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Tips for Dealing with House Building Costs

When considering the prospect of constructing a house, it is undeniable that costs emerge as a pivotal factor necessitating careful consideration. Thoughtful planning of construction expenses becomes essential to effectively optimize available resources. In the following discussion, I will share insights on practical strategies for managing home construction costs without compromising on quality.


Thorough Planning


The initial and crucial step in this endeavor involves meticulous planning, commencing with the identification of primary objectives in house construction and the establishment of priorities. Whether the focus leans towards structural quality, aesthetic appeal, energy efficiency, or captivating interior design, setting clear priorities aids in judicious budget allocation.


Following this, it is imperative to outline a clear and realistic budget. For example, allocate a budget of 500 million for the construction of a two-story dwelling. It is advisable to always include a contingency reserve, typically ranging from 10-15% of the total budget, to accommodate unforeseen expenses. Through effective planning, one can identify and anticipate potential challenges, facilitating timely and appropriate measures to maintain control over the budget.


Collaboration with an Architects


I recall a quote from Ralf Speth, CEO of Jaguar: “If you think good design is expensive, you should look at the cost of bad design.” Indeed, good design may come at a price, but the cost of poor design is far greater. While you may contemplate saving money by forgoing the services of an architect in home construction, it’s crucial to understand that the risks of wastefulness, errors, and construction issues may be higher without the assistance of an architect.


For instance, constructing a house without considering energy efficiency in its design may lead to higher operational costs for the residence. You might find yourself paying larger electricity bills every month, contributing to increased living expenses over the years. In this scenario, poor design becomes an additional cost paid due to overlooking energy efficiency.


Another example is if you opt not to engage a competent architect or engineer in the planning and construction of your home. This decision may result in structural problems down the line, such as cracks in walls, roof leaks, or foundation issues. Rectifying these problems can incur substantial expenses. In this case, poor design forces you to bear significantly higher repair costs.


An architect considers space efficiency, proper layout, and functional optimization in their designs. By planning efficient spaces, you can avoid material wastage and expenses for inefficient areas. Architects also bring project management expertise to the table. They can oversee the project, ensuring work is executed according to specifications and preventing unnecessary changes that could escalate costs. The cost of hiring an architect is considerably lower than the potential expenses incurred in the future due to the risks of not engaging their services.

House Building Costs
Architects can help plan a house according to your budget.

Negotiating with the Contractor


In general, the contract system with contractors or executors is divided into two main categories: lump sum and cost and fee. The lump sum system involves the contractor agreeing to complete the entire project for a fixed cost predetermined in the Bill of Quantities (BQ) during the bidding process. On the other hand, the cost and fee system entail the project owner, you in this case, paying the contractor based on the actual costs incurred during project execution, plus an agreed-upon profit margin (contractor’s fee) determined beforehand. I will delve into the differences between these systems in a subsequent article.


Do not hesitate to engage in price negotiations with the contractor. Discuss your budget with them and explore the possibility of reaching a mutual agreement. Several aspects can be subject to negotiation, including contract price, material specifications, schedule, and payment terms. However, ensure that these negotiations do not compromise the quality of construction.


As an additional tip, when negotiating changes in material specifications, avoid alterations to structural materials such as steel and concrete, as these relate to safety. You can potentially save costs by making changes to finishing materials like tiles, paint, or other aesthetic-related finishing materials. Always discuss such alterations with the architect who designed your house.


Phased Construction


Phased construction is an increasingly popular approach to navigate home construction costs. This method allows you to build in stages according to your budget and needs. For example, if your requirement is a three-bedroom house but you have a limited budget to construct everything at once, you can start by building essential spaces like the living room, kitchen, and master bedroom first. Then, you can gradually add additional bedrooms, extra bathrooms, or other rooms over time.


The advantage of phased construction lies in its flexibility. Homeowners can adjust the construction stages according to their financial capabilities. Additionally, phased construction allows for changes or adjustments to the house plan over time, aligning with family developments or changing needs. This approach also helps alleviate financial pressure throughout the construction process.


House Building Costs
Phased construction, a solution to overcome the costs of building a house. Image by Adityuwana.

Prioritize Furnishing Essential Spaces


This remains connected to phased construction. If your budget is limited, the prudent first step is to prioritize furnishing truly essential spaces, particularly focusing on furniture and interiors. For instance, you may want to ensure a comfortable and functional bathroom with complete sanitation equipment. In bedrooms, concentrate on elements meeting your needs, such as beds and wardrobes. Also, prioritize the kitchen by equipping elements supporting everyday cooking activities. This doesn’t imply that other rooms are unimportant, but allocate the majority of the budget to furnish these crucial spaces initially.


What about other rooms? Spaces like the family room, library, or hobby room can be furnished in subsequent stages. While these rooms can be constructed initially, furnishing them can be postponed until the budget allows. This provides you with the opportunity to prioritize the most necessary rooms at present, ensuring good work quality without exceeding the available budget.


Hunt for Promotions Diligently


Another way to manage costs in home construction is by diligently seeking promotions on materials and building supplies. This is a wise step commonly taken by many. By hunting for discounts or promotions, you can obtain lower prices for the same materials. This can significantly reduce construction costs, as long as you ensure that the quality of the materials remains good and aligns with your project’s requirements.


I remember a story about someone renovating their house. During the finishing stage, a construction supply supermarket opened a new branch and offered substantial discounts. Without hesitation, they purchased all the needed materials to complete their house.


Furthermore, don’t hesitate to inquire with friends or neighbors who have previously built houses; they may have recommendations for quality materials or information about construction supply stores that frequently offer promotions.


Maximize Local Resources


Utilizing local labor and materials can be a judicious choice to save on home construction costs. Local labor is often familiar with the surrounding environment and can frequently provide more competitive pricing. Additionally, utilizing local labor means there’s no need to allocate additional budget for their accommodation during the construction process.


The use of local materials can also aid in cost savings. Choose materials readily available around the project location to reduce shipping costs. Ensure to find a construction material store located near the project site, but also verify that the material quality meets the standards recommended by the architect.


For some specific types of materials, you may consider purchasing them online through e-commerce platforms. From my experience, there are materials sold at more affordable prices through e-commerce, even after factoring in shipping costs. Therefore, it’s advised to carefully compare prices. Also, pay attention to the estimated delivery time, as delayed material deliveries can lead to project delays, negatively impacting ongoing work.


Conclusion


Constructing a home on a limited budget indeed requires extra planning and creativity. However, it doesn’t mean quality should be compromised. With the above tips, you can navigate home construction costs without sacrificing comfort and quality. May your dream home soon become a reality! Best of luck!


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