A friend of mine asked me recently ‘when you are doing a building project how do you keep to budget?’ I thought that was an interesting question – and one with a lot of potential answers.

Like all good quantity surveyors I will preach about having a good contingency figure within your budget. The contingency is there to cover any unforeseen spending that becomes necessary on your project. When we do budgets for clients, we add between 5% and 20% for a contingency. This depends upon how progressed the design is, how complicated the project I and if it is a new build, extension or refurbishment. With a new build the real risks are in the ground, i.e. when you are digging the foundations – you may find contaminated ground or big lumps of concrete – both of which are expensive to remove. With a refurbishment the risks are higher as you are dealing with an existing building that may all sorts of secrets and problems that you may need to sort out

For most projects I would always recommend that you have a fixed price with your contractor based upon an agreed scope of works. That is you both agree what work is to be carried out, what materials are to be used and what you will be paying for it. The more comprehensive you make this agreement the greater the chance that your costs won’t increase. So it is worth spending time, working through drawings if you have them (and you should unless the work is small scale), finalising your material selections and checking that your contractors quote covers everything that you need. Not only will this help you keep overspending to a minimum it should also help with the delivery of the project as everyone will know what is expected of them.

On domestic projects it is not unusual for clients to have a lot of control over the selection of a lot of the interior materials and fittings. In this instance the contractor may allocate an individual budget for each of these items (sometimes called PC Sums). Examples of these include doors, ironmongery, ceramic tiles, timber or stone flooring and the two big ones – sanitary-ware and kitchens. For example there may be an allowance of £10,000 for the supply of the kitchen and appliances or £3,000 for the supply of the sanitary-ware. The contractor will say to you ‘go and visit some showrooms and let me know what you would like’. This is where a lot of clients get carried away as they walk around showrooms imagining how certain items would look good in their houses. Before they know it, they have picked products that may exceed their contractors budget allowances. There are also all the ancillary items that are required – for example with ceramic tiling there is the grout, adhesive, trims etc. With sanitary-ware there are the wastes, connectors etc which all add to the cost. In these situations work with your contractor, if you overspend in one area you may need to reduce your budget in other areas. Costs can easily run away with you.

It is also how many people don’t manage their costs and just literally rely on adding up contractors and suppliers’ invoices to work out how much they have spent! If you have a fixed price for your project then it is relatively simple on a spreadsheet, or even a bit of paper, to log your costs and changes. Changes are a really important point. If your contractor asks you ‘would you like…’ then don’t assume that they are doing it for free. Always respond back ‘yes – but how much will it cost as I need to see if it is worth it’. Try not to say yes without knowing how much it will cost.

The last area (as I am running out of space) that you need to keep on top of is VAT. A lot of trade suppliers and contractors give prices that are exclusive of VAT. Unless you are doing a new build, most projects will attract VAT. So when you get a quote from a contractor or supplier you need to add VAT. For example going back to choosing sanitary-ware, when you are walking around a showroom and picking your bath, shower etc, unless you are in a retail showroom (like B&Q) then the prices quoted will probably be exclusive of VAT. You pick your products, give the details to the contractor and then when the bill comes in you realise it is 20% higher than you thought – all because you forgot to consider VAT!