Staying on Budget with a Home Extension

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Written by Dan Marks

Written by Dan Marks

Be clear about your budget

What is the overall budget and what is that number driven by? Financial constraints (i.e. available funds), value (based on the limit of what you believe your property might be worth) or something else? Is the figure you are quoting inclusive of VAT? Consultant fees? Contingency?

Be transparent with your architect so they understand the budget and constraints from the outset. They should be able to help you work backwards from an overall budget (inclusive of consultant’s fees and other anticipated expenses) to a construction budget. This will help inform the scope of what you can afford to build.

Be realistic about your budget

At the early stages of a project, we often encounter a misalignment between the client’s construction budget and their goals & aspirations for the project. As soon as this gap between means and wants becomes apparent, confront it head-on with your architect/ designer. Don’t wait for it to resolve itself. It won’t, and the earlier you engage with this reality, the better your chances are of finding the right solutions for you.

Listen to your design team’s advice (that’s the reason you employed a professional team in the first place). If there’s an obvious gap between budget and aspirations how are you going to deal with it? There really are only 2 approaches:

A.     Pare back your shopping list. Identify the essential elements of your project; those elements that will make the most difference, have the most impact and are the most important to you.  Be prepared to let go of some items in order to meet the budget realistically. You will have to set priorities.  Don’t make the mistake of trying to do everything, only to end up with nothing done properly.


B.     Plan a phased delivery. You accept that your funds are insufficient to deliver all components of your dream scheme – in the immediate term. In this instance you may instruct your design team to develop a scheme that includes your entire shopping list and that they also think about this as something that is delivered in packages over time as and when funds become available. This makes sense in scenarios where a single planning application could secure consent for a number of discrete items (i.e. rear extension at ground floor, loft conversion etc). In the first instance, you may want to prioritise the rear extension and plan to carry out the loft in 1-2 years.  If you go down this road be realistic and honest with yourself about the likelihood of later phases actually happening (each time is another upheaval, moving out etc). Also, in the long run, this approach is less efficient and costs more as contractors’ overheads will be charged separately for each period they are on site (as opposed to a single construction phase).

Be mindful of the budget throughout the project

(not just when it’s set at the start).

We tend to involve a quantity surveyor in the role of cost consultant at the end of RIBA Work Stage 2/ Concept Design. At this point, with a sketch proposal, there is sufficient information to formulate an Initial Cost Model or Elemental Cost Plan. This document aims to anticipate and put a cost or rate against every item of the build; from large – volumes of earth to be dug, foundations etc, to small- taps, doorknobs and light switches.

The Elemental Cost Plan is the first tool to help forecast the evolving scheme’s cost and it supports an intelligent and informed conversation around cost and all decisions that relate to budget. It shines a light, in detail, on where the money will be spent during the construction phase. Without this you are in the dark (you don’t even know whether the design is within budget or not). With this you can make informed decisions about where to make savings. For instance, the cost model will tell you how much you are spending on floor finishes based on a per sq.m rate and your architect will show you samples of what that affords. You may be willing to compromise and spend £10/sq.m less and then you can immediately see the effect this has on the bottom line (that includes contractors overheads and profits which are a multiplier applied to all items).

As the design progresses and is fleshed out in more detail during later design stages (RIBA Work Stage 3/ Developed  Design and Stage 4/ Technical Design) the Cost Model should be reviewed regularly to ensure that any items added or omitted are reflected accurately.

An example of an early elemental cost plan prepared for works including the demolition and rebuild of a mews house in Belsize Park.

Be decisive and plan ahead

The aim should be to have as much as possible of the scheme drawn and specified before work starts on site. The more information a contractor has in order to price the works, the less chance there is that additional items (and associated costs) will emerge during the construction phase. In order to have a high degree of cost certainty before works commence you need to work with your architect to make decisions on a great many number of items – which glazing, flooring, lighting, taps, switches and electrical sockets etc. Details drawn for all junctions and so on. The aim should be to leave nothing (or as little as possible) to be decided on site as this opens the door for extras (and they start to add up quickly). An early investment in time spent planning and designing will provide dividends later on.

Always have a contingency for the construction phase

The amount will vary depending on the risk. However, 10% is sensible. You do not want the added stress of trying to find additional funds while your construction is underway.

Once on site – Stick to the plan!

If you’ve made all the key decisions before starting on site this shouldn’t be too hard. There will be unforeseen issues but that is what the contingency sum is for. It’s when you start making changes to the design during construction that cost can easily begin to spiral.

If you are inclined to instruct changes make sure that you have quotes for these variations to the contract and a clear record. If the contract is being administered by an architect request monthly cost updates that highlight additions/ variations to the contract and ensure that any variations are approved by you before the architect instructs these.

As a rule of thumb, the earlier in the process you make changes the less it will cost.

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