You have seen the many articles on builders collapsing with material and trades prices going “through the roof”. Builders holding homeowners, with fixed price contracts to ransom if they don’t pay the extra variation, they won’t get the key to their homes.
There are no winners. The builder’s cost has hugely increased, and the homeowner must agree to pay the amount yet cannot get access or have their home built or complete.
What to do if you want to build or renovate? There is another option!
Owner Build, where you can control the project from start to finish. To make this easy to understand we have the process broken down into 4 key areas:
1. Project Management.
Can you or do you need to contract a Project Manager to manage the building process.
It is important that whether it is you or a project manager, who can be a Registered Builder who would provide you Warranty Insurance if the contract value is over your state’s minimum indemnity requirements, have the necessary skills to build the project.
2. Quantity estimates of your Project.
Contract a Quantity Surveyor to supply you the above with actual costings and purchase orders for you to use in obtaining quotes from suppliers and trades. This will give you a reference point in your negotiations with suppliers and an understanding of the trade’s costs.
Now that you know what size timber you need, for example, you can approach suppliers seeking a fixed price. As the Quantity Estimator will have given you a building timeline, you will know what date you will need your supplies. Now comes the negotiations. All suppliers work on 30/60/90-day terms with builders, meaning they must pay for the materials before the builder pays them.
You will pay on delivery! This means the supplier is being paid before they pay their wholesaler/supplier. This helps their cash flow considerably and is a big incentive to want your business. You need to contract with your supplier that they need to deliver on a set date, and you will pay on delivery. This way suppliers can plan their purchases and you now have a fixed price.
If you are in the trade, or your project manager will know trades and they need to be given a timeline and payment confirmation once their job is completed. Money in the hand is a big incentive. If you are borrowing the money you need to be aware of the drawdown process of the bank and how long between approval and when your money is in your account.
Construction and Public Liability Insurance is a must have. Please read through our website to increase your knowledge.