Builders can be confusing with their terminology and industry talk they use on a daily basis.

Building is like any other industry, there is a lot of terminology used and you can feel lost at times. Here are some terms that are often misunderstood, but do become very important when they appear in a building contract. Understanding the proper terms puts you on a level playing field with the builder when it comes time to consider quotes and signing contracts, helps reduce stress and eliminates budget blow-outs.

Below, we will explain what each of the most common terms used in the Building Industry actually mean.

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Provisional Sum (PS):  A Provisional Sum, more commonly known as a PS, is an allowance that the builder has made to complete a task. It covers labour only or labour and materials. They are useful when the final selections have not been completed at the time of signing the contract.

Prime Cost Item (PC): Much like a Provisional Sum, a prime cost item is a dollar figure allowance used in building quotes and contracts. It’s an allowance for materials such as appliances, sinks, taps etc. Note that the allowance for a Prime Cost item only covers the supply of that item. If possible make your selection choices prior to signing a contract.

Preliminary Building Agreement/Contract (PBA): A Preliminary Building Agreement or Preliminary Building Contract are also referred to as ‘pre-lims’ by builders. They are a pre-contract document that includes all of the tasks that need to be organised prior to signing a building contract. Engineering, soil tests and working drawings all need to be completed in order to produce a fixed price contract. A Professional builder will always start with a Preliminary Building Agreement before committing to a full building contract.

Extension Of Time (EOT): An Extension of Time is simply the amount of days that are added to your building contract.

Variations: Variations can get introduced for many different reasons. The most popular reason for a variation being added is when you change your mind on something after the contract has been signed.

Rock Clause: Finally, a rock clause is found on most building contracts. It is there to protect your builder from unfortunate unforeseen circumstances like hitting rock during the excavation.

7 Things You Must Know Before Designing a New Home

To complete this article, make sure you understand, and you are happy with the proposal your builder has put together, for the construction of your new home.

Just thinking about building can bring about many different emotions…

It can make you excited and energised. Meanwhile, creating a surge of anxiety about what is involved with building your new home.

For most people, their home is their biggest asset, so when you are at the quoting and pricing stage of your project, make sure you don’t move too quickly. Gathering several quotes and then going with the lowest price is the normal thing to do if you’re building a deck, but when it involves building a new home, you could get taken for a ride…

In this article, you’ll learn exactly why you should be wary of builders offering ‘free’ quotes!!

The Difference Between a Quote and an Estimate, is very Clear.

The first thing to understand is the difference between a quote and an estimate. Even among builders themselves, this term gets used pretty loosely.

Step one is always to start with the estimate. You have probably been thinking and planning out your dream home for some time. You know you want 4 bedrooms, 3 bathrooms, a 2-car garage and a swimming pool for the kids would be nice too. Maybe you even have a budget in mind which is extremely helpful for a builder to know, so they can plan the home you want.

Loaded with all of that, getting the estimate is really just confirming that what you want is roughly within your budget. It’s the starting point in your building process. Estimates are ballpark figures based on your criteria. They don’t require the builder to go away and calculate every material and fitting. Estimates don’t usually cost you anything and are generally worthless as no detailed work or planning has begun.

7 Things You Must Know Before Designing a New Home

It’s when a free quote is being thrown around out there and offered to you that you need to be cautious. In most cases, free almost always ends up costing you more.

Creating a detailed quote is a time-consuming process for a builder, often taking more than 50 hours to put together. A quote for your new home involves professional estimators, contacting subcontractors for quotes and creating a lengthy and detailed job schedule. This easily runs up a cost to the builder of several thousand dollars.

It’s for this reason that a full quote from a professional builder should never be free. A nominal fee is charged for their time to provide you with a detailed quote for your project. Builders offering free quotes often rush their process and miss out incredibly important details for your home. Remember that step 1 is to work with a builder and ask for an initial estimate to see if your project can be built within your budget.

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 The Problem With a 1 Page Quote, It is Not Accurate.

One way you can tell if you are getting an estimate instead of a quote, is by how long the actual document you receive is. A one-page estimate is fairly standard and can easily include all of the necessary information to let you know if your new home is within reach.

A detailed quote however, should be between 25-40 pages and specify every inclusion and can even reference working drawings of your project. A quote details for you and the builder, the amount of materials and labour for the duration of your project.

Some builders will cut corners and leave out specifics and instead include Provisional Sums (PS’s) and Prime Cost Items (PC’s). If you see either of these on your document it should raise a flag. These are just estimated allowances and so down the road, they can end up costing you significantly more once the real values are known. This is a dead giveaway the builder saved time and gave you an estimate rather than a detailed quote.

If you are working with a preferred builder on a quote for your new home, make sure you ask for a copy of the job schedule. This will show you if the builder has quoted the job or had a guess at it.

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Builders Working for Free are not in Demand.

builder

This is a handyman, not a professional builder. Building custom homes and completing large-scale renovations on your family home is a tricky job. It’s tough and a low margin for the builders. Any builder that has free time to offer you a free quote on your project is obviously not in demand, so be wary. These guys are desperate for the cash, so they offer you everything free in the beginning to get your business, but will charge you interest on everything later on during your contract.

Professional builders are aware of their admin costs and charge appropriately for all of their services, not just the building contract but for drawings, preliminary building agreements, detailed quotes, soil test and more. A builder that charges appropriately for their services from the outset has already covered their costs and so are unlikely to inflate your contract price.

Builders working for free, on the other hand, are hoping to win 1 in every 10 that come around, so they recoup their losses on those other 9 by inflating your contract price.

Always be wary of custom home builders offering you a ‘free’ quote. Make sure you do your homework and choose the most professional builder you can find.

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Building a new house is a daunting experience.

You want your new home to be as affordable as possible, and you don’t want to get ripped off by any dishonest builders or tradies who think they can get away with overcharging.

So when you are at the quoting and pricing stage of your project, make sure you don’t move too quickly. It’s when a free quote is being thrown around out there and offered to you that you need to be cautious. In most cases, free almost always ends up costing you more.

Choose a professional builder, such as HIA builders or Master Builders, so you don’t get ripped off, they will offer a written contract that clearly describes the work, materials to be used, timelines, price, responsibilities of both parties and other details as appropriate.

A “cost per square metre rate” is a method of expressing building costs that should be used with extreme caution by both clients and contractors involved in the cost comparison and cost planning process.

Make sure you dig into the details to see exactly what you’re getting. For instance, one builder might charge you $1,000 per square metre while another’s price might be $1,700 a square metre.

Does that mean the second builder is ripping you off?

Not until you look into the details.

Truth is you may not be comparing apples with apples.

The bottom line:

Don’t fall into the trap of comparing house prices via square metre rates. Quite frankly, there are too many variables – and you may end up with an orange when you really wanted an apple.

Most people base the cost of their new home on a square metre rate, and you can never, ever trust that. You’ve got to take into account the difference in designs, otherwise you’re bound to go over budget. There’s all sorts of factors that go into the cost of something other than size or square metres and when it comes to building your new custom home, this applies even more so.

Think about it, your average home has hundreds of different components. What’s more, all of these materials come in different qualities, and the way they are assembled into a finished house can vary greatly in attention to detail and quality.

Sadly, many people don’t consider these factors, and it can lead to heartache after the design is complete and you take it to a builder only to find out it is way over your budget. You can’t afford to build the home.

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Have You Been Wasting All Your Time and Tens of Thousands of Dollars on an Unworkable Design?

It’s far more common than you think, but you can avoid it by involving a professional builder in the design process.

  • Be realistic in your expectations and make sure your budget is updated after each significant change.
  • Make sure you dig into the details to see exactly what you’re getting.

For instance, one builder might charge you $1,000 per square metre while another’s price may be $1,700 a square metre. Does that mean the second home builder is ripping you off? Not until you look into the details, truth is revealed…

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You May be Comparing Apples With Bananas

Keep in mind, simple changes to design can have a significant impact on the price. Compare these two designs for example:

house blueprint house blueprint 1 They look much the same, right? Both have an internal area of 200 square metres. In fact, it’s hard to tell which one will cost more at first sight. However when you dig a little deeper, you’ll discover the second house has a 78% greater wall area and will require more guttering, bricks and metres of gyprock. What’s more, it will need at least several more litres of paint, and will likely have more windows and doors.

Yes, every house design is different. Some are square, some are ‘L’ shaped… and others have a variety of shapes and angles. So while 5 different houses may contain the same number of square metres, the amount of building materials required for the homes can vary significantly based on the shape.

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The bottom line

Don’t fall into the trap of comparing house prices via square metre rates. Quite frankly, there are too many variables – and you may end up with a banana when you really wanted an apple.

There is a very specific process to designing your home without going over budget, and avoiding all the traps. In fact, there are seven questions you should ask your builder before committing to anything.

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A professional builder is a general building work contractor who can put your whole project together. The builder will assume complete responsibility for the work contracted and give you a warranty once completed.

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Professional builders, such as HIA builders, Master Builders offer:

  • an extensive business network of suppliers, trades, installers and experts that they draw on as required for your project.
  • understanding of all the aspects of construction in detail and knowing how houses work. They can assess your renovation and explain what is involved, as well as identify potential problems and provide solutions.
  • advice on the most suitable approach if your project requires design services, and recommendations for a design professional if needed. Some builders offer both design and construction services. Alternatively, some builders are experienced in working with architects or building designers.
  • extensive knowledge of and experience using the latest products and materials. They keep up-to-date and can help you make the selections that will work best for your project and budget.
  • great awareness of all the regulations and codes in your council area and how the system works.
  • discussion with you to determine the right budget for your renovation. Their knowledge of the cost of materials and labour and therefore are in the best position to offer realistic cost effective construction, to achieve your renovation goals.
  • a written contract that clearly describes the work, materials to be used, timelines, price, responsibilities of both parties and other details as appropriate.
  • the ability to organise and manage a project – scheduling workers, trades and delivery of materials; keeping track of expenses; maintaining a clean and safe work site; and minimising the inconvenience to you. When necessary, they know how to deal with the unexpected and the surprises that sometimes occur in a renovation.
  • most importantly, prioritising the customer. Professional builders listen carefully so they know what you want. They provide you with names of previous customers so you can check out the company’s track record yourself. They explain the process so you know what to expect, and once the work begins they give you regular updates so you always know what’s going on. They also encourage you to voice any questions or concerns you may have as the work progresses. In brief, they work for you and with you to make sure that you are satisfied and happy with the final results.

Ten Good Reasons for Hiring a Professional Builder

(And ten good reasons why you should choose a professional!)

  1. From start to finish. A professional builder will help you to put it all together – from ideas to design, from products to plans, from construction to completion.
  2. Experienced advice. A professional builder has the experience and knowledge to help turn your ideas into great results. They listen, make suggestions, and look for the best way of doing things.
  3. Technical know-how. Professional builders understand construction, how to deal with challenges and problems, and how to improve the comfort of your home.
  4. Expert teamwork. Behind every professional builder, there is a solid network of staff, subcontractors and suppliers ready to go to work for you.
  5. A proven track record. Their business is an open book. You are invited to talk with past customers, look at their previous work and check out their reputation.
  6. Accurate pricing. No need to be concerned about low-ball costing, inferior work or escalating prices once the job begins. Professional builders know what it takes to do something right and how much it costs, and they’ll tell you upfront.
  7. A written contract. Trust alone is not enough; professionals back it up with a written contract that spells your project out in detail – what, how, who, when and how much.
  8. Liability insurance and workers compensation coverage. Better safe than sorry. In the unlikely event of an accident or damage to your own or neighbouring properties, a professional builder’s cover protects you from liability and cost.
  9. Like any other consumer purchase, a professional renovation comes with a warranty on labour. And with professional installation, there is no risk of voiding the manufacturer’s warranties on materials and products.
  10. Service, service, service. Professional builders are in business for the long term. They work hard to earn your trust and make every renovation a great experience.

7 Things You Must Know Before Designing a New Home

Note our blog image – this is the result of working with a professional builder!

You may have heard people discussing ‘variations’ when they talk about building and renovating. If you haven’t, it might be a good thing that you’re reading this article.

Variations can easily be the cause of a lot of unexpected expense and an unforgettable experience, and they’re often completely avoidable if you know what you’re doing.

What are ‘variations’?

The term ‘variations’ refers to changes to what’s been agreed upon in signed building or design contracts – or any contracts, for that matter.

Let’s say, for instance, that you’ve settled in a hurry on a certain style of tiles for your bathroom, and that the style you’ve chosen has been written into your building contract. At some point during the project, you find out that you’ve chosen the most hideous tiles in the catalogue, and insist that the bathroom can’t possibly be built using these tiles.

If you choose to tell the builder you need to change to a different style of tiles, you’ll normally be liable for a variation to the original contract – and the builder can rightly charge you a lot more for it… especially if they’ve already bought the original tiles.

7 Things You Must Know Before Designing a New Home

Why are building variations expensive?

There are several reasons that variations to contracted work cost so much. The first is that a building contract is a legal document – and to get it changed may require the services of a lawyer.

Other things that can contribute to costs in variations are:

  • Cost differences between specified work or products and updated requirements
  • Pre-agreed penalty clauses for variations
  • Extra material costs (especially if materials have already been bought)
  • Added labour or work costs – particularly if work has already started, if variations require alterations to completed work or plans, or if there’s a need to call back tradespeople to the site
  • Added engineering, drafting or approval expenses – especially for revisions to structural work, which can easily cost three or four times more than just materials and labour

A bit of variation room usually is necessary on a project as big as building a house, but if there is a scope of allowed variations, it’ll also need to have its limits and conditions. To be clear, builders often need to request variations too, where original plans mightn’t turn out to be the best, most practical or most sensible option.

How to properly manage variations

If you want to request variations to what’s in your contract, your builder will usually provide a quote for the cost of the variations. It’s then a matter of:

  1. agreeing to changes and costs (in writing),
  2. negotiating a different solution or
  3. biting the bullet and continuing with the original plans.

Insist that prices and all the details of variations required are put in writing and signed off by both parties before work is done.

There’s a difference between being friends with your builder, and having a good professional relationship. Many bitter disputes begin with the assumption that everyone’s friendly enough to put the paperwork aside till later. It’s in everyone’s best interests to ensure that there’s absolute clarity and a well-managed paper trail when it comes to anything to do with contracted work and payments.

Depending on what’s being requested, you’ll need to remember that variations can have a very significant impact on deadlines and completion dates too.

Why do people need to request variations?

When it comes to homeowners, the need for variations is usually the result of miscommunication, misunderstanding or rushing in without being thorough enough with contracts.

Disputes often arise over what’s been agreed upon, and whether or not it is  actually a ‘variation’, or a fair interpretation of what’s stated on the contract.

Lack of detail in contracts and miscommunication are often the cause when it comes to variations and disputes – particularly when people realise that they’ve accidentally settled on very basic items, or a set ‘prime cost’ (PC) budget for the builder to purchase unspecified products.

A good example of the PC trap: people very often realise halfway through their building or renovation project that the money allocated for bathroom taps will only be enough for the most basic options, when they’d  prefer a more expensive chrome options. You can never be too detailed in planning…

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kitchen and dining area

The more common variations people request include:

  • variations in design
  • variations in quantities
  • variations in models and styles of products
  • variations in quality
  • variations in the order in which things are constructed

And as we’ve already mentioned, sometimes it’s the builder who needs to request variations, perhaps because there’s an issue with the original plans, or an unforeseen issue with the site. Make sure your contract’s very clear about the need for the builder to submit detailed requests for variations in writing, along with any changes to proposed costs.

How to avoid variations

The best way to avoid expensive variations is to be well prepared. Be very thorough, careful and involved when it comes to planning – and never sign a contract until you’re certain it’s absolutely specific about everything you want.

This means making sure your contract includes things like:

  • brand and model names for things like toilets, taps, power points, door handles, locks, range hoods, light bulbs etc.
  • specific detail on the number of coats of paint to be used, texturing / application preferences etc.
  • specific colours, shades and products to be used

It’s also worth ensuring that your contract is very clear about any work that’s going to be done by other contractors, about local building regulations or restrictions, and about the need to consult you, or your building designer or architect on any product choices or deviations from what’s been specified.

Is it true that variations are used by builders to trick unwary customers?

Builders rely on word of mouth for business, and it’s in most builders’ interests to avoid disputes and make sure their customers are happy. It’s also true that for most builders, variations are a potential source of trouble so if they’re professional they’ll normally do their best to make sure there’s no misunderstanding on your part.

There are instances where cowboy builders prey on less informed customers though, by under quoting and then pushing up their margins by severely over charging for the variations you’ll inevitably have to request.

The best way to avoid this is to be very thorough about what you want, research and choose a builder you know you can trust, and always be suspicious of unusually low prices.

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7 Things You Must Know Before Designing a New Home

Not only is the prospect of custom-designing your own family home a huge attraction to thousands of people, but it could also be cheaper than buying. That is, as long as you avoid some of the unexpected costs of building – some of which may surprise you. There are heaps of potential hidden costs just waiting to jump out at you and destroy your building budget. Here are five common ones:

1. Soil test and contour survey

Before any builder or building company will give you a fixed quote for a build, they will probably need to do soil and contour tests. If you have rocky soil or any issues with your soil that makes it difficult to build, then you will incur extra costs. And if you’re attempting to build on a slope, expect to pay even more. Retaining is expensive!

2. Site costs

This could well be the biggest cost you will incur, and unfortunately it has the largest variability as it will be based on your soil and contour tests. As well as elevated building costs for a sloping block, there is also the costs of connecting and maintaining services, to consider, including:

  • water
  • electricity
  • gas
  • telephone
  • sewerage
  • fire control

3. Flooring

carpet and wood side by side

That’s right – don’t forget you want to walk around on something at least remotely pleasant and not all building quotes will include flooring in your house. Unless you’re happy living on a concrete slab, consider things like carpet, vinyl,  floorboards and tiles.

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4. Driveway

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Many building quotes will only include the dwelling you’re going to live in, so assuming you want a driveway, you’re going to have to pay for it. Depending on the type of driveway, this could be fairly cheap or it could be extremely expensive. To save money you could look at not getting a driveway done immediately and look for cheap ways to do the driveway yourself until you have enough money to get a concrete driveway built. Or you could sell your car.

5. Modifications

If you’ve decided on a design and signed off on a building contract, be aware that any variations to the plan can cost you big time. A change of heart in the middle of a construction project can run up a variety of additional expenses including:

  • legal costs (to change the contract)
  • penalty clauses
  • extra material costs
  • extra labour costs
  • engineering, drafting or approvals

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As you plan to build a new home, you will be faced with the question of who do I build with? Do you choose a project home builder who is offering really low prices or do you choose to go with a custom home builder, who has experience and knowledge of the local area, provides a unique, one-off home design, but costs a little bit more!

Unfortunately, we have a tendency for choosing the cheaper option, but as with most things, the saying “you get what you pay for” holds true when it comes to building your home.

In this article we are going to outline the differences between a custom home builder and project builder, then you can decide which is better for you

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Project Home Builder

A Project home builder offers you a set of pre-designed house plans to choose from. This means the plans are usually designed for flat, rectangular blocks and don’t take into consideration difficult sites, bush fire regulations, views, natural lighting and your lifestyle. In other words, their house plans are designed for the mass market and are not “site specific”.

But can’t I just change the plan? 

Yes, you can! Project home builders, will let you make minor changes to their plans, but keep in mind that these changes will be charged to you, usually with an overly expensive mark-up. The key to using a project home builder is to know what exactly you are getting for your money. Be very clear as to what is and isn’t quoted for in the contract.

Advantages of Project Home Builder

  • Have bigger buying power – because project builders have a higher volume in house builds, they can usually negotiate better prices for materials. These savings are generally passed on to you.
  • Offer a range of plans to suit the first-time, the middle class and luxury home owners.
  • Offer house and land as a package

Disadvantages of Project Home Builder

  • Purchasing building materials in bulk – means you have limited choice when it comes to materials and fixtures used, making it hard to add your “personal touch”
  • House plans are not site specific, making it hard to get a solar passive design. This means you will pay more in the long term to heat and cool your home.
  • Market house plans to be irresistibly cheap, but have display homes with expensive upgrades, leading to consumer confusion of what is actually allowed for in their quote and the overall quality in finish of their home.
  • Any small changes are charged at exorbitant prices.
  • Don’t always provide a complete turn-key solution – meaning there are items not included that will be needed for council compliance.
  • Tradespeople and sub-contractors are usually not local, are often poorly paid and on a strict time limit, leading to compromise on the quality of the build

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signing building contract

Custom Home Builder

Building with a custom home builder will give you the most flexibility when it comes to your house design and choice of materials and fixtures used.

A custom home builder creates a unique, one-off home that is very site specific. The home designed for you will take into consideration your particular block, slope, any bushfire/ zoning regulations, the aspect and views of your block and will factor in all of your individual needs. The house plan will be designed around solar passive principles, maximising natural light and airways.

If you already have a plan drawn up by a drafts-man or architect, no problem. A Custom home builder will still be able to build your home for you.

Custom home builders generally focus on high standards in the design principles and construction of your home, meaning you will have a quality built home with a high quality finish. Like a unique artwork, custom designed homes usually cost more than a massively, reproduced project home. The key to working with a custom home builder is to establish a realistic budget and to stick to it, even when you’re enticed by the higher-cost options.

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Disadvantages of a Custom Home Builder

  • May cost more than a project home builder due to complexity in design, choice of materials used and the time and skills required for quality assurance.

Advantages of a Custom Home Builder

  • A unique, one–of-a-kind home, designed specifically for your needs.
  • A house plan, designed to suit your block of land and your budget.
  • A solar passive designed home, meaning it will cost less to heat and cool in the long term.
  • Flexibility to choose building materials used.
  • Flexibility in choosing appliances, fixtures, tiles and paint colours.
  • You can supply your floor plan.
  • Custom home builders are local people, they know the area, the land and all of the local building regulations.
  • Most will offer a free concept plan.
  • Most have qualified drafts-people.
  • Provide an excellent level of one-on-one customer service.
  • Most maintain strong relationships with past clients, so you may be able to visit a home they have previously built.
  • Deal with the builder directly.
  • Use highly skilled, local tradespeople.
  • Have a very high build quality and finish.
  • No hidden costs.
  • Provide a complete turn-key solution, meaning upon completion your house will comply with all government regulations. All you will need to do is move in.

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Conclusion

If you have a flat block with no harsh bushfire or zoning regulations, don’t want a unique, one of a kind home and you want the cheapest price, while maybe compromising on quality of build, then a project home builder is best suited for you.

However, if you want a unique, one-of-a-kind home, designed to take advantage of the views, aspect, slope or shape of your specific block and you want as much input as possible into the design, look and feel of your home and you don’t want to be limited when it comes to choices of material used and you are looking for a high quality finish, then a custom home builder is definitely the best choice for you.

7 Things You Must Know Before Designing a New Home