Estimate or Quote, Know the Difference.

February 2, 2023

I'm always trying to demystify the world of building for our clients. Information is key so I hope you find these blogs helpful

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Reviewing a Quote 

Estimate vs Quote

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Things to be mindful of when reviewing a quote 

Generally at the exploratory stage of a building project clients would like to get a gauge of what their desired build is going to cost so they can go about their planning and preparations accordingly. Most builders will supply an estimate at no cost. Generally, an estimate will support people applying for a loan and seeking building consent. 

An estimate is not set in stone it’s roughly how much the contractor thinks the job will cost, based on skill and past experience. It’s often referred to as a ‘guestimate’. A quote is more exact. Once a quote is accepted the contractor has to do the works outlined in the specifications for the quoted amount. 

There are a few ways to obtain an estimate, most commonly using a quantity surveyor or a building contractor. A quantity surveyor is trained in costing construction jobs, together with an architect, engineer and builder enabling them to provide accurate estimates for your specific project. It’s common for clients to get an estimate from a quantity surveyor first and then with this information send the job out to tender to a handful of builders. As the quotes come back in the estimate can be used as a reference point to judge the costs. If there’s anything obviously cheaper or more expensive then this is an indication that you should find out why?

Getting a quote allows you to accept an exact price for the job. Once you’ve accepted a quote the contractor can’t charge you more than the agreed price. There are a few instances where the cost can increase and they are when you agree to extra work outside of the original scope, or there are significant changes in the scope of work once the project is underway. This is where variations come into the equation. Getting an understanding of where variations could come into place before the project begins can assist in more accurate budgeting.

There are also allowances in building quotes. Sometimes allowances are specified by architects or clients based on items they think they’ll use during the construction but might change their mind about. Like, carpet m2 rate or tiles. These costs can increase or decrease depending on the actual items selected during the construction. Changing these will be a variation of the contract. Make sure you shop around and do your research on Prime Cost (PC) and Prime Sum (PS) items so that you can accept your quote with confidence. Provisional sums are often underestimated, so ask the contractor to confirm that the amount quoted will cover the quality of goods you’re expecting.

Prime Cost (PC)

When a provision for prime cost items is in your quote this represents an allowance for the supply of items not yet selected. For example, an allowance can be made for porcelain tiles based on an m2 rate for the purpose of quoting, then at a later date once the specific tile has been selected and variation can be prepared taking into account PC budget vs what the actual cost is. A labour cost is quoted for installing the yet-to-be-determined finished product, leaving just the item TBC. It’s dependent on what is specified during quoting, 

Provisional Sums (PS)

In contrast, provisional sums include allowances for both the supply item and all related work to be performed by the contractor. A provisional sum is an amount of money included in the quote to cover both work and materials which cannot be specifically detailed at the quoting stage. For example, if it’s determined that a client would like a stone fireplace, but is yet to select a stone, then a provisional allowance is made for the supply of materials in installation based on an m2 rate and will be adjusted as a variation once the final stone finish is selected. 

Shopping around for quotes can help support your decision to select a builder. But before you put it out to tender, check that the builder is a right fit for your project, if they specialise in concrete construction and you want a timber home, then continue looking to find a specialist that can execute your plans capitalizing on their skills and service offering. Check their reviews and previously completed projects to make sure you like their finish. 

If you have decided to go with one builder instead of shopping around for multiple quotes because of a steller reference or from previous experience working with them, it’s still in your best interest to get a detailed quote. This will be the reference point if there are any disputes during the construction or should any ambiguity arise. The best antidote to confusion during the build is clear communication. At the beginning of the quoting process gathering as much information as possible will help you to achieve a more accurate quote. That means detailed drawings, with elevations and specifications that outline the materials to be used, engineering and construction details plus site surveying of the block to determine what angle the block falls on if any.

Here is a check box for some items your builder will ask for when supplying a detailed quote:

Floor finishes (carpet, tiles floorboards)
Interior linings (timbers, plaster, v groove lining)
Plaster detail (desired finish, skirts or none)
Paint Finishes (colour selection and finish)
Decking timber (species and varnish) and hardware
Door schedule (interior sliders, hinge doors, barn doors)
Window schedule (all windows, including wet areas)
Glazing specs (shower screens, mirrors and custom glazing)
Exterior finish (materials and desired finish)
Plumbing items (tanks, hot water service, tapware, toilets and more)
Electrical appliances (laundry and kitchen appliances)
Light Fittings (fans, lights, switches)
Cabinetry drawings and finish
Benchtop details
Mechanical services (heating & cooling, garage door etc)

Ask for your quote in writing, preferably set into categories that make it easy for you to identify where the main costs are coming from. You also want to ask for a schedule of how long the project will take to build, so be clear on any dates that you are working with. If you have to be in by a certain date then make sure your builder has this information to begin with. Be clear about what you are after, specify if you are after an estimate or a quote when you would like it back by to review when you’d like the construction to begin and finish, your budget and your desired contract of choice. 

HIA, ABIC or Master builders contracts are most commonly used in Australia. 

It’s becoming increasingly popular for contractors to charge their clients for quotes. If this is the case then you’ll need to agree to the fees prior to obtaining a quote. Some quotes aren’t worth the paper they are written on, make sure that your builder has educated you on the value of investing in a paid quote vs an unpaid quote so that you are aware of what you are reviewing when it comes back in. 

When they do start rolling back into your inbox, think holistically about the project, quoted items and total cost. You have to ask yourself how much experience your contractor has had with similar projects to your own, what fixtures and fittings have been outlined in the quote and also ask around to see if previous clients have had a positive experience. 

Haggling is a risky game, you can negotiate the price to a degree, but check if you’re willing to compromise on finish. An experienced tradesperson is not going to be the cheapest, and the finish will be different depending on their experience. 

You quote should show:

What needs to be done

Cost for all of the materials and fittings

Hourly rate for the labour of tradespeople and subcontractors

If the quotes vary a lot in price, it’s worth asking why. It could mean the business:

  • is proposing using higher-quality materials
  • is more realistic about how long the job will take, or
  • has misunderstood the project.

Once you select a builder for the project, kindly let the other contractors who quoted the project know your decision. 

Read the contract thoroughly with enough time to understand it prior to signing, and if you’re unsure of anything, speak to a contracts lawyer for advice. Helpful information to understand in the contract is the payment schedule, make sure it’s clearly stated when and how much will be due at each stage. If you are building in Victoria, the consumer affairs website has a wealth of information surrounding contracts and it’s compulsory guide to be reviewed prior to signing a contract has lots of helpful resources.  

Once the project begins if the amount charged is different from the quote then ask why? Any extra work has to be checked with the client prior to commencing and must be added as a variation to the contract. Verbal acceptance isn’t enough, it must be in an email or preferably a signed variation form. This allows you the opportunity to check that the proposed costs are fair.

Moving forward with your construction project now you can understand the difference between an estimate and a quote and are aware of things to be mindful of when deciding what is best for your situation and reviewing them.

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