Creating & Staying on Budget
Staying on budget can be one of the hardest parts of a remodeling project.
Sometimes it seems like you're heading for a train wreck but if you follow some simple rules, you will be able to avoid the crash.
First and foremost, you must plan well and really know what your bottom line is.
What is the maximum dollar amount you can allow yourself to spend? This is a critical answer.
Just remember, construction costs almost always go up never down.
Setting A Contingency
Once you have that budget number firmly in mind, you should consider how much of that you want to set aside for contingencies.
Some people feel comfortable with 10% some 25%. It really has to do with your ability to stay the course and not deviate too much from your original plan.
Here’s an example for you.
Let’s say that your remodeling budget is set at $50,000.00 and you know that you are usually very organized and decisive. So maybe you set your contingency at 10%. So the remodeling budget you work to is $45,000.00. This allows you to have $5,000.00 in the kitty for changes or unforeseen site conditions.
If you have reserves you can tap to cover contingencies and extras, than you can just set aside the full amount for your project.
Sometimes no matter how much willpower you have to not over spend, unforeseen conditions that arise during the construction add necessary costs. We will cover some of the more important ones later in our section on The Dangers.
Time Equals Money
Be sure to create a project cost control schedule where you review the costs on a regular basis. Each time a change is made, it usually adds money to the budget and time to the schedule.
This is why the planning stage of any project is critical. It may seem like an elementary approach but it works.
By this time, you must have a good idea of what you would like your project to include. This is called the scope of the project. You do not have to have all the specifics like paint color or wall covering selections etc but you must have a good overall sense of what you want.
Please click here to visit the scope section for more information and clarification.
Let's Start the Bidding!
Once the scope is defined, you can work on finding reputable contractors to price out your job. Try to get a minimum of three bids.
I have always found that it is a good idea to inform each of them that you are securing other bids.
It tends to have them sharpen their pencils a little bit when they know there is competition.
Compare each of the bids carefully to be sure that they have all included what you have asked for. Make sure to check each bid for exclusions. Some will exclude permits and fees. These can add up so be sure to check.
Now that you have the bids, you can see how close the bid is to your actual budget. If you are way over budget, you must consider the things you can do without or what might be able to be scaled back a bit.
If you are under budget, go back to your planning stage and look at the wish list. It is possible that one or more can be added and still be on budget.
Don't forget to leave the contingency alone. You will need it at some point it is almost a guarantee that something will arise.
Architects and designers can help you outline your scope based on your budget and desires but if you are going it alone, the above should help you define objective. We'll talk a little bit later about how architects and designers can help and whether it makes sense for you to hire one or not.
Return from Budget to The Master Plan