My Top 5 Tips on Pricing a Renovation

We are a nation of renovators. Kiwis just love their homes, we love owning them and we love tinkering with them. That being the case it was no surprise when I sent out a recent survey, that most of you complete renovation work.

Pricing a renovation is HARD. It isn’t clean like pricing a new build. You must think about all the things that could go wrong, that haven’t been detailed on the plans, that could potentially change. Other than owning x-ray goggles and having a crystal ball, there is no way to know for sure what the financial outcome of a renovation is likely to be.

That being the case, I have some tips.

1 Don’t use a percentage for your preliminary and general items

P&Gs are the associated costs with doing a job, like Health and Safety and on site portaloos and their cleaning. I don’t generally recommend percentages for this category in any case, but it is especially important not to for renovations. P&G lists for reno jobs tend to be more extensive as you have to consider all the requirements for working on an existing building, like protecting the existing part of the house or ensuring health and safety when people are living there while you work. Often the $$ value of the project is also less than what a new build would be, but the P&G requirements remain the same or even more on a renovation.

2 Provide a methodology statement

Different builders will approach a reno in different ways and that is fine, however providing a methodology statement can help in a few ways. Firstly, it sets an expectation as to how the project is going to run. That saves on the questions and calls wondering what is happening and when. Secondly it assists when you need to claim a variation. If you have already outlined how you are planning on working and something out of your control happens, such as unforeseen siteworks, then the variation you claim is less likely to be a surprise to your client.

3 Include a tender letter with your pricing

A tender letter is just a written formal offer to a client. It includes how much, and all your tags and clarifications. It adds a layer of professionalism to your submission, which may help set you apart from the rest as it creates trust.

Your tags and clarifications will not only outline your sums and what they include and don’t include, but also clarify unknowns that are not covered in the pricing. Make sure you also pull through any relevant tags and clarifications from your sub-contractor quotes!

4 Outline your labour rates and how variations will be managed on your tender letter

There is nothing worse than arguing with a client over a VO they need to hurry up and approve so the job can keep moving forward. Advise what the hourly rates on variations will be, and that the variations will include processing/admin fees and a margin. Don’t process variations either negative or positive without an admin fee!

5 Run ironclad timesheets onsite

If there is ever a time labour will run over, it is on a renovation. Make sure the team uses the timesheets every single day and that they not only detail how long, but also what tasks were being completed. Collect these and back cost them against the job every single week. It is an extraordinarily powerful tool to have this info and will help keep the team on task, pick up on training issues, and of course get any extra variations you might otherwise have missed.