Home renovations, extensions and improvements have pre-occupied many Australians who choose to embark on the work for various reasons – improve their lifestyle, family planning, make money and create value for their real estate investments.
Building a new home involves an extensive list of professionals and tradesmen, the most important one of which is the builder. Some key issues to consider in choosing the right builder include:
1. Seek recommendations
If friends have previously used a builder, then the best approach would be to discuss with the friend and be able to see for yourself the quality of the build and feedback. Most architects and project managers will also be able to recommend good builders as it forms part of their everyday work in dealing with builders and tradespeople.
2. The builder is a registered practitioner
In order to carry out building works, the builder must have all the required insurance during the construction phase until the occupancy certificate is issued. A builder who is not licensed or registered will not be able to obtain the relevant public liability, WorkCare and completion guarantee insurance. Completion guarantee insurance is required by the building surveyor before a building permit can be issued to commence construction. Builders are also required to provide the statutory six-and-a-half-year structural guarantee insurance on all domestic building works. You can check if the builder is licensed under the Department of Fair Trading website.
3. Credit check and solvency
There have been many cases where the builder becomes insolvent during a project, leaving the entire construction site unattended and incomplete. This has disastrous consequences in terms of legal implications, public safety and continuity of project not to mention financial stress on holding costs. Credit checks on builders can be obtained from credit reporting agencies such as Veda Advantage and Dun & Bradstreet.
4. Previous building experience on similar work
Some builders specialise in certain type of building work and it is important to ensure the builder is capable of effectively carrying out the proposed project. Check out the builder’s previous projects to ascertain build quality and speak to their previous clients to obtain written references and feedback on cost competitiveness, timeliness and service.
The building / construction contract
a) Master Builders Association (MBA)
b) Housing Industry Association (HIA)
The building contract is one of the most important documents in the construction and development of a property. The contract generally sets out the key terms and conditions, among other things, the obligations, rights and remedies for all parties involved. It is always advisable to have the building contract verified and advised upon by a solicitor who has extensive experience in property law and conveyancing in this area of specialty.
Pertinent terms and conditions of a building contract include the following key issues:
a) Cost of construction (ie the contract price you will pay the builder) and the manner in which progress payments will be made. In general, progress payments are broken up into 6 stages and the percentages of each stage must be clearly stated:
i) Initial deposit to confirm acceptance of the building contract and for the builder to commence construction work;
ii) Payment at the end of the base stage;
iii) Payment at the end of the frame stage;
iv) Payment at the end of the lock-up stage;
v) Payment at the end of the fixing stage;
vi) Final payment upon completion of the project and issuance of occupancy certificate.
b) Detailed scope of work for each stage of the construction process
c) Timeline which sets out the, commencement date, estimated deadline and milestones for each stage of the construction phase and the final completion date
d) Sets out detailed recourse / remedies in the event there is a dispute between the owner / developer with the builder
e) Provisions that all building and construction works are in accordance with relevant building guidelines, rules and regulations
f) Specifies that work carried out is in compliance with the building specifications, architect drawings and cost calculations.
g) Specific details of all parties, location and title details – name and address of the property and the registered owner, name and address of the builder, description of the property and its title details.
h) Allowance for prime cost items – this allowance is for items, fixtures and fittings which have yet to be chosen by the owner whereby a pricing has not been determined.
i) Allowance for unsuitable weather, public holidays and other unforeseen events.