Designing your dream home |How to determine your project budget


This article will help you determine how much you need to build your house. I don’t mean giving an exact amount, but rather help you come up with a realistic project budget. I’ll be covering all the components that go into a project budget and ways to maximise your budget.

Determining Scope with a project brief

If you ask an architect to give you a quote for designing your house, the first thing they will want to know is what your project brief is. This entails everything you want in terms of features, fixtures, size, and all the bells and whistles. Don’t hold back. Do you want an infinity pool, a walk-in closet, a kitchen with an island and a pantry, a fire pit, or even a sundeck? Everything you want goes into the project brief and the brief is a major factor in determining the scope of the project.

When creating your brief, you want to get as close to your dream build as possible, so communicating your desires is key. Your architect’s job is to listen intently and understand your needs. With each of your desires, is an underlying need. For example, you may be an avid outdoor lover and camper, so having a fire pit is like bringing that camping element into your own backyard. After understanding those needs, he will then ask what your project budget is. In other words, how much money do you have allocated to achieve all those features you desire?

You should have a clear idea of how much your project budget. This information can be from pre-approved banking loans or investment from other sources which you will use to fund the project. Basically the project budget is how much you are prepared to spend.

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Difference between Project budget and Construction Budget

If you’re wondering what the difference between the construction budget and project budget is then let me elaborate. The construction budget only accounts for the cost of materials, labour and overheads to build your house. On the other hand, project budget encompasses everything included to make your dream a reality.  This includes consulting fees and all other costs BEFORE you start building. Architects use a standardised building rate per SQM to give you an idea of the building cost. However, this is not accurate but it will assist in giving you an estimation of project cost and fees. This is why it’s advisable to use a quantity surveyor, in order to get a BOQ for final and accurate costing.

Quantity surveyors will come at an additional cost if you use their service and their fees should be factored into your budget. They will take everything from your brief into account and produce an estimate.

Once a design is complete, your architect will give the blueprint to contractors who quote based on what they will charge to build the design. Contractors gives estimate on construction cost, while the architect gives an estimate on project cost.

Aligning project brief with project budget to build your house

When you approach an architect with your brief and tell them what your budget is, they will be able to advise you on what’s possible. An experienced architect will be able to tell you if your budget is realistic given your expectations. A good architect is responsible for designing or building to align your brief, with your budget. If your project brief and your project budget don’t align, your architect will advise you on what can be done, or what should be compromised given your budget.

Often, project budget misunderstandings or underestimates have led to last minute building design reductions. This is because clients realize down the line that they don’t have enough overall funding to complete the project. This is usually the case if you are working with an architect who does not advise you correctly from the beginning, or you have not been realistic or transparent with your budget or constraints thereof. This Is why its so important to ensure you have signed a contract with your architect before commencing works. All misunderstandings can easily be clarified in a contract that protects both parties.

To give you a clear picture of what to consider when planning to allocate funding, below are some components that makeup the project budget.

Project Budget components

  • Land acquisition– includes cost of buying the land, commissions, transfer duties, legal fees.(We have a land guide that takes you through this process)
  • Preliminary professional design services– geotechnical analysis, environmental site assessment (this is only required if there were concerns about environmental contaminants on your land)
  • Professional services – these include the architecture (building design), interior design, structural engineering, quantity surveying, mechanical engineering, electrical installations, plumbing, landscape.
  • Construction documentation production – this is the mass production of the blueprints for use by the contractor and sub-contractors to bid and build the project.
  • Building permits– these vary depending on the council in your area
  • Construction costs – the construction amount to build based on design and drawings created by professionals.
  • Fixtures, fittings and Equipment – these are all the appliances, kitchen equipment and installation, tiling or wooden flooring, bedroom finishes etc.
  • Temporary storage – usually in the case of a renovation, temporary storage will be required.
  • IT Network, communication and security systems- the design, devices, cabling and installation costs of all security and internet requirements.

The beginning of the project is the ideal time to discuss any budget concerns or constraints with your architect.

Ways to maximise your project budget

There is a clear guideline to ensure that you stick to your budget once you have decided on what to build. Depending on your situation, there are a variety of different approaches that an architect might recommend to limit your exposure to cost uncertainty.  These approaches might include:

Bid alternatives

These are areas of the design that are marked to be bid on separately to accurately identify their cost. For example specialist works and fittings such as underfloor heating, cooling, glazing, roofing, solar fittings, pools, saunas. These can be bid on separately to find alternatives. Alternatives can either be additive or increasing the construction cost if accepted or deductive and reducing the construction cost if accepted.

Project delivery method

The construction management at risk (CMR) method puts a contractor in control of the construction budget at the beginning of the design process. They then determine the changes to the design based on continually updated cost estimating. This usually applies to stairs, kitchen fittings, brands bricks, tiles, paints specs etc

 If you decide on a design feature and it’s estimated to be above your budget, the contractor will change the design to meet the budget. The challenge with this approach is that sometimes quality or design goals become less of a priority to the contractor.

Detailed set of drawings

A detailed set of drawings is a good way to prevent construction change orders, which are increases in costs during construction. Sometimes owners will prefer to reduce professional design fees by opting for standard in-house drawings from the contractor or developer. These are drawings which have been used previously.

However, with simple drawings, the contractors will be likely to interpret the design intent to be as “inexpensive as possible”. They will then make up for the under costing of items via change orders later.

A construction change order is an agreement between the owner and contractor. It covers the changes to the scope of the original drawings. Change orders establish any adjustments in cost or time to complete the work. Frequently change orders result in increases to the project costs, and are the number one reason for legal disputes between contractors and owners.

Your project budget is important. If a workable budget isn’t clear from the beginning, then many good designs may be discarded for concerns that they may be too expensive. When this happens, it may be difficult to achieve your desired vision for your project even if you adjust the budget later. This is why you should hire an architect to assist you through the design phase or during building works. Remember that the goal is to build once.

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