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Imagine being able to fly over the outback and spot various minerals in the ground. If it were that easy, we’d all be rich!
Unfortunately mining involves exploration, scientific testing of the ground, contour surveying and much more.
Site works in the new home building industry is not too dis-similar.
No builder is able to “look” at a block of land and tell you what the final costs will be with respect to site works. The final costs will always be dependent upon the information that we cannot see.
Therefore, it is important to note that no matter which builder you choose to build your house with, every single housing lot will have a site works component in addition to the construction component.
When paying my initial fee to the builder’s sales agent can I expect that the site works will have been fully costed and fixed from a price point of view?
No. When a client signs the initial Pre Construction Contract with a builder the sales agent will only be able to provide the client with a site works “estimate” (The building industry refers to this “estimate” as a site works provisional sum allowance)
This estimate may itemise what the builder is quoting for or simply state an amount that they have allowed. It does not necessarily mean that they have allowed for all of the items that may eventually be required or that they have allowed enough for the cost of the works that will need to be completed.
What information does the builder need in order to finalise my site works?
No builder is able to confirm the “actual” site works cost until the builder has at least been able to complete the following;
- Contour Feature survey
- Engineers report which includes a soil classification assessment and a wind rating assessment
- Bush Fire Attack (BAL) report (if applicable)
- Noise Attenuation report (if applicable)
- Energy Efficiency report
- Finished floor levels of the home
- Confirmed compliance with all Shire related requirements
The building lot must be titled and fully completed by the developer before these items can be confirmed and therefore before the final costs can be determined.
What are the issues that could lead to a higher site works cost?
The following lot types or issues are just some of the common reasons why the site works cost will usually be higher than those applicable to a standard, flat, retained lot in a new sub division. For example, sites that;
- require retaining walls to be installed
- have an incline or decline to the garage
- contain traces of limestone, rock, clay or peat in the soil
- have a high water level table
- require vegetation to be removed
- are in “high wind” areas
- are within 1000 metres of “breaking” surf
- are in Bushfire Attack zones (BAL)
- are subject to noise attenuation requirements
- require the home to be upgraded from an energy efficiency point of view
- are defined as semi- rural
- are defined as rear strata
- are in “brownfield” areas (established areas)
- require scaffolding work due to height issues
- require piling due the house being built over an underground sewer
- require the builder to remove an existing residence
Once the site works costs have been confirmed and if those confirmed costs are higher or lower than the “estimated” costs then you will be issued with a site works adjustment variation. If the confirmed site works costs are less than your “estimated” costs then the credit owing to you will be credited at your final progress payment. If the “actual” costs are higher than the original “estimated” costs then you will receive an invoice for the additional amount.
Can the site works amount change if I have already signed a Pre Construction contract but have not yet signed the final building contract?
If you receive an invoice for “additional” site works costs at this stage of the process then you will have two options to select from;
Pay the site works variation amount and then proceed to construction.
Cancel your Pre Construction Contract and pay the costs associated with your job that are over and above the Pre Construction Contract fee that you paid at the initial sign up stage.
Can the site works amount change if I have already signed a building contract?
On some occasions the client will require the builder to sign contracts “before” all of the site investigative work can be carried out. This may be due to a deadline involving a government grant or the settlement of a house and land package.
It is important to understand that the signing of a building contract does not prevent the builder from varying the contract price. The legislation that governs the contract allows does allow for the builder to adjust the contract price should unforeseen information become available following the signing of the building contract.
The protection for the consumer is that if any extra cost results in the signed contract price increasing by more than 5% then the client has the right to exit the signed building contract. The consumer must be aware that the builder may be able to claim any additional costs over and above the initial Pre Construction fee that they paid at the initial sign up stage.
If I have to pay any Shire related fees, can I pay those fees directly to the Shire?
With respect to shire related fees the client can pay the Shire directly. The client needs to be aware that they will need to fund these items upfront from their personal savings should they choose to remove it from the building contract.
The builder will not submit the paperwork to the Shire unless these fees have been paid.
Can I do any of the site related items myself?
Yes. You can do some things yourself but you need to keep in mind that if you do then you will need the funds to pay for it up front, which can be a burden on your personal finances.
Most consumers include everything in the contract for three simple reasons;
- The works is performed by the builder and therefore guaranteed by the builder
- The items in the building contract will be financed by the loan and therefore the consumer doesn’t need to come up with additional monies to pay for the works
- It is more convenient to have the works done by the builder.
Should you wish to do any of the site works items then you will need to seek approval from the companies Building Manager before you sign your initial Pre Construction contract.
Does the builder make a profit (margin) on every aspect of the building process?
Yes, more than likely. Just as the company that you work for will attach a profit margin to its costs, so does the builder.
All builders will apply a profit to every item in the building process which is often referred to as their “margin”.
Is there such a thing as no site costs or free site costs?
No. There is not. Some companies/individuals may market this way but every home will have site related issues and there is a cost attached to those issues.
Some may choose to make it a part of the house price by inflating the true house price (Aveling Homes does not practice this behaviour) or instead of offering a discount against the house itself may choose to apply the discount against the site works itself. Either way you are paying for it. (Aveling Homes does not practice this behaviour)
Who do I trust?
Online chat forums are notorious for mis-informed people providing so-called “qualified” comments. Often this misguided advice is damaging to the clients position.
Unfortunately many of these comments are provided by people who are “trolling” the online forums in search of work.
If a sales agent suggests that the site works price can be “fixed” at the initial sign up stage then walk away, as any such promise will be subject to conditions that will appear in paperwork at a future stage.
Why have we prepared this overview of site works?
Simple. We wish to be transparent.