What does a Custom House Cost to Build?

Lets unpack this popular question, often replied with "How long is a piece of string?" but with a quick answer and a 3 step guide to calculate costs more accurately based on your design.

The short answer is:

Typically 25% -100% more than the equivalent house provided by a Volume Home Builder. (Unless you'll be an Owner Builder)

However, most custom houses are not 'equivalent' so it depends greatly on the design, specifications and scale of the project.

To clarify, we are talking about a house designed by an architect or building designer and built by a third party custom home builder. Essentially working with a team of small businesses rather than a large one-stop-shop home builder.

This is not relating to a renovation project, which will need a lot of cost forecasting and cost review input from the builder.

Regarding being an owner builder and how costs vary, that is a great topic for a future article of ours coming soon!

The long answer is:

Read on, as in article we'll explain the most commonly used strategies or steps you can take to identify the potential build cost of your custom home ASAP.

Quick Note: If you'd like to explore why an architecturally designed house will typically cost more to build than customising a standard plan from a home builder, Check out this article: Why are architecturally designed houses more expensive?

But, back to a custom home designed by an architect or building designer, lets explore how can you understand the costs of your design decisions and reduce the risk of exceeding your budget.

How to calculate how much a custom house will cost?

There are 3 key ways to identify the potential construction cost, in ascending order of accuracy

1. Forecast a Budget Range: Use Square Meter Rates or a paid online tool like B4UBuild as a guide across the house or zones within the house to forecast a construction cost range to check the feasibility of the design. Contact us today for a 20% off promo code to B4UBuild.

2. Review with a Take-off Estimate: Hire a Quantity Surveyor or pay the builder to estimate all known costs of what has been drawn and selected by using their understanding of building and material costs. This will act as a cost review before diving into the full design documentation

3. Confirm with Contract Pricing: Prepare a Tender package for the building design, interior design, structural design and landscaping, specialist reports etc which can be priced as accurately as possible by one or multiple builders. Fine tuning the scope with a single builder at the end will confirm the known costs of your build.

Let's discuss each one and conclude with which methods we recommend:

Step 1: Forecast a Budget Range

This can be done in under 15 minutes or more carefully over a couple of hours.

Therefore these estimates are the least accurate and reliable, but this is just the starting point. It's essentially an educated guess, however, it is quite insightful and important to consider the feasibility of a project before starting the design itself.

Our Preferred method is to do both:

• Use B4UBuild to create 2-3 secenerios that give us a budget range, then

• Use the below square meter rates method to crosscheck the budget range

Contact us today for a 20% off promo code to B4UBuild.

Do NOT only use square meter rates!

Square Metre Rates:

This is the way builders, other building designers and architects typically check the budget at the early stages of the project. It is notorious for being wrong, vague and to general so we don't use it alone

1. Break your floor plan up into zones of Internal, Premium Internal, Covered external and Garage

2. Allocate a square meter rate to each of these zone types. eg $3,500 - $5,000* Internal, $4,500 - 6,500* for premium internal, $1,200 - 2,000* for covered external and $2,000 - 2,500* for the Garage.

3. Multiply these rates by each of the zones on your floor plan and add up the subtotals

4. This is the estimated cost of the 'house' but not the full project

5. Consider the foundation type and earthworks required and make an allowance. eg $10,000 - $100,000*

6. Consider the site works and landscaping outside of your floor plan and make an allowance (don't forget the pool, driveway and retaining walls)

7. Add $30,000 - 60,000* for miscellaneous site items, like utility connections, utility services during construction, the builder's port-a-loo, site fencing and skip bin.

8. Add you design fees (Future blog post coming soon)

9. Combine all your allowances to create a range between the two totals

10. Consider how to make your house smaller (almost everybody will need to)

    
    

* These are general guides only based on our typical projects. If your build will be top-end, and have significant concrete, custom glass or lots of structural steel you might expect rates over $6000. The same can be said for custom build in cyclone-prone regions. Knowing which part of the range to use for each space comes down to experience and awareness of what builders in your area charge and how complex it will be to build on your specific property.

Why the range in the square meter rates or allowances?

All houses are not created equal. Some have more expensive structures, building envelopes and interior fittings, finishes and fittings. It's also not possible to give a fixed total with such limited data, especially relating to the actual construction methods required at your property, so this allows for two totals that create a budget 'range'.

To reduce the range between your two totals you will need to progress the design further and get input from a structural engineer and builder.

This range becomes can determine if the project is feasible and allow you to double check your financial situation to confirm the upper limit that can not be exceeded. The more price sensitive the project the more importance should be be placed on the making the floor area efficient, not adding unnecessary features and keeping the interior fit-out realistic. In luxury projects the interior selections can massively affect the pricing.

Foundations and Soil Conditions

This also goes for the foundations. Getting a geotechnical report early on is critical if you suspect the soil could be problematic or have a fixed upper limit to your budget. Showing this report to your engineer can allow you to understand if your house will likely need above average allowances for its foundations. For example screw peers on a typical two storey custom home can cost upwards of $100,000.

This exercise is useful on day one and throughout the design process whenever floor areas change, construction scope is added or design changes are made.

Step 2: Review Costs with a Take-off Estimate by a Quantity Surveyor or Engaged Builder

As your design develops there will be more tangible and specific design information that is confirmed from an architectural, engineering and interior design perspective. Once you project has developed to a point where the overall design for the whole project is clearly on paper, you can have somebody allocate itemised costs to dozens or even hundreds of line items that make up the builder's total scope of work and give you a bottom line to review.

Be prepared to pay for this service:

As this is a substantial task to be performed by somebody with the appropriate industry knowledge and technical ability, you can't expect to get this done for free. However, for projects where staying under the upper limit of the budget is of a high priority, this can be an extremely valuable checkpoint.

Consider the information being used:

You will only get out what you put in, to this take-off, so may do this more than once as your design develops to include more of the high end or expensive items you discover you would like.

If the person doing the take-off doesn't know you expect high-spec items such as $1,500 kitchen mixer, high-performance glazing or a fully tiled pool with spa, they won't allocate the appropriate costs to those line items.

That would result with a cost review process represented of a different level of finish and only represent how cheaply you could build a less attractive or less luxurious version of the subject house.

Similarly, if there are aspects of the project that just don't exist at the first take-off estimate, they won't contribute to your take-off estimate's bottom line. Eg. the need for screw peers under your foundations, a front masonry fence with automatic gates, and extensive landscaping/hardscaping around the house, there will be no allowance at all for these items which could be over $150K - $200K when combined.

Take-Off Accuracy:

Prior to Covid19, Using a Quantity Surveyor (QS) this was quite an effective way to get a professional opinion on the accuracy of your own budget range forecasting, as average construction costs for specific items were relatively understood from a technical standpoint. Although turnkey prices differed from builder to builder this would typically give you a good estimate as to what the average builder quotes should look like.

During the recent construction boom, market pricing has fluctuated and grown massively and a QS takeoff or a builder's live estimate has become less reliable. With market rates and supply/labour prices changing all the time, these documents could quickly become outdated as the preconstruction progressed. As the building industry settles down and interest rates reduce demand we expect the accuracy of QS reports to improve provided they keep their back-end input data current with the relevant market rates.

Construction Logistics:

Another reason why the take-off only serves as a cost 'review' checkpoint is the QS is typically less likely to understand specific construction and logistical considerations the builder will need to allow for. Whether it be related to access, security, lifting of materials or specific sequencing or staging, a QS estimate is limited in this aspect. If you have a builder do this they are more likely to get those aspects closer to the money provided they have visited the property and the site was clearly visible. (As apposed to coved in thick vegetation.)

If you aren't looking to have a single builder involved in your preconstruction process, a Take-Off Estimate by a Quantity Surveyor is essentially your only chance to get more realistic figures beyond initial feasibility estimates - before your tender.

That is before engaging your architect or building designer to draw up the rest of your project for tender along with all the specialty design aspects like engineering and interior design. The take-off essentially the closest thing to an issuance policy to protect yourself against having to do a major redesign if your square meter rate allowances were significantly off due to the level of finish, engineering or site-specific factors.

Final Tip: Remember, you will need to provide your QS with an Interior Design so they can make appropriate allowances for the interior fit-out. The interior fit-out can easily add 30% if designer, imported, natural or artisan products are selected along with complex labour tasks like chevron floors, french pattern ties, or bespoke joinery/cabinetry.

Step 3: Confirm Costs with Tender or Contract Pricing

Once your entire building design, Interior design, Structural design, Landscape design, Energy Efficiency Report and any other specialist reports have been created and coordinated, you can send these out as a package to 3 - 4 interested custom home builders.

Over the course of 4-6 weeks they will send the drawings out to their various subcontractors to identify the costs of each trade, costs of materials and make allowances for unknowable items, like earthworks and the installation of a firebox. Once they have all the subcontractor pricing back and have compiled the data with values they are comfortable with they will return a bid/tender typically with a list of any exclusions and some marketing/branding/portfolio information.

Quotes might cost you money:

Some builders may charge to do this as its such a major investment of time, often over 40 hours of desk work, which takes them away from their other job sites.

At the end of the tender you can compare the various builder's quotes and then choose who you wish to progress with.

This might be for negotiation, discuss the details of the contract or to ask how they think we could easily reduce the build without taking away from the design aesthetic and overall outcome.

Contingency Fund:

It's important to understand that builders will always write clauses into their contracts that allow for some wiggle room if unknown costs allowances blow out or for requested variations. (When you wish to change the design or contracted scope). To combat this risk, many clients like to have a 10 - 15% contingency fund for new-builds and a 15 - 20% for renovations to help cover the cost of any unknown scenarios the builder is faced with that are out of your control.

If you enter into a cost plus contract you will want a bigger contingency fund.

So which method does BYO Floor Plan recommend?

All of them.

All of these methods have their time and place within the preconstruction process.

Unless you have access to extra funds, doing everything possible to check the construction price is critical to avoid wasting the time and money you invested in the design and keeping the land.

To often we hear about people who's projects are dead in the water because they:

• Didn't believe the square meter rates, so substituted them with their own figures.

• Had an ambitious interior design that far exceeded the square meter rates allowed for by the architect or building designer.

• Were caught out by rising building costs, rising interest rates and reduced builder availability. We are finally seeing that market fluctuations for materials and labour are settling down

• Didn't have all the reports and detailed drawings done when they tendered the project

• Specific subcontractor pricing exposed major technical construction complexities that square meter rates or a builder/QS take-off wasn't inclusive of. Eg unavailability of formwork material and formwork labour for a large suspended slab.

  
  

In summary, by using all the methods above, we have the highest chance of avoiding surprises and making any minor pivots as the project develops to ensure its viability.

Work with a team that doesn't just want your money, but wants to see your project get completed.

Disclaimer

This is general information only and the square meter rates provided may not be appropriate to your project given its design complexity, it's materials, the property location and local building regulations. The sky is really the limit with luxury custom homes, and so is their build costs if not controlled. Small projects often se relatively more expensive per square meter rates as they still include all of the utility types, appliances and systems found in a larger home, but just packed in tighter. BYO Floor Plan holds no responsibility for the accuracy of this information which is subject to change as the market and industry conditions fluctuate, use this at your own risk.

If you would like more information to help with feasibility of your unique design project, feel free to contact us by phone or email.