Why You Should Allow a Contingency for your Renovation Project

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Whenever we quote on a project, whether large or small, we always try to be as exact as possible. We will detail all of the steps we know are part of the project and then calculate all of the materials and labour required to complete each step. It’s a very labour intensive process to create an exact quote for our clients. We take the time to do this because we hate surprises on projects just as much as our clients do. We want our pricing to be as exact as it possibly can be.

However, no matter how exact we are with our pricing, we still suggest that our clients allow a contingency on their project. We always get worried when our clients have a set budget and plan on spending every last dime of it. What will you do if you want to add something part way through the project or if walls or electrical boxes are opened up to reveal big deficiencies that need to be corrected?? If you’ve not prepared for the unexpected, you could be forced to compromise on your dream renovation project elsewhere!

Planning is essential

Lots and lots of planning is crucial to any renovation project. The more you plan, the better prepared you are going to be. However, there is still no guarantee that other things won’t come up during the project. We just started a basement bathroom renovation this week. When we demolished the existing shower we discovered that there were only two studs along the long 5’ wall of the shower. We’re not exactly sure what was holding up the tile backer board but it certainly explained why most of her tiles in the shower had cracked and caused water damage. Although this was a small fix, it still added cost to the project to re-frame that wall.

We had one client who was planning a kitchen renovation which included a load bearing wall removal. They made selections for their kitchen cabinets, countertops, lighting, etc. that put them almost at the top of their budget. They were so excited about the project that they even went out and purchased all of their appliances (high end ones at that) and light fixtures before the final contract was even signed.

Once the architect started working on the drawings for the support wall removal, it was discovered that the existing support columns in the home didn’t line up and insufficient footings were found in the basement. To correct this and still allow the load bearing wall to be removed required a lot of additional work, adding just over $3000 to the cost of the project. This created a ton of stress!! Not only had our clients signed a contract at almost their full budget but they splurged on appliances and now had nothing left for the extra $3000 bill.

They ended up deciding to do some of the work themselves in order to try to make up the additional funds. However, these clients had two young children and both of them worked full time. This caused even more stress because they were exhausted enough on a regular, and now they were coming home from work everyday and trying to do some of the work on their renovation. It started to drag out the project to be much longer than they ever anticipated which added even more stress again.

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Our clients ended up opting to have us complete all of the work as originally planned and instead decided to eliminate the new flooring for their project. As the old flooring had already been ripped up by the clients, this meant their beautiful renovation project was finished off with nothing more than a subfloor until they could afford the new flooring! This was a huge disappointment to our clients, all because they did not plan on a contingency.

How Much of a Contingency Should I plan on?

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We always recommend that our clients plan on a 10% - 20% contingency. However, Bryan Baeumler, Canadian TV host of several HGTV home improvement shows, actually recommends a 25% contingency. What this means mathematically is that if you have a budget of $40,000 for your kitchen, you shouldn’t plan on spending more than $32,000-$35,000 (or $30,000 by Bryan’s recommendation) on your initial contract. This will allow you $5,000-$8,000 for the unexpected!

Some of the Deficiencies That can be Found Once you Start a Renovation

There are endless things that can come up during a renovation project but below are some of the common ones we have encountered in our 29 years in business.

  • Electrical deficiencies can be found once receptacles and switches are opened up

  • Mold and rotted studs are sometimes found behind walls, especially when you know there has been a leak at some point

  • Framing that’s incorrect behind walls (not framed at 16” centres) or studs that are warped

  • Walls that aren’t flat that require large (12x24) tiles to be installed on them. If this isn’t corrected, you will have problems with tiles cracking down the road

  • Your dishwasher, microwave or fridge are not on a dedicated circuit

  • Your exhaust fan is vented into the attic instead of to the exterior, or your fan is connected to a 3” duct when your new fan requires a 4” duct

  • Your drains may not flow properly due to grease build up over the years. This may require a lot of snaking, reworking of drainage lines or even replacement in some cases

  • Additional supports or footings that may be required on a load bearing wall removal

What about those extra pot lights you want to add in your family room?

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It never fails. You think you have thought of everything for your renovation project…planned out every detail, picked out the perfect paint colour, selected the most beautiful flooring and then it happens!! You realize that the family room which is adjacent to your brand new kitchen now looks dark and old next to your new kitchen!! But you spent your entire budget on the kitchen and there’s nothing left over to put in new lighting in the family room. Now your beautiful kitchen just makes the rest of the main floor look terrible!

As a project progresses you will find that you can better visualize the end result. What wasn’t obvious at first, suddenly is, and then you realize you want to make changes. If you don’t plan on a contingency for such things, you will regret it.

We did a small kitchen renovation for a client a few years ago who decided to get a new island and replace the countertop for her whole kitchen. She didn’t have it in her budget to replace the backsplash. Now that her kitchen is brand new, that backsplash looks even more dated. To this day, she regrets not getting a new backsplash. At the time of the kitchen renovation, she didn’t have the budget for it and now doesn’t want to risk damaging her new expensive Quartz countertop.

Things you can do to reduce the Stress of your Renovation

The best advice I can give you to reduce the stress of your renovation, is to not put a deadline on your contractor. Think of a situation you were in when you had to get something done by a deadline. You were probably stressed and likely didn’t perform at your best because you were feeling rushed. It’s no different for your contractor. This becomes even more evident when extras are added or deficiencies are found behind the walls that need to be dealt with. Extras take additional time and therefore your project will not be completed in the time frame your contractor initially said it would be. You don’t want your contractor to feel rushed and be less careful because that’s when mistakes can happen. This is your dream renovation! Allow the proper time to get it done right the first time.

Another way to reduce the stress of your project is to let your contractor know if you’ve got a strict budget. I understand why potential clients might not want to tell a contractor they’ve just met what their budget is. I know most people think that if you say you have a budget of $30,000 then the price will be $29,900. However, if you are interviewing an honest contractor with integrity, then they will not do that to you. Essentially if you don’t have a good feeling about your contractor, and you don’t trust your contractor enough to tell them what your budget is, then you shouldn’t be hiring them to do the job.

We have never let a client’s budget influence the way we price a job. However, if we know what the budget is for the project and we know that what the client is asking for far surpasses that budget, then we can let them know that up front and discuss alternatives. This might sound harsh but if our client’s budget for the project isn’t realistic and there’s no room for increasing the budget or downsizing the wish list, then there’s no point in wasting everyone’s time including the client.

We met with a client who wanted a load bearing wall removed, new flooring throughout the main floor, Quartz countertops, all new kitchen cabinetry, and LED pot lights throughout the main floor. Their budget was $15,000 and they needed it completed within 1 month! Not only was their budget extremely unrealistic but their time line was not doable either. Had the client not told me that information, a lot of time would have been spent putting together a quote for a project that was never going to happen.

The other advantage of knowing your budget is that your contractor can make suitable suggestions to you based upon what he/she knows you can afford within your budget. There’s no point in a contractor getting you excited about Quartz countertops if you’ve got a laminate budget.

Overall, there are two main reasons why you should plan on a contingency when doing a renovation

  1. It’s all about being prepared. Something could have been forgotten in the planning and quoting stages by either yourself or the contractor. Deficiencies might be found during the renovation itself. Having a contingency allows for this.

  2. It helps minimize stress!! This one I’ll scream from the roof tops! Renovations are stressful enough but when you don’t have a contingency and the unthinkable happens, your stress levels go through the roof. Even having a small 10% contingency can mean the difference between having the funds to fix a problem and not.

If you have further questions about how to plan your renovation budget, connect with us as we’d be happy to talk you through it. Click the button below to send us an email.