The Final Scores on the Doors

There has been a last minute flurry of activity with some bills I had not anticipated (mainly for materials) but I believe everything is now accounted for. The house is finished and I am led to believe that all the snagging is done.

In the end the total expenditure on this project against budget is show below.

Budget	Actual	Variance (£)	Variance (%)
£40,677	£42,123	£1,446	3.55%

It is clearly disappointing to be over budget at the end of all of this but I am not sure there is much I could have done to have prevented this over spend. I have yet to see the final receipts for all the materials but there is not much I can do about it now. It is certainly the case that much of the variance was caused by legal and professional fees and materials.

So that's it. We move to the final phase of this project – selling it.

Budgets v Actuals

I have mentioned before in this blog how difficult I have found the process of keeping an eye on the costs. As we have just about reached the end of the refurbishment I now have to try and reconcile it all. This caused me to wake up far earlier than I intended to this morning to review all the figures again.

So how does it all look?

The revised estimate last discussed here was £40,677. I have sent the builder what I believe to be the final reconciliation and having received the final accounts from everybody else involved it now appears that the total expenditure on this project (excluding the cost of money) will be £41,389. An over spend of £712 or 1.75%. This is still subject to minor changes as there are some small additional invoices for materials that I have estimated. I cannot be too upset about this although there is a small part of me that wishes we could have nailed it to the penny.

The main variances were "Legal and Professional" mainly because of the additional cost of insurance and the HIP which I hadn't considered and "House and Garden Clearance" where I had under estimated the number of skips required by some margin! There were other items that turned out to be more expensive such as electrical works but that is because we increased the scope of the job from first estimate by including outside lights, wired smoke alarms and so on. There were some savings to be made as well with the decision not to re-point one of the flank walls, fitting carpets instead of laminate and the price of all of the bathroom furniture helping to keep the over spend down.

The cost of money has been higher than expected. Back in September I estimated this to be £2,959 based on three months @5.49%. It has been nearer four months since we completed so this figure is (which is of course going up every day) is currently £3,329 and has been calculated line by line on when money has actually been spent. This figure will rise by c. £31 per day now for every day the property remains unsold or unrented. This is a sobering though and one to keep focused on.

Carpets and Tiles

Mrs APD is venturing forth this morning to visit the house and then, after getting some inspiration, setting off to buy carpets and tiles.

I fear we will very shortly be going over budget. This is not because Mrs APD has a tendency to purchase Italian marble flooring (although she does) but because even the initial quote we have had from the carpet suppliers indicates that it will be £1500 to supply and fit the carpets and with the tiles probably being another £400.00 on top of that we will have spent too much.

There will (I think) be one or two savings to be made elsewhere so I don't think the damage will be too bad unless she comes back with one of these in which case we are in deep trouble!

Budget Update

As this project gets ever closer to completion I have been looking again at the budgets and forecasts to see how close to the original projections we may end up.

I am not normally renowned for keeping detailed financial records (in fact detailed records of any kind) but I have forced myself to be very disciplined with this project and looking back at all the figures now I am very pleased I did.

The final bills are all coming in and there are only relatively small balances left outstanding. So where are we?

This table shows three columns. The first estimate, the revised estimate and the amount of money committed (although not necessarily paid out) so far. It is the revised estimate I am using as my budget as that is the one we used to re-negotiate the price of the house in October last year.

First Estimate	Revised Estimate	Committed
£30,370	£40,677	£39,000

If I have calculated this all properly and assuming the builder doesn't remind me of some extras I have forgotten about, I have just over £1500 left in the pot to deliver this project on budget.

I still have to purchase the following.

• Bathroom and Kitchen Wall and Floor Tiles
• Laminate Flooring for Downstairs
• Carpet for the bedroom, stairs and landing
• A dishwasher (not sure what size yet)

There is also the possibility of requiring yet another skip!

I think it is going to be very close but I might just do this. The flooring will be about £800, the tiles about £300 and the dishwasher should take the balance. Avoiding another skip could be crucial.

Ultimately, going over budget by a small amount will not be critical but I have been so focused on trying to stick to the original plans it would be great to deliver on it.

Project Update

I am told that the upstairs will be finished by tomorrow evening ready for decorating, skirting boards, door fixing and bathroom installation etc much of which will start on Monday.

I am still hopeful that we will come in slightly under budget although I think the deadline of the middle of January may be a challenge.

Disappointingly will will need a least one more skip (that will be the 6th). I hadn't anticipated spending around a thousand pounds on skips - and this is not a huge job in comparison to some. If I ever do another project like this I will work out how many skips I need and double it!!

Kitchen Design (Again)

The kitchen has been bought and paid for but we will have to wait four weeks (maybe longer) for delivery. Here is the final version. The floor tiles and wall colours are just here for effect and probably won't be what we will actually use.

We ended up spending a little more than I had wanted as all of this cost just over £1200 including the sink and taps but excluding any appliances. The worktop looks like granite and I have bought the splash back to go with it as that adds a nice finishing touch.

In order to deliver a kitchen within the initial budget (£1500) we will need to buy an oven (we already have a hob) and a dishwasher for less than £300.00. That might be a challenge. I think it will be nearer £600.00 as the oven will need a grill as well. We could elect to go for a free standing dishwasher which will reduce the costs.

I don't intend to buy the appliances yet. It is possible that we will have enough room for a full size dishwasher rather than a slimline one but it depends on how thick the plaster is!

Windows Invoice

The invoices, bills and demands for payment are coming in a little faster now and I have just received the final invoice for the new windows and doors; a total of £3470.00. This is £261.00 below the revised budget and £30.00 less than the original estimate and included more windows than original anticipated. They have done a fantastic job and I am very pleased with the whole effect.

If you need some double glazing contact Geoff at Warmlite and tell him you read about them on this blog. I don't get anything as a result but you never know – it may just assist in the negotiations next time.

The reduction in VAT has made a small but very welcome reduction to the bill.

Thank you Gordon Brown and Alistair Darling but I really must tell you that I would have spent the money anyway.

Bathroom Order

I have finally ordered what I think will be everything not purchased so far for the new upstairs bathroom and the cloakroom. This order includes all the waste, wall hangers, panels, taps and so on. Everything. Everything that is until I am told what I have forgotten! Doubtless the plumber will take great delight in telling me.

The total amount spent on all of these bits and pieces is £683.66 which is considerably less than £3000 in the budget. This seems like good news but the budget also included estimates for the stud work, plastering and fitting etc which has now been moved to another line item. As I mentioned in an earlier post it is difficult to truly know how the budget is doing line by line but overall I think we are just about there.

Fiscal Stimulus

I did not expect the chancellors PBR to have a mention on the blog but the following story made me laugh.

I received a text message from the builder yesterday - "could I order another skip and settle the account." No problem with this. We have had four skips so far (the first we paid on delivery) and I hope that this next one will be the last. We have gone over budget on clearance fees.

I telephoned the skip company to be told that I owed them for three skips and another one would be the fourth.

He then said the first three skips were at 17.5% and the one delivered on Monday will be at 15% (it being 1^st December). I asked how come they weren't all at 15% at I hadn't received an invoice from them for any the skips so far and the tax point should be the day they raise the invoice i.e. Monday 1^st December. His response to this was that we should have been paying for the skips as we took delivery of them. The fact that they hadn't asked for payment nor had they issued an invoice was irrelevant.

I did try and point out that this was not how the new rules were supposed to work but he beat me with his response.

"Do you want the skip or not?"

I have read forum after forum about how the new VAT rules are supposed to apply for services already delivered and not invoiced and confusion reigns (I know this is sad but my real job has some exposure to this). Government seems able to make the announcement that VAT will change in one week without giving any meaningful thought to the difficulties this puts business in. I have a sneaking admiration for the way the skip company operated. They are wrong, they are not short changing HMRC and they know that reducing VAT by 2.5% will not make any difference to whether I buy their goods and services or not. In that respect they are right and I ordered the skip.

So much for a fiscal stimulus.

Project and Budget Update

The main work has begun on the house now with electrical and plumbing work having started today. I had a long conversation with the main builder over the weekend and agreed costs for the remainder of the work and I can now make a reasonable assessment for the first time on how close to our budget we will be.

It has proven quite difficult to work out how accurate my estimating has been as I seem to be forever moving items from one budget line to another. For example the original plan was to ask the DPC and timber treatment company to do the specialist rendering. I have subsequently decided not to do that as the people who are doing the rest of the plastering are quite comfortable about the type of render required.

The main builder has agreed a reasonably detailed schedule of works which includes (amongst other items) all of the plastering, brickwork, studwork, painting and decorating, kitchen fitting and tiling. We just have to provide the following.

• Upstairs bathroom suite and shower

• Downstairs cloakroom suite

• Kitchen

• Any floor coverings we want (carpets, tiles and laminate flooring)

Whilst I enjoyed my foray out into the garden recently I haven't got the time to finish this off so a friend of the family is going to do this for me starting from this Wednesday.

I think we will be very close to our revised £40,677 estimate. There is slight disappointment that we won't we thousands under but I guess if that were the case the estimate wouldn't have been very good. I am very pleased that we have now understood all the work that has to be done. There will inevitably be some more surprises but I hope that the amount of planning and preparation we have done to date will minimise this.

New Windows

A big moment today as we placed the first major order for the refurbishment. The contract for the replacement windows and doors has been signed.

We obtained two quotes, one prior to completion, but have subsequently made some changes to the specification and the number of windows we wanted. Two local companies re-quoted for the work and after a short negotiation we have signed with Warmlite.

From a budget point of view their proposal is only just over our original estimate and less than the revised figure. As it includes two additional windows I am very pleased with the outcome.

They originally quoted four to six weeks for delivery and installation but after a bit of pushing they will start on 1^st December. The existing windows (which are in dreadful condition) were installed without the benefit of a lintel and the surrounding brickwork is poor so there is work to be done before they can start.

New windows make such a huge difference to how a house looks I am looking forward to seeing them installed.

On a separate note the salesman for Warmlite has been plying his trade round here for years and has approached us several times although we have never had use for his services until now. It just goes to show that selling can be all about building up a relationship without any immediate prospect of a sale but knowing that you will be first in line when the time comes.

Decisions Decisions

I have been reviewing all of my calculations and looking at all the quotes I have got so far to consider what to do about the delay and the increased costs. Here is the full spreadsheet with all the calculations in it in full. It is fairly straight forward but basically column1 titled “Initial Estimate” is the initial estimate posted before, the next column is revised to reflect the actual figures so far and any additional estimates or revisions and the next column is the same with a revised purchase price (more later).

When I set out on this project my aim was to make a 20% return before tax and assumed that we would sell the property on. I have tried to take everything into account including figures for agents and solicitors fees on the sale and the cost of money (or lost interest) for three months. It is very easy to ignore or forget these figures and then claim a higher profit! In any event CGT has to be paid on the gain so while you want the profit to be as high as possible there is nothing to be gained by under stating it. My apologies for the way this table is formatted . Blogger is excellent in many things but getting tables and pictures to format properly requires the patience of a saint. I am sure you will get the idea. If I ever work out I why I'll fix it!

	Initial Estimate	Quotes / Updates I	Quotes / Updates II
Total Purchase Price	£185,000	£185,000	£174,900
Legal Fees	£1,050	£1,050	£1,050
Stamp Duty	£1,850	£1,850	£0
Survey	£470	£470	£470
Electrics / Re-Wriring	£3,000	£2,776	£2,776
Clearance House and Garden	£2,000	£2,000	£2,000
Central Heating	£4,000	£6,200	£6,200
Bathroom	£1,000	£1,000	£1,000
Windows and Doors	£3,500	£3,731	£3,731
Upstairs Bathroom	£2,000	£2,000	£2,000
Flooring and Tiling	£2,500	£2,500	£2,500
Plastering and Making Good	£2,000	£2,000	£2,000
Re-Decoration	£2,500	£2,500	£2,500
Kitchen	£1,500	£1,500	£1,500
Contingency	£3,000	£3,000	£3,000
Items Added After Initial Estimate
Re-Rendering		£2,500	£2,500
Re-Pointing		£1,500	£1,500
DPC and Associated Rendering		£4,700	£4,700
Wet rot repairs		£1,250	£1,250
Total Expenditure	£30,370	£42,527	£40,677
Total Price Completed Property	£215,370	£227,527	£215,577
Cost of Money 3 Months @ 5.49%	£2,956	£3,123	£2,959
Project Cost	£218,326	£230,650	£218,536
Resale Price	£249,950	£249,950	£249,950
Agents Fees on Sale	£2,500	£2,500	£2,500
Legal Fees on Sale	£750	£750	£750
Net Proceeds	£246,701	£246,701	£246,701
Gross Profit	£31,624	£19,300	£31,414
% Return on Capital (Gross)	14.5%	8.4%	14.4%
CGT	£5,692	£3,474	£5,655
Profit after CGT	£25,932	£15,826	£25,760
% Return on Capital (Net)	11.9%	6.9%	11.8%

I still feel that there is flexibility in these numbers and I would hope that some of the expenditure figures would be lower than stated and that not all of the contingency will be required but in order to get to a 20% return before tax I need to shave near enough £10,000 of the initial estimates and £22,000 off the revised figures. On the prudent assumption that the difference is not going to be made up with an increased property price I think that this will be impossible. As a result, and taking advice from comments received on the blog and elsewhere, I feel that this project is only going to work with a reduced offer for the property of £174,900 obviously specifically selected to come under the stamp duty threshold. It still won’t be easy to get to 20% but I think that it will be possible to make 15% and that would not be a disaster.

There is only one thing stopping me. I haven’t made this proposal to the agent yet. That is tomorrow’s task although as I have sent them a link to this blog they may already know!

Deja Vu

I spoke with a friend yesterday who is following this blog. He (you know who you are) has redeveloped many many properties including one that I bought with a friend about 20 years ago which he did up for us.

Interestingly he reminded me that some of the problems that I have already highlighted in this blog were exactly the same difficulties that he had all those years ago. It is also interesting because I have almost no recollection of what work was required for that project. In hindsight maybe I should have taken more notice, it might have come in handy now.

By coincidence, that house was remarkably similar to this project in other ways. They are both two up two down cottages with front doors leading directly onto the living room with single story kitchens. If I remember rightly the earlier cottage did not have a bathroom at all, just an outside toilet. We (or at least he) put a bathroom between the two bedrooms which worked very well. Something we are going to try and do with this house.

He thought that the budget for the redevelopment was tight. I was pleased to be able to tell him that verbal quotes given to me on the replacement doors and the re-wire were below the initial guess which I was quite pleased about. His view was that those were the two areas where he thought we over estimated and that most of the other items were too low!

I got the first quote for the plumbing work last night and that is substantially over the guess so he may have a point. I will publish a guess v quote reconciliation when the written estimates have arrived.

The whole point of publishing my figures in such a public way on a blog was so that I couldn’t subsequently change history by claiming that I thought the refurbishment was going to be more money in the first place and therefore claim that I was right all along! It is clear that delivering this project within budget will be difficult but I still think achievable. We are not going to use a main contractor and will be employing the appropriate trades as needed so that will give us the flexibility to spend our money wisely by picking the best prices.

Sara Beeny will be proud.