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How to Stay on Your Renovation Budget
Renovating your home can often turn out to be more expensive than anticipated. In fact, a recent survey showed that 87% of poll respondents agree that renovations can easily lead to overspending. While going over budget can seem inevitable, it doesn’t have to be this way if you follow these six key steps.
1) Hire the Right Contractor
This is easier said than done, but this is the most important factor in your renovation budget. A reliable contractor will prepare an accurate estimate, stay on top of the budget throughout the renovation and suggest ways to cut back on expenses while still achieving your vision.
When evaluating potential contractors, ask for the contact details of past clients. While project photos can be beautiful, they may not tell the entire story. Call the past clients and ask specific questions about if their project was completed within their budget and if not what happened.
Remember that trying to save money on a renovation contractor can actually cost you thousands of dollars if things aren’t done right or if they mislead you on quotes.
2) Make a Realistic Budget and Commit to It
Be honest about your budget. Contractors are used to working with a wide variety of budgets and need this information so they can prepare an estimate. If they come back and say that you can’t achieve your entire renovation on your current budget, you’ll need to scale back your renovation plans or increase your budget.
All contractors want to keep their clients happy but a good one will also control clients’ spending to make sure they stay on budget.
Many home-owners fall into the trap of upgrading as the project progresses without realizing how much all the little extras add up. When preparing an estimate a contractor will provide allowances for different parts of the renovation often with middle-of-line options. If you choose a higher-end appliance, an extra feature and change your mind about a design idea, it can add up quickly.
Before finalizing the budget consider where you want to splurge and where you can cut back. If you love cooking, you may want to invest in high-quality kitchen appliances but may not care if you have real hardwood or laminate flooring.
If you choose an option outside of the budgeted price once the renovation starts, work with your contractor to find another area where you can cut back on.
3) Stick to the Plan
Clients often say “while we’re at it, can we just …” without realizing how this can delay the building schedule. For example, a seemingly small change to the placement of a ceiling light in a bathroom may mean calling back an electrician, drywaller and painter.
Work with your contractor to make all decisions ahead of time so your budget reflects all the variables and your renovation stays on schedule.
4) Review Project Quotes
When your contractor brings in outside trades, the standard practice is to get multiple quotes. Your contractor should be showing you the quotes and letting you know why they’ve chosen a particular sub-trade. Price is an important factor, but they will also take into account their past experience with that tradesperson, their availability and skill level.
Be wary of businesses that insist on using their own employees as this is not always the most cost-effective. Contracted trades have a financial incentive to finish in a timely manner whereas a renovation or building company is not committed to a quoted price and will often bill hourly for their employees.
When helping a client review their final home-building bill that was 30% over budget, we discovered the house framing, which had been done by builder’s own crew, cost $40,000 more than it would have using an outside framing crew. It’s much harder to fight charges after the fact, so stay on top of the bigger cost areas from the beginning.
5) Regularly Review the Renovation Progress and Budget
Ask a potential contractor how often they’ll provide progress reports on the renovation as well as the budget. While online reporting systems have their place, they can often be confusing to non-builders. By the time a project has gone over budget, it is much harder to take action.
If an area of the renovation changes drastically in price you should be informed and sign off on a change order. Make sure that your agreement includes a way to address unexpected changes to the budget.
6) Budget for Contingencies
Having a contingency fund for your renovation is extremely important. Renovations can be very unpredictable as you can only see surface deep. A good contractor will use his experience to try and predict what lies beneath but in the end there are often surprises. Having a contingency that is not a part of your original budget will give you a cushion if a problem arises. If everything goes smoothly and the contingency isn’t required then consider it a bonus to do some extra upgrades in the end or take a much deserved holiday.
While renovations are by nature unpredictable, having a reliable contractor, clear plan and firm budget can keep you on track and under budget. A good contractor will have no issue sitting with you and telling you in detail where every penny has gone.
Here at Clearspan Contracting, we know how important it is to stick to a budget. If you’re looking for a renovation contractor, please contact us for a free consultation.