Owner Builder Vs Hiring A Builder

It is a very little-known fact that owner builders represent the most homes built per year. In fact, owner builders build 10 x more than the biggest home builder. In America owner builders built 550,000 per year whereas the biggest builder in America only built 48,000. In Australia owner builders build around 50,000 homes per year.

Based on my experience the reason for this is they have several major advantages over a building company.

Hiring a Building Company:

• A building company has a lot of overheads on a day to day basis.

• Most building companies’ overheads include one or more of the following depending on size of the company.

• Sales staff to sell the homes

• Receptionist

• Building estimator to price the homes and order materials

• Drafts people to design the homes and draw the plans ready for construction.

• Contract administrators to compile the building contracts

• Accountant to pay staff and subcontractors

• Building Manager

• Sales Manager

• Design Manager

• General Manager

• CEO (CHIEF EXECUTIVE OFFICER)

• Building Supervisor

• Company car for managers

• Company car for building supervisor

• Office phone costs

• Main Office Rent

• Sales Office – display home rent

• Phone costs for sales office

• Mobile phone costs for Managers and Supervisors

• Advertising costs

• Marketing material costs (brochures, business cards etc.)

In general, a builder needs to have a margin of 20 to 30% included into the costs of each home to cover all the overheads.

To put that in perspective that is the cost to build the home (building material + tradesman to erect the home) + his 20 to 30% for overheads.

So, if the home costs $300,000 to build he adds $60,000 to $90,000 to cover his costs so a total of $390,000.

In comparison the owner builder can manage the construction without the over heads and without doing any work on site and save the $90,000 on the builder’s margin.

Time wise a construction company will take 6 months to 12 months to build your home. Most of this time is due to queuing. To explain this, you are in a queue.

They do not have the home design staff sitting around waiting for you to walk in the door, they have other clients ahead of you. So it may take up to 4 weeks for the designer to finish his current jobs and start drawing your home, if you have changes or modifications to the design this could take an extra 2 to 4 weeks redraw depending on if he gets your request correct the first time (remembering he has other customers requesting changes as well).

After the design stage is completed it will move to the contract administrator – again this staff member is not sitting around waiting for you either so you are queued again waiting your turn for the contract to be produced, normally 2 to 5 days.

Next stage is finance, so again you are queued.

Then we move onto colour selection, at this stage, you will need to make an appointment with the colour consultant to select all the colours you require in your home (paint colours, bench tops, tiles, bathroom fittings, roof colour, outside colours etc. etc.)

After colour selection your next stage will be council approval.

Once the plans are approved the building materials need to be ordered, so a building materials list needs to be done by the estimator, again here you will be queued as well, waiting for him to become available.

All and all the queuing for each stage may vary depending on the work load of each staff member. But you get the idea.

After you work your way through the office you then get the home on site. (site start).

You are then passed to a building supervisor who will program the construction, an average building program is 20 to 25 weeks for a medium sized home.

However, your site start date may not be for several weeks depending on how many homes the building supervisor has been given to start.

The construction working days are only around 8 to 12 weeks, but the supervisor will allow for delays and trade sharing or trade queuing, similar to staff queuing, trades people are not sitting around waiting for your job, the building supervisor will allocate which job to do next.

Most building companies only have a small pool of trades, so waiting times for each trade can blow out construction times onsite.

The Owner Builder Advantage:

The advantage of an owner acting as Project Manager is that he does not have all the over heads and clients to look after so his site time or building time may be as low as 10 to 12 weeks. I personally held the company record for building my own home in under 4 weeks from start to finish. However, I had a large pool of trades to call on because of my connections at the time.

• Slab and drainage completed in 1st week

• Frame and roof completed 2nd week

• Lock up: outside cladding, linings completed 3rd week.

• Fit out, painted and completed the 4th week

I have helped many clients build their 1st home well under budget and under 12 weeks.

I have built a number of homes for myself and always found building your own home the best experience you can have.

Creating a dream home is fun and exciting and if you manage it correctly it will take up very little time as long as you follow a few simple systems to help manage the construction.

I have designed a procedure manual and work book that includes check lists and simple to follow guides for each stage of construction.

This also includes time management trade and supplier allocation management for the construction, this is a must have work book for owner builders and even helpful to experienced builders looking to improve their construction times and lower building costs.

I firmly believe you are best to be Project Manager of the construction rather than do the physical work yourself, managing and overseeing the work will keep the home flowing faster, reduce the building costs by having time to follow up tradesman quotes and negotiating better prices.

As you have the time to control the progress and time to select the better fittings and products it will result in a much better-quality home. Tips and Common Sense

• Use our procedure manual and work book to save time and money onsite.

• Send the plans out to quote by tradesman as soon the plans are drawn.

• Start selecting colours for your home early (paint colours, bench tops, tiles, etc.)

• Use a professional colour consultant to help, it will make the home high quality if it all blends.