10 tips for your next alteration

If you are about to build a new home or renovate, and you are nervous about the cost, the best way to save money on your project is to actively manage your costs.


It really is that easy.


We've done some thinking and have come up with 10 easy ways to manage your project to save money and stress on your residential project, have it run smoothly and successfully and avoid the nightmare scenarios which we hear about others experiencing frequently.


1. Do your homework at the start of your project, as follows:

Decide very clearly what the desired outcome of the project is. i.e. is it a personal project, fix to sell (or build to sell), or improve your own standard of living. It’s not just about cost, it’s about time, complexity, energy, capacity, risk and how best to satisfy your requirements.


Lock in an overall project “spend”. Otherwise you are in the land of wishes and denial. Your decisions are not real until there is a cost and decisions can't be made unless there are some criteria to help eliminate some of the thousands of options you have.


Prioritise your needs and wants. What is negotiable vs not negotiable. This also helps eliminate some of the thousands of options you have.


2. Define the big picture

The strategic design decisions you make at the beginning of your project when you formulate your project brief will have the largest impact on your project costs. Unfortunately there is very little if any saving to be made by fussing over the price of tiles towards the end of construction.


The more strategic you are, often the greatest impact that can be had on cost.


Two elements affect cost more than anything else: Size and complexity of construction.


A larger home will be more expensive than a smaller home. Flat or Monopitch roofs, upper level balconies and obscure shapes can look amazing and also require expensive construction.


3. Have a Quantity Surveyor prepare a budget estimate at sketch design stage.

If you don’t have some handle on the overall project cost early, then its near impossible to manage costs and make decisions accordingly. Knowing your rough numbers early helps with selections, methods of construction and cost allocations.


Waiting until the final tender process, or until you are building on-site to make changes, can waste a lot of peoples time and money. In our experience the industry is at such a capacity that contractors are reluctant to spend time on something that is unlikely to proceed. Re-quoting and optioning is not happening the way it used to and suppliers start to opt out of pricing after two revisions.


4. Take out some of the larger items that you can supply from the building contract, to save money on builder’s margin.

This comes with a BIG WARNING, whilst this strategy can be effective it only really works with a few products and you must be on the ball with their supply and installation co-ordination. It is best to converse with your contractor about the possibility for your project and agree what components suit the project.


Contractors margin covers the arrangement of site preparation, supply, installation and testing and they ensure this fits seamlessly into the project timeline so if you step up to the plate you need to deliver because the contractor definitely wont!


Some great examples of the practice working are generally items at the end of a sales run or imperfect seconds that are likely to be cheaper to consumers looking for a bargain than contractors in a hurry.


It doesn't work for materials and hardware, the commercial rebates from large merchants are often much more than the retail margins can discount so with taps and paint for example contractors will often get a cheaper rate including the margin than consumers can obtain.


Where this has helped recently was a house where we wanted to paint bricks as the cladding and interior feature. The brick layer quoted a particular brick that was easy for them and we contacted the supplier to deliver the quantity in an off colour seconds grade at half the cost.


5. Construction Costs & Project Costs: Know the Difference

Your budget should always reference the project costs with an eye on the construction costs.


A construction contract of $650,000 can have a project cost of $725,000, when project costs such as consultant fees, statutory costs, items by owner, or other works associated with the project but excluded from the principal contract works. Often this can be pathways, clotheslines, fencing, landscaping, Alexa integration etc and costs to finish the project off properly, like window coverings and essential furniture.


Other costs incurred by owners, not within the construction costs include finance costs and rental accommodation if required for the duration of the construction build.


These costs are all project specific but if you are cost conscious, they need to be identified and budgeted for at the beginning of the project to ensure the financial viability of the whole project.


6. You wont save money by cutting out the architect or designer and their fees.

Saving on architects fees does not translate into a project cost saving. In nearly all cases, it’s a false economy.


7. Engage your architect to document your project fully.

Ironically, its the biggest mistake we see made by cost-conscious clients.


Not allowing enough fee to document a project adequately heightens the risk that costs will blow out during construction, due to lack of considered design, materials selection & documentation, lack of co-ordination, lack of forethought as to the real scope of building works required.


Once construction has started, there are fewer ways, if any, to make significant amendments to the design or pull out of the construction works. Variations during construction are costly and will make your architect’s fees look like good value in hindsight.


8. Do a competitive tender.

Pick your builder early! - WHAT this is not the normal advise to introduce competition?!


In New Zealand at the moment there is more work than tradesmen, competition is a conversation around a water cooler in Placemakers about which jobs each contractor would like. Tendering in this market is genuinely a waste of time.


Recently published article defined tendering quite eloquently:

Tender submission = A poker hand where the losing hand wins

Successful Tenderer = The contractor who inadvertently left something out


Our advice is get a builder in early, get to know each other and run an open book on time and materials.


9. K.I.S.S. Keep it simple stupid.

Why does it cost so much to build or renovate today? Why is housing affordability an issue for most of New Zealand?


Well those are great questions we don't have time for at this stage, you need to get your job built! Put bluntly keeping it simple is the easiest way to navigate cost control. The moment complexity is introduced unknowns and conservative thinking regarding cost estimates become paramount which doesn't bode well for clients.. ever!


10. Have a Contingency Sum set aside of at least 10% to 15%, and for complex alterations and additions 25% to 30%.

A contingency sum is an allowance set aside to provide for the unexpected. Given the state of New Zealand's housing stock there are always items which come up during building which were not anticipated or foreseen, despite everyone’s best intentions.


There are also frequently additional scopes of work which clients choose to undertake which were optimistically omitted from the building scope, to lower costs, at the beginning of the project.


A contingency sum is a safety blanket. It lowers stress! If you don’t spend your contingency during the build, spend it on new furniture or a great family holiday! #yeahright


Another contingency worth considering is a time contingency, especially on the anticipated move in date at the end of construction. Plan for a buffer of time without publicising it and make arrangements which are flexible to a degree. This single factor alleviates an enormous amount of client stress at the end of a project which is easy to avoid completely, if thought about before hand.


So there we have 10 little simple tips to help you with your next alteration.

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