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Real Reasons Projects Go Over-Budget

Now that we have the myths out of the way, let’s talk about the REAL reasons new home and renovation projects go over budget.

Unforeseen Issues

During the renovation process, contractors may come across unexpected problems, such as mold, asbestos, or pest infestations, hidden structural damage or outdated wiring, which are only apparent during deconstruction and require additional work and expenses. For new homes, that could look like missing or incorrect information on the plans or having to over excavate to find solid ground to build on, which then requires a larger foundation.

Case Study: City's generally require homeowners to check for asbestos if their home was built prior to 1990. And there's no way around that. Drywall that is not new or date stamped is considered to contain asbestos and will need to have a sample tested before being disposed of. I've had clients hire a company and do-it-themselves - both are costly and time consuming.

Unexpected Code Compliance

In addition to unforeseen issues for renovations, if the existing home does not meet current building codes, additional work may be required to bring it up to standard. And no, “grandfathering” items is not a thing, especially items related to your personal safety. Energy specific items, such as old heating systems or insulation values, are currently not requiring updates in most areas, but they’re working on it.

Example: Just because that staircase never had a railing, doesn't mean that can continue. Unfortunately this is not a classic car situation.

Changes in Plans / Scope Creep

Homeowners may change their minds about certain design elements or decide to upgrade materials during the project, leading to additional costs that were not originally budgeted. Even moreso, the scope of the project may expand beyond the original plan, with additional features or complete rooms being added, such as adding landscaping or finishing that unfinished basement.

Case Study: Everyone I have worked with has had at least a handful or more clients who have added landscaping, retaining walls, interior design, finished driveway, finished basement, expanded their renovation, etc. Some included all listed here. They wonder how they ended up so far over budget when these items were never part of the project in the first place.

*Constantly refer back to your budget. If it's not listed, it's not included. Talk things over with your Contractor, get a price, and add it to your budget.

Material and Labor Costs

Fluctuations in material prices and labor costs can impact the overall budget of the project, especially if the renovation takes an extended period to complete. Unfortunately those going through the pandemic saw this first-hand. While it’s rarely ever that extreme for those undergoing a project within a year to two year period, it is likely that holding off on completing (or starting) your project will cost you more.

Case Study: During the Pandemic, I saw prices rise 300%. I've seen Contractors write out a budget and then throw it out by the end of the month because it wasn't valid. This is an extreme and has never happened like that within the last 50 years. But this is why quotes are only valid for 30 days. Prices do change, whether up or down. This is another reason we have a contingency. My personal opinion, it is what it is. Ask us about our project.

Inaccurate Initial Budgeting

Sometimes the initial budget may not have been based on realistic estimates, leading to underestimations of costs. Whether that’s an assumed value from the homeowner which leads to seeking out lower priced contractors, or worse, inaccurate budgeting from the contractor, the budget vs. actual cost may have been destined to fail from the start.

Case Study: I was recently speaking with a framer and their client called them devistated. Their excavation company quoted them $8k for the work and is now coming in at $24k. 3X the initial price. The reason they had chosen this company was because they came in $7k cheaper than a reputable company. 

This is the realities of not having a Contractor. The Contractor is the person that would know that budget wasn't accurate and never let the price blow out of control unless there is a logical reason. This is a grossly inaccurate initial budget from the excavation company (and possibly taking advantage of the client). Either way this should never happen, but it does. 

Contractor Issues

Poor communication, delays or mistakes, including budgeting, hiring or team, etc., made by the contractor can result in cost overruns.

Example: We're all human, and at times, things may slip through the cracks. The important part is how we deal with these situations, both the professional and the homeowner. I've been in situations where I've forgotten something on the plans. Whether large or small, I know it was mentioned so I drop everything and do the work - at no additional charge. Maintaining open communication and not overly stressing about delays is key.

Unrealistic Timeline

One I see far too often - Rushing a renovation to meet a tight deadline can lead to poor decision-making and additional expenses.

Example: You know that Venn diagram with good, cheap, fast? This I know to be true. And personally, it's not really 'cheap' anymore - more like less expensive. Great things take time. I know you wanted it done before Christmas or before that scheduled family visit, but do you want it done right? Or do you want to sacrifice the quality, something that you will look at every day, for time. And if it's a financial deadline, again there's that contingency helping.


To avoid going over budget, it really comes down to planning, doing your research, being honest with your budget, and really understanding your contractors budget. 

Make sure you know what's included in your budget. Don't just assume. If you're wanting your landscaping included in your scope but it's not listed on your budget, ask. Don't choose the lowest quote. The lowest quote is likely not being honest or accurate in their understanding of your project. Your contractor is your ally. Only hire someone you trust, build a relationship, ask questions, and they will make sure that their team will take care of you. And of course, set aside a contingency of around 10-20% of the total budget to cover unexpected costs during the renovation.