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New construction budget and home remodel costs: What to expect
If you’re just beginning your project, it’ll be a while before you have a budget in hand, but you’re no doubt wondering what to expect. Here’s an introduction to the expense categories you’re likely to find in your project budget.
The first time you see a budget for your new construction or remodeling project, you’ll want to be sitting down. Preferably at a table with your builder so you can ask all your questions. A budget for a custom home could easily climb into the seven figures and will no doubt include dozens of businesses, so it’s going to be complex.
However, taking the time to truly understand it will help you feel confident in your decision-making and your builder’s expertise. Ultimately it can build the foundational trust you’ll need to work together effectively.
Let’s take a look at the major categories of expenses associated with building so you’re not surprised when you look at your own budget for the first time.
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Your guide to building a new home
What are the main expense categories in a project budget?
A typical budget for a new construction home or major remodel will be hundreds of line items long. This isn’t that. Instead it’s a look at the main categories of expenses you’re likely to see in a project budget with details about what’s typically grouped under each category. Keep in mind there will be costs associated with both materials and labor.
For example, the cost of windows includes the window units, installation materials (flashing tape, sealant, nails), any equipment rentals (like a boom), and the labor required to install the windows.
That level of detail can quickly become overwhelming, so we’ve deliberately kept this list simple, which means it’s not comprehensive. It’s an overview of what’s typical.
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What’s value engineering?
Value engineering is the process of deciding how to balance functionality, quality, and cost by making changes to the design, methods, or materials originally planned for. Practically it’s what happens when a project is over budget, and it becomes necessary to reduce the square footage, swap in less costly finishes, and take other cost-cutting measures.
Builders and architects advise against value engineering the building envelope, or the components that protect your home from the elements, like your walls, windows and doors, roof, and foundation.
"[When value engineering] try to start with the things that can be changed later. Keep the building envelope and HVAC systems, and scale back on finish quality and square footage. Try to spread the cuts across all line items, rather than taking the quality out of a single component, like windows."
