10 Key Questions About Renovation, Refurbishment, and Construction Budgets
Larger renovation, refurbishment or construction projects can quickly involve more cost items than originally expected. Quotes change, additional work becomes necessary, deliveries are delayed and individual trades may cost more than planned.
The following ten questions cover some of the most important aspects of financial planning for a construction or renovation project. They show what contingency reserves are useful, where typical cost drivers occur and how planned and actual expenditure can be monitored more effectively.
1. How much contingency should I allow for unexpected costs?
Do not set the reserve too low
As a rough guideline, around 10% of the planned total cost can be set aside as a contingency reserve for a new build. For renovations and especially the refurbishment of older buildings, a higher reserve of around 15% to 20% is often advisable because the condition of the existing building is more difficult to assess.
The older the building and the less that is known about its existing condition, the more important an adequate financial buffer becomes.
2. What is the difference between renovation, refurbishment and modernisation?
Renovation
Renovation mainly focuses on improving or refreshing the appearance of a property, for example painting, new wall finishes or floor coverings.
Refurbishment
Refurbishment involves correcting defects or damage to a building. This can include damp walls, mould, damaged pipes or other technical and structural defects.
Modernisation
Modernisation improves a building technically or in terms of energy efficiency, for example through insulation, new windows or a more efficient heating system.
3. Which cost drivers are often overlooked during planning?
Budget for more than materials and contractors
In addition to the actual construction work, numerous ancillary costs can arise. Depending on the project, these may include permits, planning and structural engineering, construction waste disposal, scaffolding, skips, site setup, temporary furniture storage or alternative accommodation.
These items should be recorded separately in the budget as early as possible so that they do not appear later as unplanned additional costs.
4. How much does it cost to refurbish an older building per square metre?
For a comprehensive refurbishment or complete renovation of an older building, rough guideline figures of around €1,000 to €2,000 per sqm of living space are often used. The actual amount can differ significantly.
Key factors include the condition of the building, the scope of work required, the desired energy standard, building services, regional labour costs and the required level of finish. A cost per square metre is therefore suitable only for an initial estimate and cannot replace a project-specific cost calculation.
5. In what order should the trades be scheduled for a complete refurbishment?
From the building envelope and first fix to the interior finish
A commonly useful basic sequence is:
Roof, insulation and windows → first-fix electrical and plumbing work → heating → internal plaster and screed → drywall → tiling, painting and flooring
The exact sequence depends on the building and the refurbishment concept. Particularly where one trade depends on another, schedules and prerequisites should be coordinated in advance.
6. Which work can I do myself to reduce costs?
Typical DIY work includes simple demolition, filling and painting or laying certain types of flooring. Part of the labour cost can be saved if sufficient time, tools and practical experience are available.
Electrical, gas and water installations as well as work on structural components should generally be carried out by qualified professionals. In addition to safety risks, technical regulations, liability, warranties and possible inspection or documentation requirements must also be considered.
7. Which KfW or BAFA funding programmes may be available?
Check the conditions of the specific programme before commissioning work
Grants and subsidised loans are available in particular for energy-efficiency measures such as heating modernisation, insulation, windows or the energy-efficient refurbishment of a building.
The timing of the application is important. The requirements regarding the start of a project vary depending on the funding programme. Under current KfW programmes, for example, a supply or service contract containing a suspensive or resolutory condition may already be required, while BAFA applications generally have to be submitted before the measure begins.
Always check the current conditions of the specific funding programme before signing a contract or starting construction work.
8. Fixed-price quote or cost estimate: What should I look out for?
A cost estimate is essentially a forecast of the expected costs. If it becomes apparent during the work that the estimate will be substantially exceeded, the customer must be informed. For contractor work, an increase of around 15% to 20% is often regarded as a useful guideline for a substantial overrun.
An agreed fixed price provides greater cost certainty. However, this requires the scope of work, materials, quantities, execution and possible additional work to be defined as precisely as possible.
Regardless of the type of quote, several offers should be compared not only by the final price but also by the scope of work included.
9. When should existing building services be renewed?
Condition is more important than a fixed age limit
In older buildings, the condition of the electrical installation, heating system and water and drainage pipes should be assessed at an early stage. Age alone does not automatically mean that all installations need to be replaced.
The decisive factors are technical condition, existing safety defects, capacity, energy consumption and whether the existing installations are suitable for the intended future use of the building. A professional assessment provides a better basis for decision-making than a fixed age threshold.
10. How can I keep track of expenditure and payment schedules?
For larger projects, a simple list of invoices is usually not enough. It is more useful to continuously compare the planned budget, commissioned work, incoming invoices and payments already made.
Cost control becomes particularly clear when all amounts are assigned to a room, construction phase or trade and changes are continuously reflected in the budget planning.
It is not enough to know what has already been paid. It is also important to know which costs have been planned, commissioned and invoiced, and how much budget remains afterwards.
A realistic budget changes throughout the project
Good cost planning is not created once at the start of a project and then filed away. Quotes, orders, invoices, payments, material costs and schedule changes need to be updated throughout the entire project.
The TYPELOG Renovation Planner for Microsoft Excel brings this information together in a single project file. Budgets, contingency reserves, cost items, quotes, contractors, invoices, tasks and materials are linked and evaluated automatically.
TYPELOG Renovation PlannerPlan your budget and control costs throughout the entire project
Manage planned costs, quotes, order values, invoices, payments and remaining budget in one linked Microsoft Excel file.