Estimating for Owner Builders
Our New South Wales and Queensland Owner Builder course students are introduced to the basics of estimating and costing at a level which is relevant and appropriate to a typical owner builder project.
Estimating is different to preparing a quotation and for the owner builder, there are several basic principles that need to be understood.
At the most sophisticated level and arguably the most accurate estimates are produced by quantity surveyors. These tertiary qualified professionals generally produce and work from a Bill of Quantities that in theory considered each and every component of the project down to the last nut, bolt, nail or other fixing. They consider the project at a micro task level and assign a value based on the three project parameters of time, scope and quality.
For most owner builder projects, this will not be required and you should have a basic understanding of how to 'predict' project costs.
In estimating at project level, we can attack the costing in one of several ways.
Firstly, the owner builder may choose to base their estimate on a square meter rate.
You will still need to know the quality you wish to achieve and what your project expectations are. For example you need to establish is your project high end, mid range or have only budget inclusions? From here we can use recognised rates to establish the likely build cost of the dwelling.
Remember however, everyone is different, has different needs and very different expectations. Be realistic and do not underestimate costs as this will ultimately result in cost overruns or cash flow (project funding) issues.
To put this in some perspective, consider a high end house, it may not be unreasonable to spend $300 per square meter on floor tiles whereas a more general rate may be 60 to 70 dollar per square meter. Appliances, fixtures and fitments are another area where costs can vary considerably. A set of taps could be $100.00 or as much as $1200.00 and upwards. A stove top could be $300.00 or $3000.00, so know yours and your family's expectations.
Your square meter rate will also vary for a low set as against a high set.
For the sake of providing an example, when considering a low set house using normal construction techniques such as tile roof, slab on ground, timber frame cavity brick built in a capital city will typically have a build cost of 800 to 1200 dollars per square meter for a standard level of finishes. A house of the same construction type with high end finishes could be anywhere from $1500 to $2500.00 per square meter but of course the sky is the limit.
So at 1200 per square meter, a typical 240 square meter house could be budgeted at around 288,000 dollars.
When considering your owner builder development, there a couple of rules of thumb you should be familiar with. Possibly the most important of these is the value of the construction when compared against the value of the land. In order not to over capitalise, you generally would not build a house that was significantly more expensive than the cost of the land. So a block worth $500,000 would normally support a $500,000 build cost.
Conversely, using the rules of thumb and standard rates, you can get an idea of the size of home you should consider for any given land portion.
In the example above, a $500,000 block would warrant a 416 square meter home with a build cost of $1200 per square meter.
In our owner builder course we go into far more detail and introduce our students to worked examples of costing and producing estimates.
In future blogs we will consider several other methods and techniques that owner builders can use to determine likely costs for their projects or specific scopes of work.
It was quite a shock to read in the information in the course about estimating of a build to be roughly equal the price of the land. Whoa, there are a few slaves to the bank out there if that is the case. I am all for building small (under 100 sq mt) and having two or more stages of building over several decades. We started that way and what we have now is ours, not the bank, well in advance of our friends whom are still paying off their initially larger homes. Just a thought for discussion.
One element i'm sure you will cover later is the overall saving of doing some of the labour ourselves. I'd be pretty happy if I could our build to $850 per square metre
I too was fascinated that your build cost should equal the value of your land. I myself are always conscious of over capitalising so that is a good bit of information to remember.
not hard and fast Natalie but certainly a good rule of thumb to consider.
We are putting up a 50 square metre granny flat in our back yard. We are surprised at some of the prices we have been quoted and have had to work hard to keep costs within a reasonable budget. Does the average cost of $1200 per square metre still apply to this type of addition? Also, does the $1200 per square metre average exclude overheads like Council approvals, drafting of plans, engineers etc, as these extras have been more than we realised!
My last project was getting a granny flat built in Colyton, west of Sydney.
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Rick Heaton is a Building and Construction Industry professional with formal tertiary qualifications in management and training.