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How to budget for a home renovation when building costs are rising

By April 26, 2022Home
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Setting a budget for a home renovation can be a challenge. Tough decisions need to be made often to reconcile the budget with the wishlist. And it can be hard to know how to prioritise to maximise your investment. Now, with material costs rising every week, it’s even harder to understand what to expect when it comes to building costs? I spoke with Quantity Surveyor Patricia Power to get her advice about navigating these rising costs and her tips on budgeting for a home renovation. 

Plan early and stay involved

When working out the budget for a home renovation, put the time and effort in at the very early stages of your project. Work through the design and ensure it is within your budget. Give yourself plenty of time to research and select your finishes and fixtures. Once the build gets underway, you’ll feel under pressure. There will be distractions and emotions to mull over, so you won’t be at your best when making decisions. Making these decisions before the contractor asks you will reduce stress and make the process much more bearable.  

Don’t be afraid to take the lead and get involved. This is your home, so don’t leave these decisions to others to make. There will be a lot of decisions that need to be made, so it’s better to give yourself plenty of time rather than having to do it under pressure.


When to engage a QS

Engaging a QS at the start of a project has never been more critical. Once you’ve set your plans with your architect, you should hire a QS to put a realistic figure on the design. It can be disheartening to find out you don’t have enough to do everything you want. However, it’s much better to find this out early in the design process as you can still make changes without incurring costs or losing too much time.

‘Don’t go for planning until you’ve had your project costed by a QS in the current climate,’ warns Power. If the design is over budget, you will be able to make adjustments without significant cost implications. 

The Bill of Quantities puts you in control of costs.

A Bill of Quantities is a very detailed document issued to contractors at the tender stage to get pricing. Having a Bill of Quantities puts you, the client, in control of the project’s specifications and standards. This document also makes it easier to compare builders’ prices and ensures everything is included in the price. This means that once your project goes to site, there will be no grey areas, everything will move along much more quickly and most importantly, there will be no rows.

The Bill of Quantities also gives you control when negotiating with builders and managing your costs before starting on site. Because the Bill is an itemised list of everything included in your build, it’s straightforward to see the implications of removing something. So you can play around with the costs rather than asking a contractor to requote if you need to bring the price down. 

‘I would always reprice the Bill of Quantities before going out to tender,’ says Power. ‘The market is changing so quickly at the moment the price may have changed if the original Bill was prepared a few months earlier,’ she explains. By repricing the Bill before going out to tender, you’ll have a good idea of what to expect from the contractors when they price. But Power warns against making changes to the design based on the repriced Bill if it’s over budget. ‘You might find you get a slightly better price once you go to tender. It’s only by going out to tender that you get a true sense of current market prices,’ she says.

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What happens if material costs go up mid-build?

‘There is no easy or correct answer to this,’ says Power. There is a clause in the RIAI building contract, ‘Clause 36’, that deals with cost increases. However, it is typically struck out. In the past, builders were happy with this as material or labour costs were unlikely to change significantly throughout the course of a project. Now, however, increases are being announced every week on everything from concrete to tiles.

While contractors are still happy to strike out Clause 36, they are looking for ways to safeguard against the sharp price increases. One solution is to order materials early. Contractors are ordering items like timbers, roof tiles, insulation, and any other building materials at the beginning of a project and storing them on site in an effort to minimise their exposure to price increases. 

It’s also a good idea for you, the client, to buy and supply items before the builder starts on site. These include things like flooring, tiles, kitchens, sanitary and any other items that the client is usually responsible for purchasing anyway. 

It’s essential you work with your builder to ensure they can finish the job. ‘If the contractor is hit with increases on every project without support, he won’t be able to complete your job. Everyone must work as a team right now,’ says Power.

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Optimise Home renovation planner
Denise O'Connor

Author Denise O'Connor

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