Pricing your building or renovation project
It's always good practice to get quotations from several contractors (preferably at least 3) for your building work. Prices for the same work can vary hugely. A contractor who has lots of work might be too busy for your building project but they'll still submit a price which is then usually very high. They'll reason that they don't really need your work but if you're prepared to pay there enormous price it will be worth their while to squeeze your project into their schedule since they'll make lots of money if you agree to their inflated price. Frequently contractors make errors and their price could be mistakenly higher or lower than it should be. So obtaining at least 3 prices means that you should have a good spread of prices and be able to compare and check them.
Not all building prices are what they seem so don't be caught out
All quotations (prices) must be in writing. Once the tenders, or quotations, have been received for your building work they must be carefully adjudicated (checked) ensuring that ‘apples are being compared with apples’, like with like. It’s important not to just look at the total price, but rather consider the whole price submission.
Not all prices or quotations are equal, so it pays to check:
Is your contractor's price too low
This may seem a strange question? Something that’s often not done is to ensure that the price is fair and achievable. Sometimes contractors make a mistake with their price, or the contractor is inexperienced and doesn’t understand the project fully, so they submit a price which is too cheap. Be wary of prices that are much cheaper than other prices. You shouldn’t become focused on a ‘bargain price’ and award the project to a contractor who then loses money. A contractor that’s losing money will try and save costs, possibly using inferior quality building materials and putting too few resources on the project. In addition, they’ll probably do anything to try and recoup their costs, which could include lodging additional variation claims, some of which may be spurious, which will waste your time to argue them, even incurring you additional costs to engage experts to fight the claims through the legal system. Contractors that lose money may become bankrupt or insolvent part way through the project, leaving you with an unfinished house. But, just because a price appears cheap shouldn’t be reason to discard it, rather be cautious and understand why the price is low – for instance, the contractor may propose using innovative construction solutions which will give you the product you’re looking for at a cheaper price.
Conclusion - it pays to carefully review all prices you receive
By carefully checking the prices you receive for your home building project you can ensure there are no hidden traps and pitfalls which might cause you to pay more for the work than you were expecting, or more than you would have paid if you selected another contractor. It's important to know what you'll be getting for your money.
Always remember to never be swayed by price alone. The cheapest price might not be the cheapest price at the end of the day and the cheapest contractor might not deliver your desired home hassle free.
This is an extract from my new book 'An Introduction to Building and Renovating Houses: Volume 1 Hiring Contractors, Managing Construction and Finishing Your Home' which also contains lots more valuable information to save you money and ensure that your home build or renovation project is a success. Click on the image to read a preview on Amazon. The book is available in paper or ebook form from Amazon and other online stores, or ask your local bookstore to order a copy for you. For tips on designing your new house as well as renovation ideas read Volume 2 - Finding Your Ideal Property and Designing Your Dream Home
© 2019 This article is not to be reproduced for commercial purposes without written permission from the author.
I’m a construction professional, author of several successful construction management books, and a home owner. I’ve made mistakes in construction management, I’ve seen others make mistakes, but importantly I’ve had multiple successful construction projects and I’ve learned from the mistakes. I want to share these lessons and my knowledge with you.
Also available from:
and 'An Introduction to Building Houses - Volume 2 Finding Your Ideal Property and Designing Your Dream Home'
As an Amazon Associate I earn from qualifying purchases