price you can make some more expensive decisions on finishes or maybe even layout of the home. Maybe you end up reframing the roof instead of working within the current frame in order to get that higher dollar. Who knows?!
Don’t skimp on budgeting. Take the time. Do it over several days and keep walking away to come back to it. I find when I do that I always find things I missed or think to myself, “What was I thinking with that number???” Get estimates if you can so that you are not guessing and don’t be afraid to ask around. Guys in our industry love talking about their businesses and most are happy to lend a hand figuring out some costs if you are not in direct competition with them. They may even share some insight on sub contractors for you to check out.
A continuing education teacher we sat with recently nailed it. He lives by this quote… “Control The Process Or Accept The Outcome” - Shawn McCadden. Budgets get blown on jobs that people don’t spend the time to prepare a proper budget. In my mind it's possible to be on budget, you just need to control the process or accept the outcome…