How to read a building quote

Read three things before the total: the allowances, the exclusions and the basis of the price. Allowances, which Queensland law calls prime cost items and provisional sums, are the builder's estimates for things not yet chosen or not yet known, and the owner pays the difference when they come in over. Exclusions are the lines that are not in the price at all, and on a second home they are often the biggest ones: site works, crane, connections, approvals, insurance, levies, the driveway. The basis is whether the number is ex factory or installed, ex GST or inc GST. Line two quotes up item by item, put a number on every gap, and compare totals last. The lower quote usually has less in writing, not less house.

Allowances: what the law says they are

Schedule 1B of the QBCC Act defines both. A prime cost item is a fixture or fitting not yet picked or priced, so the builder puts in a reasonable allowance: tapware, the oven, the tiles. A provisional sum is an estimate for work the builder cannot price even after reasonable enquiries: footings before anyone knows what is under the lawn, a sewer connection nobody has dug up. The builder warrants each allowance was worked out with reasonable care using what was known about the site when the contract was signed. It is not a promise the allowance is right, and most contracts add a margin on the overrun. Find that percentage before signing.

Queensland also makes a builder obtain foundations data, the soil, slope and drainage information, before signing a regulated contract, and stops them charging later for something that data would have shown. Ask whether they have it. A fixed price for footings with no soil test and no site visit is a guess with a signature on it.

The gaps a second home quote often leaves

• Site works: clearing, cut and fill, retaining, carting spoil, truck access.
• Footings, priced after the soil test rather than before.
• Crane and transport, on any modular or kit home.
• Connections: sewer, water, stormwater, power. Amounts paid straight to a utility or council sit outside the contract price under schedule 1B, so they never appear in the builder's total.
• Approvals: the certifier, the reports, the plumbing permit, a planning application if the block needs one.
• Home warranty insurance and the QLeave levy on a licensed builder's job.
• Decks, stairs, landscaping, the driveway, fencing.

The basis

Ex factory is the home at the factory door; installed is the home on its footings, connected and signed off, and the gap between the two is usually $59,000 to $140,000 in South East Queensland. Installed versus ex factory sets out what sits between them. GST is 10%, a business must register once its turnover reaches $75,000 so nearly every builder, maker and trade charges it, and factory and trade prices are often shown without it. Compare everything inc GST, because that is what leaves the account. An owner building to live in or to rent out cannot claim it back.

The deposit and the stages

Under schedule 1B the most a builder can take before starting on site is 10% on a contract between $3,300 and $20,000, 5% at $20,000 or more, and 20% where more than half the contract value is work done off site, which is why a modular contract can lawfully ask for more up front. After that, each claim must relate to progress on site and be no more than the value of the work it covers. A claim for crane day before the crane has been is a claim ahead of the work.

How to compare two quotes

1. Give every builder the same plans, specifications and site information.
2. Ask for the home and the site priced separately, itemised.
3. Make one sheet with a row per item. Where a quote is silent, write "not included", never zero.
4. Put a number on every gap, from a third quote or the calculator.
5. List every allowance side by side and ask why one is half the other.
6. Check the margin on overruns, the deposit and the stages. Then compare totals.

How to read a building quote has a worked example of a low quote growing by $31,000 once the ground is open.

See it for your block

• Install cost calculator
• How to read a building quote, with the worked example
• Queensland building contracts, clause by clause

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