How to Read a Renovation Estimate

Comparing renovation quotes is hard because the quotes are not really comparable. One contractor will include the waterproofing membrane. Another will exclude it. One will assume a particular grade of tile. Another will assume a different grade. Both numbers can be honest. They are just describing different projects.

Learning to read an estimate well saves you money and frustration. Here is what to look for.

Scope, line by line

A good estimate is itemised. It tells you what work is included, broken into recognisable categories. Demolition. Framing. Mechanical. Drywall. Flooring. Painting. Trim. Fixtures. Each line has a price.

A single number for an entire renovation is not an estimate. It is a guess that protects the contractor at your expense. Insist on detail.

Allowances

Some items in a renovation are not chosen at quoting time. Stone, tile, plumbing fixtures, lighting, hardware. These are usually carried as allowances. The estimate sets a dollar amount for the item. If you choose something more expensive, the allowance is exceeded and you pay the difference. If you choose something cheaper, you receive the credit.

Read the allowances carefully. A contractor who carries a $40 per square foot tile allowance is not lying; they are telling you that the quote assumes a $40 per square foot tile. If you walk into the showroom and fall in love with a $200 per square foot stone, you should expect a substantial increase.

Exclusions

Some line items are not included in the quote and should be listed clearly. Engineering fees, permit fees, abatement of any hazardous materials discovered during demolition, repairs to existing finishes outside the work area, and similar items.

A quote that has no exclusions section is suspicious. Almost every project has some.

Contingency

Older homes routinely surface conditions that nobody could have known about at quoting time. A reasonable estimate includes a stated contingency line, usually some percentage of the construction value, to absorb the small surprises without setting off a change order for every one.

A quote with no contingency on an older property either assumes nothing will go wrong (it will) or has hidden the contingency inside the line items (you cannot see it).

Change-order language

Read the section on change orders carefully. A good contract requires that any change to scope be priced in writing and signed before any work proceeds. This protects both sides. It means you never get a surprise invoice and the contractor never works without authorisation.

A contract that says nothing about change orders is one to ask questions about.

Payment schedule

Renovation invoicing is usually on a schedule tied to milestones, not on a fixed monthly pattern. Look for a deposit at signing, payments at defined construction milestones, and a substantial holdback until final completion. Front-loaded payment schedules where most of the money is due early are worth questioning.

What the lowest price actually means

If one of your quotes is substantially lower than the others, it is rarely because that contractor has found a cheaper way to do the work. It is almost always because the quote is missing scope, allowances are unrealistically low, or the contractor plans to recoup the gap through change orders.

The honest middle quote is usually the right number.