home building

What To Know When Building a Home In Australia?

Want to make your dream home a reality? Then this guide, designed for homebuyers in Australia, will help you. Be aware of the challenges you will soon face and how to overcome them. Make wiser decisions moving forward.

Choosing the perfect house plan and the building is a complex process. To achieve your desired results in a residential property, careful strategising and planning are crucial before construction begins. Here are the three most important things you need to know and plan around:

The Laws for Building a House and Your Rights

There are laws and standards to follow when building a new house. Ensure everything you do is within your rights and are legal to avoid complications during the whole process. These laws apply to the new home itself, your builder or trade contractor, the garage or shed fencing, pools, landscaping, and renovations or repairs.

The construction process

Every construction process is unique and depends on the scope and complexity of the project. But each time a sustainable house is built, the process follows typical steps, and the principles are similar for smaller-scale projects like renovations.

The Renovations and additions and Buying a home off the plan articles include more information on the construction process specific to those situations.

Step 1: Choosing a builder

choose a builder

Before you get to the stage of choosing a builder, your research and design process will have yielded finished design documents to put out for tender by builders (see Preliminary research; The design process).

Two common ways to choose a builder are:

  • choose a preferred builder and invite them to prepare a quotation or ‘tender’ (and seek an alternative quote to ensure competitive pricing)
  • call open or selective tenders from a range of builders and choose based on price.

Each method delivers a builder and a quotation, but one emphasises the best price and the other, preferred builder. In either case, note in your tender documents that you are ‘not obliged to accept the lowest or any tender’.

A designer generally helps choose builders to tender for a project based on recommendations and experience. Advertised open tenders deliver variable outcomes and often exclude smaller specialist builders who do not have time to tender for multiple projects.

Your choice of builder is almost as critical as your choice of designer.

The principal role of a builder is to coordinate the building works as a project manager. This role includes supervising and coordinating each trade; sourcing, quantifying and coordinating the delivery of materials; and, most importantly, quality-assuring the entire process.

Builders and tradespeople are understandably risk-averse and tend to manage risk using tried and proven materials and practices. Sustainable outcomes often require the use of innovative materials and techniques. To avoid problems later, ensure each builder is made aware of your commitment to a sustainable home when they are invited to tender.

Sourcing certified environmentally preferred materials (see Materials) at competitive rates and supervising tradespeople to ensure materials are correctly installed requires a builder prepared to ‘go the extra step’. Choose a builder who is both trained in and committed to delivering sustainable outcomes. Familiarise yourself with environmental certification systems to inform your own decision or agreement.

Step 2: Tender documents and contracts

In projects being tendered by more than one builder, this step precedes Step 1.

Tender documents must identify any sustainability practices or materials certification requirements that are different from business as usual. Attach schedules to the tender documents that tenderers are required to sign.

Allaying builder concerns about the unfamiliar aspects of sustainable practice can reduce the amount they allow for unknown contingencies.

Contingency sums

Areas of unknown risk can be accommodated through contingency sums or allowances that can be called on to cover unexpected costs. They are often used to cover unexpected subsoil and foundation related costs; increasingly, they are being used to provide flexibility in choosing innovative sustainable technologies and practices.

Prime cost schedules

Another way to overcome risk aversion on the builder is to ‘nominate’ subcontractors to supply and install innovative technologies and provide the builder with a ‘schedule of allowances’ (or ‘prime cost schedule’) to include in the tender.

Many designers choose and specify the exact make and model of essential or high-cost items such as windows and doors, solar hot water systems, smart metering and energy control systems, and on-site renewable energy generation. You or your designer can have these items quoted by preferred suppliers and nominated in the contract as prime cost schedule items to avoid substituting inappropriate or substandard products by competitive tenderers.

Preferred subcontractors

You can also nominate preferred subcontractors if you know a local green plumber, electrician or painter who is reliable and professional. Many builders have selected subcontractors, so negotiate this option carefully.

Lump-sum versus cost plus

Choose between ‘fixed price/lump sum’ or ‘cost plus’. These decisions are usually made before calling tenders, but revisions may be negotiated with the chosen builder before contracts are signed. Lump-sum tenders and contracts are generally effective at capping the budget but can encourage cost-cutting to compromise sustainable outcomes.

In cost-plus scenarios, the builder nominates a percentage addition to materials costs for ordering and scheduling and hourly rates for the builder and trades. These contracts require high levels of trust between owner and builder. While allowing the owner more control over expenditure decisions, they reduce builder responsibility for cost overruns. This can force cost-cutting and loss of critical sustainable features (e.g. photovoltaic arrays) as the budget is exhausted.

For tight budgets, fixed-price contracts are generally preferable. If cost-plus is used, quarantine budget allowances for sustainable features.

Contracts

Standard home building contracts are available from many sources, including lending authorities and industry peak bodies. They form the basis of your legally binding agreement with your builder and any dispute resolution.

Choose a contract that strikes a reasonable balance between your needs and those of your builder. Clear dispute resolution provisions and nominated independent arbitrators are essential. Annex the builder’s tender, the council approved plans and specifications, certified engineering details and any schedules (prime cost, contingency sums or nominated suppliers/contractors) to the contract.

Have your solicitor and designer review your contract before signing.

Indicate sustainability requirements on specifications and include penalties for substituting inferior materials and products.

Tendering tips to ensure environmentally preferred outcomes

Drawings and specifications form part of the contract documentation. Ensure they indicate sustainability requirements and include penalties for substitution of inferior materials and products.

Consider nominating essential, high-cost items such as windows in a prime cost schedule to avoid competitive tenderers’ substitution.

Clearly describe sustainable methods or materials that are not yet standard building practice and include advice on implementing or sourcing them.

Include unambiguous instructions that prevent changes or substitution without approval by you or your designer.

Ask tendering builders to check tender documents for sustainability compliance risks and note or allow for any contingencies in their tender.

Ask builders to recommend alternative solutions that suit their trades and supply chains while delivering equal or improved environmental outcomes.

Consider the use of contracts that link payment to the achievement of specified environmental outcomes (e.g. details of environmentally certified materials, window and glazing specifications, and reuse or recycling facts).

Develop a schedule of reusable materials (if you’re renovating or demolishing an existing house) and negotiate their reuse with your builder.

Owner building

Some consumers choose to manage their projects as owner builders. Unless you are experienced in housing construction, are fully conversant with local building practices and supply chains, and have good working relationships with local trades, this option is fraught with risk.

Sustainable construction often requires tradespeople to adopt new practices and materials, and this can be very difficult for an inexperienced owner-builder to negotiate.

Step 3: Construction supervision and certification

Many opportunities to achieve best practice sustainable outcomes are lost during construction. This is often due to a lack of understanding of environmentally sound principles and practices by builders and tradespeople or ineffective certification.

Supervision

Your builder is frequently called on to decide about materials and procedures that vary from those nominated in the plans and specifications due to trade preferences or unavailability of preferred materials. Builders refer these (often urgent) decisions to a supervisor for verification if one is nominated. If not, they may make expeditious but less sustainable choices.

Well-informed advice from experienced professionals can quality-assure decision making and ensure environmentally preferred choices.

Professional advice or project management by a committed highly informed individual or company is critical to quality-assure the decision-making process and recommend environmentally preferred alternatives such as those discussed throughout Your Home.

Many designers offer a supervision service as part of their fee structure. Architects in some states are prevented from providing project management services. If you adopt this role as owner, consult competent advisers or consultants to verify your decisions.

Project management or supervision adds substantial professional indemnity risk to a designer’s insurance profile, so many designers prefer a less formal advisory role. You should sight a project management endorsement on a current professional indemnity policy before formally appointing a supervisor or project manager.

Certification

Your project’s inspection and certification at critical stages are required by law to confirm that it is built by the approved plans, specifications, relevant Australian Standards, Building Code of Australia and council regulations to ensure structural integrity, health, safety, and amenity.

These inspections can identify and rectify problems or omissions before they are built-in. Reported instances of inadequate certification of sustainability compliance in several jurisdictions indicate that this critical aspect is sometimes overlooked. 

Step 4: Commissioning and handover

Sometimes the best design and construction innovation can be wasted because the concepts aren’t communicated to the handover owner. Ask your designer and builder for an owner’s manual. If you are a practitioner, give your client detailed instructions on operating and maintaining the home at handover. If you sell your home, make sure the new owners have a copy.

An owner’s manual or operation guide covers:

  • summer and winter operation settings and day–; night routines for:
    • operating and maintaining heating and cooling appliances
    • opening/closing curtains and windows
    • operating ventilation systems (cross and stack)
    • operating shading systems
    • operating roof space ventilator
  • cleaning of solar appliances
  • termite barriers and inspection schedule
  • operating guides for water harvesting and treatment systems
  • isolation valves for services (gas, electricity and water)
  • hot water system sacrificial anode replacement date
  • hot water system pressure relief valve checks
  • painting intervals
  • appropriate cleaning products for all surfaces and finishes
  • landscape maintenance requirements.

Take care to avoid these pitfalls.

Common causes of disappointment or dispute emerge from choosing the wrong designer or builder, or both.

Budget overruns can arise from circumstances within or beyond your control:

  • preliminary cost overruns (e.g. council fees, design, geotechnical report, engineering design and certification, surveyor fees)
  • site challenges (unforeseen site difficulties)
  • weather
  • materials unavailability
  • not ‘nailing’ the details (e.g. materials selection or indoor air-quality friendly finishes)
  • Receiving/accepting poor advice (particularly from suppliers and inexperienced tradespeople) when urgent decisions need to be made.

Very few new design/build projects fit within the client’s timeline expectations due to:

  • council delays
  • lengthy design processes — mainly when many changes are made
  • delays finding an available builder
  • weather and builder related delays
  • tradespeople shortages
  • availability and delivery of sustainable technologies that are outside the builder’s standard supply chain.
  • Negotiating reasonable, equitable compromises may be beyond your capabilities.

Under-performance can be due to design, construction or operation:

  • Thermal performance may not deliver to expectations, commonly because of poor operation, poor sealing, failure to close or open windows, inadequate or faulty insulation, bad shading, and inappropriate glass use. A building sustainability assessor can advise on these matters.
  • If energy consumption is higher than expected, monitor individual appliances’ consumption and install smart metering or energy management systems. The behaviour of one individual in a household can often unknowingly account for excessive energy use.

Fees and Your Budget

fees and budget

Getting realistic calculations is essential for a financially secure house building process. Get multiple quotes based on your house plans for comparison, and make sure that the same things are included. It would be wise to get a fixed price because the items that aren’t fixed can change and become expensive in the future. Other costs in building a new home include soil and contour tests, site costs, flooring, landscaping, modifications and add-ons, and land registration. Once you know all the fees and expenses, you can then prepare yourself financially for all the fees, costs, and homebuilding costs.

Budget more than you expect

No matter how much you think the building process is likely to cost, it’s expected to cost more. There could be any number of items that aren’t included in the estimate your builder gives you. For instance, your builder is unlikely to have costs such as electrical and gas metres, NBN hookups or window coverings. Items such as landscaping and outdoor concreting, fences and gates, decking and letterboxes might also not be included in the estimate. These are known as finishing costs and could run anywhere from 15-25% of your budget. You’ll also need to consider site costs, which are the costs associated with preparing your site for construction, and you may also have to pay for planning application fees.

In addition to add-ons you might not have considered, you need to budget for unforeseen circumstances. For instance, you might want the luxury of changing your mind should any of the fittings or materials not match your expectations. You can use the table below to work out a rough budget.

Communicate constantly

Throughout the process, often communicate with your builder and tradesmen. Get regular updates on the progress of construction, and check-in yourself. It’s a good idea to take pictures of the progress regularly so you can document any problem areas.

Don’t be afraid to stick to your guns. If your builder, contractor or tradesmen tell you something can’t be done, push back. It might cost you extra, but odds are, with the right amount of effort, you can accomplish your vision. It’s worth putting up a fight for details that are important to you. After all, you’re the one who has to live in the completed home.

With good communication, though, you should be able to avoid arguments during the building process. If you’ve laid out what you want and the details you see as non-negotiable, construction will run much smoother.

Know your rights if something goes wrong

If you’ve planned your building process well, budgeted well and signed on with the right builder and lender, it’s unlikely you’re going to face any insurmountable problems. If the worst should happen, though, there are several channels you can go through for complaints against builders.

The Neighbourhood and Your Long-Term Goals

Assess the amenities and opportunities around your chosen location. After all, you’ll be living in this place for many years to come. Being comfortable in your new home also means that the neighbourhood suits your lifestyle and future goals, such as having a family or developing your career. Do your research and see if you like the transportation, education, shopping district, jobs available, recreation and entertainment facilities, and local services for your contentment and satisfaction.

Building a home will be an expensive process, and you’ll likely end up paying more than you anticipated. That being said, there are ways you can save money. Shop around for the best prices on fittings and fixtures and the materials your builder will use. Get multiple quotes for any item needed during the construction process.

Your new home is complete, and all that is left now is for the final inspection, which your local Council’s Building Inspector will complete.

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