How Do You Budget for a Renovation or Building Project?
By Zephyr and Stone
So you’re planning a new renovation, or building your dream home. How do you work out what your project will cost and then track spending once you start to avoid major over-runs?
It’s actually easier than you think - and all comes down to doing the right research, planning and quoting before you start. Skip this vital step, and your dream project could turn out to be your biggest nightmare! The importance of knowing just how much something really costs can’t be overlooked. Here’s how to do it…
What are you building?
First things first, you need a floor plan for a new build or a good sense of any structural and aesthetic changes for a renovation. This will form the Scope of Works when you’re ready to speak to builders or contractors regarding pricing.
2. Go Window Shopping and get Quoting
As unappealing as talking numbers may sound, a successful project simply doesn’t happen without it. The old “I’m going to renovate my house for $100k” simply isn’t realistic, and setting yourself an accurate budget is near impossible when you don’t know what you want or how much it costs. Your next step is to do a little window shopping or internet browsing and research products -
Investigate big ticket items - fixtures and fittings including tiles, tapware, flooring, appliances and lighting to name a few
How much cabinetry are you planning for? What materials and bench tops do you want?
Will you also need new furniture?
Even a detailed builder’s quote won’t necessarily be accurate if you don’t have a rough idea of the types of finishes you want for your home.
3. Number Crunching
Now you’re in a position to determine how much your project will cost.
If you’re engaging a builder, they can quote based on the types of finishes you’ve chosen. Giving your builder information like the flooring specification allows them to more accurately quote for your project. You don’t need to have chosen the exact product, however having information like an approximate m2 flooring rate, gives your builder a good indication of what to allow for in your quote.
If you’re fully renovating a house or multiple rooms, you can also use the m2 rate to quickly calculate the cost of your build. The finishes you’ve chosen will effect the rate, as will the City you live in and the type of land if you’re building a new home. Speaking to builders or trades in your area, with details of your finishes and Scope of Works, should be enough information for them to provide an approximate m2 rate. Then multiply this by the m2 size of the space being renovated or built to get a a good idea of cost.
We use our Project Tracker Tool when planning a project. The spreadsheet format means your running total is always on hand to see how your overall budget or spend looks. There’s a Budget Allowance column which is used during the planning and quoting stage, and the Actual Cost column once the project is going to keep an eye on costs.
4. Set a budget
Although you’ve had an idea of what you’re willing to spend from the start, what you want to spend and what your project will cost are two very different things! Now that you know what your project will cost, you’re in a position to make decisions -
Is the cost within your budget, and if not, what products could be changed to make it work?
If you’re renovating and the estimated cost exceeds what you’re willing to spend, you can always break the renovation up into sections rather than tackling it all at once. Having gone through the above process, means you can make a decision whether you’re willing to stretch your budget before you start, rather than being caught out half way through, with the stress of over-runs.
Allocate a contingency to allow for unforeseen costs. We recommend 10%, especially when renovating as there are often surprises hidden under the layers of 60’s wallpaper and shag pile carpets.
When’s the ideal time to get an accurate cost estimate for your project? Definitely during the final stages of the home design process; before you sign off on your floor plan design. At this stage you still have the flexibility to change your floor plan. For instance, if the finishes you’re dreaming of don’t quite work in your budget, can you reduce the size of your home? If you’ve allocated an extra room for guests, could you incorporate a sofa bed into a second living area or home office, and therefore reduce your home footprint? Could you incorporate a study nook off a hallway and reduce the number of rooms, or delete an extra bathroom or reduce it’s size? Only you’ll be able to make these decisions on what’s required for your own home.
Just make sure you don’t skip this vital step, as building a smaller but smarter homes means you’ll have more money to spend on the finishes and products you really want, rather than compromising finishes for rooms or spaces that are rarely used.
Set yourself up for success
Whichever way you choose to move forward, planning and accurate budgeting will set you up for success, and engaging the right professionals will generally save you more money that it costs with avoidable mistakes.
So work out your costs, set your budget and stick to it! It will make the whole process as smooth and stress free as possible… and as seasoned or professional renovators and developers do, track your project cost once you get going, using a spreadsheet or similar tool to avoid budget blow-outs. Take control of your Project NOW by downloading “My Project Tracker” here.