Validating builder cost estimates?

ChrisBirmele · Nov 21, 2020 11:20 am

We are planning a renovation and are currently looking for a builder (we have DA approval, the engineering drawings are done).

We contacted fourteen and ended up with three rough cost guidelines so far (the others were never interested or we eliminated them after the first meeting).

The cost guidelines range from less than 500k to 750k for the same job. I tried to normalise the variance to ensure we compare apples with apples. We still believe the average is about 20% too high.

Does anyone have suggestions how to 'validate' a builders estimate? I understand they have to make a living but some of them try to take us for a ride.

Thanks

world2160 · Nov 21, 2020 7:19 pm

ChrisBirmele

We are planning a renovation and are currently looking for a builder (we have DA approval, the engineering drawings are done).

We contacted fourteen and ended up with three rough cost guidelines so far (the others were never interested or we eliminated them after the first meeting).

The cost guidelines range from less than 500k to 750k for the same job. I tried to normalise the variance to ensure we compare apples with apples. We still believe the average is about 20% too high.

Does anyone have suggestions how to 'validate' a builders estimate? I understand they have to make a living but some of them try to take us for a ride.

Thanks

Not sure how you can validate the cost estimate yourself, i think best to just get more quotes. With the current covid situation i was told that alot of the smaller builders are out of job and should give a better deal.

Stewie D · Nov 23, 2020 8:00 pm

On a large job like that you may be well served by an estimate from a local quantity surveyor. They are up to speed with all aspects of building and should be able to give you a realistic idea of what a job like yours should cost.
Renos are hard to estimate for a lot of builders due to the nature of the beast. A simple add-on or extension is easy to work out but depending on the nature and complexity of yours, it may be more involved then you think.
Do you have a comprehensive specification that they have been working from to " compare apples with apples"?

" With the current covid situation i was told that alot of the smaller builders are out of job and should give a better deal."

Every builder ( medium sized and small ) that I have talked to in the last four months plus a lot of other trades are flat tack with work - at least here on this side of the harbour.

Stewie

ChrisBirmele · Nov 23, 2020 9:32 pm

Stewie D

On a large job like that you may be well served by an estimate from a local quantity surveyor. They are up to speed with all aspects of building and should be able to give you a realistic idea of what a job like yours should cost.
Renos are hard to estimate for a lot of builders due to the nature of the beast. A simple add-on or extension is easy to work out but depending on the nature and complexity of yours, it may be more involved then you think.
Do you have a comprehensive specification that they have been working from to " compare apples with apples"?

" With the current covid situation i was told that alot of the smaller builders are out of job and should give a better deal."

Every builder ( medium sized and small ) that I have talked to in the last four months plus a lot of other trades are flat tack with work - at least here on this side of the harbour.

Stewie

Agree, I don't get the impression builders are short of work on the Northshore - one third didn't even bother to respond. I accept renos are difficult to price, but all builders have been given the same information and the estimates vary by $250'000. For example one quoted $21'000 for a few steel lintels I could buy for $1'000. The same builder quoted $6'500 for termite treatment - others quoted nothing - yet this guy is a $100k cheaper than the most expensive one ... I am just trying to get a grip on what is reasonable and what is clearly a rip off.

Stewie D · Nov 24, 2020 7:36 am

Again...
"Do you have a comprehensive specification that they have been working from to " compare apples with apples"?"

Stewie

ChrisBirmele · Nov 24, 2020 7:44 am

Stewie D

Again...
"Do you have a comprehensive specification that they have been working from to " compare apples with apples"?"

Stewie

They all were given the same DA documentation set + all Engineering specs, plus they all came around to have a look at the property. The consensus is "yep, straight forward job".

Stewie D · Nov 24, 2020 9:25 am

A specification is a different document again. It lists room by room all the fittings etc and trade by trade what the requirements are. However, if it is a "straightforward job" as they said then it should be pretty clear just from the floorpans and elevations what was required for the overall build and any out of the norm requirements engineering wise. There will always be variations in estimates of course and some of them are going to charge like a wounded bull while others are more realistic.

Stewie

StructuralBIMGuy · Nov 24, 2020 9:27 am

ChrisBirmele

Stewie D

Again...
"Do you have a comprehensive specification that they have been working from to " compare apples with apples"?"

Stewie

They all were given the same DA documentation set + all Engineering specs, plus they all came around to have a look at the property. The consensus is "yep, straight forward job".

What you should have obtained from your designer are 1st Stage 3D bim Quantities per trade then
apply realistic costs and rates, compare them with the builders quotes
Ot if your builder cant tell you why there is such a huge cost difference...then he's not the builder for you... steer clear of builders lol, location tax egs, doublebay-> doublepay, Northshore-> paymore
Cheers
Chris

ChrisBirmele · Nov 24, 2020 10:06 am

Thanks guys for all the feedback, this has been really useful for me to understand how this works. Much appreciated!

building-expert · Nov 26, 2020 9:31 am

world2160

ChrisBirmele

We are planning a renovation and are currently looking for a builder (we have DA approval, the engineering drawings are done).

We contacted fourteen and ended up with three rough cost guidelines so far (the others were never interested or we eliminated them after the first meeting).

The cost guidelines range from less than 500k to 750k for the same job. I tried to normalise the variance to ensure we compare apples with apples. We still believe the average is about 20% too high.

Does anyone have suggestions how to 'validate' a builders estimate? I understand they have to make a living but some of them try to take us for a ride.

Thanks

Not sure how you can validate the cost estimate yourself, i think best to just get more quotes. With the current covid situation i was told that alot of the smaller builders are out of job and should give a better deal.

How do you know the cost is 20% too high or is it just your wish list it should be lower.
The best cost estimate is economic reality, what the builders will charge to get the job done. I am a QS and I can tell you that it does not matter what estimate I come up with if you cannot get the builder to build it for the less than theirr price.
All you can do is ensure that your instruction set to the tenderers is clear and simple and carefully select who you invite to tender, that means research.
Ultimately a well conducted tendering will result in realistic offers, if then it is too high your project and specification will need a haircut.
Beware of tenders that are way too low, you won't get quality or performance.