Why do builders charge for a building or renovation...
Why do builders charge for a building or renovation quote?
MELISSA GERKE SEP 28, 2020
Getting the best value for money is something we all aim for in a transaction so, when it comes to building a new home or a major renovation, the idea of paying for a quote may feel uncomfortable.
A quote is a detailed financial plan for a build. It can avoid unnecessary changes, disputes, extended timeframes and cost blowouts, making it quite a valuable document.
A builder’s quote can be more than 30 pages long and can include the cost of materials, labour and compliance requirements. To complete a thorough quote can take days, depending on the scope of the build.
“It’s from their concept all the way through to construction,” says builder Craig Millar of Millar Projects in Whittlesea, Victoria. “If they choose not to engage me, they’ve bought that information.”
What’s wrong with a free quote from a builder?
If a builder is continually building a very similar product, such as a granny flat, they would have a good idea of what’s involved and how much the project would cost.
For smaller projects under about $50,000, an experienced builder could usually quote this quickly for free.
But for larger projects such as renovations costing more than $100,000, more materials and specialist tradespeople or consultants are needed. If the renovation is for an older house, surprises may turn up.
If a builder hasn’t quoted correctly and a contract was signed, someone falls short.
“Unfortunately, and we’ve all been in that spot, you find out there’s not enough money,” said Millar. “I’ve done a renovation and quoted $50,000. Then I find out, instead of $12,000 the kitchen costs $16,000.”
If this happens, a builder could either take the loss from their profit, complete the work more cheaply or the tradespeople don’t get paid.
An inability to pay tradespeople could lead to a builder becoming insolvent, potentially leaving the project unfinished and tradespeople forced to pursue legal avenues to claim what they’re owed.
Taking the time to create a detailed quote reduces the chances of a shortfall, minimising the risk of problems for builders, tradespeople and clients.
For every job a builder takes on, they might quote for several more, meaning builders need to be paid by clients for the time taken to accurately quote for a project.
Major renovations involve large quantities of materials and countless trades, so a detailed quote is critical.
Major renovations involve large quantities of materials and countless trades, so a detailed quote is critical. Photo: iStock
What is an estimator?
An estimator is a building professional who uses industry rates for tradies and measures the materials required to compile a quote for builders. The builder submits the plans and specifications and the estimator does the rest, freeing up the builder’s time to manage their projects.
Estimator Moises Lopez from Accent Estimating in Sydney says builders have approached his business after losing money by quoting too low.
“Once they got me involved, they’ve become more profitable winning jobs and the client has been impressed with the presentation, because it shows attention to detail,” he said.
“Our role is more risk management. We measure everything individually. We need to get to each tile and wall plasterboard. There’s a lot of work involved. Each report has about 30 pages and each trade has 20 to 30 items.”
An estimator charges from about $800 for a simple single-storey house to $4000 for a building that’s larger and more complicated. The price ultimately depends on the plans and size of the build. This cost is then passed onto the client.
New homes and major renovations are huge undertakings, and it’s critical to know what to expect from the outset. So don’t be surprised if the builder asks you to pay for the quote
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WHY CHOOSE US
At Spannenberg & Son, we bring traditional family values to every home extension and renovation we are entrusted with. As one of the longest running construction companies in New South Wales, we delight in bringing our experience and quality service to families throughout Sydney’s South-West and Northern Beaches elevating one home after another to meet their potential and your lifestyle goals.