When you receive your budget from your Contractor, it might be overwhelming. The number of line items, understanding each line item, the overall dollar figure 😳

We’ll get to those in a minute. 

First things first, a budget is a comprehensive breakdown of expenses of your project, including specific costs for parts and materials, labour, and any other relevant items to better understand where their money is being allocated. 

It’s provided by a General Contractor or a Project Manager and based on their experience, knowledge and assessment of the project requirements, and a collection of quotes obtained by various suppliers and sub trades.

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Overall, the budget MUST contain these three things:

1. The structure: Depending on the payment structure, this would be an estimate, quote or bid (Yes it matters, and it’s coming up). 

2. Line items: A detailed breakdown of the costs, usually separated into stages of the project with brief explanation of what each line item is and includes. This DOES NOT include the number of screws and nails. We’re building a house, not a rocket ship.

3. A total amount: The amount of each line item and the overall calculated amount of the project.

This will include both labor and material costs.

Labor: The quality and price of the labor is set based on the trades your Contractor typically works with. Over time, they would have built up their roster of skilled professionals, forming a capable and cohesive team.

Materials: The physical items necessary for construction such as lumber, concrete, insulation, etc. Costs are based on type, quality, quantity, and market prices using project specifications, estimated level of finish, and the contractor's experience.

Because of a continuous change in the market, a budget is typically only good for 30 days. Review its terms at the top or end of your budget.

Lastly, is there a cost to obtaining a budget from a Contractor? Generally it’s free, although I believe that they shouldn’t be. It takes hours, days and even weeks to put one together. 

Find out if your Contractor charges for a budget (or if it’s included in the cost of their initial deposit) before you request one.