Hi

Welcome to the June edition of KHB Ezine.

This month....
Budgeting an owner building project

Early PS: if you are reading this on a phone, turn it sideways to enable landscape view, it's easier to read.

My budgeting plan involved a number of systems and never really remained constant. I couldn't just 'stick' to the budget, as I'd hoped as many costs could not be set in stone, ideas changed as the build progressed, and more than once tradeworkers changed, including quotes. For me it was a good idea to have a contingency of 15%, although having any contingency invites overspending. So here are my five parameters that assisted my budgeting.

1. Determining time to be spent on the project
2. Listing known costs and firm quotes
3. Getting trade quotes or 'ballparks'
4. Determining extra material costs
5. Creating a Gantt chart for project management

1. Determining time to be spent on the project

As an owner builder I need to direct all activities on site and do a great deal of the work to get this build complete. So my first decisions were:

a. Do I work full time on the project and get it done asap?
This would require a 'gap' year, resignation, or both in my case. This is the avenue I chose. I decided to work full time (5-6 days per week) on the project and from Development approval submission to final move in approval it took 8 months. I did a lot of the work myself: fencing, frame erection, door and window installation, cladding, rendering, architraving and skirting, painting, landscaping. And I did it as a solo worker.

b. Work part time and devote three to four days a week to the build.
Working part time would have been a stressfull and exhausting for me. Worrying about tradework going on at the site without supervision, not having any time off to recover each week, and lengthening the build time to 9-12 months. Unless I hired more of the work out which would raise the build costs.

c. Stay at work and hire out all tasks, and work on site on the weekends.
This can only be done if you hire a tradeworker such as a carpenter/builder to do all of the work and direct other trade activities on site. Lots of communication by phone as many decisions need to be done daily, as well as being n site every evening to catch up. Many OBs use this system, but be careful who you choose. This obviously is the most expensive way, but you are earning money while the build proceeds. Here is a page on my site that explains it some more.

d. Hire helpers/labourers to assist me.
This adds more expense but reduces time considerably. As I was full time on the project time wasn't so much of a concern to me. More of a concern was dealing with the red tape of employing somebody, such as paying long service leave, superannuation, insurance and tax. So I chose not to hire.

2. Listing known costs and firm quotes
These are the easily priced items on the project: land, kit home, council fees, insurance, survey, pest control, phone connection, shed, water tank, pump, fireplace, kitchen, flooring, solar, PC items (vanities, toilets, lights and fans) etc. Here is a page on my site that has an OB planning checklist for you to copy.

3. Getting trade quotes or 'ballparks'
This takes time and can never be exact. For instance a plasterer will never give a firm quote on a house that doesn't yet exist. Either will a roofer. I needed quotes on a slab, roofing install, electrical, plumbing, waterproofing, plastering etc. If I got a 'ballpark' quote, I added 15%.

4. Determining extra material costs
For me, this is where blowouts occurred constantly. Items such as fencing, landscaping, paint, tiling, render, tools etc. Going to the local hardware and finding things to buy not on the list was a constant problem.

5. Creating a Gantt chart for project management
A Gantt chart gives you the power to make early decisions on delivery orders, my time on site, when tradework is ready to be done and when I might finally finish. I could also get the relatives to pencil in a road trip, within a week or two, to help me with painting. This is all part of the project management which saves money by timing all activities. If I failed to setup a plumber to finish a task, other tasks contingent on that work could not be done, delaying and costing the project. Here is a page on my site that has a Gantt chart example.

In summary, staying on budget requires constant monitoring of ongoing costs, making hard decisions about whether to spend more, using time management, and project management. I added a column in my excel cost list for variations that auto-totalled in red, so I could watch it closely.

Best of luck with your budgeting!

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warm regards
Michael
Kithomebasics.com