How to avoid paying for variations on your next build

by Ryan Stannard | April 6, 2024

The number one fear for clients looking to build is typically related to the cost of the project. 

Clients often worry that the final cost of the project will exceed their budget or that unexpected expenses will arise during the construction process.

This fear is understandable, as construction projects can be complex and there are often unforeseen circumstances that can impact the budget.

However, these risks can be reduced, or even eliminated simply by working with a reputable building company that provides a detailed and accurate quote covering the project's plans, specifications and inclusions rather than a free estimate containing allowances. 

Managing Unpredictable Costs

How to avoid paying for variations on your next build1The only time allowances should be included in a fixed price quote is when items are impossible to price accurately and would disadvantage the client by attempting to do so.

An example of this is structural steel and timber. 

The volatility in price on those components over the past few years would require a building company to quote an amount containing a significant contingency that covered potential price rises. 

While some consumers may prefer to limit their exposure by agreeing to a higher contract price, it’s generally far better for the client to contract with an allowance in place for those items which they will only ever pay the real cost for.

The Pitfall of Contract Variations

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Contract Variations arise when other, non volatile components are inserted into building contracts as prime cost items which apply to materials, or provisional sums which cover labour or a combination of labour and materials.

And this is where consumers get caught out with the average building company.

This is because the average building company does not produce a fixed price quote before going to contract, they work off of estimates filled with allowances which in most cases are unrealistic.

The problem is, as consumers, once you have signed a legally binding building contract you are obligated to pay these amounts whether they are in your budget or not.

So rather than ending up in a legal dispute with a builder because you don’t agree with, or are unable to pay the contract variations they are now submitting to you.

Benefits of a Full Turnkey Solution

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It’s best to avoid those situations ever arising by only signing fixed price contract agreements with almost no allowances.

To achieve this, you will need to engage a building company that provides a full turnkey solution and can take care of absolutely everything for you.

They then have the systems in place to quote you a fixed price on all of those components and include them in one simple contract that is easy to understand and execute.

It doesn’t matter if you are building your first home or if you have built many times before, designing a new home can be very overwhelming and when you hear new things for the first time, it's not easy to remember everything.

All the tips I’ve covered here are just a small sample of the information I need to share with you to ensure you are well informed when you get started on the design process... 

Which is why I put together a quick guide for you to download. 

The 7 Things You Must Know Before Designing A New Home.

It’s completely free, and it will help you to avoid any nasty surprises that can sneak up on you when building a custom home.

Just click on the link below and let me know the email address you'd like me to send it to.


Download Our Free Guide For Building In Adelaide