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It’s Time To Talk Money

We hope our last article gave you good ideas for organising and planning your project.  Have you started?  Is your scrapbook full, are your Pinterest boards bulging?  Have pictures of paint colours taken the place of your children’s paintings on the fridge?  Excellent!

Now, it’s time to focus on time and money – those two things that can run away with you if you don’t have a plan and keep them in check.

  1. Scope it Out:

Obviously, to get a good handle on these 2 elements, you need to have gone a good way to defining your scope.   Whilst it’s possible to find ball park figures for what you want with a generic description of what you’re after, the specifics of your project can totally change that price.

Describe and list what you want in as much detail as possible, including the actual finishes (tiles, flooring, kitchen units, brand of bathroom taps etc) wherever you can – the more detail, the better.  If you have also categorised these into your ‘must haves’, ‘would likes’ and ‘aah, if onlys’ …”, that will really help (unless money really is no object, which is pretty rare).

Without as clear a list as possible, you can’t go further to work out costs and the time it’ll take.  No-one expects you to capture all the items and how to programme these (unless you’re in the industry or a you’re a Gantt-chart crazed DIY’er), but you will need to clarify what you want.    By starting to categorise your wants also, you’ll have  done some of the work if your budget comes in higher than expected, where some cost-engineering is needed – you’ll know where to start crossing items off with that red pen.  If you’re cursed with expensive taste (‘Tiffany Twisted?’) but a low budget, you’ll have to do some work here but with clever thinking with your team, you’ll be surprised what can be achieved.

  1. Money Talks (but are you listening?):

You’re likely to have already thought hard about your budget and timescale.  Having a budget doesn’t mean you can’t have fun.  It means you make a plan and don’t get out of control.  Some say, a budget tells us what we can’t afford, but doesn’t stop us from buying it!  Look at it the other way – it tells you what you can afford, at this point.  It lets you structure a plan to get what you want.  If you need to put some things off for a later time, so be it – patience is, after all, a virtue!

It’s helpful to consider what really is your main project ‘driver’ – what is the absolute boss here?  There are generally three project drivers – quality, budget and time, and sitting in the middle of this is scope – change the scope and you will affect (up or down) at least one of these other 3 items.  You might say you want your project completed to a fantastic standard, as quickly and cheaply as possible, but you know there’s an impossible tension there.  (We assume the quality you require, in some respects, is fixed whatever your budget – you want your services to function perfectly, your tiles to line up, your doors to close smoothly, regardless of the price of your fittings or finishes).

  1. The W questions:

To really examine what your key driver is, let’s go back to your ‘why’.  Ask yourself the following:

  1. WHY? Why do you want to be finished by that date?  Is that as important as you think it is?  Is it an absolute?  For example, if you’re going to be living at your friend’s place rent free while you get the work done and they’re travelling through India for 6 months, if your project extends do you have ANY other options that you’d be willing to consider?  In your view, would certain changes that cause the time to shift be worth the inconvenience of finding somewhere else for a couple of months?
  2. WHY? Why are you setting that budget?  Is it because you plan to sell in 2 years and would like to (or must) ensure you make some money (or a definite amount) on the sale?  Or is this your forever home, in which case, is that really the absolute budget?  Why?
  3. WHAT IF? What if you can’t hit that finish date?  What is the upshot of that?  List the consequences and if there’s any flexibility;
  4. WHAT IF? What if you had to spend a little bit more?  Could you find that money if you had to?  Could you categorise items to be done at another time, and could you live with them not being done in the meantime???  (Always make sure, if you’re borrowing, that you don’t overstretch yourself – that goes without saying, right)?

Examining your drivers like this means that, for example, if you decide the project can extend for a certain reason, this can still be planned and controlled – you’ll have thought about it and made a conscious decision, rather than allowing budget or time to drift.

  1. Apples with Apples:

Many firms will be able to provide a quick estimate of cost and time based on your scope, requirements and the size of the property.  But, a detailed, reliable cost and timetable can require a lot of work.  It requires commitment from you in terms of really detailing what you want, including the finishes as far as possible, and it requires commitment from your build team to price based on your scope and specifics.

 There’s an inherent tension here – you understandably need a realistic  price and timetable, but your builder might not be able to put in the  amount of work that can be required to provide this without a level of commitment that they’ll win the job – it’s a bit Catch-22, but this is one reason why people get what essentially turns out to be ‘back of fag packet’ costings.  Speak to your build team and be open with regard to what you need and discuss the level of comfort needed on both sides.

Similarly, don’t get tied up in not telling your builder your budget for fear that it will drive the quote.  It’s a competitive market and if you get a good level of detail, and compare the quote to others, you should actually get greater clarity.  Also, ask around – if a neighbour’s had similar works, ask them what they paid (and, if possible, look around – is it the quality you’d expect and similar finishes?)

One thing to be very conscious of with your quotes, is that you’re comparing apples to apples – if possible, use the same document (‘shopping list’) for quotes – it’s of little help to you to compare the price of apples to the price of pears.

  1. Wiggle Room:

You will ALWAYS need contingency in terms of budget and programme.  ALWAYS.  If your project ends up costing more and taking longer, this is not at all unusual.  The contingency is there to deal with unforeseen risks and elements that will arise to some extent but, by their very definition, you won’t know when or where.  The contingency is not allocated to one specific area but is ‘insurance’.  It is not to cover your express changes, however – if you change to a kitchen that’s twice the price of the original, the money for that (and time, if it’s on a longer lead) should be an additional amount to be found – you need to leave the contingency for its real purposes.  Use it for such items at your peril (especially earlier in a project) – if an unforeseen issue arises, having budget problems on top of this can really cause problems.  Similarly, when getting quotes, if these are higher than expected, don’t be tempted to substantially lower (or remove) the contingency as part of the cost-engineering process – that’s wishful thinking and not cost-engineering at all.  If you end up not using all the contingency – yippee!  You’ve come in under budget!  But, let’s face it, if you’ve just had your house refurbished, there’s no doubt that you’ll be able to find some new furniture or amazing finishing touches to spend it on!

We hope you’re finding these articles useful.  Join us next time in the Home Improvement 101 classroom to look at your project team and what to expect from them.

Your Friendly Charter Projects’ Team


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