Does this face look familiar? Yep. We recognise it!
Budget overruns are probably the most common complaint we hear about renovation projects, whether it’s a few thousand dollars over or fully double and triple the expected cost, having your budget blow out is a surefire way to ruin the positive experience that renovating can and should be.
It has become so commonplace for me to be at a friend’s birthday, or in a cafe, or even on Facebook and I hear or read about someone’s renovation that went bad (and in the worst cases never finished!) due to cost and budgetary issues. This conversation almost always goes something like this:
Friend 1: So how is your big reno going, I bet it's nearly finished, I can’t wait to see it!
Friend 2: (Generally downing a large drink before replying) Well we’ve actually hit a few bumps; the concrete was way more expensive than we thought, and when we pulled the kitchen out we found out that none of the plumbing was suitable and that’s going to cost another five-thousand to sort out. The sparky who quoted us is now telling us the wiring is too old and wants a ten-thousand dollar variation to rewire the whole house. The damn house is sending us broke!
There are some very simple and easy ways to avoid becoming like Friend 2 and they include:
Demand upfront quotes and pricing from all your consultants and contractors, we are all experienced professionals and have done this before. We can give you this pricing, if someone refuses to do this, take it as a sign to run a mile from them!
Use the pricing and quotes to put together a project budget if you haven’t already done so, if you have you need to update your budget with solid figures. You will need to add a contingency amount to this figure, a good place to start is an additional 10%, but this can grow depending on the complexity of the project or the age of the property. Keep this budget up to date and if a consultant or contractor strays from their quotation you need to find out why.
Keep a tight rein on variations from consultants and contractors. A variation is anything that changes the scope of a project and as a result the cost. There are generally three types of variations: client driven; where you decide to change something. Unforeseen, where there was no humanly possible way for anyone on the project to anticipate a required change. Contractor/ consultant driven, where a contractor or consultant hasn’t priced the project correctly and is now asking you to pay for their error. The only real and acceptable variations are the unforeseen and these are exceptionally rare. Once you start paying for your project you want to make as few changes as possible as the further you get through a project the more each change will cost. And finally you should never pay for a consultant or contractor pricing error, if in doubt it can be good to get a second opinion from someone in the industry, it could save you thousands!
At Smits + Leigo Design Group we take care of all the above, while providing our clients with upfront pricing and rolling budgets throughout their projects, we also have thirty-years experience in dealing with project variations and finances.