How to Minimise Budget Blowouts on your Renovation
Budget blowouts on renovations are startlingly common, so it’s critical that you manage the process in a way that helps to keep your finances in check.
Scope of Work
It’s quite remarkable, as humans we are often very keen to renovate a property. ‘Scope of work’ is the term used to describe the basic parameters of a project. The scope and size of your renovation can have a huge impact on the cost. Start with a list of must-haves and nice-to-haves about what you’d like to do, e.g. bathroom renovation, because at some point during planning you’ll need to prioritise.
Before engaging a builder, be very clear on what is in scope and out of scope and don’t change your mind mid-project.
People who haven’t renovated before often don’t realise the cost of such work. If it’s a simple renovation, we suggest asking the Builder for an over the phone estimate. That way you can immediately decide if it’s worth your while and that of the builders to meet onsite and obtain a detailed quote - which can take a builder anywhere from 5 hours to 30 hours to complete.
When assessing quotes from builders, it is important that you understand all of the allowances contained in them. You will also find that the quotes received look differently, which can make it difficult to evaluate and compare ‘apples with apples’.
You’ll most likely need to ask lots of questions in order to give you clarity around what is included in the quote and what is not. Remember, the cheapest quote may not end up as the cheapest build due to the builders' exclusions and inclusions.
Stay or Go?
When living on-site you delay aspects of the build. By moving out, you’ll allow the builder to get the job done more quickly as it can take up to twice as long to complete a build if the builder has to clean up at the end of the day and then unpack again the next day.
If it is a minor renovation you may be able to stay home but be prepared for the dust, noise and lack of utilities.
So you’ve negotiated a fixed-price contract with the builder but that doesn’t account for unforeseen costs during the build. It’s only when you start taking plasterboard of walls are pulling up floors that you can decipher things like termite damage or dampness and these, in turn, are called variations.
Additionally, if the builder has allowed $300 for a toilet and the toilet you select is the gold-plated $1000 version, then you will need to pay the $600 difference as an extra. You will also be exposed to the requirement of paying a builder’s margin on top of the difference.
We find there are always a few changes of mind along the way and a good builder will keep you abreast of variations throughout the build but it’s best that you also ask for a regular update along the way.
Build a Contingency
It is sensible to allocate a contingency to your budget so that you are financially prepared. We recommend you build in a contingency of at least 10 per cent for any unforeseen costs.
A simple extension to a conventional home may only need a contingency of 5 per cent, especially if you are well prepared. However, if you are dealing with a much older property, a contingency of 30 per cent may not be enough for an unexpected structural issue.
At the end of the day, preparation is the key and working with a builder who is familiar with the type of project you are planning. Their experience will help to foresee and minimise any significant blowouts however our biggest piece of advice is to be organised. Delays due to disorganisation is a biggie because after all on a building site - Time is Money.
At Meader Constructions we can not only help you avoid a renovation budget blowout but the renovation of your dreams. Call us today on 0428 594 329 to speak with our award-winning our experts