Want to understand more about house extension costs and how to budget for your construction works? In this blog James Bryden, our MD outlines what costs you should allow for when budgeting for your renovation or home extension building project.
Always Set a Realistic Construction Budget
Here at CLPM we meet a lot of clients who are worried about the financial aspects of their building project. Home renovation costs can be difficult to budget for. Likewise no-one wishes to see their house extension costs escalating out of control.
One of the most common question we get is:
‘How can I budget for my building project and stop my costs getting out of control?’.
The simple answer is that the best way to stay in control of your finances is by setting a realistic construction budget for your building project – right from the start.
But how do you go about doing this?
Construction Budgeting is Key
Plan your finances first, before you start!
Renovating your property, building an extension or creating a brand new home is an exciting process. But don’t be in a big rush to get things going. Building your dream home can also be very stressful if you don’t approach it in a methodical way.
Construction is an expensive process, and while property is usually a great investment it’s always a good idea to plan your finances right from the start – before you get too carried away!
Every week we hear from homeowners whose projects have run into financial difficulties. Usually it’s when they’ve started to get unaffordable quotes from builders. Or it’s because their contractor is starting to bill them for a lot of extra work which wasn’t part of the original quotation.
Whenever money becomes a problem, it’s typically down to a combination of 3 things:
- The Architectural Designs are too ambitious – the scope of the project was unrealistic for the original budget or it has grown so it no longer matches what you want to spend or can afford.
- A Lack of Budgeting for Professional Fees and Associated Costs – fees are an intergral part of any construction project but are often ‘un-foreseen costs’.
- The Builder was not properly briefed – the tender process was not sufficiently detailed or robust so there are omissions in the original builder’s quotation.
Whatever the situation, the real reason people get into financial problems is a lack of proper financial planning at the beginning of their project.
If you want to prevent this happening to you, you need to spend time doing your financial homework early on – before you brief your architect.
The first thing you need to do is set a series of different budgets.
Step 1 – Calculate and Set Your Maximum Total Budget
The first thing you need to do is set your maximum total project budget. This figure is the maximum you plan to spend for everything associated with the building project.
- Start by adding up the value of your savings plus any credit you are planning to apply for – eg. re-mortgaging your home or taking out new bank loans etc. This is what you can afford.
- Next, decide what you should spend. Bear in mind the house prices in your area. Are other people improving their homes? You don’t want to be the most expensive house in your street. Is this your ‘forever home’ that you will keep for many years or will you be selling it soon? All these elements will have a bearing on how much you should spend. Try to remain emotionally detached. Decide what amount would be a prudent financial investment for you.
Use all of this information to set your maximum total project budget.
Step 2 – Understand All of the Costs Involved
It’s really important you understand all of the costs involved with your building project. If you do not, or if you under-estimate the associated costs you are very likely to overspend.
Remember that your maximum total project budget figure includes every expense you will incur. It isn’t what you have to spend on the construction works – there will be lots of costs you need to allow for over-and-above what you pay your builder!
In steps 3 and 4 we outline some of the additional costs you’ll need to budget for along the way – our QS team can help you do this for your project.
Step 3 – Budget Upfront for Your Professional Fees
Some of the first expenses you will begin to incur are at the pre-build stage.
This is the time when you will be starting to work on your designs, and gathering information about the structure of your home as well as creating more detailed architectural plans to use to get planning permission and builder quotations.
You will need to get quotations and budget for most, or all of the below:
- Structural Engineer
- Building Surveyor
- Landscape Designer
- Interior Designer
- Listed Building Specialist
- Quantity Surveyor
- Energy Efficiency and Heating Consultant
- Building Project Manager
Don’t stint on professional fees. Investing in good design and professional advice will get you a much better result – and will prevent a lot of expensive errors later on.
It’s a good idea to use a Quantity Surveyor (such as CLPM) to help estimate the costs of your designs (and check they are within your budget). A Quantity Surveyor can also get you the best quotations by organising a professional competitive tender for you as well as preparing the building contracts.
Likewise if you are planning a major project you should budget for an independent Project Manager to act as your Contract Administrator as it will protect you financially.
Step 4 – Calculate and Budget for Your Associated Costs
Don’t forget there will be other expenses too. Many of which may not be directly related to your architectural designs but which will be an integral part of your construction project. These extra costs could crop up just before or during the construction phase.
This is an area most people forget to budget for and so is where many projects overspend!
- Demolition work of any existing structures
- Stripping out – including asbestos removal
- Site clearance – for example clearing undergrowth or trees
- Skips, grabber lorries
- Rental of storage units for materials and equipment
- Rental of site facilities such as portaloos
- Landscaping works – making good in the garden, new fencing, paths, patios or driveways
- Redecoration of existing parts of the house – both externally and internally
- Replacement of doors or floor coverings in existing areas to match the new
N.B If it’s a major project you may also need to budget for additional living expenses during the construction works. You may need to move out and rent another property or pay to store your belongings.
Step 5 – Determine What’s Left to Set Your Construction Budget
By establishing your maximum project budget, and then setting aside a suitable sum from this amount for the professional fees and associated additional costs as we’ve just outlined, you can work out what money you have left for the construction part of your project.
This amount – your construction budget – can then be shared with your architect and used to steer the direction and scope of your project and the architectural designs.
We hope you have found this blog useful. If you want find out how we can help you set and control your construction project budget then we’d love to hear from you.
Simply call us on 01923 896550, email email@example.com or complete a contact form.