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3 Tips To Ensure Your Renovation Doesn’t Blow Your Budget 

Are you planning a renovation but worried about going over your budget? 

Renovations can easily veer off course, causing homeowners to struggle with the frustration of financial stress. 

The culprit is often in the unforeseen changes which can have a substantial impact on the initial estimated costs. 

Many homeowners encounter this challenge, and the truth is—it’s not really their fault. Fortunately, there are several proactive measures you can employ to avoid this situation.

So how can you ensure your budget doesn’t blow out?

Tip 1: Set Your Expectations Before Commencing Design

One of the more challenging initial steps in mobilizing your renovation plans is setting a cost expectation that aligns with your financial capacity while enabling you to achieve your dream home design.

While it is important to understand the financial demands of your project, it is equally important to keep in mind that at the initial stage of your design process, with no building plans, providing an exact quote is not possible.

However, through experience, a professional builder can provide an accurate approximation to guide your expectations reliably.

If your project is a home renovation, a renovation specialist will be best equipped to offer insights from experience. 

This is to say, coordinate with a builder who understands your project type. 

Professional builders track the data and get the insights from their past projects so they can compare your project to theirs using these project sheets. 

This comparison can help set healthy expectations on what a realistic project spend should be for your home based on an actual example of one that is similar.  

The level of detail and finish you want in your home will also impact this budget expectation-setting exercise. Understanding your desired level of finish will enable further accuracy with cost expectations and assist with a tailored design process. It is always underestimated how much it costs to complete the fit-out stage of home renovations so this is a vital step for setting the project up for success.

As you collaborate closely with your builder in setting these expectations, their expertise will also allow you to compare past examples and choose finishes that help align your vision with your budget. 

Tip 2: Find A Reliable Renovation Specialist 

A builder who only does new builds may lack the experience to adequately manage all the pitfalls and latent conditions that can be found on a renovation project. This means that a builder who does not specialise in renovations will likely make mistakes in their quote, inevitably resulting in variations during the build. Meanwhile, a builder who specialises in renovations will follow a process that allows them to price the job to a point where they can provide a fixed-price guarantee. This will help you avoid builders’ variations from the missed scope of work or latent conditions found on-site during construction. Their team of subcontractors and trades will also specialise in this type of work, and they will be able to help anticipate and investigate any potential issues that may arise during a renovation. 

The process of providing a fixed-price guarantee means the builder needs to understand the job completely. This includes all the nuances and specifics of your site so that all potential issues can be investigated during the quoting process. This extends to the subcontractors, they will need to inspect the site conditions as well to enable them to provide their fixed pricing and bring it all together. 

A great example of a potential pitfall that can easily be avoided is having to dig a new plumbing trench next to the home. It may seem simple enough when you’re standing there looking at it, but without the experience of these types of scenarios, the inexperienced builder could get caught out. He would be unaware to allow more time for the trades to work around the existing building, not knowing that this type of task may take up to two or three times longer than if it was a new home.

A renovation specialist is fully equipped with the knowledge of these pitfalls and has the experience to allow for this within the fixed price quote. This is an example of a cost that is unavoidable but very valuable to know upfront to help with your decision to move forward with the project. The last thing you want is an underquoted contract and to be hit with these variations part way through the build.

Here is an example of the process a professional builder will follow to ensure a fixed price quote for a renovation project 

Step 1: Full document review to ensure we understand the scope and inclusions

Step 2: Thorough site assessment conducted with a trusted building team and project estimator.

Step 3: Return to site with specific sub-trades to investigate and confirm the scope of work.

Step 4: Confirm the level of finishes and selections with you – the client.

Step 5: Create a full building schedule to understand how long your project will take

Step 6: Collate sub-contractor quotes, quantify materials 

Step 7: Create a detailed contract proposal with specifications, inclusions and itemised exclusions so you have complete clarity on what you are getting

If you’re working with a builder and they are quoting your renovation project from a desktop, this would be a big red flag and you should ask about their process for quoting and mitigating variations.

Tip 3: Define And Commit To Your Scope Of Work 

Most consumers make the mistake of changing or adding scope of work halfway through the job. It is very common for the first round of costings on your plans to be higher than initially anticipated. The next step from here is to talk through the scope of work and find areas where compromises or reductions can be negotiated. This is where we can cut back on the scope of work to achieve a more agreeable project price before finalising and signing the contract. 

What follows is another common mistake: people will negotiate and remove a lot of scope of work to achieve the desired contract value, only to add most of that work back into the contract as variation during the project. This practice not only creates a delay during the project but also contributes to additional costs that are usually over and above what was originally presented.

Our advice is straightforward: decide on what you want in the job, agree on the price, and stick to this contract. Indecisiveness and mid-project scope changes are the biggest factors for cost blow-outs. Untimely client variations affect the cost and will negatively impact the timeline. Subsequently, delays will require more project management time, more toilet hire, more scaffold hire, and so on. 

Making changes in the scope while the build is ongoing can cause an abundance of issues. These variations lead to extended timelines and inefficient management of material and labour costs because we are unable to plan ahead for these unforeseen extras.

This cannot be understated: Stick to the project scope and don’t add more halfway through your build.

Keep in mind that your budget isn’t blown until it blows out after you have signed the contract. A fixed price quote process allows you to understand all the costs involved in your project, and although it can be surprising how much the build costs, this process ensures that there are no further surprises from that point onwards. 

If you’re planning a renovation project and want to avoid blowing out your budget, download our FREE guide “Six Essential Things You Must Do For A Successful Home Renovation”. 

Our guide provides practical advice to help you plan and execute your renovation project successfully.

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