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  • Writer's pictureDon Magruder

10 Hidden Costs in Residential Construction Projects

Every day, budgets for residential construction projects get derailed because project owners fail to account for the hidden costs that emerge in most construction projects. Normally, when project owners figure a construction budget, they simply add labor and material costs along with some arbitrary number, like 10 percent, to cover other costs. This number will be their end all, until halfway through the project they realize they are going to run out of money.

When calculating a construction project, do not bundle all the additional costs into some fictious adder. Sadly, many contractors do this, and that is the reason why the number of business failures in construction is so high. The use of percent adders is a lazy person’s way to do estimates. Most successful builders and project owners complete detailed budgets with actual costs that have been researched.

Here are the top 10 hidden residential construction costs that should be included in your next project budget:

  • Building fees and impact fees are real and can be very expensive depending on your project’s location. These fees could be more than $20,000 for a new home in many areas of Lake County. Remodel projects also have many of the same fees. Call your local jurisdiction and get estimated costs for your project when budgeting.

  • Unless you are independently wealthy, money has a cost. Remember, you will lose interest on the money you remove from savings to complete a project, and you will be paying interest on money you borrow. Calculate the amount of interest and borrowing costs you will incur during the building process.

  • When doing a project, you must get some form of builder’s risk or liability insurance to protect yourself in the event a mishap takes place on your jobsite. Insurance is not free, and in the state of Florida, these types of policies can run up in cost depending on the project.

  • If this is a new project, you will need utility hookups, particularly temporary power. To drop a temporary power pole and get service can be costly especially if there is no power service close by. Also, many jurisdictions can have very expensive hookup fees.

  • Any decent size construction project, even a room addition, will need trash removal. Most jurisdictions will not pick up construction waste on the roadside. Therefore, you will be required to rent a dumpster to deposit trash and then pay for the removal and dumping. These fees can be very costly as landfill charges are rising quickly.

  • Many people don’t think about sanitation, however, most projects even remodels, by code, require a portable potty on the jobsite. These portable potties are rented and there are other fees associated with servicing them. You must have proper sanitation on the jobsite.

  • You should budget for mistakes in construction. Nobody is perfect and if you make a bad decision in design or material selection, it will cost you money. Based on the size of the project, budget an acceptable amount of money for mistakes that are bound to happen.

  • Delays during the COVID-19 pandemic are commonplace in construction, and in the construction world, time truly is money. Currently, many projects are being hit with extra trip charges by contractors due to delays in getting materials to the jobsites. Subcontractors will not come to jobs multiple times for free just because you are unable to receive materials timely.

  • The next item is hard to budget, but with delays comes theft. Recently, a small bathroom project had $200 worth of moulding disappear because apparently someone down the road needed it more.

  • The final hidden cost is construction clean up. At the end of the project, there will be a lot of dust, grit, and dirt to be cleaned, and unless you are willing to perform those duties yourself, hiring cleanup people is not cheap. It is a big, dirty job that experienced cleaners do best.

These 10 hidden construction costs for any residential project can run well into the thousands of dollars and can bust any budget. Talk to your contractor and take copious notes of all the costs that you will be required to cover for your next project, and please don’t just throw an adder on top of the price, or you will be singing the budget busting blues.

Don Magruder is the CEO of Ro-Mac Lumber & Supply, Inc., and he is also the host of the “Around the House” Show which can be seen at AroundtheHouse.TV.

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