Is your home cramped and uninspiring? Thinking about renovating but worried about the cost? When homeowners contact us for help with creating their dream home, their most common no. 1 concern is budget blow outs.
How can they make sure that they will be able to afford to build their home renovation? that they will get the maximum value from their budget? and there won’t be budget blow outs during the build?
No-one wants to waste money paying for a design they cannot afford to build, to fail to squeeze the most value out of every dollar spent on their new home or to be hit with unexpected budget blow outs during a build.
Here are our 3 top tips to help you avoid wasting money and set yourself up for a smooth and successful building experience with no nasty surprises.
Tip 1: Include a Builder in your Design Team
If you want to ensure that your home renovation will not blow your budget, include a professional builder in your design team.
The most important advice an expert builder can provide during the design phase of your new home is on expected build costs. Not free ‘off the cuff’ ballpark guess-timates. Properly analysed and considered build cost estimates.
A builder can also add value and reduce stress during your design phase by –
- identifying practical building issues early in the process so they can be addressed sooner rather than later;
- advising on potential build cost savings and cost effective construction methods and materials so you can get the most out of your build budget (simple changes that do not affect the design outcome can often result in significant build cost savings);
- answering all of your building questions to set your mind at ease; and
- presenting their build quotes in person so you can have a detailed discussion about the scope of works, build costs and construction timeframes.
Ensuring that your design stays within budget will save you thousands of dollars in re-design fees and months of wasted time and heartache.
Tip 2: Carefully review your Plans & Specifications
Your builder must renovate your home in accordance with the plans and specifications in your building contract.
If you change those plans or specifications after the contract is signed, you will need a variation to your contract.
There are some important things to be aware of when you request a variation:
- It costs your builder time and money to review and quote a variation. Often there are multiple knock-on effects of a proposed change that need to be considered. Expect to pay an administration fee at least for any variation that you subsequently decline.
- A variation may cause delays either through additional work or as a result of lead in times, pushing out your completion date.
- It may be too late or prohibitively expensive to make the change you have requested.
- If you are removing something from the plans or specifications, you may not receive a full refund for that item/task. If a deposit has been paid or preparatory works completed, this will be deducted from your refund along with the builder’s administration time to cancel orders/works and process the variation.
Often homeowners request variations because they did not fully understand what was on their plans and specifications before they entered into the contract. How to read and understand building plans is not always obvious but it’s absolutely vital that anyone embarking on a renovation knows how to do it. If you have no experience with reading plans it can be confusing and intimidating. So we have written an article and made a video explaining in simple terms how to read plans so you will be able to “see” your new home on the plans.
You can see our video and article here – Beginner’s Guide to Reading Plans
Don’t hesitate to ask your designer and builder questions, this is your home and it’s essential that you understand exactly how it will look and function. Don’t stop asking questions until you are sure that the plans and specifications are exactly as you want them to be.
Tip 3: Avoid Allowances
A builder will include a cost allowance in the contract price when they cannot give a fixed price for a task or item at the time the contract is signed. For example, there may be cost allowances for appliances or bathroom fittings pending selection. The contract price will be adjusted (up or down) when the actual costs are known.
There are 2 types of allowances:
- Prime Cost – a cost allowance for the supply of materials only eg. an oven or washing machine.
- Provisional Sum – a cost allowance for a task involving materials and labour eg. landscaping.
A provisional sum or prime cost must be a reasonable cost estimate for the relevant tasks or items. This is very important. Be wary of builders who include unrealistically low provisional sums and prime costs to make their quote/contract price lower, only to hit you with additional costs after the contract is signed and the actual costs are confirmed.
To reduce the risk of unexpected budget blow outs, avoid allowances. If the builder has included allowances, ask them why they were not able to provide a fixed price for that task/item and what they have based their allowances on. Check the assumptions they have made and assess the risk that the costs will be higher than the builder’s estimates.
Conclusion
In these days of high interest rates and cost of living pressures, carefully managing build budgets is absolutely paramount.
By including a builder in your design team, carefully reviewing your plans and specifications before you sign the contract and avoiding allowances, you’ll be well on your way to a smooth and successful building experience.
Proper planning and communication are essential to ensure that your project stays on track, within budget, and free from costly surprises.
Take the time to do this groundwork, and you’ll be setting yourself up for a positive building journey from start to finish.
To help you select the right builder for you & your project, we have prepared a FREE guide: The 7 Critical Questions to Ask Before You Choose Your Builder.
Download it now to learn:
How to check whether your builder is up to the job
How to avoid getting caught out by builders charging you more than you were expecting
and more handy tips
HOW TO CHOOSE THE RIGHT BUILDER FOR YOU
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