Undertaking a renovation, alteration or extension project on your home, or building a new home is likely to be the largest investment of your life. It should come without saying that ensuring the money you spend is invested wisely and quantified as accurately as possible. Here are our tips to help you understand your building quote or estimate, and what to look out for.
Check if the price from your builder is a Quote or an Estimate
All building companies will price a little differently. Why? Because each business has a different strategy. The first point to make is to understand and align each other's goals. Of course everyone is going to want the best end result, but what is the journey going to look like? Firstly, is the price you’re being provided fixed (a quote) or floating (an estimate)? There are pro’s and con’s either way. With a renovation project, based on the potential for multiple variables an estimate is the likely pricing process and in most cases the best. It means both the builder and yourself have flexibility. A fixed quote may seem that's what you’re going to pay, but if one of those earlier mentioned variables pops up you’ll experience a variation, and with a fixed price quote there's a strict contractual process to follow which may end up costing you more.
Review the quote for P&G
P&G stands for Preliminary and General charges. These are things like health and safety, administration, travel, project management, and things you are unlikely to physically see. It should be included and made very clear what the preliminary and general costs are going to be. The price you receive should have these clearly itemised and broken down. If they aren't included it's fair to ask about them as it's important for both the builder and client that P&G costs have been considered.
Check for any Exclusions
Exclusions cover what’s included and what's not included in your project. Especially with a renovation project there are likely to be exclusions in pricing. That's because it is hard to see things that are hidden behind the existing structure. Exclusions should be itemised in the price, however there may be a time during the build that a seemingly included item becomes a variation. Don’t blame the builder, it's fair to be charged actual costs that are required to complete your project that may have been excluded from the price.
Ensure you receive progress on your budget performance
During your project you will need transparency about how your budget is tracking. A good business will have technology or some tools that will have a clear handle on cost to date and what's remaining. You have every right to check this at any time. Variations should be included in any budget tracking report so “extra” costs are itemised. Bottom line, both builder and client should have a handle on what the jobs are costing and likely to cost when completed.
Understand that Variations happen
A variation is an extra cost to what was originally quoted/estimated. It's more common than we’d like to accept, but renovation projects are complex so it's only fair a variation may pop up. It’s important to note that variations need to be quantified and agreed upon by the builder and yourself before work can continue. That being said it’s also fair to note that most variations will be an actual cost of the project to ensure it can be completed. Our advice is to build variation contingencies into your pricing.
Read the Terms & Conditions
Every good building business will have a set of terms and conditions of trade that mimic legislative requirements. They should include a clear breakdown of rates and charges, and what to expect during your interaction with that business. It should also reflect the information in your building contract.
To summarise, be sure you understand the pricing provided and all the finer details. Be prepared for the unexpected when the project is underway, and if in doubt don’t hesitate to ask for help.