The Project Builder
Project builders work at the lower to middle end of the market where budget is the driving factor. Essentially there will be a range of homes already designed and ready to build. Some minor changes can be made to the design but generally these homes are better value for money when bought "off-the-shelf".
Advantages
- There are no extra design fees as the range of homes on offer has already been designed.
- Uniformity of design and large numbers of homes mean the builders have good economies of scale when buying materials. For homes up to say $600k this is usually a cost-effective option.
Disadvantages
- Limited range of designs. Designs are generally simple and include only basic specifications.
- These are big companies and in almost every case you will be dealing with a number of different people in different departments, not a single contact who is accountable to you.
- Variations. These homes are designed and are ready to be built off-the-shelf so changes to the design can incur large fees. If you go beyond the number of variations provided for in the contract you may lose the cost advantages of this model.
Summary
A good option if you’re happy to have the same design as others. This system better suits a flexible and easy-going person/couple with a limited budget. If you have very specific tastes and are inclined to change your mind, the variations can take you well over your budget.
The Architect/Designer
Most people know this model; it's an established option at the middle to top end of the market. The owner contracts the architect or building designer directly to design a home and supply the working drawings. Standard rates for this stage of work are around 7% - 9% of the estimated contract value. Most architects then also like to oversee the contract administration, essentially overseeing the builder. Standard rates for this are around 4% on top of the design fees. The main relationship for the owner is with the architect/designer, not the builder.
Advantages of this approach
- If you have an architect or building designer whose work you know and love, this can be a good option, for at least the design phase, to achieve the look you desire.
- A competitive tender for the building.
- Most architects work with builders they have used before.
Disadvantages
- Many architects do not have a thorough understanding of current building costs and trends. If you have a strict budget, this can be a significant risk. It’s unnervingly common for people to receive initial tenders/quotes 'way over budget'.
- Architects are perhaps not the best building supervisors.
- In our experience, savings derived by competitive tenders can often be outweighed by impractical design elements and numerous variations during construction.
- The communication process during the building stage can often be a weak point.
- Architects/designers may have less stake in the completion of the project. Their principal interest is the design, not the quality of the finish, the cost or completion time.
- There is no incentive for the architect/designer to reduce the number of minor or major changes to the design prior to or during the construction stage. Cost increases and time delays are more likely to occur and can create problems between the owner, architect and builder.
Summary
This can be a good option if you like their style, but be aware of the risk that your budget may be revised upwards. Of the three options here, this is the one with the highest risk of delays and cost increases during building.
The Custom Builder/Designer
This is the Humphrey Builders model. The custom builder will control the process all the way through, from architecture to completion. If you're building in the price range above $800 - $900k you should at least consider this option.
Advantages
- You get a custom designed home, as per the architect/designer model. Depending on the project and your preferred style, Humphrey Builders will choose the appropriate architect or building designer. Homes on our website include a vast range of architectural styles designed by both architects and building designers, chosen specifically for our clients' requirements.
- You have a builder as the single point of contact during the whole project. This leads to closer supervision compared to the architect approach and professional supervision is what delivers a quality finish. It's not as simple as concept, plans and build; someone needs to manage the interior designer, the kitchen consultant, the data consultant, the air-conditioning consultant, the landscape designer, the lighting designer and all the trades' people who will be affected by these consultants.
- A higher probability of more reliable budgeting and cost control than with an architect.
- A higher probability of meeting timelines and the final completion date.
- It is clearly in the builder's interest to ensure all designs and documentation are as thorough and accurate as possible prior to commencing on site, as any changes or delays during construction will not only affect our client's budget but also the builder's own profitability and time lines.
Disadvantages
- You lose the ability to competitively tender. A competitive tender can sometimes result in lower initial quotes but there are two things you need to understand about this.
- Firstly, a competitive tender will often lead to less accurate budgeting. If you're one of four builders asked to tender for a job, how much time are you going to put into researching the precise costs of the project? You only stand a 25% chance of getting the job! With the custom builder model, the builder knows he will be doing the construction so he can invest the time in accurately costing the design. At Humphrey Builders, clients are kept informed about costs during the design stage and comprehensive estimates are done before anyone commits to a building contract.
- Secondly, it places the successful builder in the situation where he is locked into a price and a profit margin. This may lead to pressure to lower the quality of finish or focus on other jobs to the detriment of your job.
Summary
This business model gives the builder certainty so he can invest the time in managing the design, budget, plans, specifications, quality of construction and customer service all the way through from the first phone call to handing over the keys. Better management means more accurate budgeting and a higher quality finish without sacrificing the quality of architectural design.
In some cases, usually depending on the attitude of the architect, it's possible to match a favourite architect and a favourite builder. However, if your concerns are construction quality and accurate budgeting, we recommend placing the Custom Builder at the centre of the process.
You're welcome to call Humphrey Builders to discuss any issues this White Paper may have triggered; our number in Perth is 9284 5444. Ask for Dean Humphrey.
