If You Think My Fee is Expensive, You Don’t Know the True Cost of a Cheap Job

By SHARON ROBINSON

To Tender or Negotiate – that can be the difference.

Over my time in architecture, I have listened to the perspectives of my clients especially when engaging a builder for that stage of their project. I have also watched how those projects have progressed and seen the short falls, expectations, realities and results it produces.

There is a very real story that is told that tendering a project and getting lots of prices is a good way to get a good deal. And maybe historically that was true. Our housing marketing is quite competitive particularly at the moment so most builders are already pricing pretty leanly to get the work. While on face value that sounds great if you are building a home, there is this little saying.

“If you think my fees expensive you don’t know the true cost of a cheap job.”

This can well ring true.

What I’ve learned is that about 12 percent of  the total build cost is builder-supplied materials. Some 20 percent is the builder’s labor costs (not admin or overhead costs) and about 60 percent trades. With between 50 percent to 60 percent of all building work being made up of labor, tendering means that is the only portion of a building contract you can negotiate on. Building products cost the same from one builder to the next if you are using a set specification of products, which you will be.

When getting lots of prices, you are effectively challenging a company’s ability to run its business and pay its bills. It starts a challenge of what someone’s worth is. It doesn’t set up a respectful relationship platform to build trust and invite value and innovation. Also, putting an accurate price together for one of the most complicated structures an entity will be creating is time consuming. If you want an accurate price, you want a firm that can spend the time getting it right.

And not all quotes are equal. When comparing prices, as a professional, I have to look hard and ask lots of questions to make sure I am comparing apples with apples. Different builders have different pricing structures so what you end up with looking will probably be hard to accurately compare.

Some builders tag out portions of the project to make their price more appealing or substitute certain aspects to give a cheaper alternative with the comparable price listed as an option at the end of the quote. You might have the expectation of what you are paying for, but the reality can be quite different.

The best way to move forward with a builder is to build a relationship. Choose a builder with whom you can have a hard uncomfortable conversation. Any building project is going to have challenges; having the challenges is not the problem – it’s how you resolve them.

Another consideration is thinking about how your architect or architectural designer will work together with your builder. When people can collaborate well and are on the same or similar page, your project becomes the focus, not their scope. That means the outcome for all the parties is what they value, rather than their value being the most important thing.

Sharon Robinson is a Homestar assessor at Smart Living Spaces.