By Tracy Hanes
Five variables that can sink your reno estimate
Recently, Bricen Sears’ contracting company in Trenton was hired to carry out a seemingly simple kitchen renovation for a client. The work required removing old cabinetry, and as they began the tear-out, a double brick wall behind the cupboards started to crumble.
“The only thing holding the brick in place, unbeknownst to us at the time, was a layer of lath and plaster, and one-quarter-inch panelling,” says Sears, president of Warren & Co. Contracting.
The wall was quickly shored up and Sears called in an engineer to suggest a way forward. The homeowners’ original quote for the reno was $29,000, but repairing and stabilizing the crumbling wall added another $7,200 to the bill—plus caused a delay in the schedule.
Unseen surprises, such as those lurking behind walls, is just one of the factors that can make renovation pricing unpredictable. This and other issues can make a reno quote a
moving target and a headache for renovators hired to do the work.
What are the key challenges and how can a renovator handle them? Here are some of the most common culprits contributing to reno pricing unpredictability and how to deal with them, according to OHBA Renovators’ Council Chair Garnet Northey (president of Spotlight Home & Lifestyle in Peterborough) and two other experienced Ontario renovators.
1. Client Changes
“I’ve never seen so many client changes as we’re seeing now,” says Northey. He cites the influence of home design-related TV shows or advice from family and friends that, while well-intentioned, may not be the best solutions or suit the homeowners’ needs. He says another problem is the endless choice of features and finishes available and “once people get started on a reno, the budget is forgotten. Psychologically, they forget about the money. They’ll say, ‘Let’s replace all of the windows, not just two.’”
Northey says since Covid—and more than ever before—people are looking at their first home as their forever home. Due to the price of houses and the overall cost of moving, they decide to remain and renovate where they are.
“They’ll say, ‘Let’s stay and pour money into this house,’” says Northey. “They may have planned to get a new kitchen, but then they’ll say, ‘We’re going to be here forever, so let’s tear down walls, replace the flooring and lighting.’”
If there’s one thing Sears dreads hearing from a client is “while you’re here…” when a job is already in progress. He says a revised quote is often not an issue and most clients understand the additional costs associated with making changes, but it can lead to disagreements.
“We had a customer recently who, after approving our quote, began adding stuff to the list before we started the project,” says Sears. “To try to stay ahead, we kept revising the quote. The client was upset with the updated price increases, ‘as we would be there anyway.’”
Sears explained the changes would add time and materials to the project and that the job would consequently cost more. After the customer delayed the job start several times and the quote had been revised multiples times, the project was cancelled, as it was no longer feasible with the budget the client had in mind.
2. Lacking X-ray Vision
Some clients may consider their contractors to be superheroes, but unfortunately, x-ray vision is not yet a thing in the renovation business. “Until we start demolition, we don’t know what we don’t know,” says Northey.
“Often we encounter issues we had not anticipated and unfortunately they are not included in our costing,” says Sears, who cites this as his No. 1 issue in reno pricing unpredictability. “A few examples would be buried structural issues, electrical nightmares and shoddy workmanship covered up by previous homeowners and/or their contractors.”
That’s also at the top of Kitchener-based Pioneer Craftsmen Ltd. President Jamie Adam’s list. “It’s usually previous renovations, and so many times they have been done by unwitting homeowners, and with no permits. These issues don’t rear their heads until the demolition, and it’s hard for a client to understand these may require additional framing and reworking of plumbing, electrical and HVAC systems because of them.”
Adam cites one job where a homeowner decided to get a start on a kitchen renovation ahead of the crew’s arrival. The client removed part of a load-bearing wall himself, which then required reinforcement to deal with the load no longer supported by the wall. Adam says that added an extra $8,000 to $10,000 to the job’s original price of $220,000, which wasn’t a huge increase but was an unnecessary expense that could have been avoided had the homeowner not taken matters into his own hands.
Northey’s company was hired to build an addition to a house. When the client started taking finishes out of his basement, it was discovered that the foundation at the back half of the house had dropped two inches. The existing home’s whole foundation had to be changed to accommodate the addition. Then when Northey’s crew started digging for the addition, piles of old construction debris that had been buried there had to be removed and disposed of—yet another unforeseen cost.
A year ago, Sears’ company was hired for what seemed like a simple job: replace columns for a carport. The original quote was to replace 6”x6” posts, add temporary supports to hold the roof up, and remove and replace the top course of the concrete block foundation. Sears had an engineer inspect prior to beginning work and it seemed the job would proceed as anticipated. But as the work commenced, the entire foundation was lost due to water damage and poor workmanship by its original builders. That required a redesign and permit changes. Excavation found a further pitfall—a serious shoring issue with the existing backfill under the carport asphalt.
“The project began to snowball into a headache job far over the budget and timelines,” says Sears. The homeowners understood the problems and were okay with the higher price, but questioned Sears as to why he hadn’t foreseen the issues.
Another surprise no renovator wants to find when demolition begins is asbestos, notes Sears, which can be present in insulation, plaster and flooring. “We try to mitigate this expense by testing whatever we can before starting jobs. We have written in our contract, as most contractors should, that should asbestos be present during the renovation, it must be tested and removed by an approved abatement team at the client’s expense.”
3. Client Expectations vs. Actual Cost
“HGTV has done a gross disservice to our industry,” says Northey. Sears agrees and lists client expectations as his No. 2 issue when it comes to pricing unpredictability.
“Sometimes it’s very hard to match expectations to reality, and what might be done on a TV renovation show may not be realistic for a contractor not sponsored by multiple suppliers,” Sears notes.
The costs flashed on screen are often ridiculously out of whack with the actual price it costs to do those kinds of renovations, especially in Canada, says Northey. “They are watching shows that are from the U.S., where people may be paid $4 an hour. Materials, by the sheer volume purchased, are so much cheaper there.”
Those TV-fuelled expectations are extremely challenging to deal with, Northey says. “None of us are hitting budgets anymore, and part of that is driven by design and trying to manage people’s expectations.”
The disconnect between customer-perceived cost and actual cost “is getting bigger and bigger and it is not unique to the housing industry,” says Adam. “A trip to the grocery store now costs a lot more than I thought it would.”
While TV and online reno programs are fuelling unrealistic client expectations, Adam says big box stores are also a culprit. A homeowner may see bathroom tile, for example, listed for a price much lower than what the renovator is quoting. But what they don’t realize, Adam says, is the products he supplies are chosen to be durable, to stand up over time and will be warranteed.
The client may also not realize that tile is only a small part of what it takes to build a new shower, and there’s also the waterproof board needed behind the tile, along with pressure gauges, etc.
“Or they may have had new doors installed in an addition and decide they want the doors in the rest of the house changed,” says Adam. “That $100 door at the big box store still needs hinges, trim, a jamb and hardware, and all of a sudden that $100 door costs $500.”
4. Inflation
Material and labour prices skyrocketed during the pandemic, and while inflation has eased since 2022, that doesn’t mean prices have gone back to 2019 levels, as many consumers believe, says Northey. That’s partly due to the media not always understanding the big picture and not reflecting the reality. For example, prices in the U.S. went up 27% during the pandemic, and while they’ve only risen 2% in the past year, “that 2% is on top of 27%, so prices are 29% higher than in 2019,” Northey says.
Labour has similarly followed suit, and with a severe shortage of trades, those workers can command and receive a lot more money for their skills. That’s why Adam notes that it’s more important than ever to maintain good relationships with reliable subcontractors so that they will continue to work with you.
5. Product Availability
Adam says when he’s looking at a job six months out, he likes to place material orders as early as possible to avoid price escalation, where possible. For work that’s not happening for a year, products may not only cost more down the road but not be available at all.
“If we wait six months and place an order and find a product’s been discontinued, that can create a lot of rework and redesign,” Adam says.
Dealing with Unpredictability
All three contractors agree that starting with very detailed contracts with a clear change order process in place is important. The CHBA has basic templates and samples of contracts that are easy for renovators to access online, Northey notes. He also does a pre-screen of clients to make sure they are going to be a good fit for his company.
Variables have to be addressed and explained in very clear language, he says. For example, the quote should be based on what the contractor can see, not what may be uncovered during demolition, as well as changes in material and labour costs.
Adam says “communication and more communication” is paramount, as well as building good relationships with clients. His company has a lead carpenter and project manager, and when a client wants a change or an issue that will affect pricing, they will make detailed notes listing all that’s involved.
“You have to list all the details so that the client understands how complex the tasks are,” says Adam. “When you have a good relationship and they understand what they are looking at, 95% of the time they’ll end up proceeding.”
Northey says you should also be prepared to walk away early if the fit isn’t right or if the client’s budget isn’t going to match the scope of the work. “I’m upfront with clients about what the costs are. We do this for a living, and yet even we are surprised at the costs sometimes. We also have a clause about the design process. It makes it clear that you have to have a design first (as opposed to designing as the work is underway), then price it. That’s the only way you get accurate pricing.
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