Managing the budget

Organisational skills are required so as not to break the bank when renovating, writes Sometimes the best person to be the project manager can be you, because it’s your money.

There is a lot to keeping on budget with a renovation. It looks simple on TV shows such as The Block, says investor, interior decorator and home stager, Anthea Baker of Homebase.

Managing the budget without the price doubling on you requires super organisational skills. Would-be renovators need a spreadsheet and plenty of research. Google the words “renovation spreadsheet” or “renovation software” and many options abound.

There are also renovation budget planners such as the one at renovate.asb.co.nz or try KiwiBank’s RenoMate, which also keeps track of estimates, photos and even paint shades.

The next step is to scope out your work properly to see what is economically feasible, says Andrew Bruce, president of the Auckland Property Investors Association.

This needs to be done long before the first nail is hammered in.

If you’ve scoped the project properly, you will be aware of necessity versus want, and what you can afford against what should be left until later.

Scoping the work also allows you to understand the consequences of your choices.

Wanting a European kitchen and the reality of paying for it could be two different things. If your scope doesn’t meet the budget, revise before starting works, says Bruce.

In order to manage the budget renovators need all house plans, diagrams, engineering documents and council consent before work begins. Bruce says has seen gross underestimates, in particular of the cost of obtaining consent for a project.

The next step is getting quotes. But beware.

“A lot of people say ‘I have got a quote’, when actually it’s an estimate,” says Bruce.

Estimates provide little certainty and should only be used to get a ballpark figure for the work. “It might even be a guestimate based on the fact you said ‘I want a double garage, can you build it?’ Is it a Skyline garage? Is it lined, does it have electricity? What level of fittings to you want?” Says Bruce.

You need a quote or tender for the work, which can be enforced in court if necessary. Not just an estimate.

“It all goes back to scope,” Bruce, a former project manager, says.

The quotes need to be fully itemised so that you’re not hit with unexpected costs along the way.

Even then, the quote might have tags, he says. That’s provisional prices. An example might be for the cost of foundations, where if rock is found you will need to pay more.

Make sure you have a building schedule so that the builders are ready for the plumbers or sparkies, all the materials are on site when needed, and so on. The more detailed this schedule is, the less the chance of scope and/or budget blowout.

One of the best ways to manage a renovation budget is to have a project manager.

Sometimes the best person to be the project manager can be you, because it’s your money.

On the other hand, homeowners may be the worst project managers, because they’re not organised enough,emotional, and can’t be trusted to change the spec part way through the renovation.

If the latter is the case, it might be a good idea to outsource the project management to a professional company.

If you’re project managing it yourself, you need to be completely professional, says Bruce. He travelled to Hamilton every week during his most recent renovation.

He arranged meetings with the tradespeople at the multi-unit property and had an agenda to cover each time he visited. “I would work out decisions to be made on each visit, set action items and I minuted everything.” If the project was three weeks from needing lighting, Bruce would get himself to the lighting shops and make decisions so that the electrician wasn’t held up.

Budgets need to be reviewed after these weekly visits and actual costs entered to keep up-to-date.

It’s important to keep expectations under check. All too often, part way through the project homeowners discover ‘to die for’ fixtures, fittings, furnishings and so on and the budget goes out the door or a rework by the builder adds costs.

Baker says a lot of renovators forget the budget in this situation and go to designer stores when Kmart would do.

Even the most perfectly managed budget needs a sum for contingencies, he adds.

If you want to renovate, says Baker, start shopping around in advance for items such as toilets and anything else you can stockpile whilst the items are on sale.