Monday, August 10, 2009

Budgets Part Du: Understand the Process

Remember, Remember, Remember budgets, and understanding budgets are the most important skills a contractor or a homeowner can have. How well the budget is controlled, and understood dictates the level of happiness, peace of mind, and exceptional customer service that can be achieved on a construction project.

Out of the three crucial elements of the building process, budget, quality, schedule, the most difficult one to recover from is the budget. You see if the quality is poor, it can be fixed and improved. And if the schedule is off, its not the end of the world, now although schedules are important its not the end of the world of you loose a couple of days; things can be done to get the project back on track. But! if the budget if off, well then its a whole 'nother ball game.

For most people money doesn't grow on trees. It is hard to come by and even harder to part with. When a contractor comes back to a client and says, "Oh and by the way, we found the dead remains of a human in your basement concrete," it creates a level of anxiety in the client, not from the dead body, but from the amount of money it will cost to remove the remains. You see they only care about one thing.....what will it do to my bottom line.

The client is now playing defense. They are not on the team anymore, their sole focus is now protecting the basket of money. When this happens, the joy of building is gone. Feelings of frustration enter, and you will be lucky to get the client back on your team. Am I right, or am I right?

So whether you are the client, the general contractor, or owner builder, the first thing that needs to be done to protect yourself from budget destruction is to start off with the right budget from the beginning. You need to understand the process:
  1. The first part of the budget process is understanding the scope of work. Do you even know what the scope of work entails? Ya, you know that you want to remodel you master bedroom but do you know what it really takes to do it? And do you know what finishes you want? How do you expect a contractor to get the price right without all the details.
  2. Take the time to walk through your project on paper. Make lists, make material lists, make tool lists, make potential problem lists, make all the lists necessary to make sure you have not missed any details that may cause budgets to change.
  3. Walk through the lists with competent contractors. I really mean competent contractors. Not your brother who worked one summer on a landscape crew, not your grandpa who has been retired for 20 years, but contractors who are in the field working everyday, and who come highly recommended. They will be able to add to your lists and help you understand the full spectrum of work, tools, material, and time needed to accomplish the task.
  4. Use those competent contractors to get estimates, as well as using those lists you've made to help you get multiple estimates from other contractors. The more you get the better. It will help you understand the wide range of prices that will accomplish the same task, because all contractors charge different prices for things.
  5. Once you have a healthy pile of estimates you can then start to put together your budget.
  6. The one thing you will find is that this process of walking through the project several times on site and on paper will help you refine your wants and needs. It will help you narrow in on the best approach to take on a certain scope of work, and the most important thing it will help you do is get very intimate and acquainted with your plans. You will start to feel comfortable about the project and how it will come together.
  7. Make sure and address the unknowns. On every job there is an unknown price for a certain scope of work. Whether it is a remodel and you will be moving pipes that you cannot see, or you are excavating and you don't exactly know what soil you will be digging into, make sure and use the best historical data you can get your hands to help estimate the cost of the unknown scope of work.
These steps are crucial in obtaining a workable budget. Most people don't take enough time because they are too worried about a schedule, or are just anxious to get started. They take the first estimate and think its good enough. They don't take time to walk through the job and they don't take the time to really think things through. Please don't be one of those people. Take the time, lock in the budget and from the starting line you will have a great experience.

Good Luck!

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