1.    How can I keep costs down? 

There are three drivers to the cost of a project – structure, scale, and finishes. There’s a limit to how much money you can save by choosing more affordable finishes. You can change a brick wall to a timber wall, a concrete slab to a timber frame, but you’re limited to how much money you can save. Often, the only way to get the cost down is by making your project smaller. The complexity of the structure can also add cost – big cantilevers and large clear spans are highly engineered and expensive to build. 

Having said that, a lot of people make the mistake of not talking about money at all to begin with. Instead, they get a Development Application (DA), fight tooth and nail to get it approved, and only then start thinking about the cost – it’s almost too late at that stage, because the design is already approved. 

Ideally get the builder involved early and get some advice on costing the project. The earlier you make changes, the easier, and cheaper it is to make those changes. After you’ve got the DA or once you’ve started construction, the ability to make changes is much harder, and the cost to those changes is much greater. 

2.    How do builders come up with their price?

It’s not just as simple as working out the average square metre price and applying it to the size of a project – it’s far more complicated than that. 

Builders price risk. Rather than eat all of the pie ourselves, we cut up the pie and ask all of the sub-contractors to eat a little slice of that risk. The electrician is far better at pricing the electricals than we are – we’re not electricians and their price will be more accurate. The same applies for the plumbing, joinery, painting, windows – everything really. 

We then analyse all the sub-contractor’s fees to make sure they’re exactly what we expected them to be, nothing more, nothing less. 

Next, we work out what it’s going to cost us to build in terms of having a foreman on site, how long we’ll need to be there, whether or not we need an office and how much scaffolding we’ll need, amongst other factors. We then apply a margin for our supervision and overheads, and we consider what the prices are going to be like in two years’ time or whenever we’re finishing. That’s our end price.

Sometimes, an architect or homeowner will see a huge spread of fees when they go out to tender. When someone says to me that another company can build it for 20 per cent less – more often than not, someone has made a mistake. Either the builder with the low fee has missed something, or the builder at the top end has interpreted it differently and allowed for something that they didn’t need to allow for. Builders don’t make 20 per cent profit, so it can’t be that they’re just charging more to do the same job – it’s a different job. 

Ideally, if you’ve got three prices that are very similar, you know everyone’s interpreted it the same way. 

3.    How do I choose a builder to suit me?

A builder should be selected based on a combination of time, cost, quality, experience and service.

Firstly, take a look at a number of builders’ websites, and shortlist perhaps three. 

I always encourage both architects and homeowners to ask for references for the builder. Talk to the last two clients that the builder has worked with, so you get a real sense of who you’re going to deal with on a day-to-day basis. Also ask for trade references – it’s always a good indicator of how professionally they’re managing jobs. 

You should also ask your shortlisted builders to provide a statement from their bank, outlining their financial position. You can also undertake an independent credit check. Additionally, you can consult the relevant business and legal registers to determine if the builder is subject to any outstanding legal action. 

Consider a builder’s experience. Are you confident the builder will stand by their work in years to come if any issues arise? Usually a builder who has been in the business for a long time is more likely to continue to be in business a number of years after your build. 

The next step is to meet and interview the builders.

Remember, you’ll be entering into a significant financial contract, and at the end of the day, you’re working closely with your builder for a long period of time. So, they need to be trustworthy, professional and easy to get along with.

See also:

Advice for first-time renovators

The builders asking what you want and what you need

Industrial disputes spike shows need for ABCC