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It is common to hear that building works are expensive, resulting in a major financial burden to a family or project. That is why controlling the construction cost is important for most of the homeowners and property developers. Learn about how builders estimate construction costs. Get insider's tips to reduce building construction costs without impacting on essential qualities.
Experienced property developers have a strategy for cost control right from the get-go of designing a project. If you are an owner who is building your custom dream home for the first time, this article will raise your level closer to the property developers.
Here, we will break down the key elements that drive how builders estimate the building cost in Melbourne, or in Australia for your project.
So what impacts the building cost?
1. Size
The size of your building impacts the cost the most. It's apparent that the bigger you build, the more expensive the construction cost will be. The cost of building materials and labour is fixed, so an experienced builder tends to have a square meter rate for custom homes using builder's range building products.
The fastest way to reduce building construction costs is to reduce the building size.
2. Structure
A simple structure for buildings generally includes a concrete slab, a timber frame, and trusses without rocks or problematic soil.
The cost of structure will increase with rock excavation, foundation strengthening in response to soil conditions, steel structures, large windows, and architectural design that requires building elements to look thin, floating, and the like.
The builder will increase the construction cost of a custom build home by 3-5% more than a volume home. This is because designing and creating specific elements will cost more.
For an Architecturally-designed contemporary style house, the builder will estimate construction cost to increase by 15%-25% alone depending on complexity.
3. Finishes
The builder's square meter rate discussed in "size" only covers basic specifications, as a builder who allows for high-end finishes in their price will not present well and will rarely win the job.
So what finishes will increase the building cost? Here are a few examples:
Cladding material other than the standard brick and tile.
Fully tiling wet areas such as bathrooms
Commercial graded windows that are larger and more stable.
Landscaping.
Specifically designed stairs
More than two split air condition system.
High-end kitchen appliances.
As a home owner, one of the building cost control techniques is to identify the critical areas with your architect, and only allow for high-quality finishes to those specific areas at the design stage.
What's the builders construction cost estimating process and practices?
The builder sees a project as combining a set of individual tasks. Every task in the building work has risks, and a good builder wants to assign the risks to the tradespeople that best control them.
In short, this is the ideal scenario: The builder has all the tasks quoted by the specific tradesperson who is best able to manage the said tasks.
For example, the electrician who's best in managing electrical work should quote the builder for electrical works. A similar process is taken for the plumbing, joinery, painting, plasterboard works and the like.
The builder subsequently adds the cost of management, site foreman, and profit to the final price.
Why does it take so long for builders to price a job? Or, why is the contract price so different from the builder's initial price estimates?
The builder needs to spend two days to obtain quotes from all the tradies, equating to roughly $1,600 on the builder's time cost as estimated in the Year 2022 in Melbourne. This cost excludes marketing and the tradies' time in quoting a specific task.
It is reasonable for clients to seek several quotes for construction work. If a builder wins one contract out of the five they quoted, they will make $8,000 for every project they win.
Builders will need to have a strategy to minimize this cost. Often, builders estimate prices instead of obtaining quotes, which impacts their accuracy in their early estimates.
Call or ask us a question if you want to learn more about your project.
Disclaimer: We assume no responsibility or liability for any errors or omissions. The information is for general purposes only with no guarantees of completeness, accuracy, usefulness, or timeliness. You must engage a suitable consultant for your specific situation.
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