How To Get The Most Out Of Your Initial Renovation Estimates
So, you’ve decided to renovate your home. You’ve likely done some research to determine the potential cost of your project. You’ve probably audited your finances to know what you’re able to spend. But the time will come where you must confirm your assumptions about the cost of your project. That means engaging with the professionals, and ultimately having them provide you with their early-stage cost-projections for your renovation project.
I won’t go too deep into how to choose which Renovation Contractors to interview, you can read more on that here. Instead, let’s start by defining what an Early-Stage Cost-Projection is. In order to make an educated decision about how to proceed with your renovation project, what we should be looking for at this point in the process is a free (albeit accurate) projection of what your renovation might cost. The idea is to interview a small (2-4) group of local Renovation Contractors to get a feel for the likely cost and timeline, and for the Contractors themselves.
Now, let me walk you through my tips to help get the most out of your Early-Stage Cost-Projections. We’ll learn compare apples to apples and watch for red flags. I’ll also help you to make informed decisions about how to move to the next stage with your chosen Contractor.
Here is my 3-point plan for success:
Level the playing field for your Contractors
Set your expectations
Make solid evaluations
Let’s get started!
1.Level the playing field for your Contractors
The key principle here is to ensure that your Contractors are making their Early-Stage Cost-Projections based on the same project. There are many variables at play on the average renovation project, and depending on how each Contractor interprets the project, your Early-Stage Cost-Projections could be varied as well. Let’s discuss a couple of simple methods to keep everyone on the same page and ensure that at the end of the day, you’re comparing apples to apples.
Use a communal Scope-Of-Work
This does not have to be rocket science. Before meeting with your chosen Contractors, write a list of everything you’d like included on your renovation project. If you can think of it, it can go on this list, nothing is too small. I’m talking about the type of finishings, the layout of the space, paint colours, product preferences and special features. The more detailed your list is, the better. Each Contractor is bound to have ideas of their own, but if everyone is working from the same list, extreme variances in their cost-projections should be minimized.
Use a communal Rough Floor-Plan
The thinking here is the same, if everyone is working with the same layout, large cost discrepancies should be minimized. Believe me, this does not have to be a work-of-art. A rough sketch by hand is often enough to give your Contractors a sense of how you might want the layout of your space to work.
Be clear about your desired level of quality
You can imagine how this might factor in. If one Contractor thinks you’re aiming for basic Home Depot-type finishings and one Contractor thinks they’re installing high-end luxury finishings, we’re not talking about the same project. Having some design photos for inspiration (Houzz is a great
tool for this) will help your Contractors understand your desired level of quality.
2. Set realistic expectations
Once you’ve received your Early-Stage Cost-Projections from your Contractors, what should they look like? Is it a number written on the back of a napkin? Or a 40-page binder full of drawings, specifications, contracts, and the like? Having an idea of what to expect with your Early-Stage Cost-Projections will only help you to make better final evaluations.
Expect generalization, not precision
I’ll say it again, each renovation project has a number of variables that can drive cost one way or another. You should keep in mind that so many of the details of your project (especially if it’s a large project) aren’t able to be defined during an initial consultation with a Contractor. For this reason, you shouldn’t expect your Early-Stage Cost-Projections to come with too fine of a point on them. I must be clear that the true detailed pricing of a renovation project is A LOT of work and should not be expected to come for free. This usually involves generating construction drawings, consulting with all relevant Trade-Partners (Designers, Engineers, Framers, Plumbers, etc.) as well as obtaining bids from those Trade-Partners for their respective work. This is often the stage of the process following the Early-Stage Cost-Projection.
For now, we should be working with an expected range-of-cost for your project. If you’ve chosen reputable Contractors to meet with, it’s reasonable to expect these projections to be accurate. I realize that a range-of-cost might not feel accurate enough for some people, but it’s important to get comfortable with that idea at this stage of the game. Renovations are a process of progressive elaboration, and those costs will be quantified in much better detail as the process moves along.
Documentation: Not too little, not too much
Let’s get back to the back-of-the-napkin vs. the 40-page binder. While more information is better than none, I’d actually approach both of these scenarios with caution, should you encounter them. Obviously, it doesn’t instil confidence if one Contractor with shoots you an email saying “Your project will cost $68,000. Thanks”. Don’t laugh, I’ve seen it. However, if another Contractor presents you with a package including drawings, detailed specifications, subcontractor bids, etc, that’s great right? I won’t deny that it’s helpful information, but I would be concerned about what doing that amount of work for free might say about the Contractor. As I’ve mentioned, detailed pricing is A LOT of work and in all fairness, is really a different phase of the project. If the Contractor is willing to do that much work for free, it may say something about how they value themselves and their time. Unfortunately, all too often this unbalanced evaluation can spill over into your project in a negative way. I’m not saying to turn this person away, but it is something to be conscious of.
What you should expect is something in the middle. Some form of documentation which demonstrates the Contractor’s understanding of the project is a must. This means providing their own Scope-of-Work. This Scope-of-Work should clearly map out what is to be included, and what is not to be included for the project cost they are proposing. Not having any documentation to explain what their anticipated cost actually includes is a recipe for misunderstanding in the future. Be wary if some form of Scope document is not included along with your Early-Stage Cost-Projection.
How long should it take?
What I must stress here is that good preliminary estimates should take some time. Doing this type of pricing correctly and accurately requires careful and deliberate thought on the Contractor’s part. Generating an accurate cost-projection is not as simple as looking up a number on a price-list. No matter how similar it may be to a past project, your renovation is still unique and deserves to be thought about clearly and methodically. For this reason, be cautious regarding those who give you their formal estimate at your first meeting. On the flip side, due to the inherent generality at this stage of the process, it also shouldn’t take weeks of planning to generate your estimate. Again, your best scenario lies between two extremes.
3.Make solid evaluations
We’re now assuming you have all of your Early-Stage Cost-Estimates in hand. All that needs to be done is decide which Contractor to proceed with, right? While that’s true, my hope here is that I can arm you with a few more ideas that can help you to make solid evaluations of your numbers:
Evaluating the numbers themselves
With your Early-Stage Cost-Projections in hand, you should be starting to have a good idea of what your cost reality might be. When evaluating your Contractor’s numbers side by side, you again should be wary of the extremes. If you’ve done a good job clarifying your project for your Contractors via your Scope-of-Work, rough floor plan, and design ideas, you should see your various projections come in relatively close to each other. However, if you see one projection coming in at a drastically different cost (be it lower or higher) it’s time to ask some questions.
While this Contractor shouldn’t necessarily be disqualified immediately, you need to determine why they might be so different from the others. While it may be enticing to proceed with a Contractor who’s come in significantly lower than the others, you should be aware that the reason for that difference may show up somewhere throughout the project, whether through inferior materials, sloppy scheduling or in sub-par communication and supervision. Having said all of that, they may have more streamlined operations or access to superior Contractor-discounts. The key is asking the question.
On the flip side, if one Contractor comes in significantly higher than the rest, do some detective work to figure out why that may be. Perhaps they’ve included superior materials or are allowing for better site supervision, both of which may be of benefit to you.
The bottom line is, if and when you see those outliers, don’t be afraid to ask some questions to see if you can get a clear idea as to why their numbers are different from the rest.
Evaluating the schedule projections
If a Contractor is unable to provide you with a rough timeline for your project to be completed, that should be cause for concern. This projection is critical in order for homeowners to be able to make decisions about their renovation project. Again, watch for extremes here. Is one Contractor’s timeline significantly longer or shorter than the others? Sometimes there are good reasons for this, so don’t be afraid to ask questions to determine why the timelines are being projected the way they are.
What’s next?
As their Early-Stage Cost-Projections are presented to you, each Contractor should also explain what the next step in their process is, should you choose to proceed with them. As mentioned, these early stages are all about progressively elaborating upon the details of your project in order to arrive at the clearest picture possible. For most Contractors worth their salt, the next stage is usually where it starts to cost some money, in the form of a Detailed Project Estimate. Providing your chosen Contractor with a small deposit or retainer allows them to dig a bit deeper and spend some time hammering out the details. This often involves generating proper construction drawings, consulting with engineers and designers, as well as with their Trade-Partners. This allows a much more detailed conclusion about the pricing and scheduling of your project to follow. This is sometimes accompanied by a Letter of Engagement, or some other form of agreement to work together, should both sides be able to come to terms on a construction contract. In most cases, this should be good enough to put your project into a Contractor’s production funnel and secure to some extent, the timing and priority of your project.
Conclusion
By employing the principles I’ve outlined above, you can greatly improve your chances that the Early-Stage Cost-Projections for your renovation project will be accurate, comparable and useful. You should also have a solid framework which you can use to evaluate the Contractors your interview, as well as the project costs and timelines they propose. Armed with all of this, I hope you’ll now have the confidence to get started on your renovation journey. Best of luck.