There are a few ways a builder can provide pricing, both can vary by thousands and determine who has spent more time scoping and costing your project. It can also vary dependant on the information you provide. Below we will look into the two most common pricing structures you will receive, why and which one is right for you.
What is an Estimate?
Depending on the documentation you have provided to the builder will depend on the level of assumptions the builder will be required to make. Lets say you provide only an initial sketch of your plans, the builder is then required to make assumptions on the type of engineering, internal layouts, ground levels (excavations) and selections. Don’t get me wrong an estimate still requires time, 1 or 2 weeks to provide an estimate would be sufficient. These are great to get an idea on where your project is sitting budget wise. If you were to allow $500,000 to build your home inc demo and landscaping, if the builders estimate came back in at $480,000 I would be concerned we are getting close to the mark. Without having constant input from your builder to ensure the build stays well below this, you could potentially run into some budgeting issues.
What is the difference between a Estimate and a quote?
Full builders quotations are prepared with a lot of consideration in mind and normally involve sending your plans out to their suppliers to confirm and negotiate pricing to ensure they are providing the best price possible. They will be inclusive of all your selections and upgrades, and will have all engineering, drainage and other site costs factored in (so no nasty surprises). Don’t be surprised if this builders quotation takes 4-6 weeks, and the builder may even require payment to provide the fixed price quote (note this should then be deducted off your fixed price contract).
Once received your builders quote should be at a minimum 4-8 pages long and include all inclusions, exclusions any questions should be raised regarding any outstanding queries relating to your plans.
Quotations can be provided once majority of documentation is provided however without all documents you are leaving yourself open for any surprises.
You may have heard the term Preliminary Agreement being thrown around, we will talk about this in next weeks BLOG.
Always remember there is no silly question, only the questions not asked. So make sure to ask all your questions upfront.
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