I presume you mean vertical insulation against the wall of the bungalow to mitigate the cold bridge.

Go as deep as the base of the foundations or if the foundations are a silly depth then 600m - 750mm. (or just 500mm 'cos that is the width of a sheet of EPS) Over here with winter temps down to -18 on occasions I've not seen water pipes freeze if they were 300mm below ground and I have a soil pipe that has only 150mm of soil covering and never had any problems. The point being it is the first 300mmor so that is the most important.

Use EPS and put on the adhesive + mesh on the outside but no need for the decorative thin film acrylic render.

See
http://www.greenbuildingforum.co.uk/newforum/comments.php?DiscussionID=10206&page=1#Item_24
for the debate about EPS or XPS below the DPC