4 Things to Consider When Planning a Project Budget

Design Project

If you’re dreaming up a home or business renovation, new build or other type of design project, all the excitement may have you eager to jump into action. But wait! Architecture and design projects are complex ventures, and complications can easily arise if you don’t start out with a well-thought plan. This includes estimating your entire project budget – something that must account for a whole host of factors, not just the cost of construction. 

In this post, we’ve given our expert advice on four main points you’ll need to consider in order to draft a realistic design and construction budget. Making accommodations for each of these elements will ensure that you aren’t blindsided by overlooked expenses. 

Project Inspiration and budget review

1. Architecture & Design Costs

The design phase of your project lays down the plans and ensures that everything is prepared for you to get the results you’re looking for. You can count on all of that work to come at a price, which will depend on the scope of your project and what’s needed.

So what will the design portion of your budget need to cover?

Pre-Design, Schematic Design & Design Development

Pre-design includes all research and discovery work done by your design team, as well as field verifications, as-built models, building code research, programming, and master planning. 

The schematic design phase entails space planning, design visioning, and even a preliminary budget estimate, based on early-stage conclusions. This will give you an initial idea of what your project’s total construction costs will be. 

At the design development phase, the plans for your project will start to be set in stone. This encompasses floor plan development, ironing out architectural and interior design details, material and fixture selection, and preparing a preliminary construction budget. 

Drafting of Architectural Drawings

Once your design concept is complete, your team will need to prepare drawings that building code officials and construction contractors can reference in order to approve and correctly build your project. 

Such drawings include those specifically required for permits, as well as building, schedules, and specifications.

Construction Administration

Your architecture and interior design team will need to participate in the construction process to ensure that the design questions are answered and the building is going according to plan. Their duties will include regular site walks, submittal reviews (for cabinet/millwork drawings, finish approvals, window/door packages, just to name a few), and responding to RFIs – these are “Requests For Information”, submitted when additional information is needed about one of the architectural drawings. 

Additionally, the team will coordinating with the general contractor and subcontractors to make sure that all the details come together perfectly. We’re there to be your eyes and ears to ensure that nothing is misinterpreted or overlooked from the construction documents. Consider your design team’s involvement during the construction process a form of insurance for all the hard work and planning up to this point, it is a crucial factor when maintaining the project budget.

Architectural and Interior Selections

Another of the design team’s duties is to ensure that every single material and architectural product chosen is perfectly aligned with your design goals. The fee associated with specifying architectural selections, such as finishes and plumbing fixtures, are included in your design costs, whereas the cost of the materials themselves are typically included in your construction costs. Likewise, if your project calls interior selections such as furniture and accessories, the process of specifying these items are included in the design costs, but the costs of the products themselves will be an additional investment to budget for.

Project Budget Graph

2. Construction Costs

Typically, when people consider their project budget, they only think of the constructions costs, when in fact this is only a portion of the overall project budget. Construction costs are generally billed directly through the general contractor.

Expect the total price of your construction costs to include:

  • Paying the general and sub contractors. Their charges will include time, labor, and profit markups. Should they need to rent or purchase any special equipment, they’ll also factor that into their price.
  • The cost of materials, and shipping materials to your work site. (Keep in mind that if any materials need to be returned, you’ll likely be charged a restocking fee.)
  • Other various costs, such as site preparation work, tools, debris removal, and even renting a portable toilet for the building crew to use on-site. 

Construction and Project Administration

3. Contingency for Unforeseen Costs

When it comes to building and renovations, you should always expect the unexpected. There’s bound to be a complication at some point, you just need to make sure that you’re financially prepared for it by building a contingency into your project budget.

Unforeseen costs can arise from the need to extend your construction timeline, as well as complications that are only discovered during demolition or building. The latter is especially common in renovation projects, where you’re often working with old foundations, frames, and other aged structural components. 

Material and labor costs may also jump unexpectedly between the time you get the first estimate, to the time you get the final bids. These changes typically happen when these parties get new information that requires broadening the scope. 

On that note, changes to the project’s details and scope — also known as change orders– are some of the most common causes of projects going over budget. These are owner-driven changes made during the construction process. You may have decided that you want that marble countertop after all, or that you in fact need in-floor heat in the bathroom. Whatever the change, it will likely add to your project’s costs. 

So with all of that in mind, how can you decide on what’s a reasonable contingency budget? After heading countless construction projects, we’ve determined that it’s best to set aside a minimum of 10% of your project’s construction budget for any potential surprises. 

Site Plans

4. Additional Project Costs

Beyond construction, design, and even surprise costs, there are a great deal of other potential expenses you’ll need to consider when drafting your project budget. Let’s go over the ones that come up most often. 

Permit Fees

While your design team or general contractor will typically submit the permit drawings and applications, the permit fees themselves are not included in either the design or construction budgets. 

Your permit fees will be based on a particular percentage of your construction costs. If you want to get a quick estimate of your project’s permit fees, you can use the Fee Calculator provided by the Minnesota Department of Labor and Industry. 

Site Survey

You will likely need a site survey of your property in the pre-design phase and for permit submission. The exception is if your project is only an interior renovation. 

From establishing property boundaries and buildable area, to locating placement of utility and plumbing lines, the survey essentially gathers all the relevant information about your land, and what factors will need to be considered during the building process. 

Site surveys are performed by an outside consultant, and cost is dependent on level of detail and size of the property. Modest residences may cost around $1,000, while expansive properties can cost a few times that. 

Land Cost

For many, buying land and building their dream home is the ideal scenario, but finding the right property can be challenging. First and foremost, the price must be right, and often times price is driven by location. Utilize realtor resources to make sure you are paying the right amount for what you are getting and where you are getting it. Secondly, you want to determine site features that may affect how and where you build on the property. Important factors to consider include size and orientation of the property, as well as terrain and vegetation.

Site Improvements

When considering purchasing land, one major factor to consider is the property’s access to utilities. Costs to install and implement utilities can vary greatly depending on what you need. If you do not have access to electricity, you will need to budget for the electric company to connect to your home. Likewise, if there is a gas line near, you will need to pay to have it connected to your property. If there is no gas line present, it will be necessary to install and above-ground or underground propane tank. Septic systems are also a necessity if your property does not have access to a local sewer system. Lastly, if a connection to a public water system is not available, a well will need to be dug.

Lot Prep Fees

Once you have purchased land, your property will likely require work to be done to prepare it for being built upon. Work may include clearing of trees (or working around trees), proper drainage systems, and grading of the land. Fortunately, having your property surveyed can help solve and plan for this preparation work. 

Specialty Consultants

Depending on your project’s needs, you may require the aid of a few different specialty consultants. These experts advise the design team on specific domains of architecture. 

  • Structural Consultants

These professionals work in an advisory role, helping your architect to develop plans for the very structure of your building. Their work ensures that it is sound and safe, while still being aligned with the rest of the project goals. 

Typically, your design team will work with the structural engineer/drafter, which is not included in the design costs. You’ll be charged for this work separately. The price will be dependent upon your project’s scope. Small homes may incur costs as little as $500, while large, complex properties could reach into the thousands. 

  • Landscape Consultants

Landscape designers and architects may be recruited if your project will need significant reworking of the outdoor area. Their work can help design the terrain to better accommodate your building, and even create great outdoor spaces (such as courtyards, parks, and streetscapes). In collaboration with the design team, landscape architects can establish a continuity between the design of the interior and exterior environments.

  • Geotechnical Consultants

Your project may require a geotechnical consultant if your property includes steep slopes, or irregular composition of soil and rocks on your site. They can help identify potential risks, weak points, and ways to structurally compensate for vulnerabilities in your terrain. 

  • A/V or Home Security Consultants

If you wish to incorporate smart technologies, automation, or tech-powered security systems into your project, these consultants can help your design team figure out the most effective way to integrate the electrical equipment and infrastructure. 

  • Sustainability Consultants 

If you’re interested in “going green” for any part of your project, you may need the assistance of a sustainability consultant. This includes incorporating sustainable components, such as solar panels, geothermal heating, water harvesting systems, or green roofs, for example. 

Sustainability consultants can help you attain special green certifications for both residential and commercial projects, such as LEED, Built Green, Passive House, Net Zero, or the Living Building Challenge

Getting some of these certifications can make your project eligible for certain tax credits and government programs. For commercial businesses, such certifications can improve brand reputation, appeal to consumer values, and position your company as an environmentally-responsible innovator.

Temporary Housing During Construction

If you are working on your home, will your project allow you to live on-site during construction, or will you need to find temporary housing?

Should you have to relocate, you may need to budget for housing expenses. Your options could include staying with family or friends, getting a short term rental, or booking a hotel. 

For commercial projects, putting a hold on your operations during construction may result in significant financial losses. To avoid this, you may want to consider master planning services. These will help work out the best way to break up your project into phases, to allow your business to maintain an income (at least at partial capacity) throughout the construction process.

Project Charette

We Can Help You Plan Your Project to Perfection

Here at BPC, we’ve helped so many project owners navigate their way through every part of the process: from working out a solid project budget, to laying out their design vision.

Whether you’re looking to create a personal abode, or are striving to build an inspiring site for your business, we’re here to help you every step of the way. 

We would love to learn more about your next project. Let’s get to know each other, you first! 

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