What to Do When Contractors Go Over Budget

Renovation of any part of your home is a process that will require you to open your checkbook because it requires a lot of hard labor, materials, etc. You may have gotten a price from a contractor for a job that was estimated at $5,000, but when you received the bill in the mail, you nearly threw up as the costs had exceeded $8,000 even though you said your budget was $7,000.


It would make sense that any human being would have a negative reaction to this, but it’s also important to understand the contractor’s position on the matter. In order to understand the entire situation without completely blowing your top, we’re going to explain what you can do when your contractor goes over the budget you originally set.


Understanding contractor quotes and estimates

There are instances where some businesses simply cannot give a fixed price for goods and services. This could be because the skills, time and materials required for each job vary depending on the different customers’ needs. No two jobs will ever be the same. Fixing the bathroom is a small house will cost considerably less than fixing a bathroom in a mansion, so that’s why it’s extremely tough for contractors to give a set price.


With that being said, a quote is a fixed price offer that cannot be changed once accepted by the customer, and it is often only good for a specific period of time. Businesses do this to protect themselves because the cost of materials can fluctuate at any point, and if the quote were to remain the same, they would be losing money if the materials became more than they originally were. With quotes, the company must adhere to the fixed price even if it takes more work than expected, which is why they give out estimates most of the time.


A price estimate is essentially an educated guess of what a job may cost generally based on their skills and past experiences. Contractors will look at the specifications for the project and then determine the raw materials and labor they need. They then go to their specific suppliers to get quotes for the aforementioned raw materials, and then they use that price, plus everything else, to give the customer their best guess of what a job may cost. The estimate may or may not account for taxes, overhead, subcontracts and equipment costs, and the prices for everything are subject to change as the job is being completed.


To put it simply, an estimate gives the client an idea of what to expect, whereas a quote is more concrete and gives a specific dollar amount and time frame.


How to prevent the contractor from going over budget

  • Hiring the right contractor for the job – there is no need to jump at the first offer that comes your way. In fact, it’s better to get a quote from at least three different contractors so that you can compare pricing, professionalism, what they offer, etc. Going for the cheapest contractor sounds nice when looking at your wallet, but you’re sacrificing the quality of work when you disregard better contractors who charge a little more. It’s important to hire a contractor who gives you a price based on an extremely detailed estimate that doesn’t leave anything out, so you can truly know what to expect at the end.


  • Plan out your project exactly how you want it – In order to allow your contractor to create an extremely detailed estimate, it’s important you create a step-by-step plan so that the contractor knows exactly what you want and need. If you’re extremely detailed, then you will be prepared for the incoming expenses because you’ll be on top of everything. Even if it’s small details, make sure your plan is solidified because last-minute decisions can cost you a pretty penny.


  • Stick to your plan and your plan only – second guessing and curiosity is human nature, but it’s important to try and refrain from doing so so your budget can stay on track. If you start to add things on during the middle of construction, you’re going to be charged extra, and it could take away from other important parts of the project.


  • Focus on the most important parts of the project – The key to having a successful renovation is to make sure you get everything you truly want to be completed. Creating a list of all of the important things to you will allow you to push the necessary funds towards that while negotiating and leaving out unimportant parts.


  • Make sure you account for everything you’re paying for – when a job is being completed, many homeowners only look at the big projects when mapping out pricing (kitchen cabinets, tiling, etc.) but leave out things like décor, furniture, etc. Identify the cost of everything so that you can ensure that you have the correct amount of funds necessary for everything you want to be completed. It would be a shame to account for the big projects, only to realize that you have nothing left for the smaller ones.


  • Add wiggle room to your budget – for many jobs, there are unforeseen problems that arise during renovations. That’s why it’s wise to add an extra 10% to 15% to the final figure in order to have finances should something go wrong. If something comes up, you have the money for it. If not, you can use the extra money towards something else, or stash it away in the bank.


By working closely with a reputable contractor and figuring out the cost of every little thing, you’ll ensure that your budget will cover the expenses and then some. Being responsible and taking the extra time can and will save you from having to spend an unnecessary amount of money. Being on top of things will also prevent your contractor from going over budget because you’ll be prepared for whatever situation may arise.


Dealing with a contractor who went over budget

HGTV provided a detailed list of what to do when a contractor has overspent the budget even though everything was on track regarding the material pricing and completion date.

  • Define the issue – put the facts on paper before you discuss the issues. State clearly to the contractor what things went wrong from the project expectations so you can show them where things took a turn for the worst. Stay calm while talking to them to ensure a civil conversation.


  • Invite prominent people to the conversation – belittling the contractor in front of people or their employees pretty much guarantees he/she won’t admit to any wrongdoing. By pulling them aside and treating them with respect, they will be focused on trying to solve your problem rather than maintaining their professional dignity.


  • State facts – instead of name-calling and fighting, it’s important to bring the facts to the table. Even if you don’t understand why they did what they did, explain to them that what they did went over your budget in a calm manner. By doing so, you’ll prompt a civilized response, not a personal attack.


  • Listen – Instead of going up your contractor and down the back of them, let them say everything they want to say and actually listen to it. Maybe they found mold, asbestos, etc., and they needed to spend a little extra to ensure that the job was done safely while removing whatever they had to. Figuring out the problem and solving it can help avoid conflict in the future.


  • Don’t place the blame – even if it’s clearly their fault, try and work out the solution so that the timeline and budget don’t get completely messed up. Rather than fighting about who’s going to fix the error, find the solution to the current problem so you can get back on track. The rest can wait.


  • Review the contract – if need be, bring out the contract if you feel as if there was a major oversight. Sometimes the contract has already laid out the solution for you.


  • Don’t wait to say something – If you notice a problem, report it immediately so that it can be fixed and won’t cause any further problems. If you wait too long, you’re creating extra work for the workers that could’ve been easily avoided.


Before any work is to be done on your home, it’s important to develop a relationship with your contractor while banging out the specifics. You should not have to worry or be suspicious of pricing because it should be already laid out for you.


At Tandem Contracting, we believe in paying our employees a fair wage while compensating our sub-contractors equitably. We also make sure to handle every aspect of the project while working with the homeowner to ensure that they don’t have to worry about a single thing. If you’re ready to make those long-awaited changes to your home, get in touch with us at 973-864-3100 or via our online contact form.

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