When you’re renovating, unexpected costs are not really unexpected. The majority of projects involve some sort of unforeseen problem or added expense. It’s just the nature of building work – particularly when you’re working with an existing structure with unknown issues. That’s why contingency planning is so important.
Before you start work on your renovation project, you and your builder or project manager need to sit down and hash out the potential problems or setbacks your build could involve. You may not be able to predict every possible issue, but you should be able to get an idea of the risk you’re taking on.
Once you’ve sorted through a range of issues, you can build a contingency fund into your budget. This gives you some leeway if anything does go wrong, so you won’t go way over budget and be forced to ask the bank for more money.
Unexpected building issues
The most common causes of budget blowouts are unexpected issues with the house or land. A good builder will help you avoid some of these issues by doing a thorough inspection of your property before building starts, but even that isn’t foolproof.
Because they’re often hidden by the existing structure, issues like leaky pipes, rotten framing, dodgy wiring in walls, rock in the ground and structural issues can be missed at the planning stage.
If your build runs into an unexpected issue, you may be facing changes to your budget and timeline. Of course, the MyHome team – and any good builder – will always advise you of any issues and price up a solution before starting any unexpected work.
Complications with consent
Waiting for resource and building consents is a frustrating part of the renovation process. When you’re planning, it’s a good idea to factor in at least 6-8 weeks for applications and revisions. The Auckland Council aims to process applications for resource consents in 20 days, and building consents within 30. This timeline can be extended by a request for further information (RFI). If you receive an RFI, your application is put on hold until you return updated plans or forms to the Council. Some renovations receive multiple RFIs, which extends the consent process well beyond the original 20 days. To minimise the potential for processing delays, a good designer will submit a detailed application at the beginning, to minimise the council’s requests for more information.
Because the team at MyHome and our designers have worked on so many renovation projects and have strong relationships with the council, we can help you avoid delays and make sure the consent process goes smoothly.
Most large renovation projects will include a number of different contractors at different stages, including plumbers, roofers, tilers, and electricians. A good building company will have preferred contractors that they trust to show up on time and do the work well, but this doesn’t completely eliminate potential problems.
The good news is, if you’re working with a competent building company, contractor issues shouldn’t affect your budget – sorting out any problems will fall to your project manager. At worst, a contractor failing to show up could add a couple of days to your timeline and any flow-on effect will be someone else’s problem to sort out.
Everyone wants their building work done quickly, but that’s not always possible. Problems with the property, consents, contractors, or even the weather can delay your project. Delays are always frustrating to deal with, but they can be even worse if you don’t have a contingency plan in place.
When you’re planning a significant renovation project, don’t rely on the projected timeline too much, and think about how a significant delay will affect you and your family. If you’re moving out during the build, will you have somewhere to live for another month or two? Will you be able to afford the extra rent? If you’re a landlord renovating an investment property, do you have tenants moving in? When does the rental contract start? Will you be able to push the move-in date back a couple of weeks or months?
If you can be flexible, you’re less likely to be affected by changes to the timeline.
Budgeting for the unexpected
Building a contingency fund into your initial budget helps you avoid being stung by unexpected costs. If your build goes smoothly and no problems come up, all that happens is you have some extra cash in hand.
Of course, because you don’t know what – if anything – will go wrong, it’s impossible to know how much to include in your fund. Most recommendations put the figure at between 5-10% of the total cost of the build. If you’re planning a huge project, that may sound like a lot of money, but labour and material costs to address an unexpected issue can add up very quickly. Even a seemingly small issue can end up costing $10,000 very easily.
That’s why it’s safer to over-budget for contingencies – better to be left with unexpected cash than to have to beg the bank for extra funds.
When it comes down to it, the most important factor in contingency planning for your renovation is your builder or building company. A reputable, experienced builder will be able to predict many potential issues and deal with the unexpected as it arises. They’ll also keep a close eye on contractors and may be able to expedite the council consent process. Better yet, having a professional on hand to deal with any problems takes a lot of the stress and frustration off your hands – and that’s worth a lot.
Want to ensure your renovation goes smoothly? Talk to the experts at MyHome Renovations now.
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