Browse Forums Building A New House 1 Jul 31, 2007 12:06 am Greetings Home'sters,
We have been reading these forums for a number of months now and find the experinces and advice of people here really valuable so we are hoping to get some advice of our own. We have had a nice 650m2 parcel of land just within the 10km radius of Melbourne which has a decent slope from back to front and potential for city views. We have plans to build a 50 square Georgian with quality finishes and fittings. Due to the site cut, none of the larger developers (Simmonds, Burbank, etc) would touch us so we decided to design a custom home with an Architect and go out to idependant builders for construction. From the design phase to the final negotiation (which is where we are now) it has taken us the better part of twelve months, a very long and sometimes painful process indeed! The design and architecture phase was relatively straight forward since we knew what we wanted in terms of house style, materials and fittings. We were also lucky to work with a pretty creative architect who had good taste and didn't charge the Earth for a full set if working drawings, engineering and specification. During this journey, the not so surprising element was dealing with builders. Out of nine builders we took our documentation to, we only received two 'estimates' and two firm quotations. I guess its the price you pay when you have a difficult site and the market has more demand than supply! Those who supplied estimates wanted substatial $$$ to quote in further detail which I was prepared to do if the price was reasonable. We are now in final negotiations with two very different types of builders. The first builder is a medium sized developer who mostly specialises in multi-dwelling/apartment constructions and does a few private residentials per year. They have around 60 sub-contractors working for them and have done some nice residential work in some good suburbs (Essendon, Moonee Ponds, etc). During our discussions they have been very responsive with answering our questions/concerns however the attention to detail in their quotation leaves much to be desired. They have given us a bare-bones breakdown and I have had to ask for further information on every PC/provisional item. When quizzed about the details of our project, they can be quite clueless stating 'its all included' which does fill me with a great deal of confidence. The second builder on the other hand is a reasonably small developer who mostly does medium to large scale private residences and only takes on three to four jobs a year. They have only one crew of sub-contractors but have worked with most of them for 15 years. The builder has shown great passion and strong consultation explaining all elements of his quotation. He has provided a good breakdown of materials, PC's and provisional sums. I also feel quite confident that he has done his due dilligence on our site by getting multiple quotes on the escavation and site cut. He shows a genuine understanding of our project and the complexity involved. We also have been to his house on many occasions which has very similiar finshes to what we want. The big problem we have is that the price difference between the two builders is just over $100,000 with the second, smaller builder being more expensive. The overall project cost vary's between $700,000 - $800,000. I always figured the smaller guy was going to be more expensive however I didn't think the difference was going to be so much? After drilling both builders for the past few weeks on inclusions/exclusions, quality of material, etc, I have not been able to definatively determine if either the cheaper developer has missed some items or the smaller developer is ripping me off? The estimates I received from the other two builders were on the higher end of the scale so I am leaning more toward the former. My questions are: 1) Is a $100,000 difference between quotes on a project of this size something to be skeptical about? 2) What items should be prime costs (PC's) versus fixed costs versus provisional? The smaller builder has included things like kitchen, benchtops, slabs, footings as provisional costs? 3) Is there a 'Builders Advocate' service out there (similar to buyers advocate when buying a house) that I can pay to get the quotes independantly verified? 3) The smaller, more expensive builder has refused to budge on his initial price. On a project this size I would imagine there would be some room for negotiation and they wouldn't put their best price in first thing? Would really appreciate any advice / thoughts / experience people have on our situation. Looking forward to making our dream come true! Regards, Mr Ed Re: HELP! Final negotiations with builders on custom home 2Aug 03, 2007 9:21 am A tough situation.
overall at that level its about a 15% difference in price (7 to 800k). Not so much when you look at it as a percentage. Still a big chunk of cash though. I don't know of any kind of builders advocate - maybe your architect can help? Suggest you make a list of items you need resolved with the larger developer that you say you need before you sign up. If they refuse to provide then I think thats pretty telling of the kind of relationship you may end up with if you went with them. you can always negotiate I find. make the smaller builder an offer in writing with a deposit cheque attached. if he doesn't accept it, he doesn't accept it. nothing more you can do. Show him the other quote if you want to. Tell him you'd rather give him the business but $100k is too much to justify. keep us posted how you go. good luck! Re: HELP! Final negotiations with builders on custom home 3Aug 03, 2007 10:19 am Sounds like a great project.
Has anyone suggested using a quantity surveyor. They are normally used to provide a "cost of project" for tenders etc, and a mate of mine is QS in perth - and I ran some figures past him for a large shed once and he was pretty much on the money. They will charge you - but you then might have some more factual figures in front of you. and as i've mentioend before - if you can trust the builder - going costs plus 10% can be a workable situation. You pay for all the material plus 10% plus the builders wages. Thats way they are not factoring in a "risk" factor which could be where the $100K is. Good luck. Steve Re: HELP! Final negotiations with builders on custom home 4Aug 03, 2007 10:35 am I would ask both to supply "Bill of Quantity" (BOQ ) which will have itemised list of everything with measurement and quantities + any allowances. It will help you compare both builder on apple 2 apple basic. It will also show you where they are making mistakes in qty. If BOQ is pretty much same for both builder than difference in quote price comes from cost, markup and quality of material each is using. Re: HELP! Final negotiations with builders on custom home 5Aug 03, 2007 10:36 am Mr Ed,
You will ultimately need to specify each item in your house. That is, the brand of stove, which taps, toilet, etc. Can I suggest that rather than "trying to save time" and choosing them later, that you choose them now. This way the price can be included in the quote. I don't like Prime Cost and provisional items. For Prime Cost items there is no incentive for the builder to negotiate a good price. He would rather pay more if it means, for instance, that the part will be available on time. If you have Prime Cost + 10% then the builder actually wants the part to be as expensive as possible! Prime Cost means that you and your builder are not aligned. You want the specified item as cheaply as possible, the builder wants the part as conveniently as possible. Provisional items are also a nightmare. Can you select the kitchen and supplier? If not, provisional means nothing since the builder can charge whatever they like and the provision is quickly used up. You get a $10,000 kitchen for $40,000! In summary, my suggestion is, get rid of all PC and provisional items and get fixed priced quotes. Only then can you compare apples with apples. Also two quotes is hardly enough. I would find a third builder to quote. Anyone in Melbourne use a custom builder? Cheers, Casa HELP! Final negotiations with builders on custom home 6Aug 03, 2007 9:11 pm Thank-you to eveyone who replied, I knew you guys would be helpful!
Yak_Chat, good call on the Quantity Surveyor! My wife actually reminded me of a friend of ours who is a Building Surveyor and I gave him a call to discuss our dilemma with him. He also suggested contacting a QS to take a good look at the meterials, finishing and fittings of our project so that we could get an independant assessment. Casa2, we actually spent the better part of six months during the deisgn phase with the architect also picking materials and appliances, in most cases right down to the colour and model number. What we finished up with was a 30 page specification which was sent out to the builders along with the working documents and engineering. The idea was to try and minimise any confusion or assumptions so that we could get a real 'apples for apples' comparison. This is why after all this effort, I am surprised that there was such a variance between quotes? I also agree on the comment about the provisional items, I am very uncomfortable having too many items in there for the reasons that Casa2 satated. Although I understand that the builders do need to protect themeselves against potentially unknown site issues (ie. rock, fill, etc) or unforseen price fluctuations from suppliers, when it comes to items such as kicthens, bathrooms, cabinetary, ironwork etc, I would expect these items to be included as fixed price. The latest is that I met with a Quantity Surveyor today (who I found myself from www.aiqs.com.au). He took a look at our documentation and stated we had done all the right things in preparing our paperwork. He happened to have done some idependant work for clients looking to build with one of my builders (the cheaper one). He experience with them was posititve, clients reported their quality was good, very professional and their quotes were competitive due to the volume of business they did. In a nutshell, he told me not to rule them out. If I decided I was comfortable with the cheaper one as a builder, the QS suggested that we meet together to go through all items carefully to cover off materials, quantities and inclusions, and if necessary re-quote. He was extremely helpful. I think we are going to give that a go and see what happens. I would really like to go out and get a third quote, but after going through 11 builders in the past six months and only getting two estimations and two firm quotes, I honestly don't know how far I will get? Not sure what other people's experience is with custom builders in Melbourne but I found it pretty tough to get them to come back to you? We will keep you posted. Re: HELP! Final negotiations with builders on custom home 7Aug 12, 2007 12:16 am Thought I would give everyone an update on our progress with negotiations (after all, I'm sure there are others who are or will be going through this shortly!).
We had a two hour meeting with the QS and builder on Thursday. The QS had reviewed all our documentation beforehand (which he was very happy with) and prepared a number of questions and confirmations to ask. I also came prepared with a list of items to discuss - specifically stating our inclusions, exclusions and further detail on certain finishes. As it happens, the builder did not include some external works items (ie. retaining walls, external concrete stairs, etc). This certainly helped explain the difference we had between quotes. We also discussed further detail required on things such as engineer drawings on drainage (since my site requires civil works), construction of ventilation boxes, type of render to be used, etc. All in all, it was a very positive and relaxed meeting and I am so glad we did it! It was an opportunity for both parties to get on "the same page" and clarify any ambiguities and most importantly expectations prior to signing any contracts. The QS was very good at driving the meeting and suggesting how things should be priced and presented. I certainly recommend this step to anyone who may be feeling insecure about their quotation. The builder provided us with estimates on the additional works the next day with formal re-quotation early next week. They are still $60k cheaper than the more expensive quote so we have decided to go with them pending final quotation. My next job is getting the rest of my documentation ready for the building surveyor so I can get my building permit. Boy there is so much to do when building a custom! Hi, can anyone recommend a custom home builder who can build in north east area? Looking to build a custom 4-br energy-efficient home with a max budget of 750k. If they… 0 22813 ideal house depends on the site and location as much as internal floor plan....what is the distance from the house to all four boundaries, where is north, describe your… 3 15155 |