Spiking prices and materials shortages can wreak havoc on budgets and schedules. After September’s Hurricane Ike, for example, many remodelers had to put jobs on hold when they couldn’t access (much less afford) gas, lumber, and other materials, thanks to shuttered businesses ranging from gas refineries to lumberyards.
You can’t prevent natural or economic disasters, but you can protect against them if you:
Budget carefully. On an annual basis, compare year-to-date expenses against budgets, “dissect anything that is way out of line,” and adjust for the next budget process as needed, says Lisa DiFillipi, vice president of <a href=“http://www.alure.com/” target=“_blank”>Alure Home Improvements</a>, in New York. Don’t simply add to your budget, she cautions; if you must beef up one line item, find another to cut.
Track costs monthly or weekly, and adjust internal pricing systems as needed.
Nurture vendor relationships to stay apprised of upcoming price hikes and shortages. Lock in prices if possible, even if only for a certain period of time.
Stamp “expiration dates” on estimates. Alure limits the time frames on its estimates based on factors such as project size and scope. After Hurricane Katrina, Texas-based Curb Appeal Renovations shortened its pricing guarantee from 30 days to 14.
Above all, pay attention to the economy. “Be keenly aware of overall economic conditions and especially those in your market,” DiFillipi says. Last fall, she basically doubled Alure’s fuel budget for 2008. “Prices were rising drastically,” she says, “and we didn’t see an end in sight.” So she based her budget on the last three months of ’07 and padded by 10%, she says, “just to make sure we were covered.”