How to avoid the hidden costs of building

In almost every aspect of life, the devil is in the detail. It’s certainly the case in building a house, when unforeseen costs can see a budget quickly skyrocket.

Whether using a volume builder, or architect/draftsperson and independent contractors, understanding the potential hidden costs of building is the best way to avoid any nasty surprises and keep the finances in check.

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Melissa Fleming, Principal Architect and Director at Melbourne-based Metroworks Architects, names the three biggest hidden costs.

Variations

“The biggest one is the ‘v’ word – variations! Leaving elements unplanned while the building starts, with the idea you can work it out as you go, can lead to the need for changes to be made during construction, which is the most expensive time to make them,” Fleming says.

“For example, if the bathroom layout is not carefully considered before the plumber’s ‘rough-in’, which can happen early in a project, waterproofed wall lining, waterproofed floor lining or even structural elements may have to be pulled out or rearranged to provide access to the pipes or other components that need to be moved. And that’s expensive.”

Volume builders often advertise a “total package price”, but this includes standard inclusions only. If buyers choose to upgrade, costs rise. House and land packages sometimes don’t include extras like landscaping, driveways and fencing either, which can quickly add up.

Site preparation

The cost for a builder to set up the building site ready for work is another often-unanticipated cost.

“Preliminaries may include safety fencing, permits, provision of facilities for the tradespeople on site, Worksafe compliance and signage. It may also include project management fees, among other things,” she says.

Prime costs

Other costs that can be hidden in a contract price from a builder are prime cost items and provisional sums, Fleming says. These are often included where the final scope of work can’t be completely defined.

“For example, if the interior joinery details are not complete, or their finishes not selected, ie: stone benchtop versus laminate, before the job is priced and the contract signed, the builder may include an ‘estimated allowance’ for the joinery. Then, if the actual cost for the joinery is higher, the client will be required to approve and pay extra to get what they want, or make changes to get back on budget,” she says.

The reverse can apply too.

“If the allowance is greater than the actual cost, there will be a credit in the client’s favour,” Fleming says.

Get organised

Discussing the build in detail with the builder and being organised during the construction phase will minimise unexpected costs. Picture: Getty

Good planning is the key to minimising changes and therefore avoiding extra costs, Fleming says.

“There is not much you can do to avoid the preliminary site set-up costs, but it is wise to clarify with your builder what is included,” she says.

For the actual build, Fleming recommends being as organised as possible.

“You need to think through, plan and document all aspects of your project before the builder gets onsite, or ideally before the project is priced for construction.”

“Good planning and documentation will also help avoid the need for provisional sums and other estimated allowances within your contract price. The best idea is to try and remove these allowances from the contract price entirely, by providing your builder with as much information as possible, so they can accurately price all elements of a project,” she says.

Erin Delahunty – http://www.realestate.com.au/advice/hidden-costs-building-house/