The first time you see a budget for your new construction or remodeling project, you’ll want to be sitting down. Preferably at a table with your builder so you can ask all your questions. A budget for a custom home could easily climb into the seven figures and will no doubt include dozens of businesses, so it’s going to be complex.

However, taking the time to truly understand it will help you feel confident in your decision-making and your builder’s expertise. Ultimately it can build the foundational trust you’ll need to work together effectively.

Let’s take a look at the major categories of expenses associated with building so you’re not surprised when you look at your own budget for the first time.

What’s value engineering?

Value engineering is the process of deciding how to balance functionality, quality, and cost by making changes to the design, methods, or materials originally planned for. Practically it’s what happens when a project is over budget, and it becomes necessary to reduce the square footage, swap in less costly finishes, and take other cost-cutting measures.

Builders and architects advise against value engineering the building envelope, or the components that protect your home from the elements, like your walls, windows and doors, roof, and foundation.