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Home extension fee structure

10 years ago

Hey guys,

just wondering what most people have paid their builders/project managers for home extensions.

I have a quote for cost plus builders margin (budget ~$200k). is this option more risky for me, as I'm potentially subject to the builder under quoting the initial budget. or should I push for a fixed fee build?

what's everyone's experiences with this?

Appreciate everyone's help!

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Comments (5)

PRO
Inspired Spaces
10 years ago
Depends on how detailed your brief was and what is specified in your quote. I find my builders often quote this way if they are not sure of what they are going to find when they demolish.

If you go this way you can in fact save money as long as you have a very detailed scope of work from your designer or architect. A fixed price will be inflated to cover unforeseen contingencies, however contact the builders previous clients and actually speak to them to gauge how far their budgets blew out. Don't forget to allow a minimum of a 10% contingency fee in your budget .
Eric H
Original Author
10 years ago
Would it better for me to try and push for a fixed fee amount as I don't necessarily have a bottomless pit of funds :)
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PRO
MB Design & Drafting
10 years ago
A fixed tender may seem like a great idea as you know what you're up for. But, the tender will have unforeseen costs already added as the builder is crystal balling what may potentially be hidden behind the walls..... even then there may be more issues than whats been costed, so there may well be another clause to cover these extras again.

My advise is have a good builder do the job. Easier said than done however I recommend a particular builder because he does exceptional work and is genuinely honest. He's not the cheapest but he's not the most expensive. Therefore I'm sure your chosen designer would have one they are happy to recommend too.

I'm also sure your designer understands budgets and costs and has designed to suit your particular budget and also allowed a contingency.....

Inspired Spaces is 100% correct. 'A very detailed scope of work from your designer or architect'.

Even million dollar jobs are budgeted for as they don't have bottomless pits either just a bigger budget.
PRO
Envirotecture
10 years ago
The advice above is great. The other version is a hybrid where the 'knowns' are fixed priced and the 'unknowns' are CostPlus.

CostPlus has a horrendous reputation for good reason. It should only be attempted by those who know what they are doing and have exceptionally well documented projects.
PRO
Melbourne Design Studios (MDS)
10 years ago
last modified: 10 years ago
Hi Eric,

Great question, that applies to so many people in similar situations ! Typical house alterations & additions scenario with limited budget... What I recommend to my clients in those cases is usually a fixed price lump sum contract to start off with. The way that works best is that we prepare a really good and detailed set of drawings for them, and we try and foresee as many of the potential issues as we can, then we get prices from builders and lock a price in for that scope of work. That's part 1, which gives you a good level of price security.

In addition, you then need a considerable contingency sum for the unknowns. Whenever one of those comes up, the builder will price them as 'variations' to the original contract, and we would check and approve (or don't approve them) for our clients. So this is the second part, which pretty much works like a cost-plus.

That way you get the best of both worlds. A pure cost-plus I would only ever recommend with a builder that you know and trust really well, and if you are under time pressure. Otherwise most clients would be generally much better off following our usual recommendations as described above...

Good luck with it all !

Best

Marc

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