Major renovations can be exciting and transformative, and with a little planning ahead, you can set realistic financial expectations and curb overspending on your project. When budgeting for a major renovation, it’s important to consider factors like labor costs, material costs, as well as a contingency fund for unexpected expenses.
Benefits of Planning for Costs and Expenses
By thoroughly understanding the potential costs involved in a renovation project, you’ll be able to make informed decisions about how much you are willing to invest, and allocate your funds accordingly. Having a well-planned budget, including a contingency fund, also prepares you to deal with any unexpected expenses that may be revealed during the renovation process.
Collaborating with a professional company like Koeppen Construction ensures that your home additions are seamlessly integrated, maximizing the value they bring.
Estimating the Cost of a Renovation Project
Start by defining your scope of work. Consider the areas you want to renovate, the materials you plan to use, and any additional features or upgrades you have in mind. Note the square footage of the area you plan to renovate, as this will impact the overall cost.
Once you have a clear vision, research the average costs associated with similar projects, then obtain multiple quotes from qualified contractors. Since contractors vary in how thorough their estimates are before a commitment is made to hire them, make sure you’re comparing apples to apples so you have a clear picture of costs.
Labor Costs
This refers to the expenses associated with hiring skilled professionals such as contractors, architects, and tradespeople to complete the project. To estimate labor costs, you can use the concept of average cost per square foot as a baseline. This figure provides a rough estimate of how much you can expect to spend based on the size of your project, keeping in mind that the smaller the project, the higher the price per square foot will be. By multiplying the average cost per square foot by the total square feet of the renovation area, homeowners can arrive at a ballpark estimation of the labor costs involved. On average, the smaller the project the higher the price per square foot will be.
Cost per square foot varies by region, but there are several online tools to help you find a basic average. Bear in mind that because renovations are often complex in their scope with so many possible variations that affect the amount of labor needed, most general contractors do not use a cost-per-square-foot metric. Use the tools as a basic guideline, but rely on the individual estimates to determine the labor costs once the scope of work has been clearly defined.
Material Costs
This covers everything from basic framing materials such as wood and screws, to new appliances, custom cabinetry, plumbing and electrical fixtures, and more. Your material costs will largely depend on the scope of work, and the quality and pricing level of the selections you choose. Once you’ve communicated that to the contractors you’re seeking bids from, they will detail these out in their estimate and proposal.
It may be helpful to create a master list of materials needed for each room you are renovating. Things to consider: Flooring, cabinetry, countertops, plumbing fixtures, electrical fixtures, tile, doors & hardware, and paint.
Unexpected Expenses
They happen, but planning for the possibility of them will give you peace of mind. Unexpected expenses can arise when you open up walls for renovation, or replace a roof, and can include unknown water or pest damage, structural repairs, plumbing and electrical work that is not up to code, and more. Plan to have a contingency fund to cover unexpected expenses.
Additional Costs
Depending on your scope of work and the building requirements in your city, there will be plan review and permitting fees. Depending on the age of your home, some cities also require asbestos testing, and abatement if needed.
Changes in design can also lead to unforeseen expenses. Whether it’s altering the layout, adding or removing features, or upgrading materials, these changes can impact the overall cost of the renovation.
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