Owner Builders Blog

Are owner builders entitled to builders or trade discounts?

I get asked this a lot by many of my owner builder course students.

When I respond, I always think of a famous quote;
“you get what you negotiate, not what you deserve!”

I guess that goes for owner builders as well. Simple truth is, that with the advent of the mega hardware stores Like Bunnings, the volume they sell and the deals they can source through their buyer dictate the price point that the are able to offer any of their products.

So, does that mean that owner builders should just accept what they are offered at full retail?
No, you always need to ask. I have many a good friend who has been very successful in a variety of areas and the one common theme is that they always buy well.

Then, how can owner builders make get the best price out of their suppliers and contractors.
It takes work and organisation. To get a great deal out of your hardware supplier, the most successful approach is to do exactly what a savvy professional builder or contractor would do. Have the suppliers compete for your business and have them quote on a job lot.

Show them you are serious, go to the suppliers trade department with a well compiled and organised set of tender documents. Specify exactly what it is you want to purchase, provide, quantities, product and model numbers, profiles and colours. Let them know you are seeking offers from other suppliers, make them work for your business.
Making the supplier want to be your provider of goods, is the best way to get a good deal, but make certain you know exactly what it is you want before you present the tender documents to them. Understand that each supplier may have different products they will offer, so be sure you understand your own mind. What is negotiable what is not and what represents a suitable alternative.

Remember that this does not just work with suppliers, you need to do the same work with the selection of trade contractors for your owner builder project.

Always seek three quotes and make certain the tender documents include specifications and work instructions that give you the best opportunity to receive quotations that can be compared like for like and that they are based on exactly what you have specified and that they meet your expectations.

Sounds easy? Well, it’s not. Like all areas of owner building, the best way to ensure success is to be disciplined and organised.

Good luck with your owner builder project.

Rick

It is always an interesting year for business when there is a Federal Election.

Unlike almost any other event, a Federal election has the effect of putting the brakes on the economy and particularly building activities.

We have noticed a real slow down in owner builder courses being completed, and talking to some of our competitors, we are not alone.

There has been a general easing of the housing market, particularly in Sydney and Melbourne, with even Brisbane coming off by about 4 to 5 %.

However, we all know what happens, whoever gets in, the building and housing industries will fire up again, but we are not expecting it to be with the same level of activity as seen in 2017/18.

There have also been some changes in the course requirements, not specifically owner builder course, but certainly for the White Card or General Safety Induction Training. No longer can this training be completed online.

Whilst we believe we offered a good course that provided real skills and knowledge, we understand the reasoning beyond the move and of course have now removed our online offering from our website.

Interestingly, most things go in cycles, and we are seeing an increase in the number of owner builder students wanting to complete the course face to face. The online course is absolutely complete and full of great information and activities that have been successfully preparing our owner builder students to complete their projects for over 20 years.

The face to face course does offer advantages.

One on one training provides the opportunity to ask questions and resolve issues on the spot. Further, we encourage our students to bring in their plans and have them reviewed by our qualified building staff.

As well, we find it is a great way to introduce our owner builder students to the many resources we have tailored to owner builder specifically.

It is a little more expensive, but more and more of our students are letting us know the cost is worth it.

Our training facility in Ormeau, is conveniently located on the Gold Coast corridor smack bang in between Brisbane and Surfers Paradise and is easily accessible just off the M1.

We are offering the face to face course by appointment and on scheduled Saturdays.

Contact us for more information and course costs.

Happy Owner Building,

Rick

Selling Your Owner Built Property
 
At some stage you may want to sell your dream home and move to something more suitable.

It could be your family has left and the house is too big leaving you to a decision to downsize.

It may be that your job has taken you to another location and you need to sell to fulfil your career aspirations.
Perhaps you enjoyed the process so much you want to do it again!

There are a few things you need to consider.
Of course, if you are going to do another project, you will need to ensure you have met the requirements in respect to the prohibited (exclusion) period to gain another owner builder permit.

But there are other considerations.

If you need to sell inside the regulated time and inside warranty period, you will need to ensure you include a warning in the contract of sale that brings the attention of any owner builder works to the notice of the purchaser and advise them the works are not covered by a government backed Home Warranty Scheme.

This always raises more questions than I have been able to satisfactorily answer in respect to the individual insurances and statutory warranties that are required either under building legislation or through common law practises.
Most state legislation requires any works undertaken by a licensed contractor, in excess of a stated value, to be covered by insurance and warranties.
So where does the owner builders obligation end and the contractors start?
I wish the answer was easy.

My best advice is to consider yourself as the owner builder to be required to meet the same legislative requirements in your capacity as the Principal Contractor. This means those obligations that would be required to be met if you were a licensed builder with the appropriate classification of license. Eg; General Builder, Builder Low Rise etc.

This in most cases will require you to warrant the structural component of the construction for a period of 6 or more years and unlimited warranty in some areas.

All this without the ability to effect Home Warranty Insurance under the applicable government scheme.
Sounds daunting, and it is.

So, our advice to all our owner builders is to take the time to consult with professional construction insurance providers, understand you relevant legislative requirements and always employ qualified and insured tradesman.
You can mitigate against all the warranty and insurance pitfalls, but it takes diligence.

Take care and Happy Owner Building
Regards,
 
Rick

Owner Builders and Consultants

I always encourage our owner builders to take advantage of the skills and knowledge that professional and consultants can provide in support of owner builder projects.

Very few individuals have an overall knowledge of all aspects of the building industry and the specific details or information that make projects more efficient and more importantly compliant.

You may during the course of your owner builder project seek guidance on a number of varied matters that one person would not reasonably be expected to have a complete working knowledge.

Of course, the use of consultants and the requirement to draw on external advice will be driven by the size and complexity of your project.
A recent example that is quite topical as we come into this time of year, is the use of Bushfire Management Planners.

If you happen to be building in a bushfire prone precinct, I can not stress enough, the important of good design and consideration of all of the factors that will influence the ‘survivability’ of your construction if the worst happens.

This is a great example of where specialist skills and knowledge is required to determine the design and practicality factors that should be considered and incorporated in an owner built domestic dwelling.

Lifestyle living is becoming increasingly popular as is the requirement to build in a sustainable manner.

I am appreciating more and more the importance of good design and the requirement to keep up to date with the latest developments in sustainability and renewable energy.

Unless you are dedicated to that area or design discipline, it is impossible to remain truly up to date and still maintain your day job.
That is why, more and more, I am turning to professionals who focus only on energy ratings, new products and sustainable concept dwellings. It is not hard now to be truly ‘eco friendly’ and many owner builders are heading down this track.

We have always maintained a contract/project management facility to assist owner builders and whilst it went through a considerable lull for around 5 years, more and more of our owner builder students are seeking this service.
I guess what I am saying is, no person could be across all of the requirements and legislative considerations. Give some thought to seeking the advice of those who really know their industry and have the time to keep up to date with current trends and innovation.

It may involve a cost, but the ultimate savings to yourself, your community and even the planet, are usually worth the investment.

Happy Owner Building

Rick

Wow, I cannot believe I have been asked that question again!
Why does a XXXXXXX (insert any qualified trade contractor) charge so much?
It just amazes me that it is so poorly understood why a good tradesman, that runs a profitable business, that is compliant and reliable charges 100 plus dollars an hour.
The fact is any owner builder needs to understand, if you engage a trade contractor, you should be prepared to pay the appropriate hourly rate.
When you engage a contractor, you have a reasonable expectation that the traddie will be prompt, courteous, professional, competent, carry the appropriate insurances and be respectful of your needs and the requirements of the other trades he works with on your project.
So lets take a typical small contractor that employs two or three tradesman.
There business needs to comply with the relevant legislation and remain compliant against the provision of their individual or corporate licenses.
Consider the following fees and overheads that must be met before they can even ‘open the doors’ these days:

• Wages
• Workers Compensation (workcover)
• GST
• PAYG Taxation
• Contractors Risk
• Public Liability
• Professional Indemnity
• Motor Vehicle
  • Comprehensive insurance
  • Registration
  • Repairs and maintenance
  • Tolls
  • Fuel
  • Lease or Hire Purchase financing cost
• Premises and facilities
  • Rent or mortgage
  • Phone
  • Electricity
  • Insurance (building and contents)
  • Rate
  • Water
  • Body Corporate
• Marketing
  • Website
  • Advertising
  • Letterheads and Stationery
• Fees, Registrations and Licensing
  • Professional Development costs
  • Subscriptions and Memberships
  • Annual contractors license fees
  • Business Registration
  • ASIC
  • Accounting Fees
  • Inventory costs

The list goes on and on.
Each week, month and year, these costs are there for trade contractors. These obligations need to be paid in full or the business cannot operate.
After you consider the business expenses, think about what it is that you are paying for.
Do you want safe and compliant services and finishes for your property or will you be satisfied with shoddy workmanship that does not really provide value and may make it difficult to realise a fair price for your property should you choose to sell?
None of this even considers the time and effort that the contractor has expended to gain their qualifications.
Most trades require considerable study and effort to demonstrate competency and be granted their license.
So, if owner builders feel they cannot afford a fully qualified, registered, competent and insured contractor, I would argue they cannot afford not to!
Happy owner building!
Rick

Recently I am getting a lot of questions from our owner builder course students about the legal aspects of building dual occupancy, specifically duplexes.

In the past, we have always responded that this is allowed in NSW but not Queensland and we have been very happy with our answer.

More and more, we are being told that some certifiers are approving duplexes for construction by Owner Builders in Queensland.

We have done considerable research and we confirm that the QBCC still has a restriction under the legislation that prohibits the construction or modification of multiple dwellings, dual occupancies and duplexes under an owner builder permit.

If you are told by your Principal Certifying Authority that it is allowed, then our suggestion to our owner builder students, is to seek clarification from the Queensland Building and Construction Commission (QBCC) for a ruling before you expend any funds on the project.

Failing ti do this may result in the owner builder being in breach of the legislation and be fined or sanctioned as a result.

For those of you who have asked this question, I apologise for the slow reply on this forum, but we wanted to be certain of our facts.

NSW owner builders continue to be able to construct duplexes.

Hope this information is of value.

Best Regards and Happy Owner Building

Rick

I quite often get asked or more correctly told, by my owner builder course students that they are doing the majority of the works themselves so if they do not meet their estimated or established times for works as scheduled, it is no big deal!

Whilst I get their way of thinking, I often wonder if the owner builder has considered the cost of money.

Now if you are one of the fortunate owner builders who are self funding the project, then this will not have as great an impact however if like most of us you need to borrow to complete you project then time is a significant cost.

I will keep the figures very basic and easy to follow, and of course every owner builder project will be different and each of us will have different financial circumstances but you will get the idea.

Lets consider you are building a new home as an owner builder and you your estimate the project cost, including land value, legals, insurance etc, to be a neat $500,000.

With most banks only lending 60% to owner builders, it is likely you will may a loan in the order of $300,000.

Lets assume the owner builder has estimated the timeline to run for 12 months from first turning soil to practical completion and has factored in the finance costs over that period.

What is the cost of a 60 day overrun?

If we take an average 5% on an interest only loan (typical of a construction loan), and assume 90% has been drawn down awaiting final completion, then the owner builder is paying an amount of $1125.00 in interest each month.

60 days will mean an overrun of $2250.00 in interest alone, but of course there are other associated costs such as rent until you can gain occupancy, extended project insurances, temporary fencing, hire gear and such.

So even a two month delay is likely to have a negative impact approaching $10,000.00 and that is not taking into account the personal cost and stress that often is associated with building a new house.

The figures I have provided are very basic and we are in a current low interest rate period so the cost of money is very low. Imagine the impact where interest rates are 10 to 12 % and higher.

So if you think you can afford to let your project just amble along and do not keep a careful watch on your schedule and timelines, it can be a very expensive exercise.

Best Regards and Happy Building,

Rick

Owner Builder Permit Restrictions and Conditions
 
Each of the Owner Builder regulating authorities places certain restrictions and conditions on the use of an owner builder permit.
 
For our major owner builder student base, we are going to do a quick comparison.
 
However, before we consider the differences lets look at the fundamental principles of an owner builder permit that remain consistent across all of the states and territories:
 
An owner builder permit is available to an owner of a property or someone who has an interest in a property such as a long term lessor or a trustee where the property is held in a trust.
 
An owner builder permit is for the primary purpose of building, extending or renovating a domestic dwelling that the owner builder applicant intends to live in for a minimum specified period of time.
 
Owner builder permits are issued to a real person only and cannot be issued to an entity, they are restricted in the number of permits which may be issued to a person in a given period of time. This is to protect those registered builders and trade contractors who have significant investment in their skills, knowledge, qualifications, equipment and resources in their business.
 
An owner builder is not in the business of building.
 
An owner builder has the same responsibilities as a registered builder and is considered the Principal Contractor. 
 
An owner builder has an absolute responsibility in respect to the Work Health and Safety issues on their site.
 
The owner builder is responsible for the organisation of all required inspections and certifications for their project and the retention of the associated documentation.
 
I think that pretty much covers the basics of the obligations and responsibilities that are consistent for owner builder across the states and territories. Lets now have a quick look at the differences:
 

1. In NSW an applicant may be issued an owner builder permit once in every 5 year period. For QLD, this is a 6 year period.
2. In NSW you are permitted to build a duplex, in QLD, you are not however, you may build a granny flat.
3. In NSW, the Department of Fair Trade issue the owner builder permits. In QLD, this is done by the Queensland Building and Construction Commission.
4. In NSW, you must provide evidence of having completed General Safety Induction Training (White Card) prior to being issued an owner builder permit. In QLD this is not a requirement, however WHS legislation places an obligation on a Principal Contractor to have completed the White Card, that is to say in QLD, they are not linked.
5. Both states have an educational component as a pre requisite to obtaining an owner builder permit. QLD has a specifically tailored single unit of competency which is heavily focused on owner builder activities. NSW has adopted the approach of selecting 5 units of competency from the CPC08 Plumbing and Construction Training Package. They are not contextualised for the owner builder and are quite generic in nature. Abacus Training has attempted to focus to the extent possible, on owner builder activities whilst still maintaining the integrity of the required skills and knowledge listed in the performance criteria for the unit.

 
These are the major differences between NSW and QLD, I hope this has provided a little clarity and answers the common questions that Abacus fields from our owner builder students.
 
As always, good luck with your project and,
 
Happy Owner Building.
 
Rick

There are many things that make me smile when it comes to the service we provide owner builders, but one of the greatest kicks I get is when I am told how the lessons learnt and skills gained are put to great use in another unrelated area of an owner builders life.

Today I got a call from a current owner builder student who was excited to tell me how the Work Health and Safety knowledge gained during his owner builder course influenced actions taken in his workplace.

For those of you in South East Queensland, you will know that we are experiencing a bit of a heat wave here at present with temps in the high 30's and relative humidity around the 90% mark. Pretty uncomfortable!

Not only uncomfortable, but potentially extremely dangerous for workers out in the field.

This owner builder student had recognised some of the heat mitigating strategies and identified an appropriate way of communicating the fluid and Uv protection requirements for himself and his team to the relevant supervisors and managers.

What has resulted is an effective mitigation strategy being developed and implemented which can be as simple as a esky of cold water, wide brimmed hats, sunscreen and worker awareness and education.

None of this is mind blowing or earth shattering, however many times it is a simple prompt that is required to achieve a safe outcome for all.

This is not the only area where the owner builder student is adapting skills and knowledge from the owner builder course, he also informed me of how he is creating better excel spreadsheets and word docs as a result of his studies with us.

The WHS example was important and relevant right now.

For those of you that are interested, this owner builder student is out in the Broadwater and Moreton Bay estuaries at present, working with crustaceans in an attempt to stop the spread of White Spot in our crabs and prawn population.

I guess the lesson here and the point I want to make is keep your eyes and your minds open and you will find enormous benefit from the knowledge and skills developed during your owner builder studies that will in all likelihood be of benefit to you across a range of endeavours and undertakings.

Best Regards and as always,

Happy Owner Building,

Rick