How to Build a Reliable Residential Construction Plan and Budget

Remodeling a home versus building a home from the ground up are very different processes, both with pros and cons and complexities involved. One of the most significant advantages to customizing a new home is that you can personalize every detail: layout, lighting, paint, finishes, cabinetry, tile, flooring, and décor. Another advantage is knowing that your new residence will be constructed to meet all current codes and can incorporate the most up-to-date technology and energy-efficient measures, such as those outlined here at

If you have chosen to embark on a new build, you will likely spend significant time outlining your particular design needs with the goal that your new residence will meet the criteria of your lifestyle once completed.

Once you have the architecture and design settled, the next step is building the construction plan and budget. While this can feel somewhat intimidating, you are likely to have assistance from your design consultants and general contractor to help you create a detailed line item budget to use as a map along the way. The more detail you have within your budget, the easier it will be to track where true costs are coming in at as the project progresses.

Another benefit of creating a detailed budget is that it helps you to see the overall picture of the build in terms of timeline. Understanding which components must be procured first and which services take the longest to arrange and complete will empower you to understand the bigger picture, and hopefully help eliminate any potentially frustrating ambiguities along the way.

Below is an outline of the major components that your budget should account for. While not comprehensive, it should help you to flesh out the details of your particular build:

  • Costs of Construction: This should include a line item for every component being procured and any labor required. Examples are framing, roof materials, electrical, plumbing, windows and doors, HVAC, drywall, paint, flooring, cabinetry, hardware, lighting and appliances.
  • Consultant and General Contractor Fees: Fees should include any architectural, design, and engineering consultancy work, as well as construction manager and site superintendent costs.
  • Permit and Utility Fees: Factoring in the jurisdictional and regulatory costs for permit review, corrections and approvals is necessary at the onset of budgeting, as is accounting for utility service connections like electrical, water, gas, and internet. Home Advisor features a building permit estimator by zip code that may be helpful in the budgeting process.
  • General Conditions: This includes security personnel for the site during construction, special tools, shipping costs, portable restrooms and similar items.
  • Special Conditions: If your site has any atypical needs for access, drainage, foundation work, or other unusual considerations, be sure to detail them ahead of time.
  • Demolition and Site Preparation: Be sure to include any costs for demolishing any existing structures or trees, shrubs, or other landscaping that needs to be removed, as well as resurfacing and leveling.
  • Landscaping and Hardscaping: It’s important to consider the curb appeal of your property and account for the costs involved in at least preliminary exterior elements like driveways, walkways and hedges.
  • Waste Removal and Cleaning: This should factor in any debris that needs to be hauled from the site from a previous structure and all construction waste generated throughout the build.
  • Sales Tax: If you don’t know your local sales tax rate, it is easily searchable by zip code.
  • Temporary Renting: If you and your family require temporary housing during the build process, be sure to factor it in.
  • Contingency Fee: Even the most detailed plans cannot account for surprises along the way. While you always hope these can be kept to a minimum, it is wise to add a 5-10% contingency fee depending on your budget size. If the project comes in under budget, you can always roll this in to future improvements or maintenance.

5 Ways to Reduce Construction Costs

  • Choosing the Right Team: It is paramount you assemble a trustworthy team of licensed architects, contractors and consultants for your build. We previous detailed the considerations involved here. Don’t be afraid to solicit multiple bids, and be sure you are doing an apples-to-apples comparison as you review the various quotations.
  • Choosing Cost Effective Design and Materials: Overly complex ceiling heights and extensive landscaping can add significantly to labor costs, so be sure that what you are designing is feasible for your budget. The structure of your home is also far more important long term than expensive interior finishes, which can always be upgraded down the road.
  • Building an Efficient Floor Plan: While it may be tempting to create a sprawling estate, be sure you are thinking about your current needs vs. your family’s future needs. Are you planning on building a larger family? What will you do with those bedrooms once the children go to college? Remember that the larger the home, the more maintenance and expenses you’ll encounter down the road.
  • Energy Intelligence: Considerations like proper insulation and energy-efficient windows and doors and a well-designed HVAC system can go a long way towards lowering your monthly utility costs.
  • Smarter Spending: As the build progresses, material costs can fluctuate. If it is not possible to remain in budget as costs change, being flexible in choosing alternative materials may come into play. Be sure that you are making decisions you can live with and continue to monitor the build and budget closely with your team.

Taking proper time at the beginning of the process to create a workable budget and continuing to monitor costs, materials, and installation practices along the way will provide savings and significant return on investment in the long run.