Construction Budgeting

A Primer - Part 1



We will be referring to the
Construction Budget.pdf file in this article, feel free to download a copy for your personal use.

Budget PhotoAt first, our Construction Budget may look a lot like a Home Depot shopping list and in a way, there are a lot of similarities …as long as you throw in the costs of hiring skilled labor and the GC’s profit, of course.  

In effect, on those five pages is a generic “shopping list” of the 150 or so most common expenses that building restaurants, office space or retail stores can cost you…some assembly required, of course.

Now, to what extent does any or all of these potential charges apply to you? We have no idea…and although you might a have a general one, the truth is neither one of us knows for sure; but you're the one that needs to find out.

Because the final cost of bringing your space up to your specifications can be controllable or it can kill you, this process should never be taken lightly. This is especially true if you’re planning on getting financing for your project. Attaching a well crafted construction budget to the Financial Projections section of your business plan can go a long way in convincing your lender that you have things under control.

At first, you’ll probably just estimate these costs on your own. This is called your Preliminary Budget and the numbers in it are pretty much for discussion purposes only. Eventually, with the help of your GC and possibly an architect, you will be putting a finer point on the pencil and your budget should reflect a more accurate estimate. This would be called your Final Budget.

Since a lot can go wrong during the construction process, it pays to review your budget - in detail - with your professional group on a regular basis and over the entire course of your build out...no exceptions.

Control it well, and you’ll be that much closer to making a profit. Lose sight of it, and it could suck the life out of you. That’s why you took so much time finding and interviewing your General Contractor in the first place. One of their many jobs is to try and control this for you.

Next: The Major Cost Categories

 

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