Budgeting for a renovation

Construction-Concierge-How-to-budget-for-a-renovation

The success of any renovation comes down to a number of factors including the right planning from the beginning with the right team of consultants behind you. Just as important is the strict and realistic setting of budgets and costs from pre-construction all the way through to the end to ensure you stay on track with the scope of works as well as not over-capitalising. Let's take a closer look at budgeting for a renovation.

Scope of works

We have spoken about the importance of planning in previous articles and I can't stress this enough. The outcome of the project will most certainly be determined by the amount of attention to detail you put into the planning phase before any work begins. Part of this is ensuring you have planned your finances and budgets correctly to ensure you not only stay within your budget but that you also don't overcapitalise. From the outset you need to be very clear and honest with yourself to determine two things: 

1. What is the maximum I am willing to spend on my renovation?

2. What is it going to cost me to undertake my planned renovation?

Generally you will fall into one or both of these categories. You may have a predetermined budget and you may be planning on how you can stretch that or where you can spend it. Others may have a grand plan of all the things they would like to get done but unsure of what it's going to cost. 

Whatever category you fall into you need to make clear distinctions on what your needs and wants are. Once you have an understanding of what you are planning on doing it is a good idea to engage the right consultants from the beginning such as an architect if needed. You need to make sure your budget allows for not just construction costs but also consultants, council fees, materials if purchasing and contingencies.

If an architect or designer is engaged to draw up some plans it is a good idea to get some indicative prices after the concepts are done to see if the budget is realistic. There is no point getting all the drawings done and going through all the way to having all your plans approved to then get quotes coming back that are $100k over your budget. If you get some indicative prices early on it is a good idea to try and lock in a builder at this stage you are comfortable with. This will ensure the builder is informed during the design phase and can have input to keep costs down and within budget.

If no designers are needed always make sure you get multiple quotes from different trades or builders and have them itemise exactly what they are quoting for. Don't leave things up to interpretation because you can very easily run into trouble and have to start paying for variations on the original scope. Make sure you ask as many questions as possible as to what is and isn't included and make sure this is detailed on the quote and in the contract. We always recommend getting quotes itemised as well as a fixed price to avoid any surprises.

Allow for contingencies

No matter how well we plan a renovation we can always expect something to go wrong. This can be anything from structural problems to plumbing, electrical or even hazardous material such as asbestos. Whether you have done multiple renovations or are undertaking your first it is always a good idea to set aside a contingency for those unforeseen circumstances. As a general rule of thumb it is always advisable to have a contingency of about 10-15% of your construction budget.

Consultant fees

If you are undertaking a small renovation then you may not need many consultants, if any. Smaller renovations may require you to hire a designer whose costs can vary anywhere from $3k to $50k depending on who it is and the amount of work involved. When you start to undertake larger jobs that require more formal approval it is likely you will need some of the following consultants:

Structural engineer - $3k plus

Private Certifier - $3k-$5k

Surveyor - $1500 plus

Stormwater / hydraulic engineer - $3k plus

Town planner - $3k plus

Heritage consultant (if in an heritage overlay) - $3k plus

Water Servicing Coordinator - $3k plus

It's important to remember that every renovation is different and some of these consultants may not apply to you. It is also possible that more consultants will be needed depending on the nature of the renovation you are undertaking. 

Materials

This is where costs can easily blow out and catch you off guard. It is absolutely imperative that you have a complete understanding of the exact materials you want and what you will be paying for them before you sign a contract. For example it is not uncommon to be given choices of different flooring options during the build where a particular product may look better. This may be the case but it is also very likely that it will cost more. If you make similar choices with tiles, stone, taps etc then before you know it your budget has just increased by $50k! Ouch! Always get the builder or trades to itemise on their quote the exact materials that will be used so there are no surprises during the build. 

Keep track of your costs

One of the best ways to keep track of costs is to have a system set up from the beginning. This can be as simple as using an excel spreadsheet that tracks all of your budgeted items against actual invoices paid for work. It is also a good idea to add in things such as holding costs if they apply and any variations. This way it gives you a visual to see how your spending is going compared to what you budgeted for each item and makes it easier to see very early on if you are overspending and allow you to make the tough decisions earlier rather than later.

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