Thinking about it · High risk
What is your true budget ceiling?
Set the number you will not pass, then hold 10–15% of it back as contingency.
- When it lands
- Before any design work is commissioned.
- What it costs to get wrong
- Running out of money mid-build is the worst place to be: you lose negotiating power, and stopping a site costs money on its own.
A budget is not what you hope to spend. It is the number you will not pass, decided before anyone draws anything, with money deliberately held back for the things nobody can see yet.
Most overspends are not caused by extravagance. They are caused by a ceiling that was never really set, or one that quietly included every pound available with nothing left over.
Start with what is genuinely available
Add up savings you will actually spend and borrowing that is confirmed in principle. Leave out equity you hope to release later and money you might have if something else goes well. A ceiling built on optimism collapses at the first surprise.
Then take 10–15% off the top and set it aside as contingency. What remains is the figure the design has to fit — not the figure plus a bit.
The costs that never appear on a builder's quote
Design fees, structural engineer, planning and building control fees, party wall surveyors, measured and drainage surveys, VAT where it applies, and the cost of living somewhere else if you have to move out.
On a domestic project these routinely add 15–25% on top of the construction figure. Homeowners who only budget the build cost are not overspending later; they underbudgeted at the start.
What happens without contingency
A couple budgeted £90,000 for a rear extension and allocated every pound of it. A drainage diversion added £6,400 and a steel redesign £3,100 — both discoverable only once the ground was open. With nothing held back, the site stopped at plaster stage while they arranged further borrowing.
The extra cost was not the disaster. The pause was: a stopped site still has to be secured, and a builder who moves to another job does not always come straight back.
Hold the number in public
Tell your designer the ceiling, including fees and contingency, in writing at appointment. Designers who know the ceiling design to it. Designers who are told to be ambitious produce beautiful schemes that come back over budget, and redesign costs both money and months.
Why this one matters
Builders price the drawings they are given. If the drawings were designed against a number you cannot actually reach, you will pay a designer twice — once to design it and once to shrink it.
Do this week
- Write one figure you will not pass, including fees and VAT.
- Ring-fence 10–15% of it as contingency and name it as such.
- Send the ceiling to your designer in writing.
The realistic choices
Savings only
Safest. Design to the number and keep the contingency untouched.
Savings plus borrowing
Confirm the borrowing in principle before design, not after quotes.
Phase the work
Do the structure now, finishes later. Cheaper overall than stopping mid-build.
What good looks like
- A total figure that includes fees, VAT, surveys and contingency
- A separate contingency pot you have not already spent in your head
Questions worth asking
- Does this figure include professional fees and VAT?
- What happens to us if this costs 15% more?
From real projects
Stopped at plaster stage
A couple budgeted £90,000 for a rear extension and spent all of it. A drainage diversion added £6,400 and a steel redesign £3,100. With no contingency, the site paused for eleven weeks while borrowing was arranged; the builder charged for demobilising and returning.
The lesson: A stopped site costs money on its own. Contingency is not spare money — it is the price of not stopping.
Putting it into practice
What this decision should leave behind
The steps to work through, the paperwork worth keeping and the questions to send your builder today.
- · Add up what is genuinely available
- · Take 15% off the top
- · Add the invisible costs
- · Template: Budget ceiling worksheet
- · Paperwork: Budget breakdown sheet
- · Paperwork: Mortgage or lending agreement in principle
Next decision
Have you checked what the site will allow?