Building or renovating your home is likely to be the largest investment you’ll ever make. The sums of money involved can seem staggering – and sometimes terrifying, especially when it’s your money on the line.

If you’re shopping around for quotes from builders, it’s not uncommon to receive quotes that vary dramatically. And, when you’re dealing with such large amounts of money, it’s tempting to go for the cheapest quote.

But this is rarely the best choice. And in this blog, we’ll explore why.

You might be talking to the wrong builder

First up, a cheap quote might be a clue that you’ve spoken to the wrong type of builder – especially if you’re looking to build your dream home.

Not all home builders are alike: there are two main types that you’ll come across. These are usually referred to as ‘project (or volume) builders’ and ‘custom builders’

Project builders are usually large companies that build hundreds of pre-designed homes per year.  Typically, they provide standard floor plan designs, materials and fixtures and finishes for you to choose from. You’ll typically get a cheaper quote, but you may find that a volume builder steers you towards one of their standard floor plans or isn’t truly capable of customising a design to your needs – meaning you may end up compromising on your dream home.

On the flip side, custom builders focus solely on creating bespoke building projects. They are usually smaller building companies who only carry out a small number of projects per year but, as  the name suggests, will customise the build to your specific design requirements and needs. These builders may seem more expensive at the outset, but you’re more likely to get a high quality of work, the finishes you want and a home that matches your vision with a custom builder.

Your ‘cheapest’ quote may not include everything

A common way other builders may gain work, is to create an upfront quote that appears cost-effective on a surface level, but hides required payments in jargon terms, inclusions, indicative costs and provisional sums.

Therefore, when you receive a ‘cheap’ quote, make sure you take a very close look at what’s excluded from your quotation. Going through the list of exclusions is a great way to unearth any items that may have been assumed by the other. For example, a builder may include lighting in their quotation, but only includes the batten, not the light fittings; whereas you may assume the light fittings are included.

If you’re unsure, obtain clarification on what is excluded from the quote so that you both fully understand where the responsibility for an item lies – and the true cost of the build.

Other words you must be alert for in your quote are indicative, provisional sum and prime cost.  These mean the builder hasn’t committed to exact prices, so the costs may increase.

• Indicative is the estimated price or the likely price range for which something will cost to supply or install.
• Provisional Sum (PS) is a cost allowance made in the quotation to cover both the supply of the materials and the labour of the foreseeable work. The work requirement is uncertain at the time and cannot be accurately quoted.
• Prime Cost (PC) is a cost allowance made in the quotation for the supply of specific items which have not been finally selected at the time of quotation (such as tiles or tapware). The PC is limited to the cost of the material and does not include the cost of any labour to complete the installation works.

While these terms are also used by reputable builders, they can be abused by unscrupulous operators to hide the true costs – it is vital that you understand these when reviewing quotations so you are prepared and are able to budget for any variations before starting the project.

Cheap quotes = compromises somewhere

The discussion above leads neatly into this point. If a quote is significantly cheaper than others, then you need to be very cautious. In our eyes, cheapest means a red flag about quality of build.

We’d like to share Irene and Oliver’s story. They wanted a large-scale renovation completed at their home, and they approached Builder A, Builder B and Builder C to give them quotes for the work.

Builder A priced the job at $150,000, Builder B priced it at $145,000 and Builder C provided a quote of $90,000. They decided to go with Builder A. Why was this a good decision?

While Builder C’s quote looks like the best deal on paper, the major variance from the other two quotes set off alarm bells for Irene and Oliver. They reasoned – quite rightly – that if Builder C was using the same quality of materials, the same quality of trades and provided the same level of customer experience as Builder B and Builder A, then its price should have been in line with the others. Builder C’s price difference could have been due to several reasons:

• The quality of materials, trades or customer experience has been substituted somewhere.
• Builder C has made an error in his quoting and hasn’t considered everything for the job.
• Builder C knowingly has submitted a quote much lower in price in the hope that he will win the job, however, will try to sting Irene and Oliver with variations during the course of the renovation.

So, why not Builder B you may ask? It’s simply because they connected better with builder A and had more trust.

It’ll probably cost you more in the long run

The sad truth is that a cheap quote almost never actually ends up being the cheapest. As highlighted above, there might be compromises made on materials or quality of workmanship. You might find that extra costs keep mounting up due to sharp practice or incompetence when quoting. You might find that the cheapest operator botches the job or, even worse, you might end up being scammed by an unlicensed builder who takes your deposit and never returns to finish the job.

No matter what happens, more often than not you’ll end up paying more than the most expensive original quote, as you’ll ultimately need to hire a quality builder to rectify or finish the works, and do the job properly.

Perway Construction Services is Perth’s most recommended and experienced custom home, renovation and extension builder. We’re here to help you navigate the building process and ensure your project is completed just as you envisage it. To experience Perway quality, get in touch today.