Episode 8: The Construction Budget (What It Includes: Prelim, Progress, Contracts, Construction Updates)

In this episode, Rick Bell breaks down the process of creating, reviewing, and managing a construction budget for a custom home. 

Listeners will learn how to build a realistic budget from preliminary allowances to finalized trade bids, and how to maintain control throughout the construction process. 

Rick shares how transparency, good communication, and proactive planning can make the difference between a dream home and a budget nightmare.

What You’ll Learn

• How to create a preliminary budget for a custom home
• What allowances are and why realistic numbers matter
• The role of construction documents (CDs) in accurate bidding
• How to identify and avoid scope gaps in trade proposals
• The importance of builder oversight in reviewing bids
• How to track changes with allowance adjustments and change orders
• Why monthly draw meetings keep budgets on track
• The value of transparency in financial communication

Glossary of Terms

Preliminary Budget: An early estimate of costs based on the homeowner’s vision, square footage, lot conditions, and quality expectations.

Allowance: An estimated budget placeholder for selections not yet made, such as appliances, flooring, and lighting.

Trade Partner: A subcontractor who performs a specific scope of work, such as plumbing, electrical, or masonry.

Construction Documents (CDs): Detailed drawings and specifications that define the scope of the home for bidding and permitting.

Scope Gap: A missing or unclear portion of work in a bid that can lead to unexpected costs or delays.

Construction Contract Budget: The finalized summary of costs that forms the basis of the contract between the builder and the homeowner.

Draw Meeting: A periodic meeting during construction to review completed work, approve invoices, and track costs against the budget.

Change Order: A written agreement that modifies the scope, cost, or timeline of the construction project after the contract is signed.

Resources & Links

- Landmark Custom Homes: https://www.landmarkcustomhomes.com/

Connect With Rick

- Email: Rick@TIGTCH.com 

- LinkedIn: https://www.linkedin.com/in/rick-bell-lch/ 

- Instagram: https://www.instagram.com/homesbylandmark/