For a buyer who has bought a plot and is constructing a house on it or even if he is buying an under construction property from a developer, mid-construction price escalation can be a major irritant. While most people face such situations from time to time, they however are unaware that price escalation is actually a result of poor overall project planning. Planning well ahead is perhaps the best option to avoid price escalation. Do your research about how much it is going to cost. Talk to people who have recently constructed their house. If you have a seen a house which you feel is more or less like the one you would like to construct, show it to an architect or a builder and ask him how much time a similar type of house would take to build and how much it would cost. Also reading related books, magazines and browsing a couple of websites available on construction tips can do a world of good.
The construction of a property has two basic stages:
Designing: This is the first step of building a house, which requires a lot of planning based on budget, area, FSI rules, availability of construction materials in the locality, climatic conditions, etc. Since you will be employing a professional who will be doing this job, make sure he is aware of the location. In many cases, mid-construction price escalation arises out of faulty designing.
Construction: Based on the design, the contractor/ builder you have employed will start his work. This is the stage where you will be spending the 90 percent of your resources. So it goes without saying that construction of the house requires a lot of planning if you don’t want any unnecessary hassles in between. Even before you lay the first brick, it makes sense to make a list of the materials you would need and in what quantity.
For your benefit we have listed all the likely situations that lead to mid construction price escalation and ways to counter them:
(i) PURCHASING BUILDING MATERIALS: There are many factors that can make construction of homes more cost-effective including conventional ideas like purchasing materials in bulk and storing these materials for a longer period of time. When material costs increase, so does the savings of bulk buying. This is especially the case with the purchase of reinforcement steel. With the present market trend, cost of basic materials is always increasing. More than 25 percent of the cost of building is on reinforcement steel. Steel prices are forever increasing, so buying in bulk makes sense.
(ii) SEASONAL PROCUREMENTS: Since there are seasonal fluctuations in availability of material used for construction, knowing the material procurement season circles is very important. For instance, sand and gravel mixtures which are part of the concrete mixture are best bought during the dry season, because they are cheaper then. Buying them in the midst of the rainy season would mean shelling out more money. Having said that, you also need to have enough infrastructure to store them with no or very minimal loss. However do not buy bulk cement before the rainy season. It’ll set and just go waste, meaning you will be spending twice for the same materials.
(iii) SEASONS: You will notice that most price escalations to your total project cost occur due to weather delays, which cost both the home builder time and money. So phasing and planning your construction can help mitigate delays such as, completing structural work pre-rains thereby providing a dry working platform for the interior finishing during the rainy season, etc. There are issues with availability of basic materials for structural work in the rainy season when they usually become more expensive. Moreover investing in proper waterproofing and allowing structures to stand a whole rainy season are very important. Hence finishing structures prior to rainy season is useful to cut down on costs.
(iv) HOLIDAYS: Labor plays an important role in the timely completion of your house. So keep in mind the religious and regional festival and holidays in your location. Ideally it is a phenomenon all builders experience that most laborers are late in resuming work after the festivals. So to avoid such sudden breaks in construction make sure you start construction during the period which has lesser holidays.
(iv) MISCELLANEOUS: There are many small things which combined add up to a huge sum of money spent. This includes things like disposal of rubbish and excess materials, use of facilities such as power and water, access to the building, storage of building materials. The importance of these becomes particularly apparent in the final completion stages. Also beware of theft of electrical and plumbing items. This is quite a common issue with some many things lying around unattended in the store and most of the people trying to meet deadlines.
I hope the article covers most of the points to help you cut cost and counter mid-construction price escalation. If you have recently built your house and have found other ways to counter price escalation do share with us.