How to Save (or Not Save) Money on Your Renovation

(Skip to the end to learn a 3-minute exercise that can save you money on your renovation)

In the daily process of renovation planning and estimating, there is really only one comment that stops me in my tracks. In fact, over many years, dozens of projects, hundreds of estimates, and thousands of emails, phone calls, and house walk-throughs, I can only remember this happening two or three times.

What's the comment?

"Huh, we thought it'd be more than that".

In fact, I'm much more accustomed to, and prepared for, the alternative: "How can it cost that much?" For the vast majority of people considering a major renovation (we wrote about what exactly constitutes a major renovation here), they are entering a completely unknown space when it comes to cost. Thus, for 99.7% of people, the goal will ultimately be "how can I save money on this project?"

For any major renovation project, there are ways to create significant savings and incremental savings. However, the most common suggestions we receive from clients looking to develop savings often don't, in fact, save at all. In many cases, they generate more cost.

So, without further ado, let's answer the question "How can I save money on my renovation?" by first answering the opposite: common misconceptions that won't create savings on your renovation.

1. Do the demo yourself:

   1. Demo in itself is a skill, and if not done correctly, can create added costs down the line. We have stories of clients "helping out" by doing the demo beforehand, only to take out the wrong will, cut the wrong pipe, or damage a flooring system that cost them more later.

2. Do some of the work yourself.

   1. This would be like going to a nice dinner out, ordering a steak, and then wanting to cook it yourself. You've hired the contractor to maintain a certain quality and timeline, and interjecting yourself into the project will only hinder both.

3. Reuse materials.

   1. Let us make a distinction here: if a material in the home (such as a door, window, lockset, faucet, or mouldings) holds sentimental value for you, we can reuse it. However, reusing a 40-year-old door with seven coats of paint and the door hardware, which requires a finish carpenter to install, will not save you money. Blending old and new materials may be the aesthetic you're aiming for, but it won't ultimately save you money. Let it be said: reusing materials isn’t inherently bad - in fact, we love the opportunity to keep the character of the home and reduce waste - but if cost savings is the goal, this isn’t the best path.

4. Source or provide your own materials.

   1. Our construction process is rooted in creating an efficient workflow, and the more efficient a project is, the lower the overall cost with respect to management and labor costs (more trips and more time equals more cost to you). Interjecting anything from outside our process, whether it be a vendor, a trade ("I've got an electrician I like"), or a specific material, almost always creates a headache for both the client and the contractor, which trickles into added cost.

5. Remove scope mid-project

   1. A major renovation is like a train. Once everything gets going, it takes a lot of time and manpower to slow it down or pivot, which may create savings related to the scope item you took out, but will drive costs up in other areas. It's never a zero-sum game once construction begins.

Now that we've covered how not to create savings, here are the three best ways to create savings on your renovation.

1. Reduce scope

The quickest and cleanest way to create substantial savings on your renovation is to reduce the scope. Reducing scope is removing parts or whole aspects of your renovation. Let's take the example of a renovation that will include a kitchen, pantry, and mudroom, and let's say the overall cost estimate is 150K. You want to spend around 130K. The estimate for the mudroom includes custom mudlockers, tile flooring, new lighting, trim, and painting, and the total cost will be around $25,000. You can remove this from the scope and be right on target.

2. Reduce specifications

Another straightforward way to create savings (albeit less substantial) is to reduce specifications. Reducing spec is opting for a more economical option for the selection items within your scope of work. You're not removing anything from the scope, but you are making cost-saving decisions on items like cabinetry, countertops, fixtures, and appliances.

Using the same example as above, let's say your all-inclusive cabinetry allowance for the kitchen, pantry, and mudroom is $ 50,000, and your countertop allowance is $10,000. You can reduce the custom details inside the cabinetry, opt for butcher block countertops for the pantry, and consider a mudlocker setup that includes a seat, then install hooks on the wall. Those hypothetical savings net you $ 10,000 across those budget items without taking anything out of the scope of work.

3. Value engineering

Value engineering your renovation is something that you'll need to lean on your contractor to advise you on. Value engineering focuses on identifying and implementing efficiencies within a project's design to reduce costs ultimately. Within a project, there can be aspects of the design that may be creating costs that you have no idea about. For example, suppose your kitchen renovation requires relocating all the appliances or moving a load-bearing wall. In that case, that will have a substantial impact on the labor and materials costs in your project. So, you may like the idea of a new kitchen layout, but is it worth an extra $ 6,000 in plumbing and electrical work? Maybe not, but without your contractor's advice, you'd never know.

Conclusion:

Try this simple exercise to determine how to save money and maximize the benefits of your renovation.

Take a piece of paper and write down all the aspects of your project. If it's a kitchen, you'll be writing down items like "custom cabinetry", "high-end appliances", "quartz countertops". You'll also want to write down things like "open floor plan", "reformatting the layout", or "new flooring". Write all these things down, then rank them from NEED to WANT. From there, you can discuss the costs associated with your list with your contractor and explore ways to create savings without compromising what's most important to you.