Contingency is the amount of money set aside when building or renovating a home that will cover any unexpected costs or upgrades that come up during construction. When you begin to prepare the budget for your build or project be sure and have a contingency of about 15% set aside. I would lean even a little higher, closer to 20-25% if you can.
As labor and supply costs rise, and shipping delays keep emerging, expenses will pop up that you had not planned on. As your house begins to take shape you WILL change or add something. Any change, upgrade, or substitution always comes with a cost! Change orders go CHA-CHING with every one!!
Here's the thing....you WILL go over budget. It's gonna happen. And you know what? It's perfectly normal, most do. It is so hard to predict every detail before you begin building or renovating. Knowing you have an amount set aside may help with the stress when a problem arises. Some problems will be out of your control, and will need to be taken care of to continue to move forward in the build or renovation.
We will definitely be over budget. We added more than was on our original floor plans. What did we add? Framing was a pretty big area.....we added window seats, storage areas, soffits, things that we didn't see on paper. But once the house began taking shape we found items we wanted added or even taken away. Electrical also cost us more. Once we began to walk around the house after framing and imagine living in each room we added more outlets and lighting that were originally planned. We also added rough ins for future projects to make them go simpler when we are ready. We roughed in for things like patio heaters, extra electrical panels for future pool, a second tankless water heater, generator hookup, etc. When we are ready for those future projects we will have the prep work completed!
The only people who have a chance of not going over budget are the ones who planned everything down to the last detail.....every single detail. That person is a unicorn, and if you find them tell them I need help with our budget! ....Even those folks will have the occasional change order or upgrade during the build.
Lastly, there will be things you just plain forgot to add in the budget. Especially the non-construction costs like insurance, taxes, sprinkler system, security system, window treatments, furniture, etc.
Take a deep breath, and before you begin the most important thing to do is to plan as much as you can....down to what you think is that last detail. And then when all the details pop up that you forgot about, rest easy, cuz' you got back-up!
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