Apr 30, 2006 5:06 pm
Hi, I would appreciate if anyone could share any info as to why the major builders seem to be a lot cheaper than smaller builders (who still do display homes but don't have the volume of the big ones). I can understand the fact that with major builders it's sort of "production line" going but surely this fact can't account for a difference of 80k in a quote with same size house (30 sq.) with comparable standard inclusions? Or can it? Thanks.
Re: Major vs small builders2
May 01, 2006 8:22 pm
Economies of scale would play a big part. Generally the more you buy the cheaper you can get it for.
Another thing might be that the larger builders continually develop innovative ways of designing and building which can reduce costs.
Re: Major vs small builders3
May 02, 2006 8:09 pm
Big players have the infrastructure behind them to take on more jobs (and at a cheaper price as well). Your local builder will only do X amount of renovations per year. If they are busy they usually increase the quotation price (as they have nothing to lose) and see if they can land some good paying jobs.
Re: Major vs small builders4
May 07, 2006 10:27 pm
I will now (partly) answer my own question after going to see a display of a major builder (after seeing lots of smaller, more expensive ones). I found that "standard inclusions" of the major builder were nowhere near as inclusive as the smaller ones (even though I initially thought they would be), eg. no tiling or carpeting (apart from wet areas) included in the standard inclusions can raise the price by a few thousand. Their design (positioning of rooms, walls, etc) seemed a lot worse, ie. lots of space that could not really be used, much smaller bathrooms, etc. So while still cheaper after talking in detail than smaller builders, they are not THAT much cheaper.
I acknowledge alto's and renomart's points, thanks for that guys (it probably shows I'm a complete amateur).
Re: Major vs small builders5
May 09, 2006 12:32 pm
I hope you all don’t mind me adding my two cents. I noticed that a few of you used the word cheaper as one of the main differences between big and small building companies. Cheaper is not necessarily the case, when we quote against the “big” companies we often find we are very competitive when the quotes are apples for apples.
What I find to be the biggest differences between the Big Guns and the small to medium firms like us is the level of standard finish and the extent of complying with the building code. Now I’m not implying that the “big” companies don’t comply because the building industry is fairly well regulated and I’m sure they wouldn’t want to get caught out, the point I’m trying to make is that there is always an easy way to comply compared with the right way to do things. The hardest thing for us small to medium size guys is “selling” something that at the end of the day is hidden behind gyprock and paint.
Quality Quality Quality, is what you get more of with the smaller companies.
Sorry for sounding like a sales pitch but these are some of the questions you could ask yourself when comparing the “big guns” to the smaller operators.
- How many homes will my supervisor be overseeing?
Some big firms have supervisors overseeing over 30 homes at a time. The smaller more attentive operator will not allow their supervisors any more then 5 to 10 homes at a time. This assures attention to detail and a superior finish.
- Will I be able to speak regularly with our Supervisor?
You want to know that if you have a concern regarding the construction of your home that you can catch the problem before it’s too late. There is nothing more frustrating then having to speak to a receptionist to pass on a message to a supervisor, and then have to wait for a supervisor (who might have 30 other clients chasing them) to call you back, by which time it’s to late to make the change or fix your concern.
- Can you make changes along the way? And who do I speak with to make a change?
Some companies keep their costs down by freezing their clients out of the building process once the contract is singed. So what you singed for is all you can get, no changes, not even colours or fixtures. And for those who do allow you to make changes you first speak to a receptionist, who tells your supervisor to call you, an you discuss the change, then the supervisor speaks to the estimator who prices the change and relays that to the supervisor who then calls you back. This is a long process, it’s a bit like Chinese whispers and there is a lot of room for miscommunication.
With the small to medium size companies you have open lines of communications with the supervisor and in most cases the Construction manager. And when you ask a question you can get instant answers, with out have it passed up the chain of command. We tend to put our clients in the forefront of our processes not to the back as added baggage.
Now I have generalised a lot, and I’m more then sure there are some big guns out there who do go over and above for their clients, but this is all just a bit of food for thought.
Re: Major vs small builders6
May 09, 2006 2:08 pm
Thanks Shane, your reply has certainly helped me to be assured we're going the right way by choosing a small-er builder as opposed to one of the big ones. Any other tips would be greatly appreciated.
Re: Major vs small builders7
May 22, 2006 2:53 pm
I also like to add my 2 cents. I agree with a lot of what shane has mentioned.
I myself went with a larger builder for the extra security of better financial backing. Im guessing some of the differing costs between a small and large builder is due to builders warranty insurance. I think the biggest advantage i see of a small builder versus a larger builder is the quality. Large builders owned by public listed companies are looking after themselves at the end of the day and working for their next bonus, whereas a smaller builder have their long-term livelihood and reputation at stake so you know you will be looked after. However i do think the worst case scenario of going with a smaller builder is much more costly than going with a larger builder.
Re: Major vs small builders8
May 25, 2006 10:54 am
I also like to add my 2 cents. I agree with a lot of what shane has mentioned.
I myself went with a larger builder for the extra security of better financial backing. Im guessing some of the differing costs between a small and large builder is due to builders warranty insurance. ...
However i do think the worst case scenario of going with a smaller builder is much more costly than going with a larger builder.
My own logic in choosing between big or small builder is that there is x number of people that must build the house whom the builder must pay. The larger the builder, the more people they employ, not just tradesmen but there is also administration, office rent and advertising to name a few additinal expenses they must pay. Smaller companies have smaller offices, less overheads so the large ones MUST be more expensive no matter how cheaper they can make themselves seem.
And there is also the compliance vs quality (not the same thing) and attention vs mass production already mentioned here
Re: Major vs small builders9
Jun 08, 2006 5:15 pm
We will be building in a few years time, having walked through a multitude of volume builders display homes, we will not be using a volume builder.
Upon closer inspection of there displays you can really see the lack of quality in joins of carpet, tiling, kitchen cabinets etc. In my personal view if they cant atleast present a well built product as a display they certainly wont be getting my business. Sure they will come back and fix defects eventually but how long do you have to wait. I have heard many horror stories!!!
In my view I'd rather pay a little more get better materials and workmanship to save me the headaches and costs of patching up later on. Having said that If you have had a great experience with a volume builder in Melbourne with regard to quality and price please forward on there detals
I'd have to agree as stated previously, volume buying is cheaper because volume sales on product and services.
Re: Major vs small builders10
Jun 12, 2006 10:30 pm
It is worth noting some very good points that have been made here;
If you compare prices between small & volume builders on an "apples for apples" basis you will find that the smaller builder is actually better value. The big boys have massive overhead costs which are barely offset by their "massive" buying power. And have a look at how much they spend on advertising!
The quality & finish of the display homes is deliberately poor as they cannot achieve any better on the homes that they build for clients. This way they can say "your home is at least of display home standard" as a way of avoiding rectification of poor workmanship. And what about those "independant quality inspections"? Imagine having to get an outside consultantant to tell you that you are doing your job properly. An what are they going to report anyway when the builder is giving them hundreds of thousands of dollars worth of work every year? You guessed it.
Financial stability? The bigger they are the harder they fall. Remember Avonwood homes in 1999?
Service. Whilst it's nice to have your own CSO (Customer service officer) these people are nine to fivers and often have little knowledge or even interest in the building industry, let alone the PASSION that the small builder will have given that his / her reputation and liverlyhood is on the line. Ask yourself "in my time of need will the owner of the business return my call?" Fancy making the biggest financial decision of your life to date and not being able to speak to the person with whom the buck stops.
After sales service & defect rectification with major builders. Does it even exist?
McDonalds sells the most hamburgers in the world but are they the cheapest or the best hamburgers in the world? NO. So how does this work? MARKETING & ADVERTISING. Not a day goes by where you won't drive past a store, see a billboard or hear an ad on the radio. Big builders are exactly the same. They do the most advertising so they build the most homes. NOT the best homes, NOT the cheapest homes, just the MOST homes. That's why they are called volume builders. And it doesn't stop there. They also have huge budgets for their display homes which has the effect of baboozling you with interior design, furniture and landscaping. They are selling the sizzle rather than the sausage and poor old Mr. & Mrs Punter get so caught up in the stunning decor, ambient lighting, designer furniture and $50,000 swinmming pool they actually forget to look closely at one thing; The house they are buying!
In summary; do your homework! Find out about the business you are about to do business with. I'm sure you'll make the right decision.
Re: Major vs small builders11
Jun 13, 2006 12:56 pm
tub, very much agree with your post. It makes me sad (mad?) when you realise display house you liked had tiles worth $120/sq. m, yet allowance in the specifications says "tiles from builder's range" and when you ask, you are told the allowance is $25! Just a small example...
Re: Major vs small builders12
Jun 13, 2006 11:12 pm
That is exactly what I was talking about in the other discussion - make sure you choose everything and get it put in the specification and costed BEFORE you sign the contract. Building is complicated whether with a small or large builder, hence the attention to detail is most important and vital for your financial well being.
Re: Major vs small builders13
Jun 14, 2006 12:14 am
And by all means, make sure it does include "all" that you want, because it's the "extras", that throw a spanner in the works. Pick it and stick to it....
If you get a rush to the proverbial, contain it and do it later...