Home Renovation Budgeting
Much to do about Home Renovation Budgeting
With each new client’s home visit at Woodsmith Construction. We seem to come across, time and time again, a real lack of understanding of what good home renovation budgeting is. Most people obviously understand intellectually what a budget is and how important it is to the proper planning of any renovation. The real problem lies in the details, as they always seem to do. Now one would think that we would all be sensible and prudent with our numbers. Making sure we add for variables and to keep good buffers on trade costs. The reality of how people seem to budget for their home renovation is very different. Everyone always has a list of wants with any home renovation project, as they should. The problem starts when the wants outweigh what is realistically affordable to them.
The root of this problem lies in the fact that most contractors don’t want to be the bearers of bad news. So when people should be told that they can’t afford to have whatever it is. Instead, the budget gets adjusted to make it look like they can. This is usually by having much-needed buffer removed or by taking trade or material costs down to unrealistic levels. Now, because the client has no idea what is or isn’t realistic, This adjustment may not even be realized at the beginning of a project, but it can most assuredly have very detrimental consequences down the line. Improper buffers and unrealistic costing are the two most deadly sins for any budget and can cost you big money when it comes to your home renovation budget.
Improper Buffers
Buffers should be your best friend when it comes to your budget, but unfortunately, people tend to take a way too optimistic view of things could cost. Planning a budget is no time to be overly optimistic.It is always better to have allowed more and spent less than the other way around. Now granted, this can result in a higher perceived cost to begin with, but to plan without buffers will guarantee a higher actual cost in the end. We have found that through the process of any renovation, a good budget should have a or- margin of around 10%. Now this margin can give you a bit of wiggle room if it goes in your direction but it won’t kill you if it doesn’t. The only way you can ever achieve that kind of accuracy with a home renovation budget is to factor in proper buffers
Unrealistic Costing
This is by far the biggest drag on any budget. As mentioned before people want what they want and don’t like to be told they can’t have it or can’t afford it. Budgets can be very misleading when unrealistic costs are factored in. As I write this we deal with on average a 10-15% increase in either material or trade costs on each new project we start. This means if we just took our previous costs and tried to apply them forward, we would consistently be wrong. Proper costing comes from knowing the environment you are trying to build in. Is it a busy market with lots of buildings going on, or is it a slower market? Each of those conditions will change cost dramatically. Also, are costs being drawn from local trades or out-of-town trades because that can push the numbers in the wrong direction?
Always make sure your contractor can defend his numbers, and if he does say you can’t afford something, thank him for being honest. It’s better to plan accountability from the beginning than to overpromise and underdeliver in the end.
