Under- Quoting in the Building Industry – A Common Issue.
Whether you’re thinking of renovating or building a new home, the very thought of building should not make you feel anxious, or fill your mind with images of Current Affairs reporters chasing fraudulent builders down the street. It’s sad, but unfortunately for a lot of people their biggest fear is whether they will get “ripped off” by builders or not.
In my 40 years plus experience as a Building Designer and a licensed Builder, I have seen many situations where both the client and/or the builder may have been “at fault”. Yes, there are builders out there who do take advantage of clients. We know that but thankfully, they are in the minority & they usually don’t last long in the industry before they move on.
In the majority of cases when things do invariably go wrong, the natural thing to do is to look for blame; … “My builder didn’t tell me I’d have to pay for this as an extra!!… He’s ripping me off !”
From the builder’s side, you might hear; “The plans didn’t specify marble floor tiles, so how was I supposed to know the client wanted marble tiles??? Of course its going to cost more than ceramic tiles !”
Who is to blame for under – quoting?
When you see and hear similar arguments from both sides time and time again, you then start to wonder whether it’s the building system we have inherited that could be at fault here.
A typical scenario may go something like this;
Mr & Mrs Smith want to build a house. They shop around to get plans drawn and they choose a local draftsman who works from home at night. He’s quick and he’s cheap! The plans are approved by Council so the owners start approaching builders to quote on their approved plans.
The builders look at the plans and realise there is very little detail describing finishes etc. As a result, when quoting on the work, the builders need to make quite a few assumptions and on occasions they need to guess what the owner’s expectations are. Generally, due to lack of available time, they will choose to “quote low” or “under quote” for the construction.
Why??? They need to keep the quote low in order to give themselves a chance of winning the job. So, they may allow for smaller amounts of money (allowances) for their floor and wall finishes. Again, this is partly due to basic plans not detailing what the finishes are and lack of communication between the builder and the owner.
In using the previous example, the clients may have had high expectations of walking on a marble floor, but due to the lack of detail on the plans, the builders quote for a cheaper ceramic tiled floor. The clients still want the marble floor so the builders now charge the client an extra cost (variation) of say $20,000.
If the builders were to quote for an assumed higher level of finish prior to submitting their quote, they each run the risk of not only losing the tender to another builder who under – quoted, but they also run the risk of wasting their time tendering as well. So, in my experience, the majority of builders (out of necessity) quote low in fear of losing the tender to another builder who under-quoted.
Generally, the result of this tendering process is that the client ends up selecting a builder with the cheapest quote and the builder then commences the construction. What we then consistently see is a series of events that show up the current building system in NSW as being flawed.
The clients are not experts in determining what should or shouldn’t be detailed in their documentation. Yes, there are basic, legal requirements for plans that are needed to obtain consent to build, but these requirements do not extend to specifying the client’s detailed expectations. Clients are not expected to understand what an electrical allowance of say $10,000 includes. Without this understanding, the construction can result in a variation (extra cost) by the builder due to the client asking for a finished product that exceeds what the builder has originally allowed for.
It may be a similar story for internal painting. The builder makes an allowance in his quote of say $25,000 for painting but after construction commences, the clients tell the builder they don’t want white walls in each room. They would actually like a different colour feature wall in all their rooms plus a higher grade paint. The builder calculates this “extra work” as a further $10,000. The client didn’t realise that the $25k wouldn’t meet their requirements and the builder didn’t know they wanted a higher level of finish so again, who/what is at fault here?
What the client sees is the final contract sum increasing on a regular basis (due to these variations) to the point they have real concerns as to whether they can actually finish the project or not. Their expectations of the build were much higher than what the builder/s had anticipated and they now have to pay for variations that they can’t afford in order to have their expectations met. Invariably, their expectations are compromised and they are disappointed in what is being delivered to them by the builder.
Do we blame the draftsman, owner, builder, council, the system or all of the above? Maybe each one has contributed to the problem but one thing is for certain, there are no winners in this scenario.
” Am I able to Obtain Accurate Quotes From the Builders …… ? “
Generally speaking and at the risk of sounding naive, the answer is reasonably simple. Yes ! Provide reputable builders the detailed and complete information they need and they will give you the accurate and competitive quotes you’re looking for. Here at Jim Demetriou Group, we believe we have a relatively simple and practical process in place that will go a long way in avoiding these unnecessary issues occurring. Unsuspecting owners need to be protected against the practice of under-quoting, but we as professional building designers do also. As part of our own essential standard (and award winning) service, we deliver a complete and accurate set of documents that fully reflect in detail, the expectations of our client.
Our objective is to ensure we thoroughly understand what our client’s expectations are before we commence the tendering process. Our systems approach, which minimises the opportunities for under-quoting and/or misunderstandings, forms part of our very own quality assurance program. This is a “win win win” for all parties concerned, namely the building designer, the owner and the builder. Working with us, our client will always know exactly what will be presented to the various builders to quote on.
In order to ensure a quality and complete set of documents so that the builder has the necessary information to quote, our process includes the preparation of a Scope of Works, detailed architectural plans, specifications, interior / exterior design package, external consultant’s plans, etc.
Our approach ensures that after listening to our clients, the resulting project can be delivered promptly and efficiently without any hidden and nasty surprises. We focus on giving our clients certainty along with peace of mind by knowing that their build has been completed on time and on budget – without any unscheduled appearances on Current Affairs!
Reputable Builders Need Complete and Detailed Information to be Able to Quote Competitively
If you feel that we are able to assist you, or if you would like to know more information, please don’t hesitate to contact us.