One of the most prevalent “horror stories” about building a custom home or doing a home remodeling project has to do with homeowners going over budget. That tale of woe is followed closely by stories about projects that took much longer to complete than planned. Sometimes that happens when a homeowner doesn’t take enough time to think through what they really want and need. That may mean adding options later that weren’t in your original budget (here’s a post that deals with that in more detail).
There are some other things that can cause building and renovation projects to exceed their budgets and deadlines—and homeowners often get surprised by these things.
It's no surprise that (generally) a bigger house costs more money. Your builder will use more materials and more labor. One housing trend that may be a bit of a surprise for you has to do with the size of homes. For many years new home sizes got gradually bigger and bigger. House sizes took a dip around 2008 but then began edging up again. Around 2013, however, that growth flattened out and actually started down. Instead of focusing so much on the size of their homes, owners were paying more attention to the comfort and quality of their homes. They wanted homes that fit their lifestyles. Here’s an article that talks about the emphasis on better over bigger.
Size isn’t the only physical characteristic that can affect your building cost. The layout of your home can have an impact as well. Some plans are more expensive to build than others. Here’s a look at the cost difference between building a one-story home, a one-and-a-half- story home, and a two-story home.
Sometimes new homeowners forget that the money they spend on their lot is actually a pretty significant portion of the overall cost of the home. Location and size obviously affect the price of the lot, but the condition of the lot (it's suitability for building) can also affect your cost.
When you’re looking at the finishes for your new house, it can be tempting to add more upgrades than you really need. It’s not that you shouldn’t do it (sometimes it’s the right thing to do), but lots of little upgrades can add up fast. Here’s a post that looks at the surprising impact of both property costs and upgrades.
Scope Creep: Small Changes That Aren’t So Small
This is a problem that hits a lot of homeowners. Part of what makes this issue so insidious is that it doesn’t happen all at once. It tends to creep up on homeowners without them being aware of it. Some builders call it “scope creep” and here’s how it can happen.
It begins when you add “small” features to the plan or contract you’ve already agreed upon with your contractor: “Let’s move that wall 5 inches to the right.” Five inches isn’t much, but sometimes it leads to having to move an outlet. In your kitchen, it could mean moving some plumbing. Or moving the wall may affect the light in the room, so you want to add a window to compensate. What seemed like a really small change can end up having a big impact.
Of course, not every change has major ramifications, but you get the picture. Changes happen in small increments that don’t seem like a big deal. But it can cost you considerably more money and add to the time it takes to complete your project.
How can you avoid scope creep?
Start by paying close attention to the plans you and your builder have created before construction starts so you both know what to expect. If you feel strongly that something needs to change, talk to your builder about it. Tell him what you want (or don’t want) but don’t dictate the solution. Your builder may come up with an answer that doesn’t cost you more or extend your deadline. When you tell your builder what you want, he’ll probably respond in one of the following ways:
- Sure, we can do that! Here’s the revised estimate, reflecting the increased cost.
- No problem! That’s a change we can make, but it will take us an extra week.
- Yes, that’s something we can do. It will cost you an additional $X and it’s going to take us an additional five days to complete the project.
- Sorry! If you’re not willing to spend any more money and if you aren’t willing to extend the amount of time it will take to complete, we can’t make this change for you.
Talk to Your Builder and Focus on What You Can Control
Sometimes circumstances beyond anyone’s control (unforeseen increases in material costs) can increase your costs some. Unexpected material shortages or bad weather can cause delays. And sometimes things are just more difficult than expected. But you can avoid the horrors of “scope creep” by maintaining clear communication with your builder.