Six Ways To Establish An Early Project Budget

Why you should set a Budget for your Renovation?

When you’re first looking into new residential project or renovation, one of the most important early tasks is to establish a realistic budget. While you might have a fixed amount of money for your project, in my experience, most clients have an easy enough time imagining what they want in their renovation, but a hard time determining how much it will cost.

A project budget will not only help you to finance your project (through a loan or a savings goal) it will also give you a realistic idea of the size, type and quality of renovation that you can afford. 

Importantly, it will also inform your architect and builder (or any other members of your project team) on what they should be designing for. While it may vary throughout the project – you might find some additional money for the project, or you might reduce the scope of the project, it is a valuable early step.

 However, it can be a challenging process to establish a budget for your renovation. In the early stages of research you might just be happy with a general impression of similar types of renovations, but as you learn more, you will want to be getting more and more specific information on the cost of your renovation.

Friends and Networks

You might have tried talking with friends who have done some renovations recently. But make sure their project was recent, nearby and similar in scope and size as yours.

While asking around is a natural first steps, there are a lot of variables involved in a project and you should use this method with caution - this is really just a first point in the process.

Online Research

Forums, social networks, Reddit, blogs - there is no limit to the amount of information you can find online to get a sense of what projects can cost. But, as with asking friends, make sure that you trust the sources, they are recent, local and relevant to the type of project you are starting out on.

Treat any research you do online as very general - just a way to start building up a picture - until you are ready to start speaking with relevant professionals in your area.

Square Metre Rates

Square metre rates offer a good ‘rule of thumb’ for new residential projects - but again, these should be treated with caution.

The quality of the finishes, the location, local site conditions (sloping ground, sites that are difficult to access), size of the project and current economic conditions all play a part in the final cost. Square metre rates don’t really take this into account - as such they can vary widely.

While square metre rates can be a useful early indicator for a new builder or large extension, it is not advisable to use them for renovations. This is because the costs involved in renovations are very specific. The amount and type of demolition, remedial work and the variability of the new work make it hard to put a general number on it. For this reason, it is best to start talking with people in the know at this stage.

A Builder

You might talk with a builder about your idea and get some cost input from them. Think of it as high level advice at this stage - not a full quote. However, builders are better able to give advice on project costs when they are working from a clear project scope.

While you can chat with them on site about your idea, until its down on the page in some form, its difficult to make sure you’re both on the same...page.

An Architect

Architects, building designers and draftspeople are able to work through the design with you and document it in some form - usually drawings and 3D renders.  With these, your project can move from a general discussion about building costs to specific advice about your particular project.

They can also offer general advice on the cost implications of building materials, site conditions and the current economic climate and connect you with other resources to establish a project budget.

A Quantity Surveyor

Finally, a Quantity Surveyor can offer highly specific cost advice on your project. While they may use square metre rates as a basis to form the cost, they will usually itemise costs for all of the elements of the building - think walls, floors, services, windows and doors. However, they predominantly base their costs on a set of drawings and are therefore best to engage when you already have a relatively clear idea of what will make up your project.

As the design of your renovation progresses, they can be a great resource to target costly items in your design. Because they break down your renovation in to each of its parts, you will see a dollar value next to each element of your project. This means that if the project estimate is higher than you had hoped, you can clearly see where your dollars are going. So if your beautiful hardwood, hand made doors are putting your project over budget, you can switch them out for a more affordable option.

While they are an additional fee, their advice could save you tens of thousands of dollars.

Final Thoughts

Consult widely when establishing a cost for your project.

Each of the methods above can help to form a piece of the picture of what your project might cost - but remember, until you get a quote from a builder, these are general estimates varying greatly in degrees of accuracy.