This article is going to focus on budget, a topic we began to cover in the article on the “3 legs of a successful project“.
Almost every project will have room for strategic budget decisions to allow for the total cost to come down while maintaining the integrity of the project. However there are certain instances when the expense of a specific element, or the extent of a new finish cannot be minimized without compromising the quality of the overall project. This article is aimed at educating you on how to identify these parts of your project, and how to maintain project integrity even in the face of impending cost cuts.
There are several ways to consider a budget when planning for a home project. One type of budget for planning your project is an overall budget, the money available to do the whole project, and this approach tends not to put any hierarchical preference to any one piece of the project. A second approach to budgeting for a project is to segment the overall budget into pools based on what the project is. For example, if you are planning for a kitchen renovation, you may have a budget for cabinets, countertops, flooring, paint, and appliances, and each of these items has its own budget within the overall budget. A final approach to budgeting is to have an itemized budget. This strategy would require a lot of pre-planning, and would benefit from coordination with an architect. An itemized budget would have every single element of your project listed, like a shopping list, providing the most accurate overview of your project.
When considering a home renovation project, I find that the second approach, segmenting your budget into pools under the umbrella of the overall budget is the best way to plan for a successful project. This allows for you to appropriate funds to parts of the project you want to be the best, and can cut back where a more economical option would still keep the project in budget, and maintain the overall quality.
Now, to the meat of this article, when to spare no expense. In the end, this is a judgement call on your part, but prioritizing goals on a project is the key. I will use my kitchen renovation example once again (sorry, but I will keep bringing it up as it is easy to relate to). In this example, your overall budget is $10,000. Your budget for countertops is $4,000, your budget for new cabinets is $3,000, and the remaining $3,000 is for appliances. You really want new quartz countertops, and thought that while you were replacing them, you might as well get new cabinets and appliances. This sets up your expectations, and priorities. It is critical that you do not lose sight of your original goal, so that the final project will reflect that rather than dilute it. Now that you have a budget, and scope in mind you contact an architect, and they explain to you that the design and construction will be approximately 6 weeks. You now know the three critical components to your successful home project, and you decide to move forward with the project.
After design work, and initial bids from contractors you find that your project is over budget by $3,000 for a total of $13,000. This could have happened for several reasons, but for the sake of this example, the breakdown ended up being as follows: $4,500 for countertops, $5,000 for cabinets, and $3,500 for appliances. At this point it is imperative that you consult with your architect on how best to bring the project back to within your budget. Together you should have a clear idea of what is critical to the success of the project, where you can spare no expense, and what may be made more economical, or eliminated altogether. A sample solution to this could be to eliminate the new appliances from this project, and complete the countertops and cabinets for the original budget. The finished project would have successfully included new quartz countertops, and cabinets (the majority of the cost), and allow for future replacement of appliances when funds become available.
A separate article on effectively phasing projects is forthcoming for those of you who would like each project to spare no expense, and have time to build up budgets for each portion of your project to complete them as the funds are ready.
I hope this article was helpful in educating you on how to keep perspective when budgets may get blown, and how an architect can aid in maintaining project integrity, and allowing the project to move forward on budget, even if some more economical choices need to be made.
Sticky Note Conclusion
When to spare no expense can be an incredibly hard decision to come by when you have so much emotionally, and literally, invested in a project, but maintaining clarity on the goals of the project are essential to ensuring the final product is a success.
If you need help planning the budget, and setting the goals for your next project, please reach out, and tell us what you have in mind.