E120. Building estimates vs. final build costs - what you need to know

Cost Estimates vs Final Build Costs – What You Really Need to Know Before You Build

Why do so many building projects blow their budget? Why does the “estimate” you were given at the start look nothing like the final cost at the end? And how can you protect yourself from nasty surprises when you’re investing hundreds of thousands of dollars into a new build or renovation?

In this episode of the Building Design, Prime Time Podcast, Amelia and Frank dive deep into one of the most misunderstood parts of the building process: cost estimates versus final build costs. From vague, half-page quotes to highly detailed, professional pricing, they unpack what separates a reliable estimate from an unrealistic guess.

You’ll learn why an estimate without proper documentation is essentially just an opinion, how missing details like selections, engineering, site conditions, and external works can derail your budget, and why “cheap” or overly simple quotes can end up costing you far more in the long run. They also explore the importance of contingencies, the risks of builders pricing to a target instead of reality, and why custom builds require even greater care and accuracy.

If you’re planning a new home, renovation, or extension, or even just thinking about it, this episode will give you the insight, confidence, and knowledge to ask better questions, understand what you’re really paying for, and avoid costly mistakes.

Because when you’re spending $400k or more certainty matters. 🎧

About us
Prime Design is a building design company locally owned and operated in Tasmania since 2004.  Our goal is to share as much valuable information as possible about the process of building design, extensions, and more. We will talk about a different topic each week. To suggest a topic you would like us to talk about contact us at info@primedesigntas.com.au

Disclaimer
The information provided on this podcast is for educational and informational purposes only and is not intended to be a substitute for professional advice, individual circumstances, or remedy. We strongly suggest you consult a qualified professional before taking any action based on the information provided in this podcast. The views, opinions, and information provided in this podcast are those of the hosts do not necessarily reflect the official policy or position of any other agency, organisation, employer, or company. All content provided on this podcast is provided “as is” without warranty of any kind. We make no representations as to the accuracy, completeness, currentness, suitability, or validity of any information on this podcast and will not be liable for any errors, omissions, or delays in this information or any losses, or damages arising from its use. We reserve the right to change content or delete any information provided on this podcast at any time without prior notice.

Transcript

E120. Estimates vs. final build costs 

[INTRO] (0:08 - 0:24)

Hello and welcome to the Building Design Primetime podcast, focused on providing valuable information for anyone looking to undertake a new build or extension project. We'll share our tips, tricks and stories from a building designer's perspective.

[Amelia] (0:26 - 0:42)

Hello and welcome to the Building Design, Prime Time Podcast. I'm your host Amelia and once again we're joined by Frank Geskus.

[Frank] (0:42 - 0:43)

Hey Amelia.

[Amelia] (0:43 - 0:45)

Happy Thursday, we're doing it on a different day today.

[Frank] (0:45 - 0:50)

We are, we are. So, we've got some things to do. It's straight away a long weekend coming up.

[Amelia] (0:51 - 0:53)

We do. How exciting, three days off?

[Frank] (0:54 - 0:55)

Four for me.

[Amelia] (0:56 - 1:06)

Lucky for some, although I bet you're not actually having a day off. You're probably working. 

[Frank]

No.

[Amelia]

No, you know, like working in other areas of your life.

[Frank] (1:07 - 1:10)

Yes, on the family side of life.

[Amelia] (1:10 - 1:10)

That's right.

[Frank] (1:11 - 1:19)

Yes. So, this podcast, although we can continue on from where we were in previous discussions from contingencies and…

[Amelia] (1:21 - 1:21)

Variations.

[Frank] (1:21 - 2:25)

Variations, thank you. 

[Amelia]

Yes. 

[Frank]

That we'll talk about estimates versus final build costs, you know, cost estimates.

Because this is really important and misunderstood and anyone listening out there and you're interested in this, when you go through this process you need to listen and understand through the process really, really clearly. There's a good reason for it and we're going to go through that. So, why people get this wrong from day one, basically.

And this is a really interesting thing that an estimate without information is only an opinion. Now, we actually give out a lot of these opinions because that's all they are. So, people call us up.

Hey, I want to do a house. I want to do an extension. I want to do this.

I want to do that. And it says, what do you reckon it's going to cost? It says, I don't know.

We're going to have to work this out. But based on previous jobs, our X amount of dollars per square metre maybe could be somewhere in this zone. Does that work for you?

Because I like to be up front because if they've got no idea, well, they need to have a bit of an idea.

[Amelia] (2:25 - 2:34)

And we have had that before. We've had someone come in and say that their budget is X amount of dollars and it's probably half the prices to what it's going to cost.

[Frank] (2:35 - 2:35)

For what they want.

[Amelia] (2:35 - 2:36)

For what they want.

[Frank] (2:36 - 2:59)

So, we go through a process. So, in our cases, we do what is called a feasibility study to understand what's the most important thing, what do they want and also everything they need and in what order, what is their priorities. And then from there, we can do some sketch designs based on what they want.

And still, we're not estimators. We've got a rough idea in estimation-wise.

[Amelia] (2:59 - 3:02)

It's only because we've done a lot of jobs, I guess.

[Frank] (3:02 - 3:07)

Yeah, a lot of projects, but also work with a lot of builders. But always we work with a quality...

[Amelia] (3:07 - 3:09)

A quantity surveyor?

[Frank] (3:09 - 3:57)

Not a quality surveyor. Gee, that'd be handy, wouldn't it? A quantity surveyor or builder.

Or a builder that's part of the team and keeps up. Builder with designer. Great result.

[Amelia]

Yes. 

[Frank]

Every time. So, this is where it can go sideways if people aren't listening.

And this is what I'm saying. You've got to listen. So, builders are forced to guess when the documents are weak. Well, we're even guessing even more so when you're just verbally telling us what you want. So, this is very important to make sure that the brief is very clearly laid out. So, we go through a process ourselves.

So, this is also very important to realise what type of project, what type of contingency you need to expect for your type of works of reno, extension.

[Amelia] (3:58 - 3:58)

New build.

[Frank] (3:58 - 4:52)

New build, unit development, commercial. Doesn't matter. So, what a proper preliminary estimate actually needs.

Now, for your average house, you know, pretty nice house, big house, doesn't really matter, but it's generally within the realms of normal construction. We recommend, before we go for planning approval, that you have planning level drawings, absolute minimum, and ours include all the windows, the doors. We do an electrical plan, site plumbing plan, site contours, all the elevations, roof plan, probably more than what you normally need for planning.

So, then those can be given to the engineer to do preliminary design because you've had the soil test done as well. The engineering is a big part of that. So, if you've then got preliminary engineering design, planning drawings, soil test, if you've got a waste water, if you need that, you're a rural area, you're going to need that.

[Amelia] (4:52 - 4:53)

Yes.

[Frank] (4:53 - 5:33)

So, it actually, you've got a fair bit there. Now, here's the big variable, fit out. So, you've got the base building build, but then you've got the fit out, like, you know, do you want porcelain tiles?

Do you want other tiles? You know, taps, doors, whatever. You haven't chosen it yet, but it's an understanding between you or client and builder or quantity surveyor who's pricing it.

That needs to be understood very early and also what is understood to be an average fit out, a medium fit out, a high-level fit out.

[Amelia] (5:33 - 5:36)

Yes, because what is that? What does that include?

[Frank] (5:37 - 5:39)

Oh, totally. You know, how long's a piece of string?

[Amelia] (5:40 - 5:40)

Exactly.

[Frank] (5:41 - 6:36)

It's a case of sitting down and growing, showing photos, this is what I like, whatever. Okay, that's what I'd class as a medium, you know, and you go, right. Then the builder or the QS can go, yep, we can put figures in for that, what we think would be suitable.

Remember, this is an estimate. Yes. And this estimate could be within 20%, but it doesn't have everything, obviously, because you don't have everything available.

There are things that are unknown, but the estimate is only indicative, okay. You don't even know the type of kitchen that's going in, the heating, the fixture. We do do electrical plans generally.

Bathroom, is the tiles just up the skirting in full height, you know? Is it the flooring? Does it have home automation, the window types, the ceiling heights, multiple ceiling heights, cathedral ceiling, joinery expectations, exteriors, decks, stairs, patios, alfrescos?

That's a lot of variables.

[Amelia] (6:36 - 6:37)

That's a lot of variables.

[Frank] (6:38 - 6:38)

Yes.

[Amelia] (6:39 - 6:44)

And, maybe you've decided to put these, you know, you beaut windows or something in, you know?

[Frank] (6:44 - 7:09)

Yes, which is becoming more on the radar, which is great for better thermal performance. Even how you want your house to perform thermally. Do you just want it to be minimum?

That is the requirement, or do you want more? I'd like a bit more. Planning long term.

I want to reduce my power usage in my house. We're just saying, hey, we're going mid-range. It means nothing unless everyone agrees on it.

Well, I want high level. Well, let's all agree what that is.

[Amelia] (7:10 - 7:10)

Yes.

[Frank] (7:11 - 7:17)

Because it's all in good. Your future homeowner will go, yeah, I want all this, this, and this, and the builder doesn't get it. Misses the mark.

[Amelia] (7:17 - 7:33)

Yes. And we've talked before about having builders have, you know, an allocated sum to a particular room, for example. 

[Frank]

Yes.

[Amelia]

But then the, you know, the client, they might actually pick something that's more higher end in terms of finishes.

[Frank] (7:34 - 7:35)

It's not understanding where it sits.

[Amelia] (7:35 - 7:36)

That's right.

[Frank] (7:36 - 7:48)

So, and that is trying to get a really good preliminary estimate. Estimate, not factual. 

[Amelia]

No, not a fixed.

[Frank] (7:48 - 7:50)

It's within a range. 

[Amelia]

It's not a fixed price.

[Frank] (7:50 - 8:17)

No. So, now we go to what happens if you have an estimate and it's really rubbish? Well, it's rubbish because the information provided.

So, you might not have a soil test. Might not have engineering. The fit out may not have been discussed properly.

Windows, all that. No mention of contingency. And I've seen this happen and it horrifies me.

It's when they designed the number to hit a target but not reality.

[Amelia] (8:18 - 8:18)

Okay.

[Frank] (8:19 - 8:21)

So, it really worries me at times.

[Amelia] (8:22 - 8:25)

So, then a builder has done it, for example, to secure a job.

[Frank] (8:25 - 8:25)

Yes.

[Amelia] (8:25 - 8:28)

But at the end of the day, it's highly inaccurate.

[Frank] (8:29 - 8:32)

At the end of the project, it was pretty well revealed.

[Amelia] (8:32 - 8:33)

Yep.

[Frank] (8:34 - 9:26)

And we weren't part of that. And I've said it quite a few times. You know, people have said, oh, I can build this for, you know, X amount of dollars.

It doesn't stack up for me. And we tell them that we get fobbed off. But this is, again, not builder and designer working together.

So, that builder, then, I don't believe is a good business owner. I believe builders should be highly professional in what they do. Unfortunately, that is few and far between.

You hop on the internet, sorry, YouTube and look at all these horror shows and stuff. And unfortunately, there's a lot of this going on. They're not professional.

So, like I said, they're hitting a target, not a reality. It's very sad. Because if you're investing anywhere between $400 to, you know, $1 million on a house, you need to have certainty.

You need to have accuracy on this. The problem is, you don't know what you're looking at.

[Amelia] (9:27 - 9:29)

That's true. No one teaches you what you're looking at.

[Frank] (9:29 - 10:03)

They don't. And only people in the know, in the industry, know this. 

[Amelia]

Yes.

[Frank]

And this is, I believe, in some cases, go get three, four prices on a house, but it's got to have good documentation. And also, all your selections, chosen. Now, we're digressing into areas we're about to talk a bit more about.

I'm getting all excited. So, final costings. Let's move on to that.

So, we described good, you know, good quality preliminary estimating and rubbish preliminary estimating. Basically, you'll get that on a half a piece, you know, half a note.

[Amelia] (10:03 - 10:03)

Yes.

[Frank] (10:04 - 10:50)

So, when you're looking at final costings, for a proper final build cost, you should have fully detailed construction drawings. Sounds obvious. 

[Amelia]

Yes.

[Frank]

But there's still got to be good drawings. Again, you don't know that when you engage a designer architect. Are they actually going to be quality drawings?

I'll leave that alone. Are all your selections are made? I mentioned it all before, you know, your kitchens, your heating, your bathrooms, your electrical, your flooring, home automation, thermal, you know, thermal performance, ceilings, joinery, outside decks, alfrescos and patios and the like.

You know, all this is well known. You've chosen the decking boards. You've chosen the fly screens, all that.

Even to the point, if you've got brick, you've chosen the right, you know, the colour of the mortar.

[Amelia] (10:50 - 10:52)

Yes, that's such a small thing.

[Frank] (10:52 - 11:38)

There are some builders, this is where project builders can be really, really good at this stuff. So, the engineering is complete. The scope is clear.

The risks are clear because of the type of sites. And I'm going to use Tasmania as the example. We're not exactly flat.

And in our cases, we've got to deal with a lot of slopes, a lot of retaining walls, a lot of rock, dodgy clays, a combination of everything, and really dumb planning overlays and other stuff. So, that can really knock your costings around. You may have to put stormwater detention.

All that's got to be put in there. Then we look at the other external works and who takes responsibility for these. Because a lot of builders just want to build the house as part of the contract build.

[Amelia] (11:39 - 11:39)

Yes.

[Frank] (11:40 - 11:42)

And that's what the valuations are based on.

[Amelia] (11:42 - 11:47)

Especially, you know, a lot of people these days, they might want to shed. Often that's separate.

[Frank] (11:47 - 11:54)

Yeah, it can be added in. But see, all of this comes to depending on your finance and the valuations as well, what stuff is worth.

[Amelia] (11:55 - 11:58)

And depends on how the builder likes to do things, I suppose, too.

[Frank] (11:58 - 12:17)

Yeah, true. They'd have to contract it out because a lot of builders don't put up proprietary coal on sheds. So, probably got to get a specialist in.

So, by doing it well, you're going to have less chances for variations. Hence, you've still got the same provisional sum, but there's less chance of using it. And we spoke about this last time.

[Amelia] (12:17 - 12:17)

Yes.

[Frank] (12:17 - 12:30)

So, your pricing's tighter, less stress for everyone, fewer variations through the build. Okay, now we're going to talk about rubbish quotes. I can also tell by how many pages it's on.

A really good quote is a lot of pages.

[Amelia] (12:31 - 12:33)

Yeah. Yeah, it's very specific, lots of detail.

[Frank] (12:34 - 12:34)

Heaps of detail.

[Amelia] (12:35 - 12:35)

Yeah.

[Frank] (12:35 - 13:37)

Many builders price the house and the deck and the structural retaining walls to make the house compliant with what the permit has outlined, because you need retaining walls sometimes for the house, you don't have a choice. They may not include, not all builders want to do this, driveway paths, landscaping, fencing, external drainage, certain service connections and stuff like that. Now, also this can affect your subject to what you're borrowing, how much you're borrowing and how much equity you have and all the rest of it.

This may have a big bearing on your loan. 

[Amelia]

Yes. 

[Frank]

And you may not be able to do it as part of the loan.

Everyone's got a different situation. So, anything that's outside the building footprint, assume it's excluded until proven otherwise. So, the client thinks the price of the whole job, then reality hits later.

You've got to be very clear and you've got to read it. Don't be scared to ask dumb questions. Is this in there? Is this not in there? You may not understand the wording.

[Amelia] (13:37 - 13:38)

Yes.

[Frank] (13:38 - 13:43)

So, you do need to go through that in great detail. You know exactly what you're getting. Are you getting boundary fences?

[Amelia] (13:44 - 13:46)

Yeah, that's a good point too.

[Frank] (13:47 - 14:25)

Sounds odd, but yeah. So, paid quotes are usually a much higher level and that's why I was just talking about good quality quotes. Some project builders do this really, really well.

They're geared up for this to do really good quotes. There are other builders that you pay them to do the quote and the price comes off the overall price of the house if they're successful. But you've also got to remember, if you're paying someone to do it, they're definitely going to spend more time on it, do it properly.

High level detail, better risk assessment and management. The documentation will be professional because if you're spending money on it, it has to be professional.

[Amelia] (14:26 - 14:26)

Yes.

[Frank] (14:27 - 14:35)

And the builder really takes ownership of the number. So, the hard truth is the free quotes tell you more about the builder's sales process than the pricing accuracy.

[Amelia] (14:35 - 14:36)

That's so true.

[Frank] (14:37 - 15:19)

You know, so you really need to be aware of this. How a builder runs his business, how he's organised, that tells you how he's going to handle his variations as well. So, these things you've got to keep in mind.

All right. We'll tie back to previous podcasts. We spoke about contingency.

We'll just skim over that. So, you need to make sure that the documentation is really, really good, but the contingency still matters. So, as we spoke last time, new builds on the basic site, not too complex, you've got to allow about 10%.

Reno’s, extensions, we spoke about 15 to 20 of a lot of unknowns. So, just remember, contingency isn't poor planning. It's intellectual risk management.

[Amelia] (15:19 - 15:22)

Yes. I mean, we spoke about that already.

[Frank] (15:22 - 15:40)

Yeah, exactly. Unfortunately, I've seen some poor quotes where they barely come on half an A4 and they don't go into detail, where in reality, it does need to go into great detail because you've had this experience yourself, just getting someone to do some work around your home.

[Amelia] (15:40 - 16:00)

Yeah, yeah. And I mean, the quality of work was very good. There was no issue with that.

But unfortunately, the quote that we were given, it just wasn't very specific in the areas that we were getting done for some painting work. And so, we moved all this furniture, thinking we were getting all this extra painting done.

[Frank] (16:00 - 16:02)

Well, you assumed the whole area was going to get painted.

[Amelia] (16:02 - 16:02)

Yes.

[Frank] (16:02 - 16:04)

It wasn't extra, it was just you assumed it was this whole area.

[Amelia] (16:05 - 16:07)

Yes, because it just said upstairs.

[Frank] (16:07 - 16:10)

And how much of upstairs? One room?

[Amelia] (16:10 - 16:15)

I think there was the toilet and a small section near the kitchen and pantry area.

[Frank] (16:15 - 16:18)

So, have you learned from that?

[Amelia] (16:19 - 16:22)

Yes. It definitely needed to be more detailed.

[Frank] (16:23 - 16:24)

Be clear.

[Amelia] (16:24 - 16:25)

And ask questions.

[Frank] (16:25 - 16:46)

Yep, exactly right. The poor estimation leads to poor quoting for the actual works, which will then lead you to chewing up your contingency or more. So, a good builder price, honestly, fairly, especially if you're paying for it, it is professional.

[Amelia] (16:47 - 16:47)

Yes.

[Frank] (16:48 - 17:07)

Okay, bad builders hide it until the construction starts or it only exposes when the construction is finished. So, really, that is the takeaway, just making sure you ask questions and know exactly what you're getting. If in doubt, get a second opinion on just going through the quote.

[Amelia] (17:07 - 17:15)

I still think it starts with good design. Because, you know, the builder has to interpret that.

[Frank] (17:15 - 17:21)

I think we do pretty good design and I've still seen builders say, I didn't allow for this and I didn't allow for that. I'm not joking.

[Amelia] (17:21 - 17:22)

Yeah, okay.

[Frank] (17:22 - 17:38)

Like, I remember the client wanted to rip him a new one. Says, I've asked you for a complete build. You've priced me for a complete build.

Yeah, but I didn't allow for this. That's part of the build. No, I didn't allow for it.

So, that guy priced to a number. 

[Amelia]

Yes. 

[Frank]

Not to the actual project worth.

[Amelia] (17:39 - 17:45)

And, I mean, it's such a dangerous thing to do because you can get caught out so easily.

[Frank] (17:45 - 17:48)

Especially this one client that I had. It was a very dangerous thing to do.

[Amelia] (17:49 - 17:49)

Yeah.

[Frank] (17:49 - 17:53)

You know. You're not going to get referral work as a builder, are you?

[Amelia] (17:53 - 17:56)

Oh, definitely. Not if you get situations like that.

[Frank] (17:56 - 18:06)

No. So, that's why you really need to do a great job and build the trust, you know. I think we need to build a checklist for everyone.

[Amelia] (18:06 - 18:06)

Okay.

[Frank] (18:06 - 18:20)

I reckon we could build a checklist. So, then you can download it off our website free and you can go through this process of what part of the estimates and then what's expected for a paid quote.

[Amelia] (18:21 - 18:22)

That's a good point.

[Frank] (18:22 - 18:24)

Paid quote or any quote for that matter.

[Amelia] (18:24 - 18:32)

Yeah, even if it's… I know some builders, they don't do paid quotes. 

[Frank]

That is true.

[Amelia]

They're just happy to quote a job.

[Frank] (18:33 - 18:33)

Yes.

[Amelia] (18:34 - 18:37)

I'm sure some of them still do quite detailed quotes.

[Frank] (18:37 - 18:41)

Yes, some do. Some are great and they don't charge a cent for it. I reckon they're mad.

[Amelia] (18:41 - 18:45)

Well, it's a lot of time they've got to put in, especially if it's custom build.

[Frank] (18:45 - 19:01)

I don't think people realise. I've spoken to a number of builders and they vary from, you know, smaller renovation might take them 15 hours to quote because they're asking all their subbies to price. But I've also, you know, to a reasonably large house and it could be like 25, 30 hours they spend.

[Amelia] (19:02 - 19:02)

Wow.

[Frank] (19:02 - 19:05)

That's nearly a week they're not getting paid for.

[Amelia] (19:05 - 19:06)

Yeah, that's a lot of time.

[Frank] (19:06 - 19:07)

To do it really, really well.

[Amelia] (19:07 - 19:11)

Most other businesses would not give away 30 hours of their time for free.

[Frank] (19:12 - 19:47)

Exactly. But there's an expectation in the industry and this is where I believe builders have to be professional and if you want an estimate, go get three of them. Everyone should be paying for those estimates.

It shouldn't be for free. To get it really accurate. I think we've got to flip the whole industry on its head a little bit there.

At the end of the day, the average person is going to get a far better job. It is actually accurate, a lot more accurate and then you're going to be happy with the end product. 

[Amelia]

Yes.

[Frank]

A lot more trust in a five-page document compared to, you know, half an A4.

[Amelia] (19:48 - 19:54)

Yeah. There's no way you can have an accurate price on half an A4 page if it's a custom build.

[Frank] (19:55 - 20:06)

Oh, custom builds are another world again because even what we've got here, if you don't get estimates and quality pricing on a custom build, you've got rocks in your head. I'm sorry. Custom builds are so complex.

[Amelia] (20:07 - 20:09)

Yeah. There's just so many variables.

[Frank] (20:09 - 21:00)

Oh, it is. And this is how we do beautiful buildings. We do some beautiful buildings but unless you've got a bottomless pit of money, you know, you've got to be real careful of that, it can burn so fast and the builders actually charge more because it's custom.

It's not a straight build. 

[Amelia]

Yes. 

[Frank]

So you need that accurate pricing.

They allow certain hours to do all this type of stuff. It's got to be done well. So then they've got to price it well.

So we're going to put something on the website to help you understand this a little bit further and feel free to download it. Give us a couple of weeks to put it up. This isn't a delayed telecast.

We've got to build it but I think it's worth sharing with everyone so you're not caught out by misunderstanding and misinterpreting for what the builder is promising to do.

[Amelia] (21:01 - 21:02)

Yes, exactly.

[Frank] (21:02 - 21:03)

Hold them to account.

[Amelia] (21:04 - 21:12)

Exactly. And because knowledge is power, I guess, in this situation. 

[Frank]

It is.

[Amelia]

You want to know exactly what you're getting and exactly what you're paying for.

[Frank] (21:12 - 21:15)

Well, if you're dropping a minimum of 400 grand, 400 grand's a lot of money.

[Amelia] (21:16 - 21:16)

Yeah.

[Frank] (21:16 - 21:18)

But that's just like a minimum build now.

[Amelia] (21:18 - 21:20)

That's right. Crazy.

[Frank] (21:20 - 21:21)

How things have changed.

[Amelia] (21:21 - 21:21)

They have.

[Frank] (21:22 - 21:23)

All right.

[Amelia] (21:23 - 21:27)

We might wrap it up there, folks. Thanks for listening to the Building Design, Prime Time Podcast.

[Frank] (21:27 - 21:27)

Catch ya’s later.

[OUTRO]

You’re listening to the Building Design, Prime Time Podcast.