Quotations, Quotes, Proposal, Investment, Paperwork – whatever the builder calls it, what you’re after is the cost. How much will it cost to build my new business premises, and second, why should I pick you for the job? I recently built a new family home and because I am not involved with the domestic building industry day in and day out, we as a family, decided that the best person to build our new home would be one of the many homebuilders in our local area.
So this is where the fun began (and in the start it really was fun). We looked at all the show homes, talked to many builders, looked at various plans and started to get an idea of what we wanted.
So Many Questions
Then at some point we had to make a decision on who we were going to build with. There is serious money on the line and who will we be able to work with?
To some extent, it’s a leap of faith in that you’re putting all your ideas and dreams of what your new home will be in the hands of one company. Would they deliver all the things they’ve said they would? Will they stick to the cost? Will they give us ridiculous variations? Will they be finished in time and will they deliver great quality? You should be thinking much the same when looking for a builder to construct your new business premises. It’s not an easy decision because there are important items on the line, like how will the business operate if the builder you choose bombs out? What if they are really difficult to work with, never on time with anything, can’t be reached on the mobile ever? You don’t want to be in a situation where you need to vacate your existing premises but don’t have completed premises to move into. Believe me, it happens. Your homework on selecting the right builder includes:
- Checking references – whom have they worked for in the past.
- Asking how long the company they are working with has been in business.
- How many staff do they have?
- Talking to the managing director to get a feel for his attitude.
- Looking carefully at their manner when you meet them – did they grasp the project, did they ask questions, were they able to suggest other ideas, did you feel they knew what they were doing?
- Asking yourself, could you work with them?
- Maybe even visiting one of their existing sites and observing how they operate.
What you should be looking for in order of importance:
The overall figure will immediately show you the range of pricing and you can ascertain if you are on budget, under or over. It’s also a quick way to see if all the builders have provided comprehensive pricing as you will see the range of costs from highest to lowest. The smaller the difference the better. If there is only a small variance then it means the project has been properly briefed, usually through a written specification and detailed plans. However, if the price range variation is large then possibly your instructions to quote were not as clear as they should have been. Or the builders have misunderstood your requirements. Either way, you need to take a close look at the quotations to account for the variances.
Have they understood what you want? Is everything listed in an easy-to-read format? A good proposal will make sense the first time you read it. It will clearly explain everything that has been included in point form and will have references to the plans and specifications (if you have them) so that you understand exactly what has been allowed for in the quotation.
Have they identified individual costs or just provided a lump sum figure for the entire project? As a standard inclusion in all our quotations, we always, always provide a listed quotation trade-by-trade so that our clients can see exactly how much things actually cost. This benefits the client because they can see immediately the cost for specific items. And perhaps if the budget limit is being pushed, they may decide to drop that Zip boiling/chilled water unit at $5,000 or that trendy lounge in reception at $6,700.
Listing also provides a comparison sheet to other quotations and you can quickly see where the differences are. It is not uncommon for certain items to be missed or just left out when quoting a project. For example one builder might provide a comprehensive quotation and the other builder may think that the client was providing all the workstations and chairs through another supplier - that’s $40,000 worth of equipment. If you had received two lump sum quotes with a $40,000 difference you may be inclined to run with the cheaper builder, without knowing you had to supply the workstations.
The listed quotation also provides an excellent way to spot differences between trade costs. For example you may really feel good about one builder, but when you received his quotation you could identify from the cost breakdown that his electrical and plumbing costs were significantly higher than the other quotes. By doing a trade-by-trade analysis you can go back to the preferred builder and advise him that, based on other quotes, these two trades are high and can he please explain why? The builder won’t mind at all, as he knows if you’re asking questions then he may well be in line for the job. There may also be a very logical answer for why his pricing was a bit higher including:
- He may not have had time to get a quote from his tradesman so he estimated the price based on previous jobs.
- He may have doubled up on a particular item. For example he may have allowed twice as many light fittings by mistake. (It does happen.) He might have thought that a particular part of the works had to be completed outside normal working hours so has allowed for double time (this will always pump up the cost)
Be prepared to discuss your quotation and enable the builder to give you further information, so you can make an informed decision.
The exclusions list. If there isn’t one, be concerned, as there will generally be items that are not included. For example, any of the following:
- Council certification or Private Certifying Authority costs.
- Works after hours.
- Particular trades and services, e.g., if you have a nominated supplier (an electrician) then the builder’s quote should say ‘no allowances for electrical work’ just so it’s clear.
- As-built drawings (some building owners will ask for these as a part of a fitout) but unless specifically asked for at quoting stage, builders will not allow for them, as the costs increase their overall quotation.
The exclusion list is sometimes just as important as the inclusion list – always be sure to read each point because there may be items you need and they must be budgeted for.