Build for cost schemes make the builders life easy
Recently a lot of people have asked me about schemes whereby they contract a builder to construct their homes or renovations and then they deal directly with suppliers and sub-contractors to buy materials and services.
Well on the surface it sounds like a good idea. It would seem that you can make significant savings on materials and services, with the security of knowing that you control the money. I know more than one customer who raised concerns about paying money to a builder who might then go broke, leaving sub-contractors and suppliers unpaid.
But is it really such a good deal?
Well for the builder it is. They have no risks and all rewards. They get paid to oversee the project, but have no risks themselves.
This is particularly useful for any builder that does not have a lot of capital behind them. They do not need to pay for materials in advance of receiving payments themselves from you the client. Instead you pay the suppliers and the builder simply gets paid for their time.
But do you get as good a rate on materials as other builders would? Are you REALLY getting the same rate that the builder would get his or herself?
Also, when you contract a builder to build your new home or renovation, if work done by a sub-contractor is not up to standard, it’s the builders responsibility to get it fixed. If the sub-contractor goes broke, moves interstate or simply does not have the ability to fix the project, your builder is still responsible to get the project fixed – at no extra cost to you.
So how does it work when you are paying the sub-contractor directly? What if you have paid for materials that the sub-contractor has used, only to find that they have done a terrible job and the materials are unusable? Well you’re builder will no doubt step in on your behalf to try and sort things out. But what happens if the sub-contractor goes broke, moves interstate or simply does not have the ability to fix your project? Who is responsible then? Certainly the builder does not need to worry about it to the degree they would under normal circumstances.
In fact, what responsibility does the builder actually have? What real recourse do you have against them? Essentially they appear to be doing little more than project management. Are they really the best person to be managing the project?
Our system is simple;
- builders tender for the project
- the winning builder is then responsible for the construction of the project
- we manage the project on your behalf • we deal directly with the builder
- the builder is responsible for dealing with any problems arising from work done by sub-contractors
- the builder is responsible for dealing with individual suppliers
So how does this compare with these other schemes?
Well with our system, providing you have hired us to administer the contract (manage the project for you) then you deal with us. That’s it, that’s the extent of your involvement. We deal with the builder on your behalf and the builder deals with everyone else.
Under these other schemes, you deal with the builder, you also deal with each and every sub-contractor, you also source materials and deal directly with suppliers, and if anything goes wrong, you need to deal with the builder AND the person who created the problem in the first place.
Now all of this might be bearable if you were saving thousands and thousands of dollars. But will you really be saving that much? Will you be saving any more than you would using our tendering system?
With our system a number of suitably qualified builders all tender on exactly the same design, exactly the same materials and exactly the same specifications. They are responsible for getting the best price on materials and the best rates from sub-contractors. The ones that get the best rates will typically have the cheapest tender, and providing all else is equal, they will win the project and you the client know that you have received the very best price. Best of all, you’re not having to run around sourcing things, organising things, dealing with problems as all of those things are taken care of for you.
So are these schemes really worthwhile? Well in my opinion, and the opinion of others I know in the industry they are not.
So if you want the very best price for building your home or renovation, give us a call today and let us show you how we can not only save you money, but also save you time and heartache.
Click HERE to contact Dion Seminara Architecture.
