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Why the Cheapest Quote isn't Always the Cheapest

You've gathered a few quotes from Building companies and now you are scratching your head wondering why there is a significant difference in prices between them,

You have a chat with a friend who just completed a home renovation, they picked the lowest-priced quote for their build but once they were done the renovation cost them more, in fact, they paid the same as the highest quote, so what happened? are quotes not worth the paper they are printed on?

A quote is a fixed price for an agreed scope of work, once you accept that quote the builder cannot charge you more for that scope of work without your agreement. If there is a change in that scope of work it could alter the value of the original quote, these changes are called variations, they are a variation to the agreed contract. A variation is issued which will include the change of scope and the value of that change, could be more could be less, and will need to be agreed upon. The conditions for which a variation can be issued to you will be in your contract and quote documentation.

This takes us to the single most recurring reason I have experienced for builder's quotes to vary in price; each builder is basing their price off their own interpretation of the scope of work given to them by you. I'll explain it like this, If you were asked to do a grocery shop for a family of 5 will your trolley be filled with the same items as another person asked to do the same? probably not. How about if you were asked to shop for a family of five but you were given a list of what each night's meals were going to be? would you now have the same contents in your trolley as the next person, probably not, but there will begin to be similarities, you might like beef burgers for burger night and they might like chicken burgers but you both have the same burger buns, can you see where I'm going with this? The more information and detail you can give to someone about your 5 days of shopping the more those trolley contents will look the same.

This is exactly the same when a builder is preparing a quote, the more information you give them about the scope of work the more accurate their price will be, and the more accurate their price is in the beginning the more clarity you will have when budgeting for your project.

Plans from an architect can communicate one level of detail, an important level at that, at a minimum it gives the builder instructions to follow for layout and specific systems used in the build to achieve Building Code Compliance and depending on the designer could expand into many more levels of information, this is also why choosing the right designer has an impact on your build project, but that's another blog for another day. A quote that has been built around a well thought out scope of works will be very accurate and while you can never eliminate the need for variations it will certainly minimise the impact of variations on your overall budget. A quote that is built around limited scope and information will reflect that and may be considerably less in value, if their scope of works is limited in information and then you agreed to it you will have a situation where the outcomes you were expecting are not actually in the price you agreed to, and if you still want what you were expecting you will be paying for it in extra variations. sometimes this is unintentional by the builder, sometimes it is a sales tactic used to win the job by being the 'Best' price, but can catch you out when they pile on the variations.

When I quote I include a breakdown of the scope that I have interpreted for Pricing, this might only need to be a general overview when information is clearly documented in the plans. If the information is limited or unclear then I will include a more detailed description of what I have included or excluded.

I will also include 'Provisional sums' for parts of the scope that I cannot accurately price, these are pockets of the price that are an estimate and will require further investigation either prior to the project starting or during and then once there is more clarity can be locked in more accurately with a variation whether the cost is more or less, these provisional sums are helpful for you planning your budget going into a project. Preparing a clear scope of works for your builders to base their quotes on will make the process easier for everyone, and ultimately contribute to a project that is within budget and meets your expectations of the final result. For help preparing a renovation scope of works my friend Jen at Nine Yards Consulting has a great resource I recommend which can be found in amongst other great resources here


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