project management

Problems with the conventional building project

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We always assumed we were going down the “traditional” building route, as follows:

  1. Hire an architect or “building designer” to create a set of plans.
  2. Make a guess on the cost of the project, based on “$x per square m, multiplied by the size of the extension”.
  3. Use the plan and guessed budget to get council approval.
  4. Create a tender, outlining the project and a bunch of the details.
  5. Get three or more builders to quote on the job.
  6. Pick the cheapest.
  7. Haggle, then sign a fixed-price contract.
  8. Get going!

As we proceeded through the process, we started to have increasing concerns.

The building designer was fine, although there were times when we felt he wasn’t fully listening to our needs. We also kept wanting to know when the details would be worked out, but were always told “later”.

We liked the final plans, even though it took us twelve months to nail them down.

It was here that we really started to get nervous:

  • How would we find an initial list of good builders to go to?
  • Would they give us a meaningful quote, or just a quick guess?
  • When did the uncertainties get resolved?
  • What would stop us from getting hit with “death by a thousand project variations”?
  • How could we assess the quality of the builder?
  • If we were expected to pick the cheapest quote by default, wouldn’t that mean we’d get the shonkiest by default?
  • What about the unusual elements, like the rammed earth wall?
  • How much was this actually going to cost?

In the end, we stopped. And headed down the owner builder route, which we don’t regret.

In my day job, I help companies run tenders and projects. This leaves me convinced that the “traditional” building route is fraught with problems, at least in the residential space.

Issues with traditional building processes

These are a few of the issues that I see:

  • Uncertainties aren’t dealt with. There are easy bits to every building project, and there are the unknowns. We knew that strange things such as the rammed earth wall could cause problems, but it’s the unexpected things that get you. For example, our building designer had drawn a magnificent arrangement of doors and windows out onto the deck. Luckily, we thought it could be useful to get some early quotes to help with our budgeting, and quickly discovered that what had been drawn was unbuildable. Had this been a traditional approach, we only would’ve found this 1/3 of the way into the build, blowing out our budget, and costing us six weeks of time to resolve. Ouch! And this was just one of the uncertainties that would’ve lain in wait for us, had we gone down the traditional route.
  • Costs aren’t managed. As a result of the issues outlined above, the builders’ initial quotes are little more than educated guesses. There also isn’t a reason for them to commit huge amounts of time during a tender to accurately assess things, leading almost inevitably to cost over-runs later in the project.
  • Building materials aren’t carefully selected. The tendering builders make a set of assumptions about building materials when quoting, and these often aren’t the highest spec. Once building starts, it can be quite difficult to change materials, impacting on both quality and environmental impact.
  • Cost trumps quality. It goes without saying that picking the cheapest builder hardly biases the project towards quality.
  • Changes are hard. With a fixed price quote, it’s inherently hard to change things. And every change encourages the builder to inflate the cost of the variation.
  • Speed discourages thinking. While modern building practices are very efficient, having a pile of trades on-site means decisions get made in a hurry, leaving little time for tuning and refining the design.

In short, the traditional approach seems to virtually guarantee budget blow-outs, unpleasant surprises, and cut corners. No wonder there are so many horror stories of projects finishing 150% over budget, and a year late. Crazy stuff.

Now I’m not saying that you can’t get a great house at a great price, going through the standard process. It just seems to me that the odds are stacked against it.

While we went down the owner builder route in response to these concerns, I’m convinced that a more sensible approach to traditional practices could also get a good outcome. Such as exploring the uncertainties earlier, getting the preferred builder to do initial “scoping” to refine the cost and materials, and tuning the fixed-price/cost-plus models.

What do you think? Should we be building houses differently?