A BCA can save you money says MBA

2015-09-22 06:00

Having a building cost analysis before you start building your dream home can save you lots of maney and heart-ache. 


Having a building cost analysis before you start building your dream home can save you lots of maney and heart-ache. PHOTO: Freeimages.com

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A building cost analysis (BCA) and the right contractor are key to building on budget

“The value of a proper budget combined with the expertise, efficiency and materials supply contacts of a professional contractor cannot be overemphasized,” says Mohau Mphomela, executive director of the Master Builders Association North (MBA North) in a press release.

“It is not uncommon for consumers to find themselves over budget on a building project. In fact it happens so frequently that friends at the braai-side will joke about doubling the estimated costs and taking out a loan to make sure the job is finished.

“At the crux of it is a poor understanding of the costs involved in building projects. Building costs should take into account, amongst others, variables such as labour, material, equipment, building codes, job-site conditions and standard markups applicable to the area.”

Going over budget can place the homeowner in a financial predicament. It comes with the risk of having their building bond frozen by their bank until the extra money is furnished, lead to the building project grinding to a halt and the contractor walking off site. On the flip side, having the costs of a building project accurately calculated through a business costs analysis before starting the project can save thousands of rands.

A BCA, says Mphomela, is the only financial risk mitigation tool available in the country.

“If you haven’t had your budget drawn up or committed to by a registered builder, you can be almost sure that all sorts of costs have been overlooked. For instance, have the costs of connecting wires and plumbing points or fittings and fixtures been considered?”

Aside from including the full costs of labour and materials, a BCA will help to reveal hidden costs associated with a build as well as enable the homeowner to compare apples with apples when considering different contractors as their markups will not be included. Additionally, a BCA will help to ensure that contractors have an accurate picture of the costs involved in the project and prevent them from under quoting in order to secure a job.

A BCA affords the homeowner with a crucial level of protection against being over charged and going over budget. It is also a helpful tool for them to use for project managing their own building process.

With a plethora of consultants and contractors offering building costs analyses as a service, Mphomela cautions homeowners against picking just anybody.

“Check their credentials, ensure that they are registered with the NHBRC, and a member of the Master Builders Association. Also remember that a BCA does in no way obligate you to use the same contractor to undertake the building project,” he advises.

Choosing the right building contract to undertake the project is the next important step towards getting the job done properly, soundly and within budget.

Consumers are offered some degree of protection by the NHBRC and their financial institution if the project is financed via a building bond.

All contractors who work in the residential market must be registered with the NHBRC, as should the project itself. The NHBRC though, only provides “insurance” for defects in the work up to the value of R500 000.

If the project is financed via a building bond, the bank’s inspectors will visit the site five to six times during the project to check that work is adequately completed before releasing the funds to the homeowner to pay the contractor. The reality is however that even if a contract has been entered into and signed, the homeowner is alone in dispute resolution and arbitration as neither the bank nor the NHBRC will get involved.

“Building your dream home should be an exciting experience. You should not have to worry that the project will end up costing more than you budgeted for, or can afford. Knowing upfront what the costs will be, instead of relying on optimistic costings, and choosing a qualified and responsible contractor will help to ensure that you meet your budget and see your dream home come to fruition,” concludes Mphomela

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