HPH241 : 10 tips for better budgeting on a self build – with Ben Adam-Smith

Ben Adam-Smith shares 10 tips for creating a budget, which is detailed and realistic.

1. Start a budget… and keep fine-tuning it!

The greatest sin is to be casual about this. A budget is an essential part of any construction project, and even if you haven't done this before you must get to grips with it.

And budgets do not stay still. They will evolve with the project as more decisions are made on what is going to be built and how.

2. Start with cost tables

Initially your budget is going to be rough, but by nailing down (or playing with) a few variables you can start to get a broad picture.

It starts with land. What will be the finished value of the house on the street? You can come up with a figure for this by using websites such as RightMove to look at what other houses nearby have sold for. This will help you pin down a ceiling value and from there you can work backwards.

3. Budget for the completed home, not a house build

The build cost is not all encompassing (as may seem logical to the uninitiated). So remember that there is lots more to consider than just the basic shell of the house, however finished that is.

Run through in your mind all the items that will make it a finished home. This may include things like…

Hard landscaping – driveways, paving, fences

Soft landscaping – laying turf, trees, hedges, plants

Interior – curtains/blinds, furniture, new equipment

There will also be things like the architect's fees to factor in.

4. Set a contingency

If you're creating a budget you need a contingency. There will always be unforeseen costs. If the professionals need a budget then so do you!

The jury is out as to what percentage of the overall budget it should be. For first-timers a minimum of 10% is a good idea.

For those who have more experience, maybe it will be closer to 5%. Needless to say most people dip into their contingency. Groundworks can often be a stage of the process with the biggest risk of an overspend.

5. Use a quantity surveyor

The problem with people who worry about cost is that they want to make as many cutbacks as possible. Sometimes consultants can seem expensive, but you've always got to remind yourself of the value they deliver.

Having a strong degree of cost certainty is a wonderful thing. And what better way is there of getting this than someone that does this day in day out.

6. Don't overspend in the early days

When you discover that you can't buy your dream plot for the money you thought you could, there is a temptation to spend more.

Unless you are consciously increasing your budget and can afford to, it's dangerous to start down this road. Spending more early on means spending less later in the project. This is of course possible if it's thought through but there has got to be a balance. It just doesn't make sense to have the most amazing site, and then really be scrimping on what you build on it.

Adam Cohen had a buckets approach to the budget, whereby the buckets must balance. He says the bucket with the most flexibility is the ‘finishes' bucket.

7. Invest in the fabric of the building

If money is tight, the logical thing is to build something smaller!

If you don't think this option is right, then for heavens sake don't scrimp on the building elements which will be really hard to change further down the line.

For example, reducing the specification of the insulation will save money but in the long term it's a false economy.

Perhaps a better approach is to keep that investment in the fabric of the building and specify a cheaper kitchen. Kitchens can cost £5000 or £50,000! And it will be a lot easier to replace the kitchen than increasing the insulation levels at a later date.

8. Don't be afraid to bring things to a halt

If you discover you don't have the finances to see your project through, be brave and bring things to a halt. It may be a hard decision to make – particularly if you will lose some money in the process – but ending up with a half-built house will be a lot more stressful.

Don't be a victim of the sunk cost fallacy.

And being flexible may allow you to phase parts of the project. For example, perhaps you can build a house but it's the garage that will have to be put on hold.

9. Choose architects/designers who have a proven track record of building to budgets

If you make this a project priority, then you can enter into an agreement with your chosen architect/design that they must provide designs that can be built within the budget. And if they don't end doing this, then the plans are deemed not fit for purpose and will not be paid for.

The good thing about this is that an architect/designer who does agree to this approach will go out of their way to keep the project on track.

10. Bank up your cost savings… don't spend them

You can and will make savings on your project, but make sure these do not get immediately spent on something else. Instead put them in the contingency fund.

Related podcasts

How to budget for a house build

Budgeting for our eco home

What are the hidden costs of building a house?

Making Passive House homes affordable

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About The Author

Ben Adam-Smith is the owner of Regen Media, a UK production company that specialises in creating video and audio for the construction industry. He also helps other self-builders create better homes, having built his own home to Passivhaus standard.