Budget and feasibility
Determining the budget and what is feasible is a crucial early step in renovation planning.
Renovation work can involve substantial sums of money, and an assessment of costs and benefits will need to be made in consultations between the designer, the owner and possibly the builder too.
Owners often have unrealistic expectations as to what they can actually get for their dollar. They can be overly optimistic, and designers need to be careful not to fuel expectations that cannot be realised within the given budget.
Property owners need to decide ultimately whether a wiser use of their money might be selling and moving to a house that better meets their needs, or demolishing and rebuilding if work is extensive.
Working out just what work is economically feasible and what the costs/benefits are of the different options can be difficult. What needs to be considered against the cost of the renovation/repair is:
- the cost of delaying work that is necessary and the cost of necessary work the owners may not recognise
- the cost consequences of owner choice – for example, there are a wide range of fittings that can be selected with an equally wide range of prices
- any likely ongoing savings as a result of the renovation – for example, reductions in power usage due to increases in insulation or reductions in water usage from more water-efficient appliances
- potential improvements in the value of the property
- ways the desired renovations can be streamlined to reduce cost – for example, making the roof line simple will keep the cost down, and by avoiding details such as internal gutters, internal valleys and so on, you will also reduce the risk of weathertightness problems
- ability to incorporate deferred maintenance into the renovation project
- not over-capitalising the property value as a result of the work – where an owner plans to stay in the dwelling for some time, over-capitalisation may be less critical.
It may be that some work needs to be done on the house in addition to (or even ahead of) the renovations requested by the owner.
BRANZ house condition surveys show that, while the visible areas such as kitchens and bathrooms are often in good repair, areas out of sight may need attention. Common examples are subfloors that need better ventilation, subfloor bracing that needs to be added or replaced and inadequate ground clearance that needs to be remedied.
Delaying essential repair work can be expensive. For example, BRANZ research from 2005 indicates that repairs delayed for 10 years cost three times as much as repairs delayed for just 5 years. A renovation project offers the opportunity to catch up with deferred maintenance.
If it is not possible to do all the owner wants within budget, it might be possible to plan two or more stages of renovation. First, develop an overall plan of what the owner wants to achieve. Then, consider how that can be broken down into stages and carried out in a logical order. As a general rule, start with the most fundamental work – for example, repiling or levelling should be carried out before new wall linings are installed.
Estimates don’t provide much certainty for owners and should only be used in the initial planning and setting of budgets.
As the plan develops, you will need to provide a quote or tender for the work. Under law, a quote is enforceable and an estimate is not. Using a quantity surveyor to price the developed sketch plans is recommended to give a more realistic idea of renovation costs before the design is finalised.
With all renovation projects, there is always an element of uncertainty as to what will be found when the building is opened up by the builder. To accommodate this, there should always be available a contingency sum (of available money) to accommodate the unexpected costs that may be incurred – if the job proceeds without any unforeseen happenings, this money remains unspent.
Typically, 10–15% percent of the budget or tender price should be made available by the owner for contingent items.