Quotes vs Estimates

We've all heard the stories of owners obtaining 'quotes' only to have the price blow out after going to contract. How does this happen? Well, without ALL the required information, most Quotes are really just Estimates and subject to a lot of unknowns.

A Quote is considered to be a fixed price. An Estimate is considered to be a rough (but hopefully accurate) price.

There are 3 main parts to a build contract:

1. plans

2. inclusions and specifications

3. engineering

A 'Fixed Price Contract' means just that - the price is fixed, based on what is in the contract. Usually the contract is produced from a Quote. However, quite often the Quote/Contract is lacking 1 or 2 of the main parts that should be with it. A common variable is the detail of the Inclusions. Very low allowances (PC) on kitchens, floor coverings or appliances etc, or low quantities of fans, downlights etc, can result in owners having to upgrade as a variation. Lack of detail is also a common issue. Stating 'white fan to living room' may not necessarily be that $600 Balinese fan the owner actually wanted.

If the contract does not include structural and foundation engineering, those items become 'variables', which is referenced in most contracts. Quite often, Quotes are based on N2 wind ratings and S class soil. These are very low-rated allowances and uncommon. And owners soon find out the difference to N3/N4 or M/H sites can be tens of thousands of dollars, often as a result of over-priced variations.

As we see, the more information that is missing, the more a Quote becomes an Estimate despite the heading on the piece of paper. Running around with a sketch or even basic Preliminary designs and obtaining prices from builders is not a Quote, but an Estimate and open to many, many variables which result in variations. Many builders will take advantage of this obvious amateur quoting exercise by owners.

A professional Build Tender contains very detailed plans, specifications/inclusions and all engineering. Although obtaining the documents required for a Build Tender involves a significant up-front cost, following the correct process will often save thousands in variations after contract.