If you have plans for your proposed building project and are seeking quotations from a number of builders, here are a few tips for you to compare their quotes and ensure you end up choosing the right builder for you and your project.
Tip 1 – Ensure all the builders work off the same scope, specifications and drawings
Every builder provides quotations in their own format, estimates differently and allows for different inclusions. To be able to fairly compare quotations from your builders, they need to be provided the same scope, specifications and drawings. Even then you will receive quotations which are different to each other in relation to what has been allowed for. As such, you will need to compare the details provided by each builder.
At Broadwater Builds, we provide our clients with our own detailed scope to show our understanding of the client’s requirements for their project. This provides our clients with complete transparency of what we have allowed for in the base price versus what we may have excluded or provided as optional upgrades.
Tip 2 - Go out to 3-5 builders for a quotation
Going out to 3-5 builders is a good idea. Three quotations usually gives you sufficient competition and confidence that you are obtaining value for money for your building project. With 4-5 builders you will get 2-3 builders who should be providing similar prices and 1-2 builders who we call outliers; they are either significantly cheaper or significantly more expensive than the others. Going out to more than 5 builders can be time consuming and cost you lots of time in doing your comparisons. When getting quotations from builders, it is also a good idea to let them know they are competing against other builders. Also ask them to fully itemise their quotes.
Tip 3 – It’s in the detail!
When you receive your quotations, check immediately whether the builders have provided detail. If you receive a brief one pager back from any them with a single figure, be very careful. We suggest going back to the builder and requesting further detail and asking them to itemise their quotation preferably by trade or discipline. Without this detail you will find it extremely difficult to fairly compare between your builders.
When you obtain a quotation from Broadwater Builds, we provide you a detailed breakdown by discipline (e.g. concreting, bricklaying, structural steel, etc.), provisional sums, prime costs and our progress claim payments. Along with our pricing, you get our scope document. With this documentation you have everything you need to make your decision and compare against other builders.
Tip 4 - Don’t compare apples with oranges!
Make sure you do detailed comparison of the quotes from your builders. Check that they have allowed for everything as per your brief, specifications and drawings. Every builder will quote differently and allow for different items in their base price. Find out what the differences are between each builder’s quotes and do the work to ‘normalise’ them. Normalising means you will be able to compare apples with apples. For example, if one builder has left out painting in their quotation, it’s a good idea to ask them for a price for painting so you can add this to their base price to normalise against the other builders who did allow for it.
Note that if one builder quotes much lower than the others, make sure you understand why this is the case. Most of the time it can usually mean they have left out a number of items from their quote or underspecified certain items. It is quite rare that the builder who is cheapest by a large margin is delivering everything you have asked for and at the standard that you expect.
Conversely, if a builder comes in much higher than the rest, it can mean a number of things. They may well have priced in everything that you have asked for (and possibly more), they may have more expensive trades/suppliers, they may have a larger margin and/or they have priced in more contingency into their price. It could also mean they are quite busy or not interested in the job. Regardless, it is still worth investigating why they are higher before you dismiss their quote.
Our advice is to thoroughly compare quotations and don’t be shy to ask questions from your builders regarding their quotations. Be wary of the builders who cannot satisfactorily answer your questions or who are vague regarding their inclusions.
Tip 5 – Building prices can vary greatly with specifications
Builders’ quotations can vary greatly due to the specification they have allowed for. For example, there is a big cost difference between a framed shower screen versus a frameless shower screen. But it is easy to overlook this difference in wording when comparing quotes. Differences like these can add up between a builder who has priced for everything you have asked for versus another builder who has priced for similar items, but underspecified certain items to make their quotation appear cheaper.
Again, you need to do your homework and spend time comparing apples with apples and interrogating the quotations you receive. You also need to be clear with your builders about what finishes and products you are after for your building project.
Tip 6 – Check the Provisional Sum items
A provisional sum is an allowance made by a builder for a particular item that is difficult to quote on or cannot be accurately quoted for at the time. For example, site works for a difficult, steep block could be quoted as a provisional sum by most builders. A provisional sum could also be allowed for a kitchen where there are few details at the time of quoting for the design and finish of the kitchen. They can also be used for plumbing fittings and fixtures when no selections have yet been made by the client.
Watch out for budget-level selections in provisional sums allowed for by builders which will make their quote appear cheaper. If you are after quality finishes and products, make sure you understand from the builder what products and finishes they have allowed for in their provisional sum. Ask for their deluxe range as well and the associated cost with these so you can compare. Watch out for low prices in provisional sums; you can end up paying a lot more in the long run.
A quotation with many provisional sum items should also ring alarm bells. Whilst provisional sums are unavoidable sometimes, particularly when final selections on finishes and products are yet to be made by the client, the presence of several of these in a quotation can potentially mean that the builder has not sufficiently taken the time to obtain a fixed price for these items and is placing the risk of any cost blowouts with the client.
Broadwater Builds aims to minimise provisional sums wherever possible by taking the time to scope up and provide fixed prices. Whilst this is not always possible, we provide full transparency to our provisional sum allowances.
Summary
Your key takeaway from this should be to take the time to compare each builder’s quotation thoroughly. Comparing the price alone at the bottom of their quotation and making your decision solely on this will likely be a mistake. Ensure each builder is allowing for the same scope and specification. Only then will you be confident that you are comparing apples with apples.
We have seen time and time again clients choosing the cheapest builder, and often a builder who was significantly cheaper, only to realise that they ended up paying a lot more, the builder cut corners and sacrificed workmanship, or their expectations were not met. Choosing a very cheap builder can also lead to even bigger heartaches such as the builder going bust during construction, leaving the client with a half finished product. Underquoting happens often in the industry and while you think you may be getting a bargain or a good deal, the risk is sometimes not worth it.
Broadwater Builds have sometimes been the cheapest while at other times we have not. What we stand by each and every time is full transparency to what we have allowed for in our pricing together with a thorough and detailed quotation each and every time for our clients. You know what you are getting when we provide you a quotation.
Lastly, and very importantly, don’t just rely on cost for your decision. What else are you after in your builder? What about good communication? Transparency? Competency and experience? How long will they take to construct your new home or renovation? What about references and testimonials? You also need to take these factors and others into account when choosing a builder.
Louis Gonzalez is a registered builder and certified project manager, and a director of Broadwater Builds, a Perth based building company specialising in custom homes, renovations and unit developments.
Broadwater Builds provides free and friendly advice on all aspects of the building process. Feel free to speak to us today about any building related queries you may have.
