The importance of contingency planning
For the first-time DIYer and the experienced renovator alike, budgeting for a renovation project can be a daunting task. Impulsive decisions taken on a whim will quickly add to unplanned expenses, turning your dream home renovation into bloated beast of burden. The rule of thumb is that, no matter what, there should always be room to accommodate hidden and unexpected costs. Setting up a contingency budget is not just a good idea – it is absolutely essential.
A contingency budget is a budget that covers unexpected expenses such as unforeseen increases in costs and labour. Should problems arise, not having a contingency plan in place could delay the whole project or even prevent work from being completed.
In this article we’ll give you the basic outline of the contingency planning process and what it should contain.
Start by asking “What can go wrong?”
Be prepared by considering all the risk areas and unmeasurable aspects of your renovation project and ensure that you have a back-up plan in place. A prudent approach will prove profitable in the long run, so when drawing up your contingency plan, try to undertake the following:
- Contractors & Subcontractors – It’s a good idea to have a backup list of subcontractors ready – just in case one backs out at the last moment, or is not working out. Communication is key between you and the contractor especially prior to the project, this will ensure that everyone is on the same page regarding expectations and outcomes.
- Hidden obstacles – Consult your home’s building plans and do a property inspection with a professional builder before you start budgeting. There may be some underlying issues within the walls, plumbing, ceiling or foundation that will require extra planning and materials to avoid disaster.
- Materials – Ensure that your contractor and subcontractors provide you with a complete breakdown list of all materials needs for every aspect of the project. If you need help projecting material costs, visit our instore Contractor’s Counter to speak to one of our specialists.
TIPS & INSIDER INFO:
Know the lingo and process:
There are 3 different ways to request pricing, to ensure the correct relationship is established between you & the contractor/subcontractor.
- RFQ (Request For Qualifications) – Simply requesting paperwork concerning qualifications or a portfolio of completed projects.
- RFP (Request For Proposal) – This is the next step and concerns requests about pricing, etc.
- Hard Bid – This is when all bid documents are complete and a lump sum is decided on.
IMPORTANT: Waiting for paperwork can be frustrating, especially when you’re running over schedule. It’s a good idea to factor in at least 6 weeks extra into your renovation schedule, to make room for resource and building consents.
HOW TO CALCULATE CONTINGENCY COST – THE 10% RULE
Calculating contingency is not an exact failproof science, however as a rule of thumb, most construction projects use a construction contingency percentage rate of between 5% and 10% of the total budget. It is always better to have a bigger margin – as mentioned before, not having a contingency plan in place could prevent work from being completed and delay the whole project.
Whether your renovation project is colossal or conservative, it’s always best to put a contingency plan in place. Luckily at BUCO, our cost estimation experts can assist you in the process of setting up a renovation budget, with all the contingencies in place.
Property News You Can Use presented by Harcourts
Before renting your home out or investing in a “buy to let” property, prospective landlords should consider some essential things.
Being a landlord does not stop when the lease is signed.
- It involves effort and commitment.
- Not only do the Tenants need to be managed to ensure they abide
- By the terms of the lease and look after your investment;
- The Landlord must maintain the property well and ensure all bills are paid.
- These issues must be actively managed. However, if ignored, it can swiftly get out of control. That said, property has proved to be an excellent investment over time.
- Being a landlord can be a richly rewarding way to build legacy wealth for yourself and your family. Every cent earned from a tenant towards the rent goes towards enabling you to grow your wealth through your property.
- Property can be an excellent investment, but you must take a long-term view to achieve real value. You also need to be realistic about whether you can afford to be a landlord.
Ask yourself whether :
- The rent will cover your bond, rates, and insurance.
- Ongoing maintenance
- Have enough to put extra aside when you have a vacancy or an expensive repair.
- Unexpected costs will inevitably arise, so ensure you have budgeted the money and time for routine maintenance and emergency repairs.
Do you have the time?
- It takes time and commitment. Once your tenants have moved in, you will need to be able to respond rapidly to their requests and complaints.
- Sometimes maintenance issues cannot wait. Good tenants are worth keeping happy, and a quick response is essential to them. At the same time, your property is a significant investment, and you want to minimise potential damage.
- Ongoing property management and maintenance require a significant number of hours. They can be difficult if you have a demanding full-time occupation.
Use professional agents to screen your tenants.
Getting stuck with a bad tenant can be mentally, emotionally, and financially disastrous. Therefore, do not cut corners when vetting your tenants – thorough credit checks must be done, and all references should be followed up. Strict tenant vetting and monthly management procedures ensure landlords have peace of mind. This equates to their tenants likely to pay their rent on time, every time.
Harcourts look at more than just a credit score – factors like account payment patterns, nature and age of judgements are also considered when vetting tenants.
Just as essential is a professionally drawn-up lease that is fair and watertight. A good understanding of South Africa’s landlord-tenant laws is critical. These are governed by the CPA (Consumer Protection Act), the RHA (Rental Housing Act), the Prevention of Illegal Eviction from and Unlawful Occupation of Property Act, and Common Law.
Should you hire an outside estate agency, like Harcourts, to assist you?
Managing your rental can be pretty taxing, and it’s best to have a professional agency with skilled and experienced individuals doing the work for you.
Harcourts Services offered to include:
- Property marketing, viewings and tenant vetting include the due diligence of credit and other checks before tenants can move in.
- Comprehensive contracts and advice regarding the legal obligations of landlords and tenants.
- Prompt attendance to maintenance & management issues that saves you time and money.
- Transparent processes, established routines, standardised documentation and regular feedback, maintain high service standards.
- On-line accounting system for investment, receipt and payment of all funds. Proactively actioning slow and non-payment by tenants with the involvement of the Landlord.
- Harcourts offers all this and more to our landlords. We have a long history and excellent track record built on our experience of what landlords and tenants need. We are very optimistic about the rental market, and our agents are happy to discuss and offer advice where required. We believe that property provides a unique wealth-building opportunity for South Africans, and we want to help you to make that happen.
and three-time WSL World Champion Gabriel Medina (BRA) defeating Ramzi Boukhiam (MAR) in the men’s Final. The stage is now set for the remaining 2023 Championship Tour (CT) spots to be clinched at the final Challenger Series event of the season in Haleiwa, Hawaii.
Medina Delays Qualifications for Top Ranked Surfers
Medina once again made history, winning the first-ever Challenger Series event in Latin America. The Final between Medina and Boukhiam was a rematch of the 2013 World Pro Junior Championship which took place in Florianópolis, Brazil, where Medina clinched his first title prior to becoming the first Brazilian WSL World Champion in 2014. Medina and Boukhiam have remained friends since then and may potentially be on the 2023 Championship Tour (CT) together.
Three-time WSL Champion Gabriel Medina of Brazil -Photo by Daniel Smorigo/World Surf League
“Ramzi (Boukhiam) is a really good friend of mine, we’ve had a Final together before and he’s someone I admire a lot,” said Medina. “I know he trains hard, surfs incredibly well and I hope he makes it onto the CT because he deserves it. I’m stoked that I got the chance to finally win an event in Brazil, especially during such a challenging week here in Saquarema. I’m also happy that I’m 100% healthy and now we’re only one month away from when the real work begins when I arrive in Hawaii.”
Medina’s path to the Final was not an easy one having to go through Maxime Huscenot (FRA), in the Quarterfinals and local hero João Chianca (BRA), in the Semifinals. Both Huscenot and Chianca had a chance to guarantee their qualification onto the 2023 CT with an event win at the Corona Saquarema Pro, as did Boukhiam. Chianca has now moved up into 8th place on the Challenger Series rankings and Boukhiam now sits in 4th place.
Ramzi Boukhiam of Morocco s – Photo by Daniel Smorigo/World Surf League
“I really like Brazil a lot. I have a great connection with the country, with the people here and I’m really stoked with my result,” declared Boukhiam. “Medina is my favorite surfer and I know I’d have to surf my best to have a chance of beating him. It was a close one and he got the score at the end, but for me, he’s the best surfer in the world. I had a great time here, I think I was able to move up in the rankings and now I’m hopeful to make it onto the CT.”