Now you have the approvals, let’s find a builder. You ask a few mate that may or may not have building license to give us a quote. One says it is a 550k job, your jaw drops, the budget was only 420k. The next builder has a quick look over your drawings and gives you a quote of 400k you are excited is actually under your budget and you have a little to pick a few nicer finishes. You go with the cheapest quote.
No sooner has the builder stepped on site then he hands you a variation for some piers that he has decided you need. The next day it is extra excavation because your draftsman didn’t quite get the levels right and now the driveway can no longer meet the gradients required, so on and so forth. Before you know it the builder has you in a pattern of approving variations each time you walk on site. Your little extra in the budget is soon swallowed up and you begin to wake up in cold sweets each night, where are you going to get the money from you find yourself back to see the bank. All told at the end of the day you add up all the bills and find your 400k house costing 600k. How did that happen? This was supposed to be a cheap build. Does this sound familiar? or do you someone this has happened too?
There are a number of fundamental issues at play here that lead to this escalation of cost.
1. By engaging a draftsman you can expect they will to have most of the technical issues covered, however who is designing your house? If this in you, do you have the design skills? The first place to look for real cost savings is within the design. A good designer or architect can achieve much more out of a small area. With an experienced designer on board, you may find they can achieve you same requirements within a smaller floor area. Ultimately a cheap design fee may cost you many tens of thousands if not 100’s of thousands down the track.
2. A good designer or architect would also point out you would likely struggle to meet you expectations within your given budget. Knowing this upfront is of great value, as you can change your requirements or expectations of what will be achieved for your budget, or be better prepared with the required finance to meet you expectations.
3. The process of finding and engaging a builder can be fraught with difficulties. How do you know that each builder is giving you a price for exactly the same thing? If you take incomplete set of drawing along to a builder they will have to make assumptions to fill in the gaps. These assumptions offer a great deal of latitude to hit you with variations later during construction. Armed with a complete set of drawings and specifications, all design decisions made prior to getting the builder to give you a price. By calling tenders from a number of builder this will make them as competitive in price as the market allows at the time. All the prices should not vary more than about 15% above or below the average price. If after this process is complete and all the prices are still over you budget, working with your architect, you can negotiate with your preferred builder (usually the lowest, but not always) and seek their input as to where they may see you could save money in the construction. This could be as simple as allowing them more time to complete the project, you don’t know as this is very specific to the builder you are then dealing with and there situation also. finally after everyone is happy you can sign a contract and expect that the building should be within a certain price range.
4. Within the contract price there should also be included a contingency sum of money, as there are always unknowns throughout the construction process. This should be at least 10-15% for a simple new build and higher renovations and more complex projects. This is a sum of money allocated for that case that you do really need that extra pier or often there are situations arise on site where you may need to change something.
5. You may consider engaging an architect to also administer the contract. This means that the architect acts as your agent and deals with the builders questions on a day to day basis, meets with the builder on a regular basis tracking the progress and ensuring that the builder is building what is shown on the drawings and in the specification. It also give you an independent professional on your side if there are tricky building issues arise and you are not simply slugged with another variation. In this role the architect reviews the work each month and certifies each claim payment that the builder makes. Ensuring you are only paying for what is built to that particular point, no more no less.
The more time, experience and expertise going into the design upfront before the builder is on site you will have greater control there is of the costs. If working to a tight budget, this is paramount. To change a line on paper is cheap compared to removing a wall and building a new one in a building.
If you would like help to get started on your project without making a large commitment upfront consider starting our Concept and Viability Study.