Building Estimate vs. Building Quote: Decoding the Difference
Embarking on a major home renovation or new home build project is an exciting yet complex endeavour, and navigating the cost to build pricing options is an integral part of this process.
To price a build there are two terms used to define two separate pricing services:
Building Estimate, and
Building Quote
These two terms often cause confusion amongst homeowners, and can make it difficult to compare apples with apples when choosing which builder you want to move forward with.
Here, we delve into the differences between the two, what each option does and does not provide, and how to choose which option is right for you based on what stage you’re at in your home project journey.
Building Estimate
A home building estimate is a preliminary, high level projection of the potential cost to renovate or build your home. It serves as an initial cost guide, offering you a broad understanding of what you might expect to pay, without going into the level of detail found in a building quote. You do not need to have your DA or CDC plans approved in order to request an estimate from a builder.
Key Features of a Building Estimate:
They’re only a Rough Projection
A building estimate only provides a rough projection of the overall potential cost associated with undergoing your home renovation or new home build. It is an initial cost exploration based on the builder's experience and knowledge of working on similar projects and simply offers a ballpark figure. Building estimates do not take into account the specificity and detail that would be found in a formal building quote.
They’re Non-Binding
Unlike a building quote, a building estimate is not a binding agreement. The figures presented in an estimate are subject to change as more detail about what is required, and the complexity of the build, is uncovered. This flexibility allows for adjustments based on unforeseen circumstances, changes in the scope of work, or other factors which may impact costs.
Allow for Initial Project Exploration
Building estimates serve as a tool for you to explore the financial feasibility of your home renovation or new build project, before you commit to a formal agreement. They allow you an opportunity to open a discussion with your builder or architect and make any necessary adjustments to your design vision, project timeline, material selection and build complexity to better align with your build budget.
Quick turnaround
A building estimate can be produced pretty quickly – usually on the spot if you’re undergoing a site visit with a builder, or after a couple of days if you’re providing additional high level details (e.g. design sketches) for a builder to provide a cost estimate from.
Building Quote
In contrast, a home building quote is a formal document provided by a builder, outlining a detailed breakdown of the costs associated with completing your home renovation or new home build project. It goes beyond a mere estimation, providing explicit detail into exactly what is required to undergo the build, and the costs associated with it.
A building quote serves as the basis of your building contract with your builder. Most builders will only provide you with a building quote once your DA or CDC plans have been approved and Construction Documentation prepared by your architect. The reason for this is simply because approved plans and Construction Documentation means your design and scope has been fully and clearly defined and approved, giving your builder the ability to accurately quote for quantities and labour requirements.
Key Features of a Building Quote:
They are Extremely Detailed
A building quote is not simply a high level number. It is a comprehensive breakdown of all the costs associated with completing your home renovation or new home build. This detailed breakdown includes labour, materials, permits, and any other essential elements required for the build, so you can see how costs are allocated for your particular project and programme (i.e. length of time for your project).
They Form a Binding Agreement
Once accepted, a building quote forms the basis of the legally binding agreement between yourself and your builder. This legal standing ensures that both parties are committed to the terms and costs outlined in the quote. It not only protects you from unexpected costs, but it also holds your builder to account for delivering as per the agreed-upon specifications.
They’re presented in a Fixed Price or Cost Plus Format
A building quote will usually come in one of two formats – fixed price or cost plus. A fixed price contract is where a builder agrees to complete your project for a fixed dollar amount. In contrast, a cost plus contract is where the builder is paid for their actual costs of labour and materials, plus a percentage for overhead and profit. Read more about the differences between fixed price and cost plus contracts and learn about the pros and cons each format offers.
They Outline the Scope of Work
Building quotes delve into the detailed specifics - quantities and quality of materials - for your project's Scope of Work. Each phase, from site preparation to finishing touches, is meticulously detailed, leaving little room for ambiguity. This clarity ensures that both parties are on the same page regarding the expectations and deliverables throughout the construction journey.
They are a Builders Mark of Professionalism and Credibility
A formal building quote not only serves as a financial contract between yourself and your builder, it also provides an insight in the professionalism and credibility of the builder you have chosen. A professionally prepared building quote takes around 3-4 weeks to prepare and should demonstrate your builder’s commitment to transparency and honesty, as well as their clear understanding of your project's requirements and potential challenges. Given the time and involvement required for a professional builder to prepare a proper building quote, you should expect to pay for a building quote. Read more about why you should never trust a free building quote.
So, Which One Should You Ask For?
While both building quotes and estimates play vital roles, they cater to different stages of your build journey and thus serve distinct purposes. A building quote provides a detailed, legally binding agreement between you and your builder, ensuring transparency and accountability. On the other hand, a building estimate offers a preliminary cost projection, providing you an opportunity to make adjustments to your overall design vision and goals in order to meet your project budget.
Ask for a Building Estimate if:
You’re just starting out on your project and want a basic guide as to what your home renovation or new home build vision may cost.
Pro Tip: When you’re working with your architect or draftsmen, ask for updated building estimates at each stage of the design development, to ensure no nasty build cost surprises once you have your designs approved.
Ask for a Building Quote if:
You have your DA or CDC designs approved and your Construction Documentation ready (most builders won’t spend the time preparing a building quote until you have these elements anyway)
You are financially ready to commence construction. Material and labour costs and availabilities can change quickly in the building industry. As such, most building quotes are only valid for a short period of time (e.g. 3 months). It’s best to only ask a builder for their time to prepare you a building quote if you’re actually ready to start, otherwise you may find your builder may need to re-quote (or, they may consider you a tyre kicker and turn down your request for an updated quote).
Understanding the distinction between what’s supplied in a building quote and a building estimate is key step when embarking on your home renovation or new home build project. It’s also important to understand that the cost of construction is only one element you need to prepare for when looking at the overall budget for your project.
Before embarking on a major home renovation or new home build, it's crucial to engage in thorough discussion with your Architect and builder to ensure you receive a clear understanding of the potential cost to build your vision - especially before you progress to the approvals phase of your design. At MILEHAM, we provide our Clients with an updated Building Estimate at every stage of their Design Process.
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