No matter how much you may plan, there will always be unexpected twists and turns in in-house construction costs, and you might just go way over the top in your budget if you do not know how to cope.
In this regard, your construction cost calculator will come in secondary to quick thinking and sensible judgment.
Just some of the factors that may give rise to unexpected costs include changes in specification, weather, on-site accidents, theft of materials, and unscrupulous contractors, among other things.
There is a reason why so many contractors in the United States are finding themselves being sued and dealing with the roller coaster of costly litigation; many of the factors just mentioned can and do happen.
So what is a project owner to do if the unexpected happens?
First, let it be stressed that nothing can be achieved can by going ballistic if things do happen. Take the time to step back and assess the situation: what can you do? If it is just the weather like the rain, put in some extra protection at the job site. Cover your materials with tarps and, if needed, the whole work-in-progress.
If it is not the weather, think of the most common sense things to do in the given situation. If you are dealing with theft, report it to the police.
Second, talk to your contractor. Find out what can be done to avoid the cost or cut it down. Again, this is depending on the situation.
If you are dealing with a contractor who refuses to do further work on the construction, it won’t hurt to ask what is wrong and to tell them who is the boss (you, of course).
If dialogue fails, prepare to change contractors.
Third, go back to your insurance policies and bonds. As a project owner, you are NOT supposed to begin any building project without covering all the risks involved in construction.
Alongside estimating building costs, you are supposed to thoroughly assess your insurance requirements and get the best insurance policies from there. At the very onset, you are supposed to require your contractor to get all-risk insurance on your building project.
You are also supposed to get bonds to protect you against contractors who do not follow through on their winning bids (or bid bonds), bonds that protect you against non-performance by a contractor (or performance bonds), and bonds that protect your building materials and labor, and bonds that protect your property against liens in case of a lawsuit.
Fourth, consider downgrading on materials and divert the savings to cover the unexpected cost. This option can cramp your style (think vinyl tiles instead of ceramic tiles). But think thoroughly – if you don’t do it, will you still have a home by the target completion date?
Fifth, draw on your slush fund. Everyday wisdom will tell you to add 10% to 20% to your budget as an allowance to cover unexpected costs. Draw on this fund so it can serve its purpose.