1. Plan! Plan! Plan!

The most profitable businesses know it, successful government leaders know it, retirees with adequate finances know it...skilled planning reduces costs, reduces the stress of surprises and prevents you from committing to more than you can reasonably afford. The more you want to save, the better planning you need!

2. Total costs are as important as initial costs

We all have the instinct to minimize costs. But it is better to minimize TOTAL costs instead of just considering INITIAL costs. Consider the purchase of a new water heater. INITIAL COST of option 1 is $600 while option 2 is $1200. The choice seems obvious except that Option 2 saves this family $200/yr in energy costs which are expected to rise 10%+ per year. At the end of year three, the cheap water heater has a higher total cost. And at the end of 10 years, the cheaper unit has a TOTAL COST that is almost $2,600 more while also having a shorter operating life!

3. Time IS money!

Generally, pushing a project to be completed in faster than average time will cost more. Tighter schedules mean more risks of various phases bumping into each other and causing inefficiencies.

4. Creatively use low-cost materials in low-risk areas

Lower cost materials hold promise for saving on project costs. Pick low-risk areas to use "non-standard" materials so that unexpected problems are easily fixed and do not affected many other phases. For example, reclaimed lumber for interior trim is less risky than using surplus metal beams under the main bearing wall.

5. Use professionals...but wisely

There are some phases of a project you can work on without help from a building professional. However under-use of professionals can add costs and/or result in problems. Like the home-handyperson that finishes off a basement at a lower cost per hour than a building professional. Yet the handyperson used fiberglass insulation and plastic vapor barrier on the foundation walls....very likely a big problem with condensation and mold that will cost thousands more to repair in only a few years!

BAC can help you figure out project phases that need building professionals versus ones that are less risky to tackle on your own. Regardless, you should consider the DOMINOE rule: When something goes wrong early in the project, it usually affects all subsequent phases thus compounding the cost of the problem. So it is generally wise to maximize professional expertise in the early phases of a project.

6. Something else WILL come up

Unknown costs can easily come up that you will be responsible for. Even the best contractor will not know that you have a minor leak beginning in a lead drain behind the bathroom wall that has not been opened up yet. You can certainly avoid the scope addition by letting the leak grow and then pay much more to have it fixed in a few months or you can accept a scope increase. The only way to reduce these types of unexpected costs is to pay a professional to perform what is called "destructive investigation" before a project starts. BAC can help you figure out when/if that makes sense for you project.

7. Slice up that budget

Many of us still budget for things like we did when we were kids...when we wanted to buy a bicycle with our $100 savings we generally bought the one that cost $95. But then we realized that we didn't have enough to buy the lock and chain and the bike got stolen! OK...so your new kitchen won't get stolen but the lesson still applies. In the excitement of budgeting for the fun new home improvement, you will likely end up happier slicing up your $100 budget using the following formula:

MAX BUDGET: XXXXX
SET ASIDES (at minimum):
Design — 10%
Unexpected Costs — 10% (bike lock and chain?)
Furnishings/appliances — 5%
CONSTRUCTION BUDGET: 75% of Max budget