Are you in the process of renovating your house in the Toronto area? Are you fed up with not sticking to a budget too? This is a common experience when tackling renovations… an experience that often happens. Why does the cost keep going up and what can I do to stay within budget? I don’t claim to be an expert but I’ve been involved in the building industry for 25 years. I’ve learned a lot from mistakes (mine and others) and hopefully this blog will save you from making the same as well. Here are the top 10 pitfalls of keeping your renovation on budget.
Pitfall 1: Low Initial Quote
Another issue that often catches homeowners by surprise in the middle of a renovation project is a low initial bid that does not turn out to be the bottom line. This situation often occurs when a contractor gives an artificially low bid as part of winning a job, then incrementally increases the price. Some contractors even refer to this practice as ‘bait and switch’. In an urban environment like Toronto and some surrounding communities, all this effort is often required to prevent getting ‘bitten’.
To save yourself some grief and frustration, always get detailed and transparent quotes from a minimum of three contractors who clearly spell out the costs of renovation, including labour, materials and permits or other extras.
Sometimes this more realistic quote costs more on the surface, but is a true reflection of the overall cost, therefore avoiding unexpected – and unwelcome – financial surprises.
Pitfall 2: Hidden Commissions
Another less obvious pitfall for homeowners is what I like to call hidden commissions. This is when a contractor might have entered into a mutually beneficial deal with a supplier or subcontractor, resulting in the contractor receiving a commission – often an undisclosed one – for recommending products or services to you, the homeowner. It is a subtle but steady increase in the cost of the renovation, happening unbeknown to you while the contractor smiles their way to a small fortune.
For example, consider a contractor’s recommendation of a certain brand of fixtures or appliances. Is it your diligent contractor’s desire to represent the brand of products and services that best compliments your design project? Or is it your contractor simply meeting their quota for the month by earning their kickback?
In order to avoid this pitfall, homeowners in Toronto and the surrounding areas should track prices, quality and make sure they ask direct questions regarding commissions and kickbacks from the contractor. Ask for itemised bills, ask to see other quotes. Do your own legwork.
Pitfall 3: Change Orders
One of the biggest pitfalls that can higher the cost of a basement renovation project is the existence of many change orders. Many times, the homeowner or the contractor may decide to add things to the original plan after the project has already begun. This means added labour for the contractor, added materials, and a significant increase in the cost of the overall project. For example, a homeowner may decide to change the orientation of an area (a kitchen, for instance) or the material to be used, which require additional time and money.
Similarly, contractors may also suggest additional things to add to the project, usually to improve the overall experience or the appearance of the project – but it means increased pricing. To avoid this, it is important that the homeowner has a very well defined plan for the project and that such a project is well thought out before the work begins. In this way, homeowners can minimise any necessary changes to the project.
Change orders normally stretch your budget beyond your financial plans. So, it is important to evaluate these painstakingly. Carefully speak with your contractor about the ramifications of any change, and make sure you understand how the change may impact the project – financially and otherwise.
Pitfall 4: Unforeseen Issues
One of the most common – and often unanticipated – traps facing those who attempt a renovation is the actual cost of doing so, which may quickly outpace your expectations.
The cost-control trap is an every-project, no-avoidance no-win either: somehow, everything takes three times longer and costs three times more than what you hoped. The roots of this issue are simple. When you buy into a renovation process, much of what’s going on ‘under the hood’ isn’t readily apparent. While your design ideas certainly shape things – as do the layout of doors, fixtures and other architectural features – some issues become clear only after contractors start opening walls, removing furniture or taking up floors.
For instance, hidden roof damage, poor wiring or plumbing, wall mould or even foundational problems may crop up, and all may dramatically change how much the renovation will cost, and how long it will ultimately take. If you’re having a house built, a major renovation or even a simpler fix-up, expect some kind of ‘surprise’ cost to appear.
To guard against such shock, budget 10-20% of what you expect to spend as a contingency (known in the trade as a ‘congenital’ problem). You might also consider (and most do) calling in a home inspector prior to signing on the dotted line. In some cases, they can spot issues that might otherwise come to light only once you’ve had walls torn down or floors pulled up. As a result, you need a realistically flexible approach.
Pitfall 5: Cost of Materials
Increasing material costs are one of the most common and significant pitfalls of home renovation projects. As proposed costs are being assembled, the primary components for a project are estimated based on standard materials. However, as the project progresses, suggestions or enticements emerge for shifting to higher quality or more attractive materials. The homeowner may have been budgeting for a fairly basic laminate countertop, for example, but a contractor may suggest a much costlier granite or quartz variety. While such upgrades may substantially improve the final result, they will – almost assuredly – also increase the project’s cost, sometimes substantially.
Contractors may also contribute to this problem by suggesting more expensive materials, either because they feel the extra cost is warranted by general quality increases or because the contractor has a relationship with a particular supplier. Home owners can minimise the risk of unexpected increases in material costs by establishing a firm budget for materials at the start of a project and sticking to it. Researching materials beforehand and shopping around can also lead home owners to similar and acceptable alternatives that don’t cost much more.
Pitfall 6: Time Delays
Some of the main pitfalls that can result in extra time and extra costs, particularly in terms of labour charges, include a poor project management strategy, work done late because of unforeseen problems in the structural aspects of the house, or simply delays because the contractors get overstretched with other projects at the same time period. If a renovation to a house in Toronto that should take four weeks becomes eight weeks (because of poor scheduling or because of unforeseen problems), then double the labour hours – and the labour costs escalate. Simple. Then there are delays in delivery of materials. Contractors often juggle a number of projects simultaneously, and while work can be taking place on another site, little or nothing can be happening at your site.
Homeowners can try to gauge if the delays are being caused by any negligence on their contractor’s part, or whether they’re unavoidable. To avoid the financial implications, homeowners can insist upon a detailed timeline from the contractor at the outset – with specific milestones and completion dates therein – or even clauses that will penalise the contractor financially for unwarranted timelines. Make sure to check the progress of the work on a regular basis.
Pitfall 7: Vague Contracts
Having vague contracts, for instance, often causes home renovation projects to cost more than expected because lawyers, designers and builders claim they misunderstood what was really agreed upon. The homeowner in Toronto might agree to a renovation project in general terms or, following advice to get an accounting of the project before beginning work, signs a contract to very generally itemise what is to be done, but possibly not the materials to be used or when deliveries or work is to be completed as part of or after the installation of certain materials.
Everything comes down to the signed contract. It is highly advised that every aspect of the work be detailed in a long, written contract, broken down into specific items with expected costs attached such as:
- A full breakdown of the work and timeline,
- The work to be done,
- The material to be used,
- Specific times the work is to be done, including a timeline of proposed milestones for work done.
Pitfall 8: Overbilling
Overbilling is one of the classic pitfalls of renovation projects; it inflates the cost of the project as the contractor bills for more hours than he or she has worked, more expensive materials than those actually used, or charges for tasks that never actually took place. It can be especially hard for homeowners (especially those who are off-site for a portion of the renovation) to notice discrepancies between hours worked and charges incurred, especially when the charges are for things the homeowner does not have a familiarity with, such as construction materials or carpentry skills. For example, a renovator might be billing a homeowner for premium-grade paint while applying builder’s grade paint or billing for 40 hours of work when not all the work hours for the week were actually worked.
To guard against overbilling by contractors, homeowners should insist on detailed, itemised invoices that clarify labour hours, material costs, and all other charges. Being present on-site and checking in regularly can offer homeowners the opportunity to match their bill to the work that was done. Comparing the contractor’s reports to an independent assessment or to get a second set of eyes can offer another check against overbilling.
Pitfall 9: Lack of Communication
The biggest failure – but easily the most common and most critical – of any renovation is a breakdown in communication, which inevitably leads to higher costs. Communication between homeowners and contractors can break down when hourly building rates go up without warning, when the scope of the project or change to plans isn’t properly communicated, or when the homeowner’s expectations are confused in some way. If a homeowner in Toronto doesn’t communicate their vision to their contractor about exactly what they want done, the contractor may make decisions that the homeowner isn’t too keen on, which could result in costly revisions that could have been avoided from regular communication.
Contractors that fail to give homeowners regular updates on the progress, issues with the plans, or any other decisions that need to be made along the way could end up with construction delays, rework, or decisions that drive up the renovation cost in previously unbudgeted ways. Realistically, the only way to avoid these pitfalls is to communicate both clearly and regularly. Establishing lines of communication that both the homeowner and contractor can follow, having regular check-ins during the renovation, and keeping all changes and decisions documented go a long way to keeping the renovation on track, and on budget, by making sure that everyone is on the same page.
Pitfall 10: Incomplete Scope of Work
An incomplete scope of work is one of the most common pitfalls of any renovation, since the contract or initial scope of work typically doesn’t spell out the who, what, where and how of all the work, materials and specifics required, but leaves things ambiguous or undefined. You sell your house to move into your dream home but there are things that get broken along the way The most common example of this is a homeowner in Toronto that agrees to a kitchen renovation based on the high-level work and a general breakdown of the remodel, but for some reason has somehow agreed to a scope of work that doesn’t spell out every single task or aspect of the project.
As the project progresses, it becomes clear that additional ‘necessary’ work hasn’t been factored into the original quote or scope of work and by now likely includes plumbing upgrades or additional electrical, all of which will result in some form of scope creep and budget increase. This additional work, not previously budgeted for, is part of the agreement from a project point of view and almost impossible to say is not needed before the start of the job.
The only real way to avoid this monetary surprise is to insist on a complete with-all-tasks-accounted-for and fully defined scope of work that includes every aspect and requirement of the project that your contractor will undertake and all the materials and labour required to finish it. It not only helps to define the relationship and expectations clearly from the beginning, but it also sets boundaries on any extraneous additions to the project unless specifically agreed upon.
In Conclusion
Home renos are filled with obstacles and hurdles along the way. The key is to try to plan your renovation, communicate, deliver a detailed scope of work, and navigate this complicated process. Homeowners in Toronto and the Greater Toronto Area can find it overwhelming. That’s where hiring the right contractor makes an enormous difference.. You will need a contractor with extensive experience in repairs and renovations. Try booking a free in-home consultation with a reliable and honest company, Luar Contracting. We work on everything from basements to kitchens, bathrooms, entire homes, townhomes, apartments and even some commercial spaces. Our ability and commitment to honest estimates gives homeowners the assurance of an accurate quote and a fixed price, from plans to finished product. The best materials, transparent pricing and close communication with the customer are what sets us apart.
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