Every home improvement project differs in their characteristics and requires a different process. The following steps/guidelines should be followed to create the accurate contracting process:-

• Arrange for a Financial Plan
• Get your Plans and Specifications ready
• Perform a Cost Estimate
• Set up a Construction Schedule
• Secure Needed Financing
• Sign Contracts and Secure Permits
• Construction - Build It!

FINANCIAL PLAN

At the time of contracting a home the first thing is to make a budget for the project. If you create a tight budget before the commencement of the project it will surely help you to take decisions for purchasing fixtures and materials. This will also help you to maintain the best balance among land costs and construction costs and indemnify that the developed plans are within your means.

We realize, of course, that many people come to these pages with lot and plans in hand. If this is your situation, the second part of the financial plan, the Cost Estimate, will become your Budget.

Cost Estimate symbolizes the actual projected costs of each component includable in your home - item by item. So the cost estimate turns out to be the budget after being completed.

PLANS AND SPECIFICATIONS

In order to construct a home one has to make the house design plan along with a set of Plans and Specifications.

In each set of custom house design plan or blue print the following elements should be included :-

• The Foundation Plan
• The Floor Plan
• The Elevations
• The Site Plan
• Other Construction Details

The Foundation Plan

The foundation plan demonstrates the shape and dimensions of the foundation for your home. It is applied to outline and build the footing and foundations. It includes the outside foundation walls along with the location of any piers and interior columns.

While pouring a slab floor the foundation plan will show the foundation plan will often indicate the position of plumbing fixtures in order to acquire the pipes in the right place.

The Elevation

Elevations are used to relate the vertical and horizontal measurements or distances between certain points as they relate to all other points on the jobsite. The Elevations are the drawings in your house design plan that show the vertical and horizontal measurements or distances between certain points as they relate to all other points on the jobsite. These numbers will become visible on the jobsite prints on the Plan Views, Elevations Drawings and Section Elevation drawings.

Elevation comes up with four types of views - the front, rear, left, and right sides.

The leading features of the Elevations are overall shape (one or two story, split level, etc.); roof style, pitch, and color; type of siding or veneer; window and door location, size, and style; porches; and trim details.

The elevations point to the area from where the outer walls will be constructed.

The Plan Certification

The house design plans must be certified by an architect or engineer in case of you intend to employ FHA or VA financing. This certify that your plans meet the building codes and all other minimum requirements which are set for residential construction by the local municipalities.

The specifications are a written description of everything that are not shown in the plans graphically. As for example the make and model number of your new appliances, the make and sizes of your windows, and the types of doors you'll use.

Architect or designer will draw the specifications for your new home. The specifications are vital for builder or contractor as the bank or other financial institutions may require these at the time of provide financing.

Other construction details

In addition to the documents mentioned above some sorts of other construction details are necessary included in the house design plan to give support for cost estimating and construction.

You may get details on stairs, doors and windows, cabinets, and a host of other things. One important detail that is almost always included is a section through one of the outside walls.

COST ESTIMATE

Cost estimate is considered to be a key part of the home contracting process in which a comprehensive list is prepared of all the materials required to contract a home along with the labor (subcontractors) needed to put it all together.

While developing the home construction cost estimate the following should be kept in mind :-

• The design and specifications - the kind, amount, and quality of the things includable in your home.
• The negotiable prices for the labor and materials to be utilized in the construction.
• Time period taken to complete the home (this influences the interest to be paid on the construction loan).
• How successful you are in ordering the correct amounts of materials and in controlling waste and theft.

GROUPING COSTS

Construction costs engrossed in building your home should be categorized as follows :

Lot Costs

• Purchase Price
• Closing Costs

Financing Costs

• Lot
• Construction Loan
• Permanent Financing

Hard Costs

• Labor
• Materials
• Utilities

Soft Costs

• Design
• Permits
• Construction Management
• Inspections

If the constructed home is intended for sale, the following should be included :-

Sales Costs

• Advertising
• Closing Costs
• Sales commissions

Types of Estimate

CONSTRUCTION SCHEDULE

A construction schedule consists of a sequence of work tasks that are linked to each other in a logical manner. With a well-planned and realistic schedule that includes as many variables as possible, the construction managers get updated with the new information. They are able to make adjustments instantly by rearranging the schedules and reduce hindrances and streamline a construction process.

Construction project scheduling for home building projects is a planning function and has two aspects - developing the plan, and using the plan (daily scheduling). The plan can facilitate the owner to save money by completing the house in the quickest possible time.

Construction project scheduling alias Construction Schedule Planning is the sequence of building activities carried out at the same time to let the builder know in advance that when every facade of the job will start and when it is going to be completed.

By organizing construction project scheduling beforehand, the builder get the ability to schedule subcontractors and materials deliveries to ensure that the appropriate sub and the required materials arrived at the time of requirement which later on save time, money, and hassle.

The construction schedule also include daily schedule - a daily activity that operating right through the construction process. The daily scheduling engages getting subs and materials to the job site when they are needed.

Construction Scheduling Systems

FINANCING

It is often found that the builders or developers don’t have enough cash to meet up the construction costs. In this case you have to avail the Home Building Loan or Permanent Financing to finance the project.

There are several online sites which will be helpful to fulfill your financial requirements :-

Your credit rating

Prequalifying for a loan

Commerce Lender

There are many sources from where you can get home building loan. The most common source is a commercial bank, a credit union, or a pension fund.

VA

If you belong to a veteran, you may eligible to have a VA construction loan. For details, call your local VA office or visit the following link.

The Department of Veterans Affairs (VA), USA

FHA

The builder may qualify for an FHA guaranteed loan under some certain guidelines. These loans are achievable in the course of approved participating lending institutions and are legalized by the Federal Housing Authority - a part of the Department of Housing and Urban Development (HUD).

An FHA guaranteed loan will bear a lower down payment and a lower interest rate. However, there is a price to pay. The FHA loan has a ceiling (upper limit) on the price of the home.

Finally, you will "pay" for a VA or FHA loan in the time and money it costs to have your home inspected during construction by a government inspector.

Go through the following site to know the criteria for avail this type of loan.

U.S. Department of Housing and Urban Development.

FMHA Home Mortgage Loans

In rural areas, the Rural Economic and Community Development (formerly the Farmer's Home Administration, FmHA) provides direct mortgage loans in countryside areas under some stern guidelines.

This program is a straight government subsidy, with money allocated to local offices on a quarterly basis.

The office processes the mortgage application once you apply, generally before you've found a house, and then notifies you when the money becomes available.

UNION NATIONAL MORTGAGE CO

The secondary Market

The builder can also avail loan from the Federal National Mortgage Association, which is a stockholder-owned institution, operating under a congressional charter.

It is engaged in the secondary mortgage market. That is, it will purchase your loan (mortgage) from your local bank and sell it to an investor like an insurance company or a pension fund for a labor union.

The Adjustable Rate Mortgate

There are also another type of loan known as Adjustable Rate Mortgage (ARM.

Initially, one has to pay some "points" (money!) up front that will lower your interest rate for the first two or three years. This has the effect of lowering your payments for that period, possibly allowing you to qualify for a larger loan. Of course, this assumes that you have the ready cash to pay the points.

Second, the interest rate, over the life of the mortgage, is flexible within certain limits. It can be raised or lowered to bring it into a fixed relationship (margin) with one of the established economic barometers (index). The advantage of this is that if payments go up later, it is assumed that you'll probably be making more money then and can handle it. On the other hand, if the payments go down, so much the better!

CONTRACTS AND PERMITS

At the time of commencement of actual construction, the first step is to carry out contracts with the Subcontractors you have selected and secure the required building permits.

Sample of Subcontractor Agreement

CONSTRUCTION

The builder or general contractor should be aware of the construction management process. Some important areas of construction management :-

• Permitting your job
• Dealing with your subcontractors - contracts, change orders, etc
• Purchasing your materials - purchase orders, paying the bills
• Getting your subcontractors and materials on the job site at the right time (Daily Scheduling)
• Having a basic understanding of the building codes
• Understanding and dealing with Inspectors And Inspections
• Managing Quality Control. - How good is “good enough
• The tools you will need when wearing your Construction Management hat

The construction management activities can be categorized into the following:

• Daily Scheduling
• Purchasing
• Supervising and Coordinating the Construction. - This work involves managing the work of subcontractors and getting the proper inspections