Renovation & construction
A Renovation Budget Through an Investor's Eyes: What Must Be in It
A renovation budget is read by three signs: are there measurements, are big sums lumped together, and what is expressly excluded. Below: how a presupuesto is built and a one-evening check.
The renovation budget for an investment apartment is a presupuesto: the work is split into chapters, and every item has a quantity, a unit price and a total. A good budget can be read in one evening, and it answers three questions: is everything described, is everything measured, what is excluded. If there are no measurements and the exclusions are not named, you are looking at an estimate by eye, and the client pays for the difference later.
What a budget you can actually check consists of
A proper budget is built by chapters (capítulos), and inside the chapters come the items (partidas).
| Element | What it is | What to check |
|---|---|---|
| Capítulo | A chapter: demolition, albañilería (general building work), electrics, plumbing, carpintería (joinery), finishes, painting, cleaning | Is there a chapter for rubble removal and protection of common areas |
| Partida | A single piece of work with a code and a description | The description is precise enough that two crews would read it the same way |
| Medición | Quantity: m², linear metres, units | Does it match the plan and your own measurement |
| Precio unitario | Price per unit | What is inside: material, labour, small expenses, waste |
| Partida alzada | A fixed sum with no measurement | Its share of the budget and what exactly sits under it |
| Gastos generales, beneficio industrial | Overheads and the contractor's profit | Are they shown as separate lines |
| IVA | VAT | A separate line; the rate depends on the client and the property, see IVA on renovation |
The sum of "quantity × price" plus the partidas alzadas is called the presupuesto de ejecución material (PEM). In the public procurement regulation RGLCAP (Real Decreto 1098/2001, art. 131), overheads are set at 13–17% of the PEM and the contractor's profit at 6% (BOE). A private client is not bound by these percentages. But if a contractor does not show overheads and profit separately, two budgets cannot be compared on substance.
What is usually missing from a budget
Everything that is not in the budget gets paid for later and outside it. I check for lines like these:
- removal of escombros (construction rubble) and a skip, and, if there is scaffolding or a skip on the street, a separate permit from the Ajuntament;
- the project, technical supervision and a coordinador de seguridad y salud (health and safety coordinator), where they are needed;
- the licence or comunicació (notification to the council) and municipal fees, see permits for works;
- certificates for building systems and the certificado energético (energy certificate);
- kitchen, appliances, sanitaryware: "suministro" (supply) and "instalación" (installation) can be separate lines, and one of them is often missing;
- items marked "a definir" or "según elección de la propiedad" with no sum.
How to check the renovation budget of an investment apartment in one evening
- Check the measurements against the plan. Floor and wall areas, the number of sockets and water points, pipe lengths. A 10% error in quantity gives the same 10% difference in price.
- Find the partidas alzadas and add them up. A fixed sum is acceptable where the quantity cannot be measured before opening up the structure, but it needs a description and a ceiling.
- Compare prices with a reference database. In Catalonia this is BEDEC, the reference price bank of the ITeC institute (ITeC). The database gives an order of magnitude for comparison, not the truth: a contractor may use a different price, but must be able to explain it.
- Compare several budgets chapter by chapter, not by the total. How to do it is described in the article on comparing contractors.
- Ask for a written list of exclusions and the procedure for changes (modificados): who approves them, within what time, and before or after the work is done.
When the budget is part of a project and when it is the only document
Under the LOE (Ley 38/1999, art. 2.2), a project is required for works that change the architectural configuration of a building: a full intervention, a substantial change to the structural system, or a change of characteristic use (BOE). In that case the budget is part of the project and is kept by the technician. For a renovation without a project, the budget remains the only document against which you later check expenses, and the requirements for it are stricter. Whether your property needs a project is decided by a technical specialist, not by the contractor.
Worked example: two budgets for the same scope
A worked example, not a forecast. The figures are round.
| Budget A | Budget B | |
|---|---|---|
| PEM, € | 70,000 | 72,000 |
| of which partidas alzadas, € | 8,000 | 30,000 |
| share of sums without measurement | 11% | 42% |
The totals differ by 2,000 €, but in Budget B almost half the sum is unmeasured. That 30,000 € can be disputed in either direction, and the dispute will be conducted during the works. Budget A is cheaper and clearer.
Next step
The only renovation figure in DNPI's published projects is 76,230 € at Compte de Urgel. It is one property, and the figure cannot be carried over to another. The purchase and sale prices, the difference before other costs and the caveats are in the project breakdown. For your own property, start with the investor calculator and keep the budget next to the renovation budget plan.
Questions and answers
What share of partidas alzadas is acceptable in a budget?
There is no rule. I look at the logic: an alzada is justified where the quantity cannot be measured in advance, and such an item needs a description and an upper limit. If ordinary work with a clear quantity is called a "lump sum", ask for measurements.
Should the budget be an appendix to the contract?
Yes. Without it, in a dispute there is nothing to compare with what was actually done. The wording of the contract is checked by an abogado (lawyer).
Should a contingency reserve be included in the contractor's budget?
As a rule, no. It is more convenient to keep the reserve as a separate client line, so you can see how much went on real discoveries.
How is a budget different from a contractor's estimate "over the phone"?
A phone estimate gives an order of magnitude without measurements or exclusions. You can use it for a preliminary check of a purchase decision, but you cannot sign a contract on it.
