Once you’ve established a budget for your luxury custom home, we can’t blame you for wanting to stay within it. We’ve all heard the cautionary tales from a neighbour or friend who ended up paying much more than they bargained for to build their custom home. How do you ensure this doesn’t happen to you? We’re so glad you asked. Like so many things in life, a little research, discernment, and careful planning will keep you off the cost overrun express.
What Is a Cost Overrun?
A construction cost overrun occurs when a finished project costs more than the final budget established in pre-construction. This could happen for various reasons. Understanding what causes home building cost overruns before you enter the planning stage for a custom home could help you keep the process exciting rather than disappointing.
SevernWoods is a luxury custom home builder in Toronto and we’re here to help you avoid cost overruns in your Toronto luxury custom home by providing our industry insight. We’ve over 15 years of experience in high-end residential construction, and we intimately understand the factors contributing to building a custom home project within budget.
What Causes Construction Projects to Go Over Budget?
Artificially Low Bids
The classic horror story of residential construction ballooning 50 percent or more over budget results from the preliminary budget being inaccurate and unrealistic. Many contractors will (intentionally or unknowingly) present an unrealistically low initial budget to win the contract. The bid may exclude essential elements of the build, such as labour, or include low-end allowances for materials that the client exceeds the second they choose a quality product. Savvy customers should beware of the lowest bidder in residential construction. When a budget or price seems too good to be true, it is not true. You’ll pay more than you expect, and the pain of reaching beyond your budget to get the results you thought you already paid for needlessly clouds the thrill of your new space.
Some custom home builds start with a realistic budget but don’t end that way. Your requests and vision drive the scope of the work. If that changes after you move forward, the budget might also need to change. If you want to add a 2nd-floor to a 1st-floor addition after the project has started, this will change many elements of your plan, present new engineering challenges, and require more time and materials to complete. It could also require us to tear down elements we’ve already created, causing waste.
Other expensive requests can relate to the client or architects/designer’s selections or preliminary designs that were not considered or specified during pre-construction. Sometimes your vision is more complicated to execute than your plans articulated because of the structural or labour requirements to create the effect you’re after. High-end materials can also quickly exceed a budget created with moderation in mind. Many gorgeous or niche materials cost more than the high-end of a conservative budget for luxury materials. Spending up for your favourite luxe features is part of the joy of a fully custom home. Understanding its impact on your budget guards against sticker shock when you shop for premium or super-premium products for flooring, windows, cabinetry, tiles, bath fixtures, lighting, etc.
How Does SevernWoods Keep Your Project on Budget?
Building luxury custom homes sometimes means that the budget isn’t the primary concern. Even so, we’re serious stewards of your dream and your investment. You can have it both ways. Build a work of art within your initial budget with SevernWoods. Our precise and time-tested methods serve both the art of your vision and your bottom line.
Excellent planning is one of the best defences against exceeding your construction budget. We develop and establish a comprehensive and accurate budget during the project's pre-construction phase. We know just how much we expect to spend at each step of the build, including with our construction partners. We secure competitive fixed-price quotations from trades and suppliers before we break ground.
Project Management and Communication
We manage our projects intensely to keep you informed and ensure we’re on track at every stage. We use a construction management system called BuilderTrend that allows everyone to get the same budget update in real time so we can connect seamlessly with clients, architects, and designers through the app. Better, faster, and more efficient communication keeps small concerns small and moves us faster toward new solutions when needed. When clients request changes or make selections above or below our developed budget, we update the budget weekly and share the new information with all involved parties so that they understand how their choices affect the budget in real time. An informed client, in our experience, is a happy client, especially when you’re on your way to such fabulous results.
Ready to Build Your Luxury Custom Home in Toronto?
SevernWoods Fine Homes would love to hear more about your vision. We’d love to put our expert skills to work on your behalf. Connect with us today to take the first step in building your own perfect reality.