In the current economic climate, we know that many people are looking to expand their home and keep their costs to a minimum.
However, naturally we are always suspicious if one quote is much lower than the others.
“Too Good to be True” and other similar old sayings are usually right for a reason, but what about “Don’t Look a Gift Horse in the Mouth”?
Could a lower quote just reflect that a builder is cheaper because they are prepared to lower their profit margin, or because they aren’t as busy at that time and want to keep their staff in work?
As we explained in our recent article on how to compare renovation quotes you should always get at least 3 quotes, and prepare the brief to ensure that, as best you can, the quotes you receive are as similar as possible.
If one of those quotes is significantly lower than the others, here’s what you should look out for to ensure that your ‘bargain’ doesn’t become a budget nightmare.
What type of contract are they using?
In your brief, you may have specified that you want to receive a specific type of contract. We suggest that a fixed-price contract is your best option to control the amount you will eventually pay.
However, don’t assume that this is what you will receive.
If the quotation doesn’t specify the type of contract, ask for this to be put in writing.
And even if this is part of the quote, make sure that the contract you sign once you have selected a builder is indeed the one they specified in the quotation.
What are the Inclusions and Exclusions?
Don’t assume that a quote includes everything you expect to be covered.
An example of something that can be excluded is painting. It’s not unreasonable for a builder to think you might want to employ a separate painting company, or even that you might want to do the painting yourself. However, this might add a substantial amount to the final cost.
If in doubt, ask, and make sure these items are recorded in the correspondence between you and the builder.
Have the Provisional Sums been fully detailed?
Some of the items that are part of the inclusions might be designated as a ‘Provisional Sum’.
A Provisional Sum is an estimate of the cost of something that cannot be accurately priced at the time. For example, wall and floor tiling when you (not the builder) are making the final choice on your selection, and that selection affects both the material and labour costs.
Make sure that each Provisional Sum is listed and that the amounts across the different quotes you receive are similar. If they aren’t, either ask for an adjustment or make sure you take into account any major differences in your final assessment.
Are the assumptions used and materials the same?
The quote you receive should be split into sections that enable you to compare the details with other quotes.
If each component isn’t clearly listed and costed, ask the builder to resupply the quote with this level of detail.
If there are notable variations between individual items within each quote, ask each builder why and find out what assumptions have been made:
- Are the quantities for that item the same or similar across the quotes?
- Are the materials specified the same and of comparable quality?
Could there be any other ‘hidden’ costs?
You don’t know what you don’t know. However, one way of being sure you aren’t caught out is to specifically ask the question of each builder if there are any costs that haven’t been covered in the quotation.
These should be listed in the exclusions, but to avoid a builder saying that the exclusion list is merely things they could foresee, ask specifically if there are any other potential costs that aren’t listed in the exclusions because they are “unforeseeable”.
For example, some builders charge an administration fee for Variations (changes you make to the original quote during the project) that are over and above the cost of the variation itself.
Are there any fees that you may be required to pay to people other than your builder?
Find out the reputation of each builder?
Do your research! Ask friends, family and neighbours who have had recent renovation work done.
Personal recommendations are a good start, but they are unlikely to provide you with a big enough list to narrow down from, so it’s likely you will have to extend your list using online research.
You can also visit one of the industry association websites like the Housing Industry Association (HIA) or the Master Builders Association (MBA).
It’s important to filter the list of builders to ones that specialise in the building work you are looking for. There is little point approaching a builder specialising in constructing new homes if you want a second storey addition to your existing home. Even if they are an excellent builder and have been highly recommended by friends, they won’t have the necessary specialist expertise.
Make sure the builder you choose has a good reputation for completing work on time. Another hidden cost could be for renting alternative accommodation if you choose to move out of your home whilst the work is being completed.
If you are looking to renovate and want further advice, Addbuild is Sydney’s leading builder of home additions and extensions, with more than 40 year’s experience and nearly 2000 projects completed.
Feel free to delve into our comprehensive range of articles with advice about all aspects of renovating.
If you are ready to renovate now, call our office on (02) 8765 1555 or send us a message using our contact form if outside of office hours.
Addbuild offers a ‘concept-to-completion‘ service that includes experienced designers and the management of the Development Application process on your behalf.