It is very difficult to compare the services of Builders. Two equal Proposals for the one site can look very different and still be correct. This is due to differences in scope, the use of allowances and the amount of risk that is transferred. You must try to make sense of what you read and find out if the person or company that wrote the document can actually complete what they say.
Read portfolios for construction type, not aesthetics
The examples of previous homes by a custom home builder are great to review but more importantly, determine the complexity of past projects. Did the home have a steeply sloping yard? Deep excavations? Long span structures? Cantilevers? Challenging waterproofing? Was the home built using Passive House construction methods? Was the home a heritage home?
Their experience managing problems on site is best shown by asking them to describe and explain the negative events that have occurred on their other sites and how they were managed. Whether they were able to solve problems without variations being added, whether they were able to recover from problems with their sub-trades, and whether they were able to handle a number of negative site conditions that were discovered late in the project and managed to deliver on time.
Check the team behind the photos
Check if the Supervisor for each of the references is still with the company. Get an indication of how many homes each of your potential builders’ Supervisors are currently responsible for managing. A good Site Manager can manage 3 or so homes in construction, but as soon as they get to 4 and above it becomes a phone managed job and you won’t necessarily find out about any defects until they surface late in the build.
Normalize pricing before you compare numbers
Issue a Rebuild of the Proposal with basis for Price identical to that shown in the compares and confirm written Rebuild of the Proposal with basis for Price identical to that shown in the compares.
| Pricing model | Who carries cost risk | Best suited to | Main thing to verify |
| Fixed price lump sum | Builder, within the named scope | Fully documented designs with completed engineering | Provisional sums and the variation rate card |
| Cost plus percentage | Client | Complex renovations and unknown existing conditions | Open book access, invoice auditing, rebate disclosure |
| Fixed fee construction management | Client, with trade contracts held directly | Experienced clients with time to engage | Who carries defect liability and insurance |
Check allowances and provisional sums
The allowances included in cost to complete (the price for work not included in the contract price) need to be compared against the current market rate for supply of items such as tiling, lighting, joinery etc., and the margin that the builder will apply to any variation incurred.
Test inclusions line by line
Specifications for contrasting builders fail at the boundaries, so it is very important to read the exclusions list first. Typical items excluded from specifications for a site cut and retaining project such as this are, rock removal, temporary fencing, service connections and upgrades, termite management, driveway and crossover works and soil export. Other items excluded from specifications are council compliance items such as stormwater detention.
- Does the price include engineering already issued, or engineering yet to be designed
- Are window frames, glazing performance, and energy compliance measures specified by product or by category
- Who pays for shop drawing coordination, surveys, and certifier inspections
- Is scaffolding costed for the full program or a fixed number of weeks
Weigh warranty terms and financial capacity together
Look for the most recent certificate of insurance from the builder’s broker. Verify that they are working within the approved insurance limits for recent work of similar value to your contract. Are they working near their policy limits?
Define the defects process now
Confirm expected response time for urgent and non-urgent issues; the date for the Final Inspection and Handover; and the amount of Retention/Security held by the builder post Practical Completion. Confirm who holds manufacturer warranties for appliances, waterproofing and roofing and whether these warranties are transferred to the homeowner post Practical Completion. If you are building in northeast Ohio, it is worth asking established custom home builders in Stark County how they structure these obligations, since regional practice varies more than most buyers expect.
Compare communication systems and program control
Another aspect to consider is administration. A well managed build is very different to an average or poor build. Administration of a well managed build is generally very good and in most cases the best way to compare the short listed custom home builders is against a matrix that outlines the criteria against which they will be compared.
- Ask for the construction program with named milestones and float, not a date range
- Establish the selections deadline schedule and the consequence of a late client decision
- Confirm how extensions of time are claimed and what evidence must accompany a claim
- Set a fixed cadence for site meetings and who attends
Finally, we recommend you set up a matrix and compare all the short listed custom home builders against all of the above criteria. It’s the administration of the unforeseen that will determine a well managed build from an average build and a poor build. Experienced clients are not interested in comparing like with like on price. More often than not it comes down to how best has a builder described their scope of work in their written documentation, and who best administers the unpredictable elements of a project through the best system etc.
