How to find my Project Budget, through the Scope of Works

Coins coming out of a jar

Everyone who is a homeowner wants to get the most out of their property, especially when they’re extending or renovating their property. No more so than when it comes to construction.

On average, the construction costs will take up about 65% of your budget and then add the VAT. So when you pan out all your costs make sure that you don’t leave anything like this out, as this is where the scope of works becomes important.

To help you manage your budget, here’s a breakdown of how the scope works for your finances…

What is the scope of works?

The scope of works also called the statement of work, can be a very general or detailed breakdown of the work and costs of your project by your contractor, from your agreed contract.

The general scope compared to the detailed scope depend on what kind of contractor you end up getting. For example, one-man bands business are more than likely to offer a vague scope of works, while a larger company will tend to have the admin power to produce a highly detailed breakdown of work. 

However, no matter what kind of contractor you hire you need to push for as much specific detail as possible.

Your Scope/Statement of Works should include:

  • A project overview
  • List of deliverables
  • List of processes involved
  • Breakdown of associated costs
  • Summary of the project schedule
  • Details on project management
  • Reporting requirements
  • Works not being covered or that will be considered additional

How will the scope of works help my budget?

When the scope of works is done correctly, it will allow you to set out and agree on what the project requirements are. By this beforehand you can understand the costs involved, which allows you to be able to borrow with confidence.

If this is your first project you might want to think outside of what you will need within the project. Things like a port-a-loo and a skip. So yes many things can come out of your bank account that you wouldn’t expect if you don’t plan.

Scope of works also allows you to properly plan out your contingency budget, which is money that you have as a reserve, should any plans change onsite or you get hit by any delays.

AND REMEMBER – The contingency budget should be 10% of your construction budget.

Pitfalls to avoid

To protect your project, watch out for these pitfalls:

  • Errors and inconsistencies. For the best results, have another professional assess the contract during the tendering stage.

  • Don’t just assess one single scope of works. We recommend you consider at least three builders. See our guide to The safest way to choose a building contractor.

  • If it sounds like it’s too good to be true then it probably is! Most of the time, costs are cut by omitting key details from a contract.

  • Don’t source the scope of works too early. We know it can be tempting to get all the work down when you’ve received planning permission, but don’t rush it. However, it’s great to start mapping out your technical details for building regulations, as there is a chance a builder might not have enough information to give you an accurate breakdown.

  • Key milestones must be accounted for. By doing this it will allow you to agree on a sensible payment plan, by releasing the funds at key stages of the build, (once it’s been assessed by either yourself or your project manager).

Conclusion

Scope of works is a vital part of the construction process but their quality can vary greatly. For the best results, we recommend you insist on getting a detailed breakdown of all the costs involved, which in turn will make sorting out your finances that much easier.

At Planning2Build UK, we’re able to help you assess the contract on offer, as well as provide financial advice.

To learn more about construction, contracts, and finance with our team here.

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