Now that you have your maximum budget established, you will need to calculate your actual construction budget.  Your maximum budget should never be the same as your construction budget.

Even the most cost conscious contractor, if they are being honest, cannot promise that the construction work will finish for the amount of money on the original contract (assuming the original contract is competitive).  There are many reasons why construction projects cost more than initially planned.

The first, most common reason for construction to cost more is the discovery of deficient work done by others in the past.  Often, these deficiencies cannot be seen until the demolition has been started or completed.  Sometimes, the issues found are not even true deficiencies but rather work that was done that was acceptable in the past but cannot be left as found for the future.  It may not be that the work from the past is even illegal for the future as many communities have “grandfather” allowances permitting past work to be unchanged going forward.  Rather, the past work may not be as safe or even allow the new work to be done without more work (and cost) taking place.

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