Staying on Budget

Help, this Renovation is Getting Out of Control!
Tips for Saving Time and Money on Your Remodel—Cost Busters

As projects go, it was about as big as they get: homeowner Maggie McGee had budgeted $400,000 for a major remodel of her New York house. She was expanding, yet trying to retain the home's architectural character. The project was projected to take four to six months to complete.

Two years later, Maggie had spent $1,100,000 and her house was still not finished. Outrageous, you say? Believe it or not, Maggie's experience really was no exception to an old rule: a remodel is likely to cost twice as much and take twice as long as you think. And some people, like Maggie, say that merely doubling your projections is optimistic! Maggie eventually got her beautiful house completed but the torturous process is something she never wants to repeat.

So why are over-runs so common—and what can you do to minimize them? First, recognize that there are multiple reasons why costs escalate and timeframes expand. Some are simply out of your control (you never really know what's behind those walls until you open them up, and no one can control the weather), but many are preventable. Here are twelve tips to help keep your project on track and on budget.

  1. Create a reasonable budget. Use Excel (or a similar program) to create a spreadsheet detailing the amount you want to spend for every part of the renovation. Be realistic about what you can afford. Get at least three estimates for each job. You'll probably want a column of estimated costs and actual costs—it's about the only way to track how much a project is running over. As the costs come in, meticulously add them to the total price to see how you're doing overall.
  2. Don't necessarily go for the cheapest estimate. Your two main costs are going to be labor and materials and you may be tempted to skimp. But remember that there's probably a good reason why one estimate is the cheapest. When juggling estimates, make sure it's a fair comparison; i.e. both estimates are for the same kind of tile work or cabinets. Hire the best people you can, get them the materials they need and then allow them time to complete the job to everyone's satisfaction. "Good people don't work fast, they work well," says Lee J. Stahl, president of the Renovated Home remodeling company.

    As for materials, remember that what you choose is going to be with you for a long time and if you plan on staying in your home for another decade, you should probably choose the materials (tiles, countertops, flooring, etc.) that you love, even if they are not the cheapest in the store. These costs should be factored into your original budget.
  3. Research the rules and regulations. Before you go too far down the design road, make sure you do your homework and get a detailed list of any rules or regulations concerning renovations. Of course, if you're using a general contractor or architect, they should be familiar with local building codes and restrictions for your town. But don't put the entire burden on others: talk to your neighbors (especially any who have done similar jobs), visit the city building department, talk to your homeowners association or board if you have one.

    Local rules or regulations may seem arbitrary, but you'll save time and money by identifying budget-busting restrictions ahead of time. For example, some building codes require that you hire only licensed electricians or plumbers. If you were planning on your general contractor doing some of this work, you could be in for a costly surprise. "We had budgeted $1,000 for electrical work in our co-op which our contractor was going to do," says first-time renovator Natasha Fried. "Then, when we discovered we needed a new electrical box, the co-op board insisted we subcontract the work to a licensed electrician. We wound up paying $6,000 for electrical work, which was about 10% of our entire budget." If you own your home, be aware of local zoning laws and inspection requirements. You never want to have to take down that air conditioning unit you put on the roof because it's a foot too high for the neighborhood.
  4. Communicate—and get everything in writing. Make sure you understand all of the architectural drawings—this usually requires asking a lot of questions. Your builder or architect should do the same: do you have unusual storage needs such as extra cabinet space for your heirloom china? Need a closet that'll fit all your shoes and seasonal clothes? A workshop? Planning on kids someday? Make sure your architect or contractor understands your needs, puts a plan in place to address them, and explains exactly what you are getting. Make sure to get those details in writing; no detail is too small to consider! As your project progresses, talk to your contractors regularly. Over-communication is a much better option than arguing later about surprises.
  5. Stick to your plan. In most cases, cost overruns are the result of changes made to the original plans while work is in progress. During construction you may decide you need an extra outlet or that a wall switch should be moved to another location. Well, be prepared to pay dearly for such seemingly minor changes. "Layout for plumbing, electrical, etc., needs to be confirmed and approved at rough inspections," explains general contractor Bret Gedryn. "I cannot tell you how many times we get the okay for outlets, switches, light fixtures, plumbing fixtures, install drywall and finish. Then the owners walk through and decide they would rather have the switch in a different location, or an outlet moved, or a new wall mounted plumbing fixture instead of a deck-mounted unit. When this happens, we have to call in the subcontractor (electrician, plumber, drywall, etc.) and reschedule their work. This process leads to lost time, additional dollars, additional management and a general upheaval of the project."
  6. Be prepared for surprises. Ever heard of Murphy's Law? If not, you have never renovated a home! Murphy's Law tells us that anything that can go wrong will go wrong and your renovation is probably not going to be an exception. Every renovation has its own set of unexpected bombshells ranging from structural problems to termites to discontinued products to sudden and prolonged bad weather. "When you start to remodel, you simply never know what lies behind that wall," says contractor Carl Heldmann. "It's not one thing that derails (a budget), it's a series of small things, and there are too many to estimate." Learn to be flexible. And a little patience goes a long way. Include a contingency amount in your budget and then double it.
  7. Visit the site every day. If possible, try to stop at your work site once a day to make sure the job is progressing. Contractors have a habit of taking on whatever jobs come along and this may mean they are always be focusing 100% on your house. Don't become a nuisance and question every hour of work, but keeping on top of things is highly recommended so that the work does not get derailed.
  8. Check your deliveries. Materials sometime arrive broken or missing parts. Before your employees arrive, open all the boxes and make sure everything is intact. Once they are there you will have to pay them even if that box of broken tiles needs to be returned to the home improvement store. Making sure everything is in order and ready to be worked on can save on labor costs.
  9. Keep a close watch on the costs during the renovation. "Sometimes the owner gets caught up with upgrades, gets the final bill and is shocked by the overall cost," says electrician Ben Craigson. His advice is to ask for a revised estimate halfway through the job "so you can actually see numbers attached to those upgrades." Remember that no matter how many people you are hiring to work on your home, only one person is really concerned with how much money is being spent: You!
  10. Prepare for hidden costs. In addition to the money you will spend on labor and materials, there are other costs that need to be factored into your overall budget. If you decide to move out of your house during the renovation then you need to figure out where you will be living and how much that will cost. If you can't move back in with mom and dad for the duration, then you will have to rent another place or stay in a hotel. If you chose to stay in a hotel, remember that without a kitchen the cost of your meals may skyrocket. Most contractors recommend moving your furniture out of the house during a major renovation. (Not only will the furniture be in the way of the workers, but there will be a tremendous amount of dirt and dust kicked up during construction.) This means you need to factor into your budget both the cost of moving and the expense of renting a storage place for your valuables. And remember that the job may run longer than expected so these costs can quickly escalate.
  11. Buy the materials yourself. While your contractor may not care about the cost of individual tiles, you do. Check out discount tile warehouses in your neighborhood or online. Once your contractor determines just how much tile is needed, you can buy the materials yourself at the best price in town. For other materials, look into local garage sales, salvage yards and flea markets. You never ever know what you may find! Go online to compare prices. Check out to bid on excess building materials.
  12. Do it YOURSELF! Or, at least depending on the scope of your renovation, do some of it yourself. Look at the entire project and see if there are any parts that you can do yourself. Your contractor may naturally be leery of this idea, but discussing it up front is in everyone's interest. There's no question that learning how to strip wallpaper, paint and refinish floors yourself can save you money. is dedicated to the idea that you can do it all yourself, with a little help from your friends (meaning us!) and perhaps a class or two on home improvement.

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