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how do you you determine allowances on a construction budget?

 

 

While you should make your construction budget as detailed as possible, it is often impractical (if not almost impossible) to specify every single detail and material that will go into your home before you start the custom build process. It becomes especially complicated when you are building a truly custom home where flexibility in choices is what you are paying for.

 

Because of this challenge, ESTATA typically specifies allowances in our construction budgets—that way you can have latitude in your decisions about flooring or carpet or cabinets and still keep on budget. We can also have these allowances include a low and high range, if requested. We base each allowance on the price and overall finishing of the home, the information we have gathered about your preferences, your budget requirements, and pricing information from recent past projects. Allowances are exactly what they sound like: You get a set amount of money for a certain product, and if you go over, your house will cost more than the budgeted price.

Unless we have detailed specifications to reference, we typically specify allowances for:

 

  • Cabinets
  • Countertops
  • Flooring (hardwood, carpet, and tile)
  • Light fixtures (including chandeliers)
  • Plumbing fixtures (bathtubs, faucets, and sinks)
  • Kitchen appliances
  • Fireplaces
  • Tile (showers, backsplashes)
  • Built-ins
  • Windows
  • Entry Doors
  • Landscaping

 

You may want to consider looking around at some showrooms and pricing out some of your options beforehand. This will give you a better idea of what you are looking for, and it will also give you an in-person sense of the most recent product trends and prices. Building out a list of your preferred materials is a great way to get realistic allowances for your project.

 

It is also very important to check the allowances when comparing quotes between builders. Some contractors who want to appear especially affordable will set these allowances so low that it is essentially impossible to stay within them. When this occurs, you could find yourself with some unexpected and unpleasant expenses during the build process. To identify unrealistic allowances, pay attention to whether one builder is way out of line with certain items when compared to the other bidders. You can also use Google to get an idea of what items like lights and cabinets should cost, and then compare that with what your builder has allotted in the bid. At ESTATA, we will always support a budget line with a relevant quote from a supplier or subcontractor.

 

Even if your allowances are reasonable, you still need to be careful during the construction process. It is easy to get carried away and fall in love with the perfect counters or appliances that are just a little bit more expensive than your allowance. But remember that it all adds up in the end, and this is why you need to have a buffer in your budget to allow for overspending. Read our article on How Much of a Contingency Should You Have in a New Home Construction Budget?