The costs in building are not as mysterious as some would have you believe. For the uninitiated, they can be a little daunting and difficult to work out. Commonly referred “Hidden Costs”, have taken on the stigma of deadly animal waiting to attack the unsuspecting. Some unscrupulous builders take advantage of these costs to lure in clients with hypnotisingly low quotes, only to reveal the extras when the client commits to the contract or at least paid the tender acceptance fee. Any self-respecting builder will advise clients of known contingencies and approximate costs up front.
You’ll discover, hidden costs are not as mysterious as some would have you believe.
A tender is not a procedure that an honest builder uses to extract money but a tool to accurately estimate the cost of construction. In fact, a builder will often lose money on a tender. Professional builders know that a high percentage of tenders will flow on to full contract. Therefore considered an industry acceptable risk.
The following information will give insight to what these costs are and why they are required.
1 ARCHITECTURAL DRAWINGS
More often today, clients will engage a builder with no prior architectural plans, happy to use one of many plans that the builder may have. Please note that plans may not suite all blocks of land and clients may want to change certain aspects of the plans. Any modification of one of these plans will incur a charge.
When starting drawings from scratch, its important to understand whats required in your drawing and the associated costs. Your architect, drafts person or builder should formally propose what service they are providing. In many cases additional drawings or amendments cannot be foreseen initially but can be expected. It is important to deal with experts that can advise on what to expect in the design process from initial sketch to council drawings to construction drawings.
2 SOIL TEST AND LAND SURVEY
Often referred to as A “Geotech Report” and “Contour Survey”, they are essential in allowing a builder to give you an accurate estimate of the cost of your build. The Geotech Report and Contour Survey can exceed $2,000 but most builders will cap this at $1,000 to $2,000. It is generally considered an acceptable risk by the majority of builders. Note, even though this is an up-front cost, most builders discount this cost in the final price of the tender, essentially becoming “free” if you progress to contract.
Soil test/Geotech Report – This usually consist of an engineering firm drilling at least 2 bore holes at different points on you block of land to determine the consistency and type of soil, the amount of and depth of rock(s) and any salinity concerns on your block of land. The report will then allow us to determine the depth of piering and the type of slab and reinforcing required, all affecting price.
Land/Contour Survey – This usually consists of a Surveyor using laser equipment to detail all levels, heights above datum, slope and undulations on your block of land (including batters). Please see No 3 for further details.
3 SITE COSTS
Site costs a predominantly determined by Geotech Report and Contour Survey mentioned in the previous section. Depending on the amount of ash, clay, rocks etc in the soil, will determine the diameter, depth and reinforcement required in the piers and the size, strength and reinforcement of the base slab. Typically, most builders will cater for an “M” class slab so any rating above this will require additional costs for construction, please see table below. It is not entirely unusual to have multiple soil classifications on a block of land, front to rear or side to side.
Typically, a block of land with a slope of less than 500mm, front to rear, can be constructed using the “Cut and Fill” method, requiring little or no extra cost. Anything above this will require soil to be removed and trucked away or conversely carted in. This will add the requirement of drop edge beams and or retaining walls, depending on the severity and uniformity of the slope. This could add minimally or significantly to the cost of the build. A couple of courses of drop edge beam on a short wall could add as little as $4,000, whereas a very steep block with large retaining walls could reach or exceed $30,000. The slope of the block should be taken into account at the time of purchasing and generally, the steeper the block, for a given size, the cheaper it should be. A good rule of thumb is, the discount on the block of land should be commensurate or exceed the extra cost of drop edge beams and or retaining walls.
4 SECTION 10.7 (previously 149) –
A Section 10.7, previously known as a section 149, is a certificate issued by Council under the provisions of Section 10.7 of the Environmental Planning and Assessment Act 1979. The certificate provides advice on matters that relate to: exhibited draft DCP’s, whether it is potentially contaminated land, and other matters such as BAL (Bushfire Attack Level), Mine subsidence, Flood Zone etc, considered relevant.
Bal ratings range from Low, 12.5, 19, 29, 40 & FZ. Bal Low requires no modification up to FZ (Flame Zone), which requires your home to be resistant to direct exposure to flames and to a heat flux of greater than 40KW/m2, which can add significant cost to your build.
It is essential to understand what requirements you must adhere to, stipulated in the section 10.7, prior to any serious pricing can be completed.
5 COUNCIL FEES/REQUIREMENTS and OH&S
Different councils will have slightly different permits required and fees that will need to be paid prior to a Construction Certificate being issued. Some of these are easy to determine and some are based on the cost/type of construction. Below is a list of common items that are required.
- Council Security Bond
- Long Service Levy
- Section 94 Contribution
- Crossover Permit
- Road Opening Fee
- Safety Barrier
- Sediment Control
- Site Toilet
- Temporary Fencing
6 HYDRAULICS AND STRUCTURALS (Provisional Allowance)
Professional builders should provide a provisional allowance for hydraulics and structural engineering. An allowance for hydraulic engineering, from a suitably qualified hydraulic engineer and an allowance for structural engineering should be catered for in the preliminary tender. As professional builders, we can estimate cost based on experience. You should always confirm that your builder makes this allowance.
If it turns out that Hydraulics are not required, the allowance will be removed from tender fee. If the structural engineering cost comes back under the provisional allowance, it will also be discounted from the tender fee and conversely, if it comes in over, the difference will be added to the tender, having minimal impact/surprise to the total tender cost.
7 HOME OWNERS WARRANTY INSURANCE (H.O.W.)
Home Owners Warranty Insurance is mandatory and the premium is determined by the type and value of the construction. In the state of NSW, any building work over the amount of $20,000 requires Home Warranty insurance.
Currently in each state in Australia (except Tasmania), the Government determines the policy terms of Home Warranty insurance, manages its administration and is the sole underwriter. This means when insurance claims arise, the Government pays out the claim to the home owner.
OTHER NOTEWORTHY ITEMS
ENERGY RATING – All homes must be built to a 6 star energy rating.
DEVELOPER GUIDELINES – Some estates have guidelines that could increase the cost of construction.
INCLUSIONS/UPGRADES – Tenders in general, unless specifically requested otherwise, will only allow for a base line fitout (appliances/flooring/lights etc). Upgrades, depending on the quality and quantity, can add significantly to the price.
LANDSCAPING – Generally, unless specifically requested, is not included in the tender.
It is essential to understand what costs are not covered by builders trying to win jobs by making their tender look very cheap. We hope this brochure has armed you with the required information to ensure your tender accurately represents the real cost of construction.
Note, if you have accurately provided a list of requirements to your builder(s), their tender quotes should all be fairly similar. If you see an incredibly cheap quote, it may be wise to become extremely cautious rather than excited. If everyone is using the same products, there should be little variation in price. Too many times have we seen clients come to us that have gone down this path, only to have the price blow out and construction become delayed significantly or stop altogether. Information is power.