Cost2Build – Keeping Control

Isn’t it amazing that most of us will spend hours searching for the best deal to save ourselves a couple of bucks on a relatively small item, but throw away thousands when it comes to building?

Let me illustrate this by giving you an example: Assuming you want to buy yourself a camera. You go online, check out the newspaper, phone around, trek around the mall getting the best prices, then finally buy online to get a further R45 saving. Good job – an overall saving of R210. Phew!

Then, it’s time to build that dream home – you’ve been to an architect and got the plans, what next? For most of us it’s straight to the builder (your brother’s cousin knows someone and then there is the guy who built your friend’s house down the road). Four weeks later and a couple of three page quotes (if you’re lucky) you’ve got enough in the bank to get the cheapest guy started so you give the approval. Then off to the bank to arrange the finances (let’s hope you’re not self-employed – but that’s a story for another day). Luckily you get approval (it’s a little shy but hey you’ll make a plan later!).

The first few months go by and everything is just peachy. The builder has asked for a few stage or monthly payments – you’re a little unsure about the amounts, but you can trust him right? Then one or two “additional works” come creeping in – these “weren’t included in the quote”. You quickly scan the quote. You check the other builders quote you got – it’s a little vague so you give in. You’re a little surprised when the cost for the item comes in. You try to query it but with nothing to compare it to, you are on the back foot. Then you discover that your friendly bank doesn’t pay for extras! A few more of these and nearing the end of the project, you have a distinct feeling that somewhere along the line, you lost control and a couple of cameras worth along the way – and it’s not a pleasant feeling.

Now I am not implying that the builder is to blame. You are the one who came to him from a poor starting point and he gave you a quote as best as he could under the circumstances. Quoting off plans is no easy and definitive task. It takes hours and days to prepare at his cost and risk. Because of this he may have added in a risk factor of 10 – 15% just in case. But if he genuinely has not included an item that was not allowed for, he has a right to ask for it. The grey area is who knows whether it was included or not, and no-one ever knows what will pop up until it does – and it ALWAYS does.

So what is the solution? If you have your mind set on not employing the services of a professional Quantity Surveyor during the construction process to monitor costs, then you need a Bill of Elements. If you are going to use a QS, you need a Bill of Quantities.

What’s the difference? The BoQ is a substantial document detailing every component of the building process. Although the Queen of documents and incorporated into the main contract (the King), this can sometimes contain items that the layman may not be familiar with. It may therefore not necessarily be user friendly to the uninformed. The BoE on the other hand is a summarised version (the Jack) that describes components in a more practical manner and easily used by homeowners.

How is this used?
1. It can be issued with the drawings to a number of recommended contractors who can now price the document, rather than the project. Thus they do not need to add in the risk factor. (The saving made here by the way, will easily cover the fee to produce the document)
2. They can also price it quicker as there is no measurement required.
3. You also create a fair playing field because the document can be used to compare apples with apples
4. Defines the specification or quality of a component so everyone has a clear understanding of the finish required
5. You know exactly how much you need from the bank – no surprises
6. Any changes added or deducted can be fairly priced based on the rates submitted with the document
7. The document clearly defines what is included so there is no guesswork whether an item is extra or not
8. Prevents over-payment by easily ticking off the items completed and adding up the allocated rates to those completed items
9. Forms the basis of agreeing the final account
So if you want to be the one in control during your building project, get yourself the correct set of tools. It’s your choice!

Andy Wood
Cost2Build: Construction Consultants and Management
Building your Investment

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