The most important way to stay on budget is to severly limit "change orders"! As far as staying on time--when I built my home awhile ago and was working directly with the contractors, I offered a bonus for finishing ahead of schedule! While they didn't "earn" their bonus, it kept tem trying!

If you have already hired your contractor about the only thing you can do is to keep change orders to a minimum. I agree with the comment above, change orders will make the project take more time and you can kiss your budget goodbye. I would never offer a contractor a bonus to finish ahead of schedule. You may save some money but the quality of the work will more than likely suffer and number of problems you could run into can eat up any savings you may have gotten by having the project finish ahead of schedule.

If you are looking for a contractor check with the local Builders Association that is always a good place to start. I know money doesn't grow on trees but going with the lowest bid is usually problems waiting to happen, and a final bill that is still over your budget. Get bids from only two maybe three contractors any more than that and they will think you are not serious and either give you a from the hip bid or not even return your call. Talk to your friends who hired contractors and are happy with their work, and ask to see some of their work and talk to some of their past customers.

Good Luck.

1. Fully document and agree to the scope of work, schedule and budget as part of contract.
2. Payments should be tied to progress. Where we practice, it is generally 1/3 deposit with contract, 1/3 after rough inspections, final 1/3 with final inspections and owner sign-off.
3. Have all of the critical finish materials (ie tile, stone, fabrics) and equipment and fixtures on site before you begin. Many delays are attributed to delivery delays. Sometimes need to add 1 or 2 weeks to suppliers lead times.
4. Verify the contractor has his subs lined up and in the proper order (demo, frame, plumbing, electrical, finish, tile, fixtures).
5. Avoid "while you are at it, can you...." scope creep.
6. Practice triple constraint project management. Trade off time, quality and cost. Pick 2.

TMK is right on. Especially with the "while you are at it, can you...". I have talked to so many contractors that hate that phrase because they know it will put the customer over budget and then they (the contractor will be at fault for going over budget.)

When I offered a bonus for finishing ahead of schedule, I didn't makw myself clear, I guess. I knew the contractor personally, the subcontractor was working ONLY on my project, and we were building a house from the ground to finish. We started on a Labor Day weekend, and moved in at the end of March, building over the winter in the Northeast! Since we were framing and getting the roof on by Christmas, we did give the contractor and the five framing carpenters a "Christmas bonus."

In construction we have three common criteria...Fast, cheap and good. You get to pick two. Fast and cheap is crappy, fast and good is expensive and cheap and good is slow.

And slow and cheap is crappy.

If the budget allows consider a project manager