Renovator's guide to success
The Renovator's Guide to Success is the latest book on the market to help you to achieve your dream home and below is an excerpt from the book to help you navigate through the pitfalls that many home owners face.
You've heard the expression 'failing to prepare is preparing to fail', right? A renovator must have come up with that! The design may be the fun part, but before you start it pays to understand common problems and how to manage them, not to mention how much to spend and what you might get for the money. (That's unless you're absolutely loaded, in which case pass Go now!)
Before you begin - understand who and what you're dealing with
Not all renovations end in disaster; you probably know people who've become successful, repeat renovators. Were they just lucky? Perhaps. However, unfortunately, luck is not a management strategy. So in this chapter I'll outline what causes typical problems and broad tactics for avoiding them. I also look at different approaches to renovating and show you the options for how involved you want to be.
Many renovations go less than smoothly...why?
Even when they're not disasters, many renovations could definitely be less stressful. The biggest problems are usually due to consumer ignorance, and the inadequate skill sets of some builders and designers. I'm deliberately emphasising our responsibilities as clients as well as those of the people we commission. The importance of doing your homework and making sure the planning, estimating and scheduling is done thoroughly can't be overstated. As you'll see, weaknesses in these areas can have big ramifications later on. It's a bit like building the foundations.
I'm not letting builders off the hook altogether, though. Of course there are lots of good builders around (and if you find one, hang on to him), but there are many poor ones. There have been a number of government investigations into the industry, such as inquiries in NSW and Victoria into the state of building quality as well as national inquiries into the effectiveness of home warranty insurance and licensing in the building industry. These resulted in some improvements, but some incompetent builders are still around.
The common problems
Let's look briefly at the major problem areas and some quick tips on how to manage them. We'll be going into these in more detail later, but the typical problems are:
- Cost blow-out: to avoid this you need detailed plans, independently prepared bills of quantities, and your own quotes for big-ticket items.
- Time blow-out: your quotes for big-ticket items will help with this, as you'll get an idea of what the lead times are for things like kitchens and windows, for example. Making sure your contract has a decent penalty clause (liquidated damages) is also important.
- Poor quality or defective works: nothing beats independent assessment.
Devil's in the detail: Size matters
By mid-2005, the yearly value of the Australian new home market had grown to about $21 billion and just over 100,000 detached homes had begun to be built.
The Renovator's Guide to Success reports that at the same time, the value of the renovation market was about $24 billion and involved over 160,000 ground- and upper-floor additions (that excludes cosmetic touch-ups and kitchen or bathroom make-overs).
In the calendar year 2005, almost half of all new homes were built by what's known as the 'top 100'. The largest of these builders produces over 3,000 homes a year and the smallest over 100. Only eight of them report involvement in any renovation activity.
The bulk of additions are completed by smaller builders and the HIA (Housing Industry Association) estimates that of the approximately 10,000 builders outside the top 100, more than 6,000 of them undertake renovation activity. A builder who completes over 3,000 homes a year typically runs a very different business from the builder constructing fewer than twenty.
Managing costs: new homes versus renovations
The cheapest new-home builders in Sydney - say the ones at the top of the top 100 - could build homes for a staggeringly low $600 per square metre (on 2006 figures). You wouldn't buy it at that rate, of course, but that would be the cost price.
Add on a builder's margin of, say, 25 per cent and you'd be looking at $750 per square metre. Some of the more 'boutique' builders might have costs of up to $1,200 per square metre. In contrast, Archicentre, the building advisory service of the Australian Institute of Architects, estimated in 2006 that the probable cost for a 'typical' ground-level addition in Sydney was somewhere between $1,900 and $3,400 per square metre, while elsewhere in the country it was between $1,700 and $3,100. (The 2008 Cost Guide is out now and things have increased slightly. For example, the suburban cost range is now from around $2,192 to $4,171.) It's a big difference, isn't it? There are a number of ingredients required to achieve construction costs this low, but repetition is the most important.
Devil's in the detail: Why new homes tend to be cheaper than renovations
The typical 'business model' for a volume builder is to use standard designs and elements, volume purchasing, specialised production functions and regular trades.
It starts with a concept plan for a new 'product' - a home - that may be done by an external architect or an internal designer. It's often as box-like as possible - although planning regulations are changing this - because articulation and setbacks add cost.
Large builders like to use standard ways of building - for example, many ceilings are 2480 mm high because a sheet of plasterboard is 2400, and 40 mm can be hidden top and bottom with cornices and skirtings. (You can choose a higher ceiling, but it will cost more.) Windows go to the ceiling to avoid having a lintel (a horizontal support beam) on top of the window.
From concept to working drawings
From the concept come working drawings. These are the detailed plans and will tend to be done by the internal draughtsperson. They will typically incorporate a standard 'kit of parts' - windows, doors, details - that allows volume purchasing and trade familiarity.
At this stage, the plans are likely to be assessed by a few different departments - construction, estimating and purchasing, as well as sales and marketing, to make sure that any construction details that might lead to warranty issues later - no matter how architecturally attractive - are avoided.
The bill of quantities
After working drawings are prepared, a bill of quantities is created. Estimators do this and in the process they go over every aspect of the plan again, looking for ways to make building it more efficient.
Having calculated the exact quantities needed, they then send out to their own suppliers and sub-contractors for quotes. In most instances the purchasing manager will already have negotiated a series of agreements with suppliers to provide consistent costs per unit, or costs per indicative average.
Finally, the plans and cost for the new home are completed. After a consumer purchases a home, contracts are finalised and approvals sought. Then it's time to build.
The construction program
At this stage, the operations or construction manager will program the works into a schedule. The job will be assigned to a supervisor who manages and coordinates the different trades to a standard construction program. The program dictates the sequence and time to be taken for each stage.
The construction manager will manage the supervisor to complete stages in the timeframe. Tradespeople are familiar with the plans and standard ways of working, so they're not working things out as they go; this saves time and money.
The supervisor will also check quality as each trade completes their stage. However, there will usually be a specific quality assurance person who formally audits and signs off on the key stages.
To get the full picture, read all about surviving your renovation in the book, The Renovator's Guide to Success. Everything from managing your design and budget to how to handle builders and architects, neighbours and city planners, to sorting through planning applications, builders quotes and legal loopiness. There's even a cheat sheet for those of you who prefer to read the ending of the book!
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