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How to stay within budget on a custom build?

Discussion in 'Development' started by Turbo_C, 22nd Apr, 2016.

  1. Turbo_C

    Turbo_C Well-Known Member

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    Hi all,

    I'm about to kick off design of my two lot development on the Gold Coast. This is my first time building and I sort of jumped in the deep end, the site is on a ~25% slope.

    I have a local mate that's going through his first development so I'm chatting with him, one thing he mentioned was to use an independent building designer, so you own the plans and can put them out to tender, this way you don't get locked into any one builder, and have them take you for a ride to screw town.

    The flip side of this is the independent designer you choose needs to be very good at pricing, other wise you can end up in a situation where you have been told you can build for $300k, spent 6k on plans, and all the tenders are coming back at $400k. You then need to go back and spend $100 p/h on amendments to get back within your original budget.

    How do experienced developers insure their designers are staying within budget on a custom build and avoid the above happening?

    One designer I've met with suggested he will go back and fourth to the builder and keep getting ballpark figures, for example in the concept stage, get it to within 50k of budget, then move forward again. This same designer I've now learned has blown out by over 30% on one of his slope designs last year.

    What sort of discrepancies should I be expecting from the budget my designer and I have agreed to, and the contract prices for the tender?
     
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  2. RumpledElf

    RumpledElf Well-Known Member

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    I'm doing same but with a local architect, my site has very variable slope and the worst feels like its over 45 degrees (I've taken to crawling up it as I feel very unsafe). This is a PPoR not investment so my budget is more flexible, but I'm interested in this too. Architect stays through the process though, designer is dropped after you get the designs. I haven't had a good talk yet on how he charges since I want to owner-build, I think he knows he's one of few architects willing to take on a project like this.

    Make damn sure you find someone who is used to building on a slope.
     
  3. Joynz

    Joynz Well-Known Member

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    And used to designing for a slope!
     
  4. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Did you consider project homes especially designed for sloping land? Could be cheaper.
     
  5. alexm

    alexm Well-Known Member

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    Research exactly what the market wants and make sure that you deliver a product containing those elements. Don't get mesmerized by upgrades and stick to what you have agreed, unless they're a value-add to the end product and won't cost a lot more.

    And always question everything. You're funding the product so don;t just reply on the designer/architect as they have their own ideas about your project.
     
  6. Turbo_C

    Turbo_C Well-Known Member

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    Hi mate, your site sounds unique, do you have views ?
    My site was purchased as a PPOR and initially I was going to sell off the front as a vacant block. However due to the slope and shape and based on other vacant comparables I thought I would have to discount the price too much, so I've started down the path of running a full build & sell feaso on it.

    I've spoken with quite a few designers now, only one architect. After finally getting onto a 'no ********' building designer with loads of experience he has explained a few interesting points.

    Aside from the usual, minimising retaining, working with the slope etc etc he has said get all your specs decided on upfront, everything down to dimensions, finishes, quality, etc, this way when you put out the tenders everyone is quoting on the exact same thing.
    This eliminates the you needing to speak with tilers, cabinet makers etc, later on in the build, as you have already gone through this upfront.
    It's lots of work, another designer offered to do all this for me for 10k, called it an internal design specification list whereas others have said to do it yourself to save money or they can just guide me through this with there local contacts, whilst they compile and prepare the PowerPoint list for the tender.

    This designer did mention that, I will need to go through the site every week and double check the builders following the design, or pay 2-3% of construction costs to a project manager.

    Yes, most volume builders won't touch this slope, however GJ gardener has said they do full custom homes and will do this, the experienced building designer I spoke with also happens to contract for GJ, aside from probably wanting to take my business to one of his local slope specialist builders, he did concede none of them will be able to beat GJ on price.

    GJ has quoted me $1450 p/sq m at a medium inclusion point. Other smaller builders are saying $1500-1600

    Thanks for the tips mate.
    This has been researched fairly extensively, i know what the area demands, however, based on the build costs above I'm looking at pulling up about 40sq m short of an ideal floor area, for my budget.

    This is where I'm at at the moment, I guess I need to get back out there and talk to agents about floor size and buyer objections based on this and try to find a few recently built floor area relevant comparables to see if this build is still a go
     
  7. MTR

    MTR Well-Known Member Premium Member

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    I always get an architect/draftee to do the plans and then I shop it. Works out well for me as designs are one of the most important factor when developing and frankly I have found it more cost effective.

    Dependent on specification the builders can give you an estimation on costs per sqm.
    Work out what specification you require ie stone bench tops, higher ceiling etc.

    In Perth I was paying around $1200 per sqm and in Melbourne around $1300 per sqm
     
  8. Leo2413

    Leo2413 Well-Known Member Premium Member

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    One of the conditions I tell my architect is that if I employ him to do the drawings, I want him to engage closely with 1 of my consultant builders (who I know is very on the ball with cost effective designing/building), so I can be quite confident that right from the beginning its being designed in a way that most builders will find it cheaper to build. My consultant builder keeps in mind that he may not be building this for me himself so the designs need to be cost effective for most builders in his estimation. Obviously I let the builder tender for it himself as well as get a few more. I have found this a great way to do it.
     
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  9. Aaron Sice

    Aaron Sice Well-Known Member

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    Okay, my 2c because this is public forum and the internet gives me the right to an opinion.

    1) If your architect / designer / draftie can't design to a budget after meeting with your builder and understanding how/why they build a certain way, then they're not worth their degree; which means

    2) There's a level of implication that your architect/designer/draftie will understand your market and/or your builder; because

    3) You should be working with a builder at the same time if you are interstate, or be using someone that understands the local construction - not always a local.

    If your chosen professional can't make budget they have no right to charge for amendments to make budget. I HATE THAT - HATE HATE HATE HATE.

    It's like an Architect that's given a budget but charges on a sqm or percentage rate - no incentive to keep costs down means your budget is likely second or third to their concerns.

    With a difficult block - ALWAYS get an independent to draw it so you get the best outcome for the block - a builder is likely to design somethign that requires $100k of retaining so they get a nice simple build, whereas an independent is more likely to put the extra $100k into the design, work with the lot and create something unique that should return equity for the money spent.
     
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  10. MTR

    MTR Well-Known Member Premium Member

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    that is a good idea
     
  11. Turbo_C

    Turbo_C Well-Known Member

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    Hey guys, thanks for all the tips.

    ^^ This makes total sense, I will hit my guy up about this.

    I've decided to get independent design done with a 'Building Designer' not the cheapest not the most expensive either. We will go through concept starting Monday. He had the best rapport and made the most sense, heaps of exp etc. Had meetings with no less than about 8 independent guys and sat down with about 4 builders that offered to design and package everything for me.

    I'm paying 6k for the design, he has based it loosely off floor area as the original quote was for 7k and then my floor size dropped 100 sq/m after realizing how much build costs were.

    After a few weeks of annoying the hell out of every agent in the area, and looking at comparable more closely, 250sq/m internal @ 750k sales price is correct.

    I've attached my design brief if anyone wants to take a look.

    Didn't want to go too full on with the brief, just wanted to point out a few things I had learnt over the last few months studying floor plans and walking through open homes, and give a general direction on aesthetics. Not sure how you guys would have done it differently?

    ^^ One builder I spoke with suggested this. The problem I face is I just don't know who is on the ball at this stage, as I haven't worked with any builders before. Recommendations are a dime a dozen it seems.

    Another factor to keep costs down is in the site works. I've heard builders will often place a large provisional sum on excavation and charge the whole lot onto the client, when the earthworks company has only charged a fraction of that to the builder.

    I've considered doing the site works myself and only bring in the builder once the pad is setup. This introduced the risk of having the builder say the pad isn't correct and need to go back over it and do it again. It also means i have to front up that cash my self I think. I don't believe the bank will let me draw on the funds before i have a contract in place to build.

    Considering I wont have the cash to do this myself, I suppose it wouldn't hurt to get a few independent quotes off earthworks companies, and when the builder claims a price, I can then question his justification with more authority...?

    It's a 21% slope, probably 3.5M fall across the building envelope so I expect site costs to be high
     

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  12. Leo2413

    Leo2413 Well-Known Member Premium Member

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    [QUOTurbo_C, post: 226312, member: 364"]


    ^^ One builder I spoke with suggested this. The problem I face is I just don't know who is on the ball at this stage, as I haven't worked with any builders before. Recommendations are a dime a dozen it seems.
    Agree this is the difficult part, separating the wheat from the chaff when your starting out.


    Another factor to keep costs down is in the site works. I've heard builders will often place a large provisional sum on excavation and charge the whole lot onto the client, when the earthworks company has only charged a fraction of that to the builder.
    If the builder is not confident in his ability to cost it up because they don't do much of those builds, then often they will put a nice fat in the PS. Always best to get a builder who is used to and comfortable with building on slopes and has some creative ways to reduce the costings. Also with your PS, at the end you should ask to see the actual bills and compare to what you paid for it and then reconcile any differences. Hopefully it wont go OVER the PS eigher.



    Considering I wont have the cash to do this myself, I suppose it wouldn't hurt to get a few independent quotes off earthworks companies, and when the builder claims a price, I can then question his justification with more authority...?
    That is a good idea and I have done it before. At the very least it will give you an idea of where your builder's costings are from low to high.


    It's a 21% slope, probably 3.5M fall across the building envelope so I expect site costs to be high.

    Doesn't necessary have to be. I am doing a build on a ..I think its like 9m slope however the building envelops is spread across I think 4m. The way the architect designed it with the builder's input, it should be as little as possible. Don't know the exact costings for another few weeks though.

    I had a look at your brief and I like the concept designs, materials and specs. But it seems quite high spec. My main worry is your budget for it. Whats the total internal living space? What you looking at selling them for? Sorry If the numbers are there I didn't look in detail.

    Edit: I see its in your post now the Qs I asked, stupid me.


    250sq/m internal @ 750k sales price. What budget do you have for construction now?


     
    Last edited: 3rd Jun, 2016
  13. Gingin

    Gingin Well-Known Member

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    Worlds changing. Revit and few other design software incorporating quantity surveying tools starting to pervade the smaller scale projects. Cost implications can be taken at design stage. Your site surveys are imported to the medium. Engineering designed. Clash detection to architectural models. Future is definitely here in this space. Look it up. Revit . Navis works. Are a couple to mention... still not viable for your small stuff but can see a use for serial work( project)
     
  14. Turbo_C

    Turbo_C Well-Known Member

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    Hi Leo, the photos in the design brief did reflect a higher grade of finishes than I will end up with I'm sure. I also made mention of these two homes, which more accurately showcase the interior standard I'm trying to hit.
    House 1 - 54 Panorama Dr
    House 2 - 34 Panorama Dr
    I'm pre-approved for $380,000 (total, 20% deposit) and working my construction costs based around that figure as a maximum. I've attached my spreadsheet if your interested in the numbers
    - I should add, if your going to look at these numbers; the block is 2000 sq/m and the front lot will equate to 40% of this, which is why you will see a qty of 0.4, holding costs are 100%, the rear lot will be held vacant until the front house is sold
    Interesting you have chosen an architect, were you looking for project management or did you decide against using a drafts-person for another reason?

    Thanks for the tips, I will ask my designer which builder he will work with to keep his costing realistic.
     

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    Last edited: 4th Jun, 2016
  15. Leo2413

    Leo2413 Well-Known Member Premium Member

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    HI @Turbo_C,

    Based on the specs of the 2 houses in panorama drive, i think your budget is not too far off. I don't know the market your building in but from a guess i think you've nailed it in the middle range for the specs. Your feaso is quite detailed too, very nice. What contingency do you have? I may have missed it in the feaso. Earthworks at 15k might be light depending on the slop/design/soil. My building envelope is also across around 3.5m. We are trying to build into the slope to graduate the build upwards to minimise retaining.

    With regards to choosing an architect, it's mainly because what we're building is more on the architectural design side so I'd prefer an architect. He is also very familiar with the market we are building in and has a good relationship with 2 of the main builders that will tender so they are working together on the design stage as well as retaining wall design to reduce costs.
     
    Last edited: 6th Jun, 2016
  16. Turbo_C

    Turbo_C Well-Known Member

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    @Leo2413

    I don't know the market your building in
    The market median value for 4bd stock is just over 700k
    I don't want to expect much more than this as a sales prices however the data is showing the market rising. Putting statistics aside both the neighbors homes are up for sale, one has just sold at 755k and the other should go for similar, they are similar internal areas, quality of finishes and also similar sloped/mangled/terrible shaped yards, except they are 15 years older and in most peoples opinions not great designs. So I believe 750k sales price is probably the bottom end, however i will keep using this figure as my top end to stay conservative.

    The target market is established and maturing families with 2-3 kids in teenage years or younger.

    Earthworks at 15k might be light depending on the slop/design/soil.
    The 15k is for the first home builders boost, I haven't allocated any money to earthworks, I have simply taken builder's sq/m rates at this stage and applied it to the entire build and included earthworks in that sq/m rate, as they will be included in the contract.

    Although now that I think about this, the builder likely won't take care of site works required for landscaping, only site works to get the pad and maybe the driveway on design. So I will need to allocate cash to site works for landscaping. I will double check this today with the builders I've been talking to and then it will be time to call around earthworks companies.

    What contingency do you have? I may have missed it in the feaso.
    No you haven't missed the construction buffer, it's not actually there. I'm finding it quite hard to estimate pricing before I go through design. So I suppose I have taken the view that I need to insure the house is built for under 380k. Considering I have never built before, I should probably put a 7% buffer on this figure. This would then bring me back to 353k. Is this the figure you would give your architect, or would you give him your actual maximum and then work your buffer into the builders contract?

    I have heard I will receive a lot of variance across 3 different contract prices. I'm really unsure what to expect. In a perfect world I would expect realistic contracts to come back within a few percent of the budget my designer and I have set out. And as previously discussed we can assist that outcome by insuring the designer is liaising with an experienced builder through the design process.

    What contingency do you have?
    In regards to the other contingencies; I have allocated varying buffer percentages for each known cost, rather than applying an even number across the entire project. So that feaso includes a buffer column and I have included a higher percent for items I am more unsure of. For example one of the largest costs will be the infrastructure charge. I have received council's charge notice and I know the price to within a few percent, unlike engineering where I have only received verbal quotes. Hope this makes sense.
     
  17. Depreciator

    Depreciator Moderator Staff Member

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    Turbo, I have a mate who is a quantity surveyor and lives at Lennox. All the projects he gets involved in are custom builds. He does a fair bit of work for Sydney architects and is the 'go to guy' up his way for pricing tricky stuff.
    He built his own home on a very steep site - pole home.
    Send me an email if you want his details: scott@depreciator.com.au
     
  18. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Hi @Turbo_C



    The 15k is for the first home builders boost, I haven't allocated any money to earthworks, I have simply taken builder's sq/m rates at this stage and applied it to the entire build and included earthworks in that sq/m rate, as they will be included in the contract.
    If your anticipating a more than normal cost for site works due to slopage then just make sure that your sq/m rate is taking higher than normal siteworks into account.

    Although now that I think about this, the builder likely won't take care of site works required for landscaping, only site works to get the pad and maybe the driveway on design. So I will need to allocate cash to site works for landscaping. I will double check this today with the builders I've been talking to and then it will be time to call around earthworks companies.
    Most likely the case, although I don't think site works for landscaping would be significant, can always check with the builder for feedback or with the people who will be doing the driveway/landscaping.


    No you haven't missed the construction buffer, it's not actually there. I'm finding it quite hard to estimate pricing before I go through design. So I suppose I have taken the view that I need to insure the house is built for under 380k. Considering I have never built before, I should probably put a 7% buffer on this figure. This would then bring me back to 353k. Is this the figure you would give your architect, or would you give him your actual maximum and then work your buffer into the builders contract?
    Usually I apply a 5-10% contingency for construction and I don't tell anyone this. So if 380k is your total construction cost including your contingency then I would just tell the builder/architect that 353k is your absolute budget. At least that's how I do it. I never tell anyone in my team what my contingency is or even if I have one.

    I have heard I will receive a lot of variance across 3 different contract prices. I'm really unsure what to expect. In a perfect world I would expect realistic contracts to come back within a few percent of the budget my designer and I have set out. And as previously discussed we can assist that outcome by insuring the designer is liaising with an experienced builder through the design process.
    The most challenging part here is to make sure you are comparing apples with apples. What I like to do is before I submit for tender, I meet with an interior designer and work with them to get detailed specs documented in a report, then I give that report together with all other documents to the builders tendering and ask them to quote as closely as possible to the specs requested. This helps a little to ensure that the buidlers are on the same page with specs and quoting along the same lines for what you want.
     
  19. Turbo_C

    Turbo_C Well-Known Member

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    @Depreciator

    Thanks mate, I've had a chat with your guy and he had some great advice, well, he had some realistic pricing which wasn't fun to hear, but it is inline with what all the online construction calculators are telling me, basically I should be looking at around $2000 sq/m rate. He did put me onto another QS who works in Gold Coast.

    His numbers weren't as high in fact he suggested to only add around 30% more to total build costs when working on a slope. With a baseline of $1100 sq/m for volume builders on a flat block, this puts me back around $1500.

    I'm back to where i started, but now with a healthy fear that I could blow out by 30% on this build
     
  20. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Personally I think that's quite high for the specs and size you want, so unless there is absolutely mammoth site works.. I think $2000 sq/m rate is a bit high if you also have a contingency separate to this.

    Also can you maybe reduce the internal living space and have more outdoor space which is cheaper, if your end stock allows for this?