No one likes having to pay more than they expected. However, all too often we hear horror stories of new home owners who have paid tens of thousands (and in one case hundreds of thousands) more than what was written in the contract. I certainly wouldn't know where to start to find that sort of additional money.
So, how can you avoid blowing your budget and feeling the same pain as many others before you?
Fixed Price Contract
Ensuring that you have a fully detailed fixed price contract is the first step to ensuring you pay the amount expected. This contract should include all details of the build, including the progress payments, deposit required, the maintenance period and reference to a fully detailed specification list.
Prime Cost & Provisional Sums
Many contracts will have these terms within the contract and are a major source of budget blowout. Prime Cost (PC) items are allowances for the supply of materials only. Provisional Sum (PS) items are allowances for the supply of materials and labour costs. If the particular item that has been allowed for is not specified to your satisfaction then ask the builder to clarify. Make sure that this is in writing!!!!
An example of a PC item commonly listed in a contract is for tiling. The contract may state that an allowance of $40/m2 for tiling has been allowed for. However, where are the tiles allowed for going? Splashbacks, shower recesses, skirting tiles etc. If the builder has not allowed sufficient square metres in his PC allowance then you will find yourself short. If at all possible have everything specified and avoid using PC/PS allowances.
We have hit rock
Enforcing the "rock clause" is one of the most debated and highly contested element of a building contract. Whilst a soil test is always completed prior to building a new home, it doesn't always highlight the underlying soil conditions. This is especially true of "floaters". These are large rocks "floating" under the subsurface and can cause issues when excavating for the foundations. The best advice here is to ask the builder if they have built in the area previously and what they encountered at the time. Alternatively look at other developments in the area, speak to neighbours etc to see if they encountered any issues. If you find that there have been issues previously, ensure you put aside a contingency budget for these expenses. Typically for most footings the costs are not excessive, however, for major earthworks to place a garage underneath a home or similar the costs can be high. So be prepared.
In house designer/architect
Many builders these days have their own designers or have close working relationships with designers. Talking to your preferred builder before having your plans drawn can save you thousands. Builders are more aware of the costs than many architects and designers. Builders are able to identify areas of a preliminary design that may be cost prohibitive and can come up with an alternative and cheaper solution. Remember, builders are working with materials and designs in the "real world" everyday. The see and experience first hand what works and what doesn't.
A building firm can then liaise directly with the designer to ensure the design for your new home will fit within your budget.
We have some more tips available within our free guide. You can request this below. It is certainly worth the effort to make sure you have all the facts before signing any contract.