Planning the renovation-extension – it begins!

I’ve been quite busy of late, on a combination of things that I actually want to do, and things that I have to do. I suppose I shouldn’t complain though, since it’s better than being busy only on things that I don’t want to do, as is often the case for people in my line of work.

Organising contractors for the renovation is a fair bit of work, although you probably don't need a hard hat and a hammer since it's mainly just telephone calls and emails!

Organising contractors for the renovation is a fair bit of work, although you probably don’t need a hard hat and a hammer since it’s mainly just telephone calls and emails!

One of the things that has kept me busy of late (that I actually want to do) has been a lot of preparation work for our upcoming renovation and extension of our future home. That future home is the one that I have referred to in previous posts (How to lower the cost of your renovation and We’re renovating/extending a house, but is it too big?), and while I have often said that it’s the home that I never plan to move out of (they can take me out in a wooden box, or push me out in a wheelchair to the mental home), I’m starting to think that I won’t want to move out as I won’t want to go through another renovation/extension!

Planning the build – how much will it cost?

This house, which is quite central in our city (and therefore within easy access of everything we need, such as my work, my wife’s work, the schools that our kids will go to, an ALDI supermarket and even the pub) set us back a reasonable sum of money in its unrenovated form, but now we are budgeting to get the renovation/extension done for another $200k.

Completing a renovation/extension like this in a budget of $200k is a bit of a stretch if we were to be paying a builder/contractor to project manage the whole job, which is why I’m project managing it myself. I’m doing this through an Owner Builder permit, something that anyone (by obtaining the appropriate permits) can do once every five years. For me, this is the first (and hopefully last) time that I will do it, and will essentially involve me organising the contractors (plumbers, electricians, bricklayers, etc) to get the job done, rather than actually swinging a hammer myself.

Like most people in our community I’m conscious of costs, so in order to keep these costs are under control I’m getting quotes for all of the tradesmen that I require and attempting to do what I can myself (as long as I can fit it into my work schedule without killing myself). This whole process of collecting quotes has been a huge eye-opener, as I’m starting to realise just how much people charge for things, especially when you are dealing with small versus large organisations.

The large contractor

It’s probably a cliche, but I’m starting to experience some of the renowned unreliability of contractors just by getting quotes from them. You see, even though I’m asking people to effectively take my money if only they would tell me how much they want from me in advance, so many of them don’t actually even go to the effort of getting back to you at all. It’s almost like they just want to do work and then hit you with the bill at the end when it’s too late for you to do anything about it. I guess this is probably understandable in a way, as they won’t waste any effort on doing quotes that they may not win, plus they don’t need to do any real planning for a job, so if their own planning (or lack thereof) makes it take longer then they can just charge more.

I’ve found that the larger contractors typically respond far more promptly with quotes, probably because they have a larger team of people, with one or more staff dedicated to pricing jobs. I’ve also found them to be happy to put things in writing via email, which makes it quite a straightforward process.

The trade-off here is that their prices have tended to be higher than the smaller operators, sometimes significantly so. For example, from speaking to a builder friend of my brother’s I expected that my new colourbond roof would cost approximately $16k, however two large contractors came back with prices of over $22k. That’s an excess of 37.5% over the budgeted amount. Now admittedly my budget could simply be wrong as I’m waiting on a smaller operator to come back with a price, but I’m hoping that I can get it done somewhere closer to my original estimate if the smaller contractor comes through with the goods.

The small contractor

It should come as no surprise that the smaller contractors have some positives that are the opposite of the larger contractors, but they also come with their own negatives.

On the positive side of things, I’ve found smaller contractors to offer more attractive pricing and to also be more flexible in what they are prepared to offer in terms of products. For example, the larger cabinetmaker that quoted for our kitchen came in at around $22,500, but the range of cupboard-fronts that you could choose was quite limited, with only about 8-10 styles that you could choose from. The smaller contractor however was able to offer a far more extensive range of cupboard-front styles (anywhere from 50-80 different designs) at a cost that wasn’t really any greater than the larger contractor.

The other big plus from the smaller contractor was that the level of attention that they give to you is far beyond what you get from a larger organisation, with the husband and wife team of the smaller cabinetmaker offering a far superior experience to the larger contractor. This is probably because they know that this is their selling point, and while it takes more of their time to win the job, their level of overheads is far lower than the larger contractor so they are still making acceptable profits.

Unfortunately it’s not all beer and skittles with the smaller contractors though, as you have to deal with some pretty frustrating downsides. Things like not using email (it’s 2016 – how can someone run a business without using email?!), not wanting to give quotes (for fear that you are shopping around and they are therefore wasting time), not wanting to commit to a schedule (because they are poor planners), and generally just being hard to deal with (they may be excellent craftsmen but communication skills aren’t always high on their agenda) seem to be relatively common issues so far. These downsides are probably why most smaller operators win large portions of their work through word of mouth, since the operators that are good to deal with are recommended by former clients. It makes you wonder how the crap operators manage to survive though!

Where are we up to?

At this stage I’m still chasing various contractors for quotes, but hope to be able to make a decision about who we will use by late February or early March. This should then allow me to lock everything away for a July start and get a lot more certainty about how much it will actually cost, which will be a big relief as it’s been a real worry for some time. I like to think that I have most large things locked away in my life (wife, income, kids, schooling, etc.), unless I screw them up, so this is one of the last large pieces that I have to worry about for the foreseeable future!

Of late we have also been restoring some old timber sash windows that we managed to buy cheap from a local demolition, and while this is a lot of work it will be worth it to get nice windows that match the existing ones in the house. Otherwise I have been on the lookout for new appliances (cooker, refrigerator, dishwasher, washing machine), all of which will be energy-efficient options compared to what we have now. All of our existing stuff was purchased back in the day when no one knew (or cared) about energy-efficiency, so they are probably big contributors to our utility bills in our current house. I managed to pick up a nice dual fuel cooker for the kitchen on eBay for a great price, and am now looking at the other items that I’ll need as well. It’s amazing how much you can save by not purchasing direct from the bricks and mortar store!

Future updates on the house

This will be the first of a number of updates throughout the build, mainly because it’s going to occupy much of my head space for 2016. Hopefully it doesn’t bore people too much though as building houses isn’t always on the agenda in the personal finance community (often people are talking about living in RVs instead or just plain renting), but I’m trying to get a good result while not spending too much money so there’s got to be something in it for someone out there.

If anyone out there has experience/advice from a finance point of view for this sort of project I’d love to hear it – I’m sure some of you have been through this sort of thing before and would have some words of wisdom for me (and others) that we can learn from!

IA.

3 thoughts on “Planning the renovation-extension – it begins!

    • Thanks Jess, I’m glad to hear that someone isn’t bored by the house building! You are right that it’s an exciting experience – a very busy experience but very interesting and satisfying at the same time. The wife loves it and so do the kids, although they’re not particularly helpful at ages 6 and 4!

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