At last! It’s almost time for your dream home to become a reality. The design has been completed and documented and you’ve received a few building quotes. But the quotes are all set out differently, how can you compare them?
Trying to compare building quotes can be a time consuming, confusing and frustrating experience.
The problem is that building or renovating a home is a complex undertaking and comparing building quotes isn’t as easy as comparing the number at the bottom of the page.
There are a multitude of tasks involved, from demolition, excavation, concreting, brickwork and framing to plumbing, electrical works, joinery, windows & doors, cladding, flooring, tiling and painting (to name a few).
How do you know whether the quote includes everything and you’re not going to be hit with unexpected variations for tasks that were missing/excluded in the fine print?
And there is significant scope for variations in quality – both in the way the works are done and in the selection of materials. If corners are cut in construction and/or cheap materials are used, your home will not be as you wanted and expected it to be and this won’t easily be able to be fixed retrospectively.
How do you know that the quote is exactly as per your plans and specifications and the builder hasn’t compromised on quality to make the quote cheaper?
It’s too important to get wrong
Choosing a builder to create your new home is too important to get wrong. You will be trusting them with one of the largest investments you’ll make in your future wellbeing and lifestyle and working closely with them for many months.
Price is a fundamental factor when making your choice (but not the only factor – trust, communication and reputation are just as important).
If you have misunderstood the quote, you may end up paying a lot more than you expected and budgeted, not get the quality you expected, and select a builder that, had you known, you would not have appointed.
6 Step Roadmap
Follow these 6 easy steps to confidently compare building quotes so that you can make a fully informed decision when choosing your builder:
Step 1: Disregard Vague and Obviously Unreliable Quotes
Disregard any quotes that are only 1 or 2 pages long – there is too much scope for uncertainty and misunderstanding.
Also, if a builder proposes to build your home for significantly less than other builders, be wary. If you have two or more quotes for similar amounts, this is likely to be a more reliable build cost for your home. Residential building is a very competitive market and the majority of build costs are similar across builders, so there is only limited scope for undercutting. If you have received a significantly cheaper quote, there’s a good chance that the builder has under-quoted, missed something or so desperate for work they are doing it at or near cost (a risky scenario for you because it puts the builder at a higher risk of insolvency).
Step 2: Compare Allowances
Check the provisional sums and prime costs in each quote. These are cost estimates included in the quote that are not fixed (if the estimate is less than the actual cost, you will pay more). They should be clearly listed in the quote.
Then compare:
- the number of provisional sums and prime costs in each quote – the more there are, the more price risk you would be taking (why couldn’t the builder provide a fixed price for the item/works?); and
- the amount of each provisional sum and prime cost – some builders include unrealistically low allowances to make their quote lower, only to hit you with additional costs after the contract is signed and the actual costs are confirmed.
Step 3: Look Out for Exclusions & Substitutions
Check that each quote confirms it is as per your plans and specifications and clearly highlights any exclusions/substitutions. For example, check that the builder has specified the exact makes and models of your appliances and fixtures & fittings and not substituted them for cheaper ‘builder’s range’ options.
Exclusions are particularly important as they can significantly (and artificially) lower the quote so check that these are not hidden in the fine print.
Step 4: Make Sure Preliminaries are Included
Check that each quote includes all required preliminaries – domestic building insurance, site security, asbestos survey (if required), demolition, the asset protection permit & bond, protection work notice insurance, dilapidation report(s) and administration (if required), electricity company fees for electrical connections/disconnections etc.
Step 5: Compare Construction Periods
Check that each quote confirms how long the builder will take to complete the works (preferably with an available start date and a guaranteed completion date) and includes a detailed construction schedule to back this up. Then compare. The longer the works will take, the more you will pay in rent which increases the overall cost of the build.
Step 6: Assess the Builder’s Understanding of Your Plans
Look for indications in each quote that the builder has taken the time to carefully read and consider your plans and understand your design. It’s a good sign if the builder has included advice on specific aspects of the construction to improve quality or buildability or save costs without comprising the design. This is not only useful advice for you, but also indicates that the builder has invested the necessary time to understand your project in detail and therefore accurately quote it.
Bonus Tip
We also highly recommend that builders present their quotes to you in person at their office so that you can have a detailed discussion about the scope of works, build costs and construction timeframes. This will also give you an opportunity to assess the builder’s professionalism and whether they would be a good fit for you and your project.
In conclusion, when comparing building quotes don’t just look at the number at the bottom of the page. That is not necessarily the amount you would end up paying. By following the 6 steps outlined above, you’ll have the key information you need to be able to confidently compare building quotes.
If you’d like to follow your review up with a more detailed checklist, download our Master Checklist. It includes over 100 things to check when reviewing building quotes. You can download it HERE:
DOES YOUR BUILDING QUOTE COVER EVERYTHING?
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