The importance of Preliminary Agreements

Building a custom home is similar to buying a car in that you need to consider three important factors: Size, quality and level of complexity. It just costs a lot more money than a car so this is a process that needs ample due diligence. A custom-built home can cost anywhere from $2,000 per square metre right up to $12,000 or more per square metre while a project home from a volume builder can cost around $1,600 per square metre.

The quoting stage of any build is critical to ensure you and your builder have an accurate figure to work with. If a builder does a ‘free quote’ it’s estimated that you have a less than 20% chance that the quote will be accurate. A typical free quote or estimate should be used at the very early stages when conducting a feasibility test to see if a certain path in construction is worth pursuing and within budgetary constraints. 

So what is a “Preliminary Agreement”? 

For a quote to be meaningful, it has to be accurate, contain clear and detailed information for both parties to rely on as the build moves forward. An accurate quote takes a significant amount of time and money to prepare and this process is referred to as a Prelim or Preliminary Agreement.

A custom build requires a one-off detailed, fixed price quote that is tailored to your unique project. Your custom home is not like a project home that is replicated hundreds of times nor should it be approached in this way. By using Architectural/Engineering plans, Specialist reports, Quantity Surveying and spending extra time with a client to go over Finishes & Options in detail we can more accurately assess the work required to formulate a scope.

Like anything in life, you get what you pay for and there is considerable work that goes into a preliminary agreement. Choosing a builder that charges for a quote on something incredibly complex such as a custom home means they have honed in on a process they use to crunch the numbers and will give very specific information as well as a scheduling timeline in their quote. 

Prime Cost & Provisional Sum items

Many people are also unaware of what provisional sums (PS) and prime cost (PC) items are. These are parts of the build that are normally in a free quote and can’t be accurately quoted early on and are given an estimated allocation by the builder when quoting. A builder that spends the time with a client in the quoting process and enters into a Preliminary Agreement with a client can normally completely bypass PS & PC items because all the answers are normally there; time and effort just must be put in to shed light on these answers. The big problem arises when these numbers are low-balled by some builders to make their quotes more attractive and then the client is hit with a very uncomfortable costing surprise later in the build.

Make sure the quotes you receive have detail surrounding quantities and your builder has gone in to bat for you by negotiating with suppliers and subcontractors to receive the best pricing. If the time and effort have been put in there should be no or at the very least minimal PS (Provisional Sum) and PC (Prime Cost) items for optimum accuracy. Bear in mind it’s not just the building costs you have either, you should also consider costs for landscaping, fencing and site preparation, driveways, letterboxes, how many taps you want in the garden and where they’re located. Believe me – the list goes on and on….and on and a good builder will cover all these items and options with you early in the preliminary process.

Find a Custom Home Builder that is a specialist. 

Find a specialist builder who has a proven track record of building the type of home you are looking to get done. One of the mistakes many people make is getting lots of ‘free quotes’ from a range of non-specialist builders. It’s a complete waste of time. It’s more beneficial to spend your time looking for specialist builders who specialise in the type of build you want to be done, whether it’s a custom home builder or renovation and extension specialist.

If you have a difficult site, it can often result in cost blow-outs in the preliminary works. We also commonly see labour cost blow-out due to delays often caused by the client being late with their selections. Make sure you use a builder who has a process’s and systems for programming the job well before they start and get your fixtures and fitting selections in as early as possible to avoid costly delays. Pro-active builders will be asking for these early on in the piece and should demonstrate a proven process for doing so.

What’s an Austral Build Preliminary Agreement look like?

During our initial consultation, we will estimate if your budget is workable against the scope. If we believe there is a mismatch between your budget and the realistic cost of the project we won’t offer a prelim and we can start to assess with you where reductions can be made and try to hone in on what is “really” important to you and your family in your new home. If we do enter into a Prelim agreement with you, we are committed to going to work in producing a guaranteed fixed price Tender Submission with a detailed breakdown of the entire scope with all finishes and fixtures assessed. We even go into bat with suppliers to negotiate the best prices. 

How much is a Preliminary Agreement?

Depending on what stage of planning you’ve reached and what documentation you have obtained, the remaining steps of the Prelim and the quote process will vary. Have you already obtained plans from an architect, engineer, interior designer, surveyor etc for Austral Build to use in our pricing? 

The fee we charge you will be dependent on the estimated length and complexity of the build. An architecturally designed home on a difficult site with a full set of Architectural plans, DA approvals and specialist reports supplied could cost up to $100,000.00. A typical prelim agreement will generally cost between $5000 and $10,000 depending on the project. The associated costs and how we move forward will depend on the construction documentation you already have and what we need to produce on your behalf, which may include but no be limited to:

• Detailed and Contour survey
•  Ident Survey
• Feasibility and development enquiry
• Soil or geotechnical reports
• Architectural concept and subsequently detailed working plans
• Interior Designs & finishing schedules
• Engineering reports and plans
• Requirements for planning consent and approvals
• Other specialist consultant reports
• Locating existing infrastructure 
• Cost analysis/quoting
• Analysis of plans, existing plans and construction documentation

If you’re in the very early stage of the project or have yet to engage an architect, we would suggest asking us to put together a design and construct package for your project. Alternatively, if you already have some or all of these documents, this is taken into account. Austral Build will assess what needs to happen from here and the associated costs for our time to produce highly detailed and accurate pricing that you can rely on for your project and finishing schedules that will be outlined and agreed upon in the Prelim Agreement.

The groundwork for a superior custom home.

At Austral Build we always put the highest level of effort, quality and attention to detail into everything we do, including quoting on projects through our comprehensive fixed price tender submission process. Our confidence in this process is so high that we guarantee all fixed priced tenders/contracts are exactly that – fixed price, no variations no hidden surprises.

Our team provides a personalised, highly detailed and transparent service, employing experienced building estimators to create fixed price Tender Submissions for our clients. Our Tender Submission process is a service that gives you confidence and certainty that your project will be completed to the highest of standards, on time and on budget. The Tender Submission replaces the usual “Builder’s Quote” – a superior process delivering peace of mind to all parties.