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By: Steven Yeary, Construction Manager, CAHEC
As a hands-on construction manager, most of my experience in budgeting for construction costs has been reverse of how it should be. When a developer applies for housing tax credits, they commit to constructing a certain number of units and hope their plan gets awarded. Once they receive an allocation, they face the task of creating a construction budget and sticking to it. While that process does seem backwards, there are several ways to manage it.
1. Start from the beginning with your design team. They will play an integral role in determining your actual budget. One tip is to meet early and often during the design period to ensure you stay on budget, otherwise you'll end up spending money on unnecessary architecture fees. It's also important to seek feedback from your team to ensure nothing is missed. This will reduce overruns and will get to the finish line on time and more importantly - on budget.
2. Planning the buyout stage of subcontractors and suppliers is another critical step in staying on budget. Getting your subcontractors to commit to pricing before closing will allow them to begin construction as soon as possible with no delays between the Notice to Proceed and beginning their work. When working with suppliers, lock in rates for pricing for materials as soon as possible as these are almost always on the rise. Another way to save money on materials is to buy and store them in advance. While this does create administrative work, the savings are well worth it.
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Getting a Handle on Construction Costs
