News & Advice

Manage your build… and most importantly your budget

In a recent survey of homeowners, it was found that 75% of respondents overspent.While spending your contingency can be a “joke” at dinner parties, in reality it’s no laughing matter, with budget overspend one of the biggest worries.

House prices have risen significantly over the last few years,particularly in the South East, which in turn has a knock-on effect on building costs. These inflationary pressures can have a knock-on effect on financing a project, beyond the obvious. Banks are more often requesting independent analysis of costs before releasing funds.

It’s no surprise that banks like to see budget structure and pre-planning so they are not left with unfinished projects to support. Often engaging an independent expert gives a bank the extra confidence to lend, as they see a third party taking charge of the finances and pulling together a realistic budget, which at the beginning of the project is critical to ensure smooth-running of the build and no nasty surprises for anyone.

An accurate budget will also build in the correct amount of contingency funding, the “what if…” part of your budget. All building projects have risks – before the project starts some risks will be known, some unknown. Until this point you may not have had any independent advice as to potential costs.

Your architect may or may not have given you guidance and a builder may have provided rough pricing, but until you start to fully break down all of the costs you will not have a reliable final number.

You need this figure to ensure that when you finance your new build, you borrow the right amount. Going back to the bank or building society at a later stage will almost certainly mean incurring more charges, not to mention the additional stress associated with re-approaching your lender. If the overspend is then matched by an over-run, the problems really begin to stack up, often leading to extra rental costs and accompanying pressures on family and working life. 20% of respondents in the survey over-ran by 8 weeks, which worryingly will come as no great shock.

Good, reliable builders are booked up months in advance and are often running several projects in tandem. This can, again, lead to over-runs or sites being left quiet while builders juggle all of their projects. It is important to regularly check progress against your original timetable to ensure there has been sufficient progress in any one week.