Why does it take so long to obtain a builder’s quote for a house extension, renovation or new home?
If we can gain an understanding of what’s involved for a builder to prepare a quote it may explain why it takes so long.
A typical builder’s quote for a house extension, renovation, new home or any residential or commercial building project is made up of a number of cost centres.
The builder or an estimator will identify which cost centres are involved in the particular construction project and then which individual components of each cost centre are involved.
At the highest level, there are cost centres for preliminaries, hire items, labour, materials, builders margin then add GST.
The preliminary cost centre for the building project may contain costings for individual components such as building permit fees, insurance, contingencies & supervision, and miscellaneous allowances all of which may have sub-components.
Example – Miscellaneous allowances sub-component contains pricing for sewer point fees and supply administration, site signage, documentation, plan printing and photocopying.
A further example – the labour cost centre for the building project is likely to have a cost centre for plumbing with the following sub-components as follows:
- 340 – PLUMBING
- 340-1 – WATER & GAS CONNECTION
- 340-115 – Water Connection – Extensions & Renovations/Connection of New Works to the Existing Water Supply
- 340-130 – Gas Connection – Extensions & Renovations/Connection of New Works to the Existing Gas Supply
- 340-2 – SEWERAGE CONNECTION
- 340-180 – Sewer Drains/PVC – Inc Solvent Welded Joints /100mm diameter
- 340-185 – Sewer Drains/Suspended – PVC – Inc Solvent Welded Joints/100mm PVC
- 340-206 – Sewer Stack / Double Storey
- 340-3 – STORMWATER, AGI DRAINS & PITS
- 340-320 – Stormwater – Allowance
- 340-4 – ROUGH IN
- 340-402 – Plumber – Rough In / 3 Baths + Kitchen & Laundry
- 340-418 – Rough In & Fit Off / HWS
- 340-433 – Puddle Flange / Plumber / Supply & Install
- 340-440 – Hot Water Tap & Limit Valve / Plumber / Dishwasher
- 340-481 – Gas to External HWS / Piping and Fit Off
- 340-482 – Gas to Hot Plate Only / Piping and Fit Off
- 340-5 – FIT OFF
- 340-502 – Plumber – Fit Off / 3 Baths + Kitchen & Laundry
- 340-530 – Plumber / Shower – Fit Off
- 340-6 – GAS & FLUE
- 340-7 – EXTERNAL TAPS
- 340-8 – SEPTIC SYSTEMS & RAIN WATER TANKS
- 340-9 – PLUMBING LABOUR & MISCELLANEOUS
- 340-10 – PLUMBING MATERIALS
Once the builder or estimator has identified the relevant cost centres i.e. what preliminaries, hire items, labour and materials are required he then has to obtain prices for each one.
Some builders will send the documentation – working drawings, engineering, specifications etc – to the individual trades (labour cost centre – plumbers, electricians, etc) that they usually work with and ask for their pricing and to suppliers (hire items and materials cost centres) requesting their pricing.
Builders also use quantity surveyors or an experienced building estimator to obtain costings for labour and materials while builders can price the preliminary cost items themselves.
Once the builder has received the labour, hire items and materials prices he then totals them and adds the profit margin which can vary from builder to builder. The builder’s margin is very important and can vary.
Due to the increases in material and labour costs since 2021, a builder’s quote for a home extension or renovation may have a builder’s margin varying between 20% to 35% – or more – to offer the builder some protection on a fixed price contract.
A builder with less running costs can afford a smaller builder’s margin while a larger building company may have a higher margin reflecting higher company overheads, more comprehensive management structures and complex building logistics.
Small builder VS a larger building company
A small builder may manage one to two projects himself at the same time and not employ a site foreman or office administrator therefore have fewer running cots and be in a position to have a lower builder’s margin.
A larger building company however may run many jobs simultaneously therefore requiring a specialist team made up of a site foreman, in-house estimator, project managers, and office administrators which will require a higher builder’s margin.
Once a builder has listed all their costs they add their builder’s margin then they add GST to finalise their building quote.
Many builders are carpenters and can price the carpentry labour themselves and are ‘hands on’ meaning they get paid for their work as a carpenter which also allows a potential reduction in their builder’s profit margin.
Supplying detailed documentation to the builder will assist them in preparing an accurate quote for your home extension, renovation, new home or development.
The builder will most likely be working to complete the current building project they are working on while receiving documentation from architects or building designers (architectural) requesting his interest to quote. The builder wants to know that he has work booked after completing the current building project so has to decide whether to agree to offer a quote. A builder will receive many requests to quote and can be pricing 2-5 building projects at a time not knowing if he will be successful with any.
So as you can imagine it takes time to gather and collate all the prices for however many building projects a builder is quoting whilst at the same time working on existing projects.