One of the biggest issues that many home renovations run into is going over budget. Even the most experienced project manager can underestimate costs, and the nature of a renovation – with all the potential delays and hold ups – means there is a big risk of budgets escalating from the start. However, being aware of the potential for budget disaster is the first step towards making sure your project doesn’t become compromised by it.
Start with the budget not the ideas
A renovation that begins with big plans and ideas, which then have to be squashed into a small budget, is heading for trouble. Start with the budget that you have – be realistic and base it on money you can already access – and then work from there. If you’re hiring designers and architects then make it clear that the build budget is set in stone and any plans they draw up won’t be fit for purpose if they don’t follow it.
Create a contingency
You’d have to be very lucky indeed to avoid going over budget on a home renovation – even the most careful budgeters experience this at some point. With that in mind, create a contingency so that you have a financial safety net if the budget does fall away. While we often view the contingency as there for unforeseen circumstances and one off disasters, in fact it’s often used to mop up gradual, small budgetary overspills that, together, knock the figures way off course.
As the project progresses you may have to accept that there needs to be some flexibility and go back to the drawing board. Make sure you’re constantly monitoring and reevaluating costs and be prepared to go back and make changes on the basis of whatever arises. The worst thing you can do with a renovation is to just let things slide so that at the end you’re so over budget you can’t cope with the additional cost.
Be aware of the extras
The costs in the contract are not always the end of the story. In fact, extras can boost the price by up to 40% more than you had originally been quoted. Make sure that additional features, from walk in wardrobes, to swimming pools, are costed up in writing and agreed before any work takes place so that you limit nasty surprises in the final bill.
Phase the project
If funds are tight then carry out the project in phases so that budgetary demands are smaller and spread out over a longer period of time. Get some advice on how you can realistically break the renovation down into stages that you can pay for as your finances allow.