The Hidden Costs of Incomplete Tenders – How to Secure a Fixed Price for Your Custom Home You Can Trust

The Hidden Costs of Incomplete Tenders feat

Do you have a builder working on a tender to build your new custom home? Are you confident they have all the necessary information to provide an accurate price? If not, you could face unexpected costs down the line.

When embarking on the journey of building your dream custom home, one of the most crucial steps is securing a fixed price tender from your builder. A true fixed price contract means you know exactly what you’ll be paying from the outset, avoiding unwelcome surprises and budget blowouts. However, for your builder to provide an accurate tender, they need access to comprehensive information upfront. Without this, you risk unexpected costs after contracts are signed. Let’s explore the essential elements required for a truly fixed price tender.

Why Comprehensive Information Matters

Many homeowners find themselves caught off guard by unexpected costs during the building process. This often happens when builders don’t have all the necessary details before preparing the tender. Without complete and accurate information, a builder must rely on estimates and provisional allowances, which can later lead to cost variations once construction begins. To avoid this, it’s essential to provide detailed reports and specifications before the tender stage.

Essential Components for an Accurate Fixed Price Tender

1. Site Visit by Your Builder

A professional builder should conduct a thorough site inspection before finalising a tender. This visit allows them to assess external factors that could impact the build, including:

  • Site accessibility and potential excavation requirements
  • Retaining walls or easements that may need to be factored in
  • Existing services such as sewer, stormwater, and electrical connections
  • Sloping land or other terrain challenges

Without a site visit, builders may underestimate costs, leading to unexpected variations once construction begins.

2. Geotechnical Report

A geotechnical report determines the classification of your site, which directly impacts the foundation and structural requirements of your home. Accurate information on soil conditions allows the builder to properly estimate piering depths and concrete costs. Without this report, there is a high risk of underquoting, leading to significant cost increases once construction is underway.

3. BASIX Certificate

The BASIX (Building Sustainability Index) Certificate outlines energy efficiency and water usage requirements for your home. Builders must incorporate these requirements into their pricing to ensure compliance with sustainability regulations. Omitting this certificate in the tender stage may result in costly adjustments later. If you do not have a BASIX Certificate for your new home yet, then the builder will not be able to provide an accurate tender price.

4. Engineering Plans

Engineering plans detail the structural integrity of your home, including steel requirements. Steel is an expensive material, and without precise engineering specifications, the tender price may not accurately reflect actual costs. Additionally, crane hire for steel installation must be considered in the builder’s quote to prevent unexpected expenses.

5. Stormwater Design/Plan

A stormwater plan ensures proper drainage solutions are in place, preventing flooding and water damage. Builders need this information to accurately quote for stormwater management costs. In knock-down rebuild (KDRB) projects, new stormwater designs, easements, and pits can add thousands of dollars to the budget. Without a stormwater plan at the tender stage, these costs may not be factored in.

6. Detailed Selections for Fixtures and Finishes

Finalising selections for items such as kitchen cabinetry, appliances, tapware, and flooring before the tender stage is crucial. Without these details, builders may use provisional allowances, which may not align with your actual preferences, leading to additional expenses during the build. Providing clear specifications ensures the price in your contract accurately reflects your choices.

7. DA or CDC Conditions

Development Approval (DA) and Complying Development Certificate (CDC) conditions outline council and certifier requirements for your project. These conditions can impact building costs, so they must be considered during the tender stage. If provided later, they could introduce unforeseen costs and delays.

8. Sydney Water Approval

Building Plan Approval (BPA) from Sydney Water is necessary for any work related to water and sewerage connections. Builders need this approval to assess potential infrastructure costs. Delays in obtaining this approval could lead to additional expenses and project setbacks.

The Benefits of Working with a Professional Builder

Engaging a professional custom home builder ensures that all necessary information is gathered BEFORE preparing a tender.

If a builder does not request these essential documents and details, it should raise concerns about their thoroughness and commitment to transparency. A reputable builder prioritises accuracy and clarity, working with the right professionals to obtain all required reports and plans. This meticulous approach not only provides a reliable fixed price but also safeguards you from unexpected costs and variations during construction.

Choosing a builder who values precision and honesty is key to a smooth and stress-free building experience. This diligence helps to:

  • Provide a truly fixed price contract, ensuring financial certainty.
  • Avoid unexpected variations and hidden costs during the construction process.
  • Reduce delays caused by missing approvals or reports.
  • Ensure transparency and trust between the builder and the homeowner.

Avoiding the Pitfalls of Incomplete Tenders

Some builders may offer tenders based on estimated or provisional allowances, making their initial quotes appear more attractive. However, these allowances often result in substantial price increases once construction begins. Ensuring your builder has all the required information at the start of the quoting process helps prevent these pitfalls and guarantees a contract price that reflects the true cost of your build.

Peace of Mind Through Transparency

By providing all necessary information upfront, you can have confidence that your fixed price tender is accurate and reliable. Transparency in the tendering process means fewer financial surprises, allowing you to enjoy the home-building journey with peace of mind.

Remember, a true fixed price contract ensures that the amount you agree to at the beginning of the project is what you will pay at completion. Ask questions, seek clarity, and choose a builder who prioritises transparency and professionalism.

Learn more about Toby and Elizabeths Story. Highwater Homes are proud APB and HIA members.

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Toby Searle

Toby Searle is the owner and builder at Highwater Homes, dedicated to crafting high-quality, custom-designed homes across the Macarthur, Southern Highlands, and Illawarra regions. With a passion for exceptional craftsmanship and a client-first approach, Toby ensures every home is tailored to suit the unique lifestyle and vision of each homeowner through a stress free and enjoyable building experience.

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