Creating a realistic budget and managing expenses for your renovation is an imperative strategy to prevent or mitigate cost overruns. By investing the time upfront in planning activity and consistently monitoring expenditures throughout the duration of your project, you can substantially minimize financial surprises throughout the process.

Here are five tips to guide you through the budgeting phase for major renovation projects.

1. Plan Ahead – Every Detail

Carefully plan your project with every detail worked out ahead of time. Itemize each step in the renovation process that comes to mind. Every project is different, but the basic milestones are nearly the same. In the Purgula Master Budgeting Spreadsheet Download, items are listed at their milestone levels and further separated by labor and material costs, both estimated and actual. Get as granular as possible, as the more detail you have upfront in your estimation columns, the closer you will stay to your actual expenses.  See more on How to Use the Purgula Master Budgeting Spreadsheet.

 

2. Lock Down Key Features

Lock down key features and needs of your project to objectively define your vision. What is the main reason for your renovation? Will this be a re-fresh of the space or an all-out “demo to the studs” dream project? Making sure that you have a clear vision of your end goals will drive the details and prioritization of the planning process. For example, if your vision is to have a spa bathroom, then enter the items in your Budgeting Spreadsheet that will create this type of space, e.g.: soaking tub; steam shower; bamboo flooring; etc. Conversely, identify those features that are less important or optional that could be sources of cost-savings. In this exercise, group your needs into “must-haves” and “nice-to-haves”. For the “must-haves”, imagine how you would use the new space in the future (thinking also of all the time, money and effort expended on this project). What missing features, capabilities, or aesthetics would strike you as being severely disappointing? These are the key features that you need to be committed to and stay focused on throughout the project – without these items the project is a “deal killer”. There can be many ways to make these features happen even when budgets are tight. But it is your job, as homeowner, to resist wholesale eliminations of your most challenging requirements. Define a realistic budget and stick to it!

 

3. Get At Least 3 Bids using the Purgula RFP Generator

Once you have locked down details for your ideal space, capture it in an RFP (Request for a Proposal) that can be shared with contractors and other bidders. The Purgula RFP Generator will provide you with a uniform report that you can share and update as your needs or wants change. By having all bidders address your key requirements with the same information, you will find it easier to perform a true “apples-to-apples” comparison amongst their individual proposals.

   

   

4. Enter Data Into Budgeting Spreadsheet

Enter data into a Master Budgeting Spreadsheet. Once you have proposal information from at least three vendors, begin entering this data into the budgeting spreadsheet with your individual project details added. You can either take the lowest bid, or take the average of the three bids to place in the estimation columns for all items relating to materials and labor. Many contractors will provide an “allowance” for materials that they will purchase as part of their bid. These “allowances” usually reflect “builder or contractor grade” quality and are capped at a certain amount per square foot or yard. For example, if your contractor’s proposal states that he is offering an allowance for the bathroom tile at “$12 per square foot”, add this amount to the estimation column for that item. Do your homework by checking to see what $12/sq. ft. tile is by visiting your local tile stores. Once you have populated all of your estimated items, make sure that you also isolate the cost of your “must have” items. This will allow you to negotiate credits, if the contractor’s allowances are too low for your specific tastes.

Using a budgeting spreadsheet like the one below is helpful for both planning and monitoring your project’s financial health.  The Purgula Master Budgeting Spreadsheet Download is an Excel file and ready for use.  Below is a sample.

Sample Master Budgeting Spreadsheet by Purgula

5. Maintain Spreadsheet Throughout Your Project’s Life

Continue to maintain your Budget Spreadsheet throughout your project’s life. Once you have completed the project estimations, and agreed upon terms with the chosen vendors, you are now ready to monitor the costs associated with your project by phase or milestone. Once the demolition begins, and you receive invoices for payment, enter the details in your spreadsheet in the “Actual” columns. The percentages in the spreadsheet will allow you to track where you are with respect to overall labor costs versus material cost and how they equate to your budgeted plan. With this level of budgetary control, you will be able to take corrective actions before you begin to spend blindly, even when change orders are introduced.

Monitoring your renovation project at this level of detail may at first seem daunting. However, once you set up the information and maintain your cost vigilance, you will be convinced on how easy it is to control the process and the cost of your renovation.