The dream of a new home or renovation in New Zealand often comes with one major anxiety: the budget blowout. With the cost of living currently at an all-time high, financial certainty is more important than ever.
While your architect sets the design vision, keeping the final cost in line requires an active partnership; you - the homeowner, your builder, and the architect must all work together to achieve the shared goal. Read on for our tips that will give you the knowledge and confidence needed to keep your project on track.
1. Set Your Budget
Know your absolute maximum budget from the very start. Always allocate a contingency fund for the inevitable unexpected issues that arise.
New Builds and Renovations:
We recommend 5% of the estimated total cost as a contingency (for unexpected weather or delays, unforeseen issues or minor design tweaks etc).
Note:
It is important to understand that this money must come out of your total budget—it is not extra spending money. If your total budget is $800,000, your estimated build cost should be around $760,000 to allow $40,000 (5%) for your contingency.
2. Choose the Right Builder Not the Cheapest Price
While the traditional advice is to get multiple quotes (or "tenders") for your finished plans, this is not always the most cost-effective path. Part of the reason behind this is because the quotes can be complicated, and if you aren't comparing apples with apples you are not getting an accurate result. This can happen when:
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One builder has "tagged out" items that another has included e.g. landscaping
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There are unrealistically low PC Sums. A PC Sum is an allowance or estimate included in the contract for items that haven't been finally selected or an area of works which is difficult to quantify (e.g. excavations, kitchens, bathroom fittings, lighting, etc). An unrealistically low PC Sum will make a builder's quote look great initially but guarantees a budget blow-out later.
The risk of choosing the cheapest price, only to have costs escalate through an inexperienced or inefficient builder, is a frequent and costly reality in our industry.
Doing the upfront work to find a qualified, experienced builder who aligns with your vision and budget and whom you trust will pay significant dividends in the end. This research could involve meeting multiple builders initially, reviewing their past projects and client references, and then selecting and committing to just one.
By working with one preferred builder from the start, you gain significant cost advantages:
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Value Engineering and Early Cost Feedback:
Your builder can offer value engineering and real-time pricing advice while the design is still being drawn. They can flag expensive materials or complex build methods before the plans are finalised, helping to keep your budget on target. -
Reduced Design Rework:
If you wait until the design is complete to send it out for pricing, the lowest quote might still be too high, forcing you to pay the architect to re-design the entire project. From our experience this happens all too often. -
Smoother Project Flow:
A strong relationship built on trust and early involvement from the start minimises miscommunication, leading to a smoother project flow and fewer delays once on-site.
3. Choose the Right Architect
Your design dictates your end budget. Choosing an architect or designer who understands your budget is vital. They must balance your needs and design aesthetic with the practical realities of cost control.
We have had great success with clients who sought basic initial concept plans from multiple designers. This initial investment, while seemingly more expensive and time consuming to begin with, allows you to gauge which professional best understands your budget and aligns with your vision. This is an option to consider.
4. Understand and Prioritise Your Needs vs. Wants
From the very start, create a list: Must-Have Needs and Nice-to-Have Wants. If your budget is tight, compromises are inevitable. Your priority list will help clarify which items are essential to the function of your home and which are aesthetic upgrades that can be dropped if costs rise.
Crucially, if building as a couple, ensure this list and the overall budget are agreed upon by both partners to ensure there are no last minute changes.
5. Lock in Selections Early
Make decisions on all fittings and fixtures (tiles, flooring, cabinetry, lighting, etc.) as early as possible. This is important because early selections inform your architect and builder, allowing them to set PC Sums at a realistic value.
This also gives you more time to source the best items within this budget without rushing or causing on-site delays.
6. Stick to the Design
Resist the temptation to make impulse upgrades on-site—this is a rapid-fire budget killer. Any design change during construction will incur extra costs and potentially variations to council consents.
Before finalising a change, go back to your Needs vs. Wants list: is this upgrade truly more important than protecting the integrity of your overall budget?
7. Transparency is Key
Cost management requires both diligence from you, the homeowner and clarity from your builder. Transparency is key to maintaining control, for both ongoing spending and unforeseen changes.
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Regularly Review Spending:
Take charge of your budget by making sure your builder's progress claims and invoices are clear and transparent. This transparency makes it easier for you to track and manage your budget. -
Managing Project Variations:
Variations are unfortunately inevitable on some projects. When they arise, clear communication and a formal process are essential for managing the financial impact. Your builder must be transparent and proactively communicate when a change to the initial plans or specifications is required, these changes should be documented along with what the extra cost will be.
8. Think Beyond the House Build
Many homeowners reach the end of the build and then realise they haven't budgeted for essential finishing items. Don't let these be an afterthought.
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Understand whether you want your landscaping (fencing, driveways, decking etc) and soft furnishings (carpets, curtains) to be completed as part of the build, or whether they will be done later as funds allow.
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These finishing items may be tagged out in your quote, so ensure you are satisfied as to what has been included in the quote and what hasn’t.
Sticking to a budget is challenging. It requires time, planning, and discipline. But knowledge is power. By understanding these factors ahead of time, you will be more empowered to make good financial decisions and remain in charge of your budget instead of letting the budget control you.
Good luck and happy building.
