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Understand how your money is spent

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Article_ScottTip budget

Clearly defining the project and payment schedules ahead of time will set up the appropriate expectations for both the contractor and homeowners.

Here’s what each one should include.

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Project Schedules

 

Start & Completion Dates: These dates will be based on the contractor’s best estimates, but can of course be altered should there be issues with permit delays, changes of work, etc. So when these dates are set think of them as guidelines only.

Phases of Work: Most renovations will be split into phases (such as framing, drywalling, flooring installation, etc.). If asked the contractor should be able to provide an estimate of when these phases will be completed. Breaking it down into manageable chunks will help you to get a handle on the scope of the project and better understand what to expect, when. Just keep in mind that reno surprises are a reality, as are permit delays, late deliveries, and so on, so be prepared for possible changes to each phase.

Completion of Project: Make sure you’ve discussed how the project will be determined complete. Is it when the permits close? At a final walkthrough? It’s important to note this so that you have a clear understanding of when payment is due, when you can move back in, etc.

 

Payment Schedules

 

You should never pay everything up front, however you also can’t expect your contractor to fund your project until it’s complete – this is why a payment schedule is necessary. Everyone works a little differently but here’s a starting recommendation:

Some contractors prefer to work out lump sum payment schedules based on completion of milestone projects (ie completion of framing, completion of flooring, etc.). This is a perfectly acceptable practice. Some may also ask for a deposit as they need to order and pay for certain materials prior to the start of the project and start scheduling trades. If requested, a deposit should never be more than 10%.
Note that late payments on your part may be subject to interest, so make sure everything is noted in writing before you sign.

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#ScottTip

Don’t forget to let your insurance company know about your renovations to ensure coverage during the reno period.