A clear budget is the foundation of a successful home extension or building project. Without one, you will not be in control of the costs and the outcome could be considerably more than you might want. This step-by-step guide shows you exactly how to plan your budget, avoid surprises, and stay in control from start to finish.
What Does a Home Extension Budget Include?
When undertaking major building projects such as an extension, a full and proper budget is absolutely essential as it covers more than just the build cost. It should include every expense involved, from planning right through to completion, and potentially the cost of moving in.
Anything less than this and you are opening yourself up to some nasty surprises when additional unbudgeted expenses arise. Here are some of the key costs you nee to consider:
- Construction (labour and materials)
- Reinstatement works and external landscaping
- Design and professional fees
- Finishes and fittings
- Extra or unexpected costs – often called “contingency”
- Accommodation, moving and storage costs, especially if you are moving out for the build
Looking at the full picture of your proposed project early, helps prevent budget gaps and any of these potential nasty surprises later down the line. You are likely to have some surprises, as there can never be certainty in many aspects of a building project, but it important to understand where the risks are and plan for them.
Step 1: Set Your Total Budget Limit
The very first job to do is to start by deciding exactly how much you can realistically afford to spend on the project. This has to be a figure based on what you can put to the project, including a sum for contingency. If you want to achieve a certain finish, there will be a cost associated with this, so you don’t want to have burnt through your budget on the things that cannot be seen and then compromise on the final finishes which you will see every day.
- For budgets, consider savings, loans or other means of financing
- Allow a buffer of 10-15% of total budget for unexpected costs
- Avoid stretching beyond your comfort level
This figure becomes your guide for all decisions moving forward and will ultimately define how successful the project is. Be disciplined here and be completely sure of where the money is coming from for the project. It is very hard to fine the money at short notice when you are in the midst of the project, so prior planning here will save you a lot of stress and potential disappointment.
Step 2: Define the Scope of Your Extension
Be absolutely clear about what you want to build. The size, complexity and as commented, the finish of your extension directly affect the cost.
- Type (rear, side, wraparound, double storey)
- Size in square metres
- Level of finish (basic, mid-range, high-end)
- Be clear on your “must have’s” and “nice to have’s” for the project
A well-defined scope leads to more accurate pricing, which in turn can dictate the final outcome. Start with everything you want and then scale back from there, but be wary of approaching builders with your un-costed dreams and then keep on asking him to reprice it when you scale back to meet your budget. It will quickly sour the relationship. This is there a pricing service like Price Doctor can help you understand the relative costs.
Step 3: Estimate the Core Build Cost
When trying to estimate the cost of the build, start by using average cost ranges, such as cost per sqm, as a starting point. This will give you a starting cost which you can then refine as you get more information. Ultimately you should aim to get at least 3 quotes from different builders for the best idea of costs, but we strongly advise that you get the work priced yourself but an independent Quantity Surveyor (QS) or service such as Price Doctor
- Get a rough cost using Cost per square metre
- Early cost advice – Have the project priced by an independently with itemised costs
- Arrange to get quotes from at least 3 builders – see Step 8
This approach gives you a realistic baseline before getting detailed pricing. As you progress you will understand more about the costs involved and get more details about what you want. This means that you will be in a better position to engage with your builders and ensure that you are getting them to quote for exactly what you want them to do for you.
Fortunately, you can use Price Doctor to get a price using our drawing tool. This allows you to get a “go/no go” decision made, and then if you send us the plans, we will provide you detailed, accurate costs for every element of the build based on local rate so you can see exactly where your budget will be spent. Get started with Price Doctor now
Step 4: Add Professional and Approval Costs
These are often missed but are absolutely essential to your project and when they are missed, can lead to significant unexpected costs.
- Architect or designer fees
- Structural engineer costs
- Planning permission or building regulations
- Ecological and environmental surveys
- Heath & Safety costs – CDM compliance
These costs can be significant, so it is absolutely essential that they are include early in your planning and budget. They aren’t probably going to derail the whole project, but they will eat into any contingency funds you have set aside if uncosted. All this does is means that you will have less money left at the end for the lovely finishes and features you might want.
Step 5: Include Interior Finishes and Fixtures
This is area where costs can vary vastly depending on your choices and your desired finish. These normally come in the form of the following:
- Flooring, tiling, and decoration
- Kitchens or bathrooms
- Lighting and fittings
- Bespoke fitted furniture or features
As you may imagine, higher-end finishes can quickly increase your total spend even with only a few items. If you have planned and budgeted well then where should be money left to spend on these features. If the budget and contingency funds have been eaten up earlier in the project then you might be forced to compromise here on items which can be seen and will “make” the space you have created.
Step 6: Factor in Hidden Costs
Alongside missed and professional costs, many homeowners underestimate how hidden costs in a quote can affect the overall total. These often include:
- Waste removal and skip hire
- Scaffolding and equipment
- Utility upgrades or connections (drainage etc.)
- Site preparation work
- Reinstatement work or external landscaping
- Site security, welfare (eg, portaloo) and access costs
- Project management
Again, these should always be included in your budget from the very start as this helps avoid budget shocks later. They might not be in the builders quote as they might be expecting you to provide or arrange for some or all of them. It is important to discuss these and any other costs which might reasonably occur with your builder before you start the project. You should have a good understanding of their labour rates and common ‘extra’s’ so that when they do occur it in not a surprise for you.
Step 7: Set a Contingency Fund
No project is completely predictable and sometimes things just don’t go to plan. ensure that you set aside extra funds to stay protected from these nasty shocks and give yourself funds to ensure you get the space you want, especially if you want to make a last minute change.
- Typically 10–15% of your total budget
- Covers unexpected issues, discoveries or changes
- If you change your mind, you have funds to cover additional costs
This is one of the most important parts of your budget and can ultimately save a project when needed. You also have the bonus of having additional funds if they are not used. The size of the contingency should reflect the risk of issues, or uncertainty involved with the project. For a newbuild this can be as low as 10! or even lower if you are certain of ground conditions. For a renovation the contingency should be much higher as you do not know what you are going to discover. Over 15% is common and perhaps higher is sensible depending on the age and stage of the building.
Step 8: Get and Compare Detailed Quotes
We recommend that you request quotes from multiple builders, at least 3 different professionals based on the same information so that you have a like-for-like comparison. Ideally you should give them a schedule to price from, so that they all return the quotes in a similar format to allow easier interrogation.
- Ensure quotes are itemised and clear
- Check what is included and excluded
- Avoid relying on rough estimates
This step helps confirm whether your budget is realistic and whether it stands the best chance of success. Multiple quotes also allows you to discuss the project with several experts who will have ideas and suggestions about how to approach your project. This can be invaluable, but it will be much easier to have this conversation if you have already got your own early cost advice, which give you a better understanding of the build process and where the costs are expected to go.
Step 9: Plan Your Payment Schedule
Understanding when payments are due helps you manage your finances. During discussions with your chosen builder you should both discuss this in detail and settle on exact times/dates/stages and amounts to be paid and how. The normal process is:
- Deposit at the start
- Stage payments during the build
- Final payment on completion
- Potentially a retainer after any snagging has been completed
Clear payment planning prevents cash flow issues, misunderstandings and often, unnecessary tension if things are not 100% clear to all parties involved. Nothing sours a relationship with the builder quicker than delayed payments.
Key Takeaway
A successful home extension always starts and ultimately succeeds with a realistic and detailed budget that covers all of the expected costs involved with your project and any potential issues that can arise.
By planning each cost step-by-step and allowing for any unexpected expenses, you can keep your project on track and avoid financial stress and stand the very best chance of getting a top-notch job at the end.
