What are the benefits of building a custom home?
Do you have ideas for your dream home, perhaps you like parts of family & friends homes, but not sure how to piece it all together. Building a custom home means you get a tailored living space unique to your needs and lifestyle.
Building a custom home with Erban Development means you get a quality tailored living space unique to your needs and lifestyle, and importantly to your budget. Our knowledge and building expertise allows us to provide designer options, progressive building practices, unique building solutions, and attention to detail in both our product and personalised service.
At what stage should I get the builder involved in the process?
Choosing your designer and builder together at the start of the process gives you a better chance of success at achieving a home of your dreams, and importantly for your established budget. At Erban Development we provide detailed estimated costs throughout the design phase and our expertise and holistic approach means we can offer unique building solutions and costing options to our clients.
What is a PPA Preparation of Plans Agreement? Who owns the plans?
A Preparation of Plans Agreement (PPA) provides the builder to be paid (by the owner) for works carried out in preparation for entering the main building contract. Works can include site inspection, site survey, preparation of plans etc.
A PPA agreement ensures transparency for both parties and gives the client satisfaction and comfort that they are not signing a building contract until they are satisfied with a design and price. Any fees paid in relation to the PPA (i.e. Site survey, design fees) are deducted from the contract price.
Ownership of plans is transferred to the owner on entering into a Building Contract with Erban Development. In the event that the client would like to own the plans, but not enter into a building contract a licencing fee (as set out in the initial PPA) will apply to transfer copyright of plans ownership.
Why should we build for our future? How does the energy star rating work?
Sustainability is an important factor in any project, and the demand for sustainable homes continues to grow. There’s now a huge focus on healthier building practices, internal fit-outs, resource efficient products and less waste. In terms of building or renovating your own home there is a lot you can do to ensure that your project is energy and water efficient, reduces its impact on climate change by reducing greenhouse gas emissions and is as ‘green’ as possible.
All new homes are required to have an energy assessment and certificate issued prior to the application of any building permits. The energy efficiency of houses is measured through a star-rating system, with the worst performing buildings achieving a zero rating through to a 10 star rating for a building that needs no artificial heating or cooling. A house built to a 6 star standard will use about 20 to 25 per cent less energy to heat and cool when compared, like-for-like, to a 5 star house.
A rating is done through the use of computer software modelling aligned to a protocol administered by the Nationwide House Energy Ratings Scheme (NatHERS). This determines the potential heating and cooling requirements of a given house design. It takes into consideration various features, such as orientation of the house, shading, window placement and size, climate, ventilation, insulation, materials used and roof colour. The Building Code of Australia also has a set of deemed-to-satisfy solutions that are considered equivalent to a 6 star rating. These solutions can be used instead of a software rating.
In addition to the 6 star rating for heating and cooling, the BCA requires all houses to meet new lighting efficiency standards. These requirements also apply to any renovations or extensions that require a building licence as is the case for the current energy efficiency requirements.
What are the contract documents, and what do I need to be aware of?
The contract documents are all documents which, when combined, form the basis of the contract. Workable and detailed contract documents are as important to the success of a building project as the plans, designs, and materials used during construction.
All parties need to work to a written road map with clear guidelines and rules on issues such as: when the work is to be completed; the Scope of Works & Specification; the contract price; how and when payment is to occur; what happens if there are delays; how to manage variations and any other matters that could lead to misunderstandings and disputes.
Some of the documents that make up the contract documentation include:
- Building Contract – the binding document or agreement between the Owner and the Builder to carry out the building work, defining the legal rights and obligations by which each party must comply. Erban Development uses HIA contracts that have been specifically prepared for the residential construction industry to reflect the risks and responsibilities of home building.
- Quotation – copy of accepted/signed quotation including associated notes & clarifications.
- Scope of Works / Addenda – a comprehensive list of materials, parts and labour that are included in the contract, adding clarity to the drawings. Any PC/PS sum allowances will be itemised (including costs) and detailed in this document.
- Drawings – the architectural and structural engineering plans & classifications of the building
- General Specification – set out the technical requirements of the work. It describes the project and requirements for materials and workmanship with regards to codes and law.
- Other documents – including technical schedules, shire permit related documents, &/or special conditions that are an extension of the general conditions and apply specifically to the project
What are the different types of building contracts and what is best for me?
There are many different styles of building contracts, from Lump Sum (fixed price) to Cost Plus, each having their pros and cons depending on the size & complexity of the project, and your circumstances. We can further explain the best solution for you on enquiry.
As a general guide if a bank loan is required to fund the majority of the contract price, then a Lump Sum (fixed price) contract is generally required by most financial institutions, and a cost plus contract is not an option.
What are PS & PC sums and how are these costs reconciled?
- Provisional Sum Items (PS Sum) is used for work (including labour and materials) for which the builder, after making all reasonable inquiries, cannot give a definite price at the time the contract is signed. Examples include earthworks, landscaping and tiling.
- Prime Cost Items (PC Sum) are (supply only) items that either have not been selected or whose price is not known at the time the contract is entered into, and for which the cost of supply and delivery the builder has made allowance for in the contract price. Examples include white-goods, tap-ware and light fittings.
PS & PC sums are set out in the contract documents and are reconciled & processed in the next progress claim or the final claim.
- If the actual cost is less than the allowance then the owner is to be given a credit for the difference.
- If the actual cost exceeds the allowance then the builder is entitled to charge a margin on the cost exceeding the allowance. This margin is to be stated in the contract.
The builder is required to warrant (promise) that the allowance for each PS and PC are calculated with reasonable care and skill taking account of all the information available to the builder at the date the contract is made including the nature and location of the building site.
How are progress payments worked out? How do we know we are not overpaying our builder for work they haven’t completed?
Progress payments are made at the end of each construction phase. The builder will issue a ‘progress claim’ invoice to the client once the works in that phase are complete, as per the terms and payment schedule in the Building Contract. The progress payment sub-totals are worked out based on the builders estimated costs plus margin for each phase.
An example of a typical single storey build would be:
- Deposit 6% (minus any fees associated with PPA)
- Ground Slab approx. 10%
- Walls / Plate Height approx. 30%
- Roof Cover approx. 20%
- Lockup approx. 20%
- Practical Completion approx. 14%
Residential building work contracts in WA are governed by the Home Building Contracts Act 1991 (applies to fixed price contracts between $7,500 to $500,000) states that payment may only be claimed by the builder for work, materials and services provided to that point in time, indicating that payment for future works is not possible. The only exception to this is the deposit, which may not exceed 6.5% of the contract price.
There are serious consequences for a builder to enter into a contract with a home owner in breach (of the requirements of the Home Building Contracts Act) in relation to deposits and progress payments.
How do we select our finishes and colour selections, and do we need to decide before signing a contract?
Our Interior and Landscape Design partners will liaise with you and guide you in selecting your finishes and colours for your home over a series of stages at your pace.
With Erban Development you don’t need to decide on your finishes and colours before signing a contract or even commencing construction, it’s your choice. We understand that your life doesn’t go on hold while you are building, so our flexibility to this staged process allows you the time to get these important decisions right, and with our professional guidance give you the confidence in your choices.
Can we make changes during the construction process?
Yes you can. We understand and take a flexible approach to changes (variations) during our process, in order to achieve every client’s dream home. We don’t charge an administration fee on variations, and will always keep you informed when costing changes of any program implications.
Can we supply or complete some finishing items ourselves?
Yes you can. Whilst we prefer to supply and install all items to build a home, we are flexible to clients supplying or completing some of the finishing items themselves.
We are open to discuss your specific requirements further on enquiry, but as a general guide we will allow clients to supply or complete final finishing/furnishing items unrelated to the structural integrity, or practical completion of the build (i.e. final painting, floor finishes, landscaping etc).
Who is responsible for what during the process?
The Builder warrants that:
- The Builder shall obtain any permits or licences that are required for the performance of the works and (as prescribed under the terms of the Contract, Drawings, Addenda’s and Specifications) pursuant to all statutes, codes, ordinances, rules, regulations, proclamations or orders of any officer of body lawfully empowered to make or issue the same.
- The Builder shall complete the works (as prescribed under the terms of the Contract, Drawings, Addenda’s and Specifications) in proper and workmanlike manner, complying with all relevant statutes, regulations and local laws and any lawful orders or directions made thereunder which relate to the works.
The Owner warrants that:
- The Owner has title to the land and is entitled to build on the site, and that the site will support the works.
- The Owner has the ability to pay the Contract Price.
- The Builder has access to the site for the purposes of the Contract.
Whom do we communicate with during the process?
Eric Diaz (your builder) will be your primary contact from your initial meeting through to construction/handover of your home. Whilst we engage fellow industry professionals (such as our partner architects, interior designers, engineers and various consultants) Eric will be involved and guide every step of the design and build process.
How long will our home take to build?
This really depends on the site and the home being built. How much retaining / site works is required, the complexity and size of the build, and even factors such as inclement weather etc are factors in determining a suitable duration for the build.
As a general guide for a new custom home on a reasonably level block:
- average build times for a single storey home is approx. 7-9 months
- average build times for a two-storey home is approx. 12-14 months
Are we allowed on the site during construction, and can we bring someone with us?
Sure, but always with your builder present.
Under the terms of a building contract “The Builder shall be given exclusive possession of the site and shall be entitled to remain in possession until the Contract Price is paid in full by Owner, and Handover has taken place.” As you could imagine our responsibilities under OHS obligations; Insurances & building contract terms, Building Acts and Regulations, dictate that we cannot knowingly allow clients &/or members of the public to enter our building sites unsupervised.
What is the Builders Warranty insurance, how do we know if our builder has a policy for our home?
Home Indemnity Insurance (HII) protects owners against financial loss if a builder cannot complete residential building work or meet a valid claim for faulty or unsatisfactory building work because of death, disappearance or insolvency. In most instances, the insurance policy must cover the residential building work during the construction period and for six years from the date of ‘practical completion’ (the six year insurance period).
Under the Home Building Contracts Act 1991 (the Act), if residential building work valued over $20,000 is to be undertaken, the Act requires that a builder take out home indemnity insurance in the name of the owner (and provide copy of policy schedule to owner) before accepting deposit payment or commencing work.
A builder who does not take out indemnity insurance as required or fails to comply with any other of the provisions of the Act can be prosecuted and fined, and may risk losing their builder’s registration.
What happens if we disagree with the builder or we think the way our builder does something during the build process is wrong?
The most important step is to have open communication with your builder (where both parties are able to express their views) and try resolving any issues amicably before they become a dispute.
In the event of any dispute, disagreement or difference arises between the Owner and the Builder at any time relating to the Contract then either party (or their successors) can apply to the Building Commissioner to lodge a formal complaint under the Building Services (Complaint Resolution and Administration) Act 2011. Once assessed by the Building Commissioner, your complaint may be dismissed or resolved through any number of the following ways:
- Conciliation (a single mediator/arbitrator by mutual consent)
- Interim order.
- Building remedy order for rectification and/or payment.
- Home building work contract remedy order for rectification and/or payment.
- Referral to the SAT (State Administrative Tribunal)
This variety of dispute resolution techniques is intended to prevent relatively low cost disputes from proceeding to court by making a decision for parties at an early stage. Orders can be made to rectify substandard work or to correct any regulated work that requires remedying.
How does the maintenance period work? And who is responsible for what after this period?
“Your 12 month maintenance period begins from the date of ‘Practical Completion’. At the end of that period we will contact you to arrange a suitable time to carry out an inspection with you and fix any defects.” – Eric Diaz
The Home Building Contracts Act 1991 (WA) provides that it is the term of every home building contract that the builder is required to rectify at the cost of the builder all defects notified to them by the owner (within the prescribed time in the contract) after the date of practical completion.
“Defect” is defined under the relevant law to mean:
- A failure to perform the home building work in a proper and workmanlike manner and in accordance with the contract: or
- To supply materials that are of merchantable quality and reasonably fit for the purpose for which the owner required the home building work to be performed.
- Under the Building Services (Complaint Resolution and Administration) Act 2011, a builder can be liable for faulty and defective work for a period of up to 6 years after the completion of the works. The 6 year period operates as a limitation period within which a client can make a complaint to the Building Commission in relation to all faulty and defective workmanship.
As a good general rule when defining client/builder responsibilities after the maintenance period:
- Replacement of items that are damaged due to everyday wear and tear or something which the owner does to it will generally not be the builder’s responsibility.
- The builder would only be responsible when the problem occurs due to faulty or unsatisfactory workmanship.
If the FAQ did not answer your questions or if you have other questions
Please contact us and we will be happy to help.