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November 8, 2017

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How to Avoid Budget Blowouts when Building

Planning that new building project can be a daunting task, and if you watch the TV programmes; it can be fraught with disaster.It doesn’t need to be this way, it can be challenging but should also be exciting and rewarding, its all a matter of approach. Pieter Oosterbaan, Managing Director of Beacon Constructions has been in the business of residential construction for 32 years. Having overseen hundreds of successful projects over the years, he knows from experience that it can be enjoyable if approached the right way.

 

“What most clients are looking for is a project which is designed and built within their budget, and finished on time with a minimum of inconvenience. This is not too much to ask for and should be the end result of most projects”, comments Pieter.  

Unfortunately a common route for many people is to engage a designer, discuss a budget and move on to complete the plans, which are then sent out to three or four builders for a competitive tender. This all sounds fine, but there are some serious flaws.

 

Often not enough consideration is given to the budget at the design phase or unrealistically low budgets are set. Projects have a habit of growing as they are designed, which results in the escalation of costs.

 

The first sign of an issue will be when the tenders arrive, and are 50% to 100% over budget. By this time all involved will have a significant investment in the project, owner and builders alike. Now; if the project proceeds at all, the client will be very tempted to take the lowest tender (whether or not that builder has the right qualities for the job). That ‘lucky’ builder with the lowest tender will then be ask to enter into negotiations to see if they can further reduce their price. (From the builders perspective you are now wondering what mistakes you may have made to be the lowest tender.) Reluctant to lose the investment he has in the project already, he may be tempted to make some unwise decisions.

 

Frequently this sort of arrangement ends up in a lose, lose situation. The client loses by ending up with an unhappy project, substandard work and at a cost much higher than their original budget. The builder loses, by trying to deliver the undeliverable with little or no profit, and is forced to try to recover profit where ever they can on the way through, usually resulting in an unpleasant situation for all concerned.

 

It simply doesn’t have to be this way. More and more project owners, designers and builders are working together in teams to create the project from planning, through construction on to completion. This enables the client to get quality advice on budget, design and time frames from the people who will actually be building the project. It also helps to build a good relationship between all involved and makes for a happy project, producing a high quality product on time and on budget. A win, win situation.

 

Beacon Construction is a good example. Pieter Oosterbaan and his team like to work with their clients from the beginning of the project, providing good quality planning advice, quantity surveying that is relevant to the domestic market (very important!) and excellent supervision of the project, with an emphasis on attention to detail ensures budgets and time frames are adhered to. The end result is a high quality renovation or new home and, most importantly a delighted client.

 

Pieter comments, “In my experience; most of our clients expect a high quality job, on time and on budget; but because of the bad press about building projects, they are surprised when they find the building process has also been exciting and enjoyable.”

 

So what advice would you offer people contemplating a building project:

“Seek reputable people to deal with who have a proven track record with the type of work you are planning, this will involve some research. The internet is a great help and sites like www.masterbuilder.org.nz and www.gobuild.co.nz are a couple of good places to start.

 

A team approach will ensure that you are working closely with the people who will be building the project from day one, everyone will be aware of what is required and the project can be tailored to suit your needs and budget. A win win result!

 

“Clients looking for certainty over budget, design and a timely start and completion would be advised to choose their builder and architectural designer at the same time. Having them work together along with the client in developing the design will save significant time as well as money and will deliver a superior project along with a rewarding experience. Unfortunately I have lost count of the number of sets of plans that have had to be scrapped as a result of them not matching the client’ s budget. This is usually because they have been prepared on the wrong fundamentals. Pieter Oosterbaan is absolutely right, it does not have to be this way and I unreservedly endorse his comments above.” Michael Fox, Registered Master, Builders Federation Director.

 

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