How to Manage Overruns and Unexpected Building Costs

Regardless of how well you plan, there will always be unexpected home-building costs.

Learning how to cope with unexpected twists and turns in home construction costs is important in ensuring you stay within your budget.

So, what should you do if the unforeseen occurs?

1.) Assessment

You should take time to assess the situation. See what you can do about it. Think of the most appropriate thing to do in the given situation.

If it is theft of materials, report the matter to the police. If it is rainfall, cover your materials (and if necessary, the whole site) with non-porous materials.

2.) Talk to your builder

You should talk to your builder regarding the given situation. If it is about cost escalation, find out what can be done to avoid the cost or reduce it.

If you are dealing with a builder who refuses to do the right job, ask him what is wrong and if a dialogue fails do not hesitate to hire a new builder.

3.) Insurance policies and bonds

You should never begin a home-building project without covering all the construction risks. In addition to estimating home building costs, you should carefully assess your insurance requirements and obtain the best insurance policies.

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An all-risk insurance policy is particular to a certain building project and protects the construction site, the materials and the equipment being used.

This policy covers the materials while they are in transit or a warehouse.

It is recommended to obtain bid bonds, performance bonds, and construction bonds to protect against builder non-compliance and safeguard materials and labour.

4.) Downgrade materials

You may need to downgrade materials and use that money elsewhere in your project. This may be a tough call, but it is probably going to be your only way out when you have run over budget and are likely to go past the deadline.

5.) Draw on your slush fund

It is brilliant to add 10 per cent to 20 per cent to your budget as an allowance to cover unexpected home-building costs. You can draw on this fund when the need arises.

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