When embarking on a home extension, new build, or conversion project, budgeting is one of the most critical aspects. Underestimating costs can lead to unfinished projects, while overestimating may unnecessarily delay your plans. In this guide, we’ll break down how to budget effectively for each type of project and how much contingency you should set aside to cover unexpected costs.
- Understanding Construction Costs
Before diving into contingency planning, it’s essential to understand the baseline costs of different types of projects.
Average Cost Ranges (UK)
These figures provide a general guideline but can vary significantly based on location, materials, and complexity:
Extensions – £1,800 to £3,500 per m²
New Builds – £2,000 to £4,000 per m²
Conversions (Loft/Barn/Basement, etc.) – £1,500 to £3,500 per m²
Premium finishes, structural complexities, or challenging site conditions will push costs towards the higher end.
- Contingency Funds: How Much Should You Set Aside?
A contingency fund is a financial buffer to cover unforeseen expenses, such as structural surprises, planning changes, or inflation in material costs. The level of contingency varies based on project type:
a) Home Extensions (10-15%)
Extensions are relatively straightforward, but existing structures may conceal unexpected issues, such as:
Foundation issues – Weak soil conditions or existing foundations needing reinforcement.
Hidden structural defects – Rot, damp, or subsidence issues in the existing building.
Planning and regulation changes – Additional fees or compliance costs if regulations evolve.
Recommendation: Allocate at least 10-15% of your total budget for contingencies.
b) New Builds (5-10%)
New builds offer more predictability because they start from scratch, reducing the risk of hidden defects. However, unexpected costs can still arise from:
Material price fluctuations – Inflation or supply chain issues can push up costs.
Planning conditions – Local authority requirements, such as additional ecological reports or roadworks.
Unforeseen ground conditions – Poor soil, contamination, or drainage issues can add significant costs.
Recommendation: A lower contingency of 5-10% is generally sufficient, but for complex or self-build projects, lean towards 10%.
c) Conversions (15-20%)
Conversions, whether lofts, barns, or basements, are the riskiest because they involve working with existing structures. Key risks include:
Structural surprises – Older buildings may require more reinforcement than anticipated.
Services upgrades – Electrical, plumbing, or insulation may need more extensive work than budgeted.
Heritage constraints – Listed buildings or conservation area restrictions can lead to costly alterations.
Recommendation: Set aside 15-20% for contingencies, especially for older or listed buildings.
- Cost Breakdown & Budgeting Tips
A. Key Cost Categories
Regardless of project type, your budget should cover:
- Design & Planning – Architectural fees, planning applications, building control.
- Construction & Labour – Main contractor, subcontractors, and specialist trades.
- Materials – Structural materials, finishes, fixtures, and fittings.
- Site Costs – Groundworks, drainage, scaffolding, and site setup.
- Professional Fees – Surveyors, structural engineers, and health & safety compliance.
- VAT – Certain elements may be zero-rated, but others will be subject to 20% VAT.
B. Practical Budgeting Advice
Get multiple quotes – Never settle on the first estimate; compare at least three contractors.
Fixed-price contracts – If possible, negotiate a fixed-price contract to minimize cost overruns.
Track spending – Use spreadsheets or project management software to monitor costs weekly.
Plan for delays – Time overruns often mean higher labour and rental costs.
- Final Thoughts
The right contingency buffer can be the difference between a smoothly completed project and a financial nightmare. While extensions and new builds are relatively predictable, conversions require the highest contingency due to unknown factors in existing structures.
By budgeting wisely and allowing for contingencies, you can ensure your project remains on track, avoiding costly surprises while still achieving your dream home.
Jbh Architectural Services 
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