Renovation Budget - How to Establish a Realistic Project

Embarking on a renovation project can’t be done without establishing a realistic budget from the get-go. How in the world are you supposed to budget the cost of all the work planned down to the last dime? There are two common methods used to calculate renovation costs: the square foot calculation method and the full-cost method. 

Which of these two methods is best for getting an accurate estimate? What are the advantages and disadvantages of each, and how do you choose the one that’s best suited to your project? Below are some tips to help you establish a detailed renovation budget meant to revamp your space to your liking.

How to Determine a Realistic Home Renovation Budget

Square Foot Calculation Method: Insufficient in Itself

This method gauges the total renovation cost based on the surface to renovate, according to the price of materials per square foot.

However, some experts have reservations about this method for very obvious reasons. Hence, as the square footage increases, the cost of materials decreases proportionally. As such, it’s difficult to gauge whether the amount calculated is realistic against the work at hand.

It seems this method may be insufficient in itself but is nevertheless useful to gauge potential project expenses. Indeed, this leaves little room to consider renovation project-specific peculiarities, as unforeseen circumstances may occur along the way.

Full-Cost Calculation Method

As for the full-cost method, it breakdowns the costs of each aspect of the project, such as:

• Materials

• Labour

• Necessary equipment

• And more

It also includes indirect costs, such as administrative fees. 

Only a qualified expert estimating the costs associated with residential renovation projects can consider all project ramifications to establish a realistic budget.

Beware of Project Contingencies Skewing Your Renovation Budget

Even if you manage to work out a budget that looks as good as possible against the amount to be paid out on completion of the work, it’s nevertheless imperative to budget for some leeway rather than be caught flat-footed by unforeseen circumstances.

To offset such an issue, budget roughly 15% of the total cost of your renovation project for that purpose. 

How Much Does a Home Remodel Cost in Canada?

Estimating a renovation project’s cost with exactitude is essential to plan the work and stick to a pre-determined budget. Below are some general guidelines fit for different types of home improvement projects that may strike your fancy:

Bathroom Renovation Budget

Bathroom renovations can include various components, such as accessories (sink, tub, shower), new flooring or wall coverings, and modern light fixtures. The cost of this sort of improvement project hinges on the materials selected and the project’s scale.
For more in-depth information and project-specific options, check out our bathroom cost guide. 

Roof Renovation Budget

Roof-related work can include full roofing repair or replacement. Material choice (asphalt shingles, tiles, metal, etc.) and the roof’s square footage can significantly influence project costs.

To calculate specific costs based on your type of roof, check out our roofing cost guide.

Kitchen Renovation Budget

Kitchen renovations often encompass replacing cabinets, countertops, and appliances, including improving plumbing and light fixtures. Costs vary based on the quality of the material and the extent of the changes made.

For more information, check out our kitchen cost guide.

Basement Renovation Budget

A basement renovation project can include improvements such as a bathroom addition, building new rooms, laying new flooring, and adding more suitable lighting. Costs vary based on the size of the basement and the desired finishes.

Check out our article about basement remodelling costs for more detailed information.

By checking out these guides, you’ll get a better sense of the costs associated with renovation-specific projects, which will, in turn, streamline your budget planning process and allow you to weigh your options based on your needs and priorities.

For more information about other types of renovations, check out our 2024 Home Renovation Price Guide.

Helpful Tips to Establish a Realistic Home Reno Budget

• Request a detailed invoice, which will allow you to keep track of all expenses incurred at every step of the project to monitor all amounts paid.

• Allocate a budget for dismantling the areas in preparation for restoration to gauge the state of the structure. As such, you can establish a budget to carry out your project as planned or one meant to restore the structure to an acceptable state.

• Before starting improvements, make sure the contractor is keenly aware of the materials that will be used during the project. You must know the cost of each, as living a renovation project in a state of uncertainty risks costing you a lot more if luxury materials are used without your consent. On the other hand, you may be less than impressed by the quality of low-end materials and unsatisfied with the final results.

• While it might be tempting to compare your project with that of an acquaintance to gauge potential costs, avoid doing so. There are just too many parameters to consider when calculating a budget to allow you to establish an accurate estimate at a glance. Material price differences or the state of the area for renovation risks distorting your assessment.

How to Finance an Interior Renovation or Remodelling Project

Financing a renovation requires one to carry out a meticulous assessment of their needs, budget, and available options. Whether through a personal loan, home equity line of credit, or government-offered financial assistance, every option has its unique advantages and drawbacks. Taking the time to compare interest rates, repayment plans and terms, and tax-saving opportunities allows you to select the option best suited to your situation. With good planning, you can turn your renovation projects into reality while sticking to your budget.

FAQ Remodelling or Renovating a Home

What renovation work is considered the most worthwhile?

Renovations that provide the best return on investment and increase the resale value of your property include:

1. Kitchen renovation: A modern and functional kitchen is valuable to buyers and can generate a significant return on investment.

2. Bathroom renovation: Updating bathrooms with modern fixtures and sustainable materials can be especially worthwhile.

3. Adding a living space: Expending the dwelling with an additional living space, finished basement, or veranda can increase the resale value.

4. Energy-efficient renovations: Replacing windows, adding insulation, or installing a heat pump improves the home’s energy efficiency, which can be very appealing to potential buyers.

What methods can you use to calculate renovation costs?

Is a DIY renovation worth it on a tight budget?

If you fancy yourself quite handy when it comes to home improvement projects, note that some renovations can be DIYed rather easily, such as finishing drywall joints, painting, or installing moulding. However, don’t overestimate your novice renovation abilities. Bear in mind that a minor error could domino into a slew of other problems, incurring additional repair costs. In a nutshell, you risk wasting both time and money.

What is the most expensive part of a renovation?

In this climate, the most expensive part of a home renovation or remodel is high-end materials or appliances. Plumbing and electrical work aren't far behind, closely followed by labour costs and luxury features.