The Risks of Choosing the Lowest Price Builder!

Residential construction is high risk and low margin.  A good builder will price the job fairly and transparently with an agreed margin.

 

Any price, but particularly a low price should be challenged or reviewed in detail to ensure;

a) They have included everything you want to be included;

b) you are comparing apples with apples;

c) they have priced diligently and not just thrown a square metre rate at it.

The risks of under-pricing are not just to the builder, they are in fact huge for the homeowner.

 

In order to recoup, or save, money what might happen? 

• The builder skips on quality to get the job done quicker;
• little things are missed;
• the chance of defects increases and;
• the finishing may be rushed;
• materials may be swapped with cheaper alternatives – you may not be getting what you thought and it may not be evident until something happens.
• They may try to recoup costs through variations.

 

How do variations work if nothing has been priced/quoted in detail?  Are you getting a fair deal?

Do they have a transparent variation process where you agree to any changes to your contract in writing?  Have they disclosed their margin on variations?

 

If you want to ensure you get a good honest builder and the quality home you are investing in then you need to do your research, and learn a bit about the building industry, terminology, contracts, insurance and guarantees.

 

Here are some simple tips for starters:

1)      Look for specialist builders who build the sort of home you want.

For example, we specialise in highly energy efficient/thermally high performing homes and architectural new homes.  A builder that claims they can do everything will not be a ‘master’ in any one type.  If you need a renovation, create a list of builders that solely focus on renovations.

These guys who specialise, are very experienced and know exactly what to expect in the build. Importantly, their trades are also experienced in a particular area of construction so the job will encounter fewer delays.

 

2) Look for builders with a good website showcasing their work and what they specialise in.

Do they look like the team you would like to work with?

3) Testimonials – these are so important!  

Ask your builder if you could speak to previous clients?  See their previous work?  It can be compared to taking on an employee without doing the correct reference checks…. the risks of getting someone who cannot do the job or whose values /respect are not the same as the team is huge!

 

4) Ask them about their building process and ask to see a job in progress.

Ask questions like…“Can I see the schedule for that job?” 

How do they communicate with their clients and sub trades?  How do they store and find the up to date records or communications? How are things tracked?  How do they ensure things are not missed?

Some builders wont fork out for these systems, or put time into their processes…..this is when things get missed or miscommunication takes place.

Ultimately Its time and money well spent to ensure the job is done right and stress free.  A builder who invests in improving the business is a builder who wants to ensure your job is done well and you are happy with the result.

 

 

To find out the other questions you must ask a builder before signing a building contract, download our free guide here which lists critical questions to ask. 

 

 

It covers a number of items, including why contracts and guarantees are so important, builder licensing requirements, insurance cover, and much more…

By choosing the right builder you can protect yourself, but an additional benefit is it will also help raise the standard of the building industry as those who miss the mark will get weeded out.