A building cost analysis and the right contractor are key to building within budget

Doing a due diligence building cost analysis and choosing the right building contractor are key to building a new home within budget, and without nasty surprises, says Mohau Mphomela, executive director of the Master Builders Association North (MBA North).

“The value of a proper budget combined with the expertise, efficiency and materials supply contacts of a professional contractor cannot be overemphasised,” he says.

“It is not uncommon for consumers to find themselves over budget on a building project. In fact it happens so frequently that friends at the braai-side will joke about doubling the estimated costs and taking out a loan to make sure the job is finished. At the crux of it is a poor understanding of the costs involved in building projects. Building costs should take into account variables such as labour, material, equipment, building codes, job-site conditions and standard markups applicable to the area.”

Going over budget can place homeowners in a financial predicament. It comes with the risk of having their building bonds frozen by their banks until the extra money is furnished, and could lead to the building project grinding to a halt and the contractor walking off site. On the flip side, having the costs of a building project accurately calculated through a business costs analysis before starting the project can save thousands of rands.

Mphomela says a building costs analysis is the only financial risk mitigation tool available.

“If you haven’t had your budget drawn up or committed to by a registered builder, you can be almost sure that all sorts of costs have been overlooked. For instance, have the costs of connecting wires and plumbing points or fittings and fixtures been considered?”

Aside from including the full costs of labour and materials, a building costs analysis will help to reveal hidden costs associated with a build as well as enable you to compare apples with apples when considering different contractors, as their markups will not be included. A building costs analysis will also help to ensure that contractors have an accurate picture of the costs involved in the project and prevent them from under quoting to secure a job.

“A building costs analysis affords a crucial level of protection against being over charged and going over budget. It is also a helpful tool for project managing your own building process. There are many consultants and contractors offering building costs analyses as a service, but it’s important not to pick just anybody,” says Mphomela.

“Check their credentials, ensure that they are registered with the NHBRC, and are members of the Master Builders Association. Also remember that a building costs analysis in no way obligates you to use the same contractor to undertake the building project.”

Choosing the right building contract to undertake the project is the next important step towards getting the job done properly, soundly and within budget. Consumers are offered some degree of protection by the NHBRC and their financial institution if the project is financed by means of a building bond.

All contractors who work in the residential market must be registered with the NHBRC, as should the project itself. The NHBRC though, only provides “insurance” for defects in the work up to the value of R500 000. If the project is financed through a building bond, the bank’s inspectors will visit the site five to six times during the project to check that work is adequately completed before releasing the funds to pay the contractor.

However, Mphomela says that even if a contract has been entered into and signed, the homeowner is alone in dispute resolution and arbitration as neither the bank nor the NHBRC will get involved.

He recommends choosing a contractor who is a member of the Master Builders Association for additional peace of mind.

“Members are continually vetted by the MBA which provides stringent mechanisms for ensuring clients’ satisfaction and protection. Our members are expected to satisfy the building requirements of their clients and are held accountable to the association’s code of ethics.

“This means that clients can expect them to stick to the budget and deliver on their promises. In the unlikely event that they don’t, the MBA has a dispute resolution and complaints forum for people to turn to.

“Building your dream home should be an exciting experience. You should not have to worry that the project will end up costing more than you budgeted for, or can afford. Knowing upfront what the costs will be, instead of relying on optimistic costings, and choosing a qualified and responsible contractor will help to ensure that you meet your budget and see your dream home come to fruition,” says Mphomela.

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