Amy D: Welcome to our special mini series called Home Truths. We’re gonna be talking about some common misconceptions in the world of renovating, bust some budget myths, and basically shine the light on how to avoid a stressful renovation. If you’re thinking about renovating or about to start, or you’re right in the middle of it, this is for you. So welcome back to Home Truths. This series is all about going to site and today we’re gonna be tackling one of most stressful moments in any renovation. Getting the quotes back. This is the point where things suddenly feel very real. The numbers land in your inbox and often they don’t match what they were expecting at all. Jane, today we’re talking about why quotes vary so wildly, the difference between quotes and estimates and budgets and how homeowners can compare prices properly so they actually understand what they’re buying.

Jane: It’s really funny because when we first started the project, I used our budgeting tool to make a budget for the project, and it came in, at a certain price and then we’ve gone through the houses trying every which way not to make it that figure. And then when we came back and we totted it all up, it was that figure.

I think we’ve basically spent like a year, I mean we’ve been honing in on the detail and everything, but basically. I wouldn’t really accept that was the price until I actually got the price. And then we were both like,

stripping stuff out and, reorganizing how we were gonna do it. So we were going to do the fit out ourselves so that we could afford to do it. But then, obviously the fit out still costs money. There’s still materials there. So we took that out and we’re like, oh, it all adds up now.

Amy D: Yeah.

Jane: yeah, but you are, you’re not gonna have a finished house. You’re just gonna have a shell. So then I think we both got panicked and have done a last minute redesign to take out some of the more expensive things, which, it just shows you, doesn’t it? That is the moment where it all comes into focus when you’re about to part with your money.

Amy D: And is that why it’s such an emotional point for people? It’s like it’s the first time your project turns from the ideas

Jane: yeah.

Amy D: almost like a real financial commitment,

Jane: Absolutely because I mean, we have money that was set aside. Like we bought this house with the money to do it up, so we had a pot of money assigned ready. So the plan was always to do this set of works and we bought the house knowing that it needed works but all of a sudden, like my head was going through the like.

Oh my gosh, it’s so much money. And are we doing the right thing? And then you go back to square one of, all of a sudden you, you’ve had a plan and then you’re racing through all the options again, questioning. And that’s what you should do, you really should, is the time to check in with yourself.

’cause you’ve been on a process and you’re going down a road and then you’re suddenly likeis this the right thing to do?

Amy D: You mean as in like

Jane: Just sell the house, buy a different house

Amy D: like that,

Jane: yeah, because it’s such big amount, it’s just a huge commitment, isn’t it? So I think you have to go through that, like last minute questioning.

Amy D: And I guess it is weighing the commitment the investment versus what is gonna do for you and your family, I guess.

Jane: Exactly and because this is our forever home, I think it’s, every other home we’ve done. We’ve done previous projects and it’s always been like, oh, we’ll stay here for five years and then we’ll move. Obviously, it’s always longer than five years. The five year plan is such a common thing, isn’t it? But there’s an idea that you’re gonna get your money back. But this time it’s a little bit different because we’re not planning to sell.

So all of the money we’re putting in is kind of gonna be locked into the house. So it’s is that the right place where we want the money to be? What if the kids need stuff? What if, what if we want to go on holiday every now and again? It’s you spent all the money on your house and now you’ve got no money.

So it is it’s a slightly different mindset thinking that this is all the money will be in the house. So yeah. Is all of those things all wrapped into one?

Amy D: Yeah. Okay. And so your prices often come back really different.

Jane: Yeah.

Amy D: for people who haven’t been through it before, is that a warning sign? Is that like a red flag?

Jane: It’s quite a shock because you are, especially if you’ve got all of your documentation, you feel like you’ve done quite a lot of work to get together what you are asking for. And then even then, the contractors can be tens of thousand pounds apart. And I think it comes down to the fact that one different contractors work in different ways.

Their overheads will vary very differently from another type of contractor. But also just, I think that we’ve had something in the past, like when a contractor is used to doing very nice jobs with bespoke joinery and they’re filling in the blanks with what they normally provide.

So if they’re gonna build a staircase, for example, one contract will be like, okay, that will be. That staircase could be 20 grand and another contractor will be like, okay, the stair that we buy off, X is usually five grand, so anywhere where it’s open to interpretation, like what that thing is, the contractor will use what they normally use. So that can just set, you really have to dig down into all those different prices and look like why is yours so different from the other contractor? And usually there will be an answer. But there is also the other aspect that quite often the more experienced contractor who’s done that job a lot will come in higher because they know the price of doing those works. They’ve done it before, you know this is what they do and they’ve got every price in there for everything. Whereas maybe a contractor who doesn’t always do that type of job, won’t account for everything and they’re optimistic.

Like the rest of us that think things will take less time, use less materials.

Amy D: I guess you’re saying that variation is completely normal maybe the big differences don’t automatically mean that someone’s expensive and someone’s cheap. It might mean that they’ve actually priced a job differently. So there is a job there isn’t there to interrogate the prices which will come onto, but I thought it would be helpful ’cause I think there’s lots of jargon in this period of your renovation where someone, everyone starts talking about tender and tender packages and budget estimate quote, they all get used interchangeably. I guess I thought it might be useful to just talk a little bit about what the differences are or if there are any

Jane: Yeah, we always used to crack up talking about tender packages. I mean, it’s the most ridiculous word to have to use when talking to contractors. So I guess, I guess it breaks down into we’ve talked about three different kind of words, haven’t we? A budget, an estimate, and a quote, are quite different things.

So a budget is for planning early. Cost conversations, obviously it’s not fixed, it’s just a concept of an idea of how much something’s gonna cost. An estimate is still probably approximate. It’s based on information, but. It might still be an estimate. We think it’s gonna cost this much, but we’re not totally sure.

And even when you are coming to the price, collating the price, there will still be aspects from your contract that will be priced as estimates because they don’t totally know what that job’s gonna entail.

Amy D: I guess some people might receive back just like a single lump sum price for a renovation, and what did they do with that? What should they be thinking?

Jane: I would be thinking that is an estimate because it happens a lot where contractors will price a really big job with just a single figure or maybe broken down into two or three sections. In terms of managing costs on site, it’s really not very helpful just to have one lump sum, big figure for a job that’s actually so many different tasks and so many different things.

And I think if you do get a lump sum, you should be asking for that to be broken down. Maybe not per plug socket, but definitely per trade or per kind of broad task. Just because if the contractor has made their costs accurately, they will have done that already. They will have that information because they will have had to have worked it out for themselves.

So if they haven’t, it means that it’s not costed correctly. If they don’t have that figure, and then that is more of an estimate, isn’t it? They don’t, they haven’t totally understood all the different tasks or worked it out. And I think working like that is really hard. If you imagine you are on site and you say, actually, you know what?

We’re not gonna do this bit, or that’s changed when we’re gonna change from this finish to this finish. How can you talk and adjust prices when you’re just talking about one big figure you’re not gonna have productive conversations on site and things will change and things will be added and taken away and you just can’t do that.

Amy D: But also I think what’s interesting about that is actually having a broken down cost really protects both parties, ’cause I think it’s like the builder is saying, look, I’m gonna do all of these things for this price.

You come and you want something extra, he literally can point to it and say, look, it’s not here.

Jane: Yes.

Amy D: and vice versa. So I think if you, wanna take something out? He has to take that out of his breakdown. And so I think I would encourage people to see it as a kind of two-way street

Jane: yeah,

Amy D: Also when we go through costs in that kind of manner, we are checking that everything has been included. It’s an opportunity to just clarity, check that everything you think is in there is actually costed for. I just say,

Jane: yeah.

Amy D: some people that that might annoy the builder,

Jane: Yeah, it might do, and I guess if it does, then they’re not the right person to work with.

Amy D: Yeah.

Jane: I think,

Amy D: if a builder’s unwilling or unable to explain their pricing, would that be a red flag for you? Yeah.

Jane: yeah, it would actually. I think if you’re doing something extremely small like a bathroom, and they say, okay, I’ll do it. I would still want a list of the items that they’re gonna do, because how do you know what’s included and what’s not? If it’s just, a blanket figure,

Amy D: can’t compare prices with

Jane: no.

Amy D: other price.

Jane: That’s part of the, that’s what tender is, isn’t it? Tender is the process of receiving prices back from contractors and comparing them. That is a tender review where you’re looking and you’re comparing, and if you don’t have a breakdown, there’s no way that you can compare those costs. And what’s really interesting is that when we do tender reviews for people you take three different costs and they look on first instant, it’s like a one’s really cheap, one’s really expensive and one’s in the middle. And then you, once you go through those breakdowns and you say, okay. You go kind of broad category by broad category, and you find one that’s really low and you go back to that contractor and you say, okay, what?

What have you priced for here? Oh, you’ve missed out the whole of the heating or something. And weirdly, if you go to the more expensive option, sometimes they’ve quoted for things you’ve not asked for, just because they normally provide that

but they’re like, oh, normally we should, you should be looking at this. Which sometimes is a really good suggestion, but for the purposes of tender, you wanna take that price out so that you’re comparing across the way and more, like nine times out of 10, all of those quotes will come back very close once you’ve done that process.

And I think that just shows that it’s more, the difference comes from not the rates and how expensive someone is usually, but more what they’ve priced is different.

Amy D: So do you think it’s possible that maybe contractors have misunderstood drawings or miss something? what are the general reasons that prices might differ?

Jane: There’s lots of things to do with prelims, which are the things that don’t fall into a task item, but a run for the whole length of the project. For example. Skips, the number of skips that someone’s had. The prices for paying a site manager, a toilet, a parking permits, and there’s lots of kind of overheads for site.

And quite often some contractors will include them and account for them and others won’t. I guess also there’s just the amount of work. So sometimes people will throw in fittings and finishes or a kitchen that they normally have provided that they normally work with. Maybe they’re actually quoting for the fit out, whereas some other people might be assuming that you are going to be doing that.

So there’s, there’s just different ways of interpreting what’s on the page. And most projects actually get costed without a scope of work, so without a detailed breakdown of what that contractor should be pricing for. So in that case, they’re really just looking at drawings at a picture of something, and that can be interpreted in loads of different ways.

It’s really like the tender is really the price at which you get your prices back is really just the start of that process. After that, there is like an actual process of working through all those costs and working out what they are.

Amy D: I think the other one that we’ve found is that sometimes contractors separate out their profit.

But sometimes that’s baked in through every item in those broad categories. So I

Jane: Yep.

Amy D: that’s something to look out for. And I think also something we haven’t chatted about is, I guess how busy the contractor is and how much they want the job, because I think there’s gonna be like, this is how much the project is, but if they’re really busy and they don’t need it, they might price a tiny bit higher because, hey, if they get it, great, if they don’t, they’re fine.

Do you know what I mean? So I think that there is that, also to consider. Do you think the company structure and I guess I’m thinking the one man band versus the slightly bigger outfit, I mean, I’m figuring that the overheads are different and so that might also play a role.

Jane: I think it probably plays less of a role than t he misunderstanding of what’s being done, but it definitely does play into it. You need to be weighing up the type of experience, that you want and what you are paying for in terms of how much work you’re gonna be doing to support that contractor, or how much they’re gonna be self-sufficient in getting on with stuff.

So you are paying quite often for different types of services.

Amy D: Yeah.

I guess with some contractors, they might, like you say, know what the job entails and often they will list out all of the things. like how much parking permits I think is a big one. some contractors will list that out ’cause they know it’s gonna be needed.

They know it’s quite expensive, like skips and stuff like that. But others maybe don’t put that in their tender. And then it’s something that gets discussed and then those costs get brought in. So I guess it’s also slightly to do with your personality and their personality of like, you want all of those costs up front and to know exactly where you are or are you happy that there will be those extras

Jane: Definitely, I think I definitely fall into the wanting to know everything. And I think there’s sometimes this feeling that if you list everything out and that your job’s gonna cost more because you’ve obviously highlighted all of the things that you want done. And so they all have a price associated with them.

But for me, I don’t like the gray area where it’s, we’ll throw that in or we’ll add an allowance for that. I wanna know that if I take things out of the scope or if we make the job easier or downgrade something, I want to see that reflected in the costs.

I want the cost to be the cost, and quite often there’s this thing where you’re on site where you’re kind of saying, have you done this? Are you going to do this? And if it wasn’t explicitly itemized, there’s this feeling that you are asking for a favor or that it’s up to them whether they’re gonna throw that in or not.

And I just want it to be clear and that type of person, but some people aren’t.

Amy D: it protects both sides. I think the trouble with hoping they’ll absorb costs is in the end they will come back for some

Jane: Yeah,

Amy D: think you really win in the end.

Jane: no, those costs will come up in some way, shape or form.

Amy D: Yeah.

Jane: Yeah. Yeah.

Amy D: I guess what would be really helpful for people is to talk about the hidden costs maybe in tenders.

where do you think people often get caught out?

Jane: The big one obviously is the. Provisional sums or PC sums. So when you get a quote back, there will for sure, there will be some PC sums. And what it means is, is a provisional amount that isn’t confirmed. It’s more like an allowance or an estimate. Sometimes you’ll just see it written as like PC next to the item.

And they are for when contractors don’t know the price for the item yet. Sometimes there will be items that they just need to go and get a quote for that. So they’ve estimated what their electrician normally costs, then they’ll.

work out those costs and make them into real costs before you sign a contract. Sometimes they are genuine unknowns, that will have to stay in the contract. And you have to decide whether you are happy to have a provisional sum.

So really you want to get rid of as many of those as possible. And on a simple job, you would want to get rid of all of them.

Amy D: I guess big ones are like

the ones that fall into that client supply items,

Jane: Yeah.

Amy D: that’s where you can really bottom out those costs.

We would encourage you to do that.

Jane: Yeah, that ties into the whole different cost thing, doesn’t it? Because if they put provisional sum in, because they’re assuming you’re gonna buy a 10 grand kitchen from their supplier, maybe the other contractors not put that in at all. So yeah, that’s definitely something where your choices, they can’t predict, so they might put a cost in for that, or they might leave it out.

Amy D: And around that,something that you people should be looking out for is whether it’s supply and fit. Or install only. quite a lot of misunderstandings happen around that, don’t they?

Jane: Some contractors would prefer to go to their suppliers for doors, for kitchens, for flooring. And they’re gonna link you up with all the people that they normally work with and they’ll put, supply and fit costs for everything. ’cause they’re assuming that’s how you’re gonna work.

Some contractors would prefer you to sort all of that out and, just put a cost for fitting it. And then also, some contractors don’t put a supply or a fit cost for the internal works because they just don’t know what you’re going to do at that point. So those three, three different ways of doing things are quite different.

And you should look out for, usually it says supply. Or install or supply and fit and in the line item if you get a breakdown so look out for that.

Amy D: I mean, I guess we’re assuming that people would’ve taken the time to ask the question about how is that gonna be working? And so you should actually have an expectation already about what you’re gonna see in the quote. And I think that is a really important conversation to have with your builder earlier rather than later.

Yeah. any others?

Jane: VAT, so, most quotes get delivered without any mention of VAT which I always just find so strange, like we were getting some prices for roofing or some other things. And it didn’t even say plus vat. It just gave a price. But you can guarantee that is the without vat price because that’s how things are quoted.

So it’s really easy to just see a figure and assume that’s the figure you’re gonna pay, but it could be 20% more or it will be 20% more. So check that. And I guess another one that is a bit of one of those. A bit like the skips and the parking permits, is the scaffolding and access, because that’s usually a quote that they’re gonna get from somebody else.

And quite a lot of time that Contractor or scaffolder is not going to really understand what the price for that is once they’ve actually committed to the job and have got their head in, in the job and how it’s gonna work. So if the, if it’s tricky, if they’re gonna have to build over stuff then the price for scaffolding might be different.

So sometimes the scaffolding isn’t even in the quote. So it is good to ask about that and ask if they’ve made allowances for it and for how long as well. Because if they’ve assumed it’s going to be an eight week job and it’s actually a 16 week job, then the price for that will be very different.

Amy D: Yeah. And scaffolding is pretty, punchy, isn’t it?

Jane: Yeah,

And I guess, what’s the single most important question people should be asking at this stage?

What do you think is not in this price? Because if they are a contractor that is worth their salt, they’ll know the prices that they haven’t put in there. So you need to be asking them what allowances are we needing to make for other things that aren’t in this price?

Amy D: And also that’s just like a nice way I guess, of working out what is and isn’t in the quote. It’s really reasonable to have a period of time where you are bottoming this stuff out and arguably you will save yourself time and stress in the actual build process, if everybody’s clear on what has been allowed for and what hasn’t, you don’t really wanna be having these conversations mid site when you’ve got, hundreds of other things to think about. Doing it before is really the best way, I just a little note on how people do this.

Jane: I think there’s probably like a couple of stages isn’t there? So depending on how many contractors is have priced for the works, there’s a broad brush. So like you might be just having a quick call to say oh, we got your quote. Can I just check? what we would do is we would make a spreadsheet and we would put the costs next to each other and then try and align them like, okay plumbing, electrics.

Like where are, you’re trying to do apples with apples. So you’re looking at the breakdown roughly. It’s rough because contractors always price for stuff in different ways. But as much as you can see where somebody’s really quoted very low compared to others or very high and question those elements oh, and you’ll see one is put in for scaffolding.

You say, have you included for scaffolding? That’s broad brush stroke. You’re not really going super deep dive into every single detail, but you’re just trying to work out. Let’s get the general prices right, and then you should start to build a picture. There’ll be people that are available or fits with your timescale, whether you liked them, whether you felt comfortable with them, whether you liked the way that it worked, and how their prices come back.

Like we said, it’s a picture of lots of different kind of data points, and you will be building that picture. So you might hone in on two out of your group, or you might just hone in on one. So once you’ve done that broad brush, you can’t go deep dive with every single one of them.

It does take quite a lot of time. You might want to keep the others on hold while you do that with one of the contractors to see that you’re happy with, you know how that’s turning out. But once you’ve honed in on one or two, you can do that deep dive that might be sitting down in a meeting with them and really doing that line by line item like for this, are we buying this stuff or are you buying, does that include for, what type of tile does that include for

Amy D: Yeah.

Jane: for the roof, for example, we, did you notice that we wanted aluminum drain pipes? Not plastic. So you’re getting into the kind of details and checking that they’ve understood what’s involved in each of the things.

Amy D: Yeah. that’s really helpful. what would you say is the biggest misunderstanding that, that we see at this stage?

Jane: I think just making that knee jerk assumption that one contractor’s price is cheap and one’s expensive without interrogating. I can’t just can’t tell you the number of times where someone’s been discounted. For having a high quote when actually when we’ve looked into it, they’re bang on, and the others have left stuff out.

So I think it’s not making that knee jerk assumption that, okay, this one’s coming cheap. We’ll go for it without doing that kind of investigative work.

Amy D: it is tempting, isn’t it to want to choose the cheapest number, but actually, like you say, it’s about understanding the scope, the risk and like the assumptions before you go to site.

Jane: Yeah. Because if they’ve not included for scaffolding, they’re not gonna absorb that cost. That cost is definitely coming to you. It will just be like, oh, we hadn’t included that cost, and then you’ll have to pay it. Just because you’ve chosen the cheapest quote doesn’t mean that’s the price it’s going to be.

Amy D: I feel like we’ve just downloaded so much information. It is quite a lot. The next episode we were thinking about, talking about contracts and insurance and why the Oh, we trust each other isn’t really a strategy that you should go with. So if this episode made you want to double check your quotes, that’s great.

That’s kind of exactly the point. If you need a bit of help, reach out to us. You can email us at hello at Home notes. We do consultations if you are looking for some extra support at this kind of junction in your project, we are really happy to do that. And yeah, see you next week.

Jane: Bye everybody.

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