The primary reason for budgeting is that it’s a way of assessing the total cost of a proposed project to see the possibility of its implementation and whether or not you can afford to go ahead with it.
There is an easy and straightforward way to prepare a building construction budget. The first thing to consider when preparing a budget plan is to determine how much you can afford comfortably without 'breaking your back'. For most people, this will be the amount of the total funds saved, or money raised from the sale of an existing asset such as a home, and the total amount you can afford to get from financial lenders.
Building Financial Schemes
While preparing the building costs budget, it is good to know that there are numerous financial schemes available that is tailored to building extensions, restorations, renovations and erection of new buildings.
To have a complete and workable budget, you need to talk to lenders offering these schemes to know what they offer. You'll need to ask them to carefully explain how the lending scheme works, and to tell you how much they are ready to lend you.
When you have a good idea of the amount you can raise towards your project, you'll know what you can afford to expend for the project and can proceed with preparing detailed budget plans.
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How to Work Out a Simple Budget Plan
Preparing a budgeting plan for building construction works is quite similar to planning a budget for any other tasks. There are a number of costs that must be taken into consideration. Nevertheless, the total number is limited. It is easier to work it out if you break all costs into sub groups, for example:
- Professional fees
- Insurance, etc...
a) Architect's fees
b) Structural engineer fees (if required)
c) The solicitor's fees, etc...
b) Masonry materials
c) Roofing materials, etc...
Labour (for skilled workers)
c) Carpenter, etc...
Budgeting this simple and straightforward way makes it much easier to account for all the costs that will be incurred and in order to be organised and avoid confusion, work on separate sheets of paper (or excel spreadsheet if you are using a computer) for each group and their sub groups.
Storing Your Plans & Budget Information
Open a file where you can file all typed or handwritten quotes, price lists, brochures and contacts. There must be a separate list for telephone numbers of all materials suppliers, building contractors, tradesmen (skilled workers), and professionals whose bills and quotations must be worked into your budget plan.
If this is not done and documented, it is easy to forget who quoted the cost you budgeted or what price was quoted for a specific task, when you come to need the information.
Shop Around Before Planning and Budgeting
Before preparing your budget, it is a good idea to shop around first for prices, great deals, or attractive bargains. If possible, get written quotations that must be guaranteed for a certain period of time, say a minimum of 30 days or thereabouts.
So when you approach your lenders for finance, they will be impressed that you have done your homework well and that you are serious about your building construction intentions. Well presented plans and budgets will provide just the right impression which will work in your favour.
Keeping an Account of Costs
You must not forget to keep detailed accounts of those costs which will have to be met immediately, such as material purchases or deposits etc... Do this by asking about payment and other necessary terms whilst asking for such quotations.
With such planning and detailed information which will prove invaluable, when you are implementing your budget planning details, you'll be able to assess and subsequently account for the amount of cash flow you are going to need to meet all costs during the duration of the project.
Detailed planning and budgeting sensibly for your building project will go a long way in ensuring its success.