Why Are Site Costs Different Between Builders?

4th March 2024

Finance & Budgeting Pre-Construction Legal & Contracts

Site costs can vary significantly between builders, often confusing home buyers. This article breaks down the key reasons why, from slab types to engineer preferences, and explains how to compare quotes properly.

Why Are Site Costs Different Between Builders?

When you're comparing quotes from different builders, one of the most confusing items you might notice is the variation in site costs. These differences can seem dramatic, sometimes up to $10,000 or more. But why does this happen? In this episode of the Home Building Hub podcast, Colin Bischof and Darren Brennan unpack what goes into site costs and why they're rarely apples for apples.

What Are Site Costs?

Site costs are the expenses required to prepare your land so that a home can be built on it. This includes:

• Slab design and engineering

• Soil testing and site surveys

• Excavation and removal of soil or rock

• Utility connections (sewer, water, electricity, NBN)

• Retaining walls, if required

• Council requirements and additional permits

Each builder approaches these items differently, which is where the variation begins.

Key Reasons Site Costs Differ Between Builders

1. Slab Class Inclusions

Some builders include an M class slab as standard, while others include H class. This impacts the price considerably. An H class slab can cost $5,000 to $10,000 more than M class, depending on your home size.

2. Fixed vs Allowance-Based Pricing

• Fixed site costs: A builder may lock in a price early, based on documentation and developer data. These can be higher but offer peace of mind.

• Allowance site costs: Builders estimate initially, then adjust once they receive your soil test, survey, and engineering reports.

3. What’s Included (and What Isn’t)

• One builder may include rock removal, retaining walls, or driveway gradient corrections.

• Another may leave these as exclusions, meaning extra costs later.

4. Retaining Walls

Often overlooked, these can cost thousands and are critical for usability and safety, especially on sloping blocks. Builders who include landscaping tend to factor in retaining walls up front.

5. Engineer Interpretations

Two engineers may review the same site data but arrive at different designs and costs. Conservative engineers might add more concrete or steel for safety, increasing price but reducing long-term risk.

6. Builder Risk Appetite

Each builder works with different engineers and has different tolerances for risk. A builder offering a lifetime structural warranty may opt for a more robust (and expensive) slab to avoid future issues.

7. Design Differences

The size and shape of the home affects how much work is needed to prepare the site. A wider house might need more cut and fill or retaining walls than a narrower one.

8. Compliance Requirements

Additional solar panels, stormwater drainage, council-specific regulations or estate covenants may be included in one quote and not another.

So How Should You Compare Builders?

• Do not compare site costs in isolation.

• Ask what’s included in the figure and what might come up later.

• Look at the overall package, including:

• • House design

  • Inclusions

  • Site-specific elements

  • Warranty period

  • Your trust in the consultant or builder

Why Fixed Pricing Isn't Always Reliable

Fixed site costs are based on early documents and might not reflect the reality once your soil test and survey are complete. There are always 'get-out' clauses in site costs if the conditions are vastly different in reality to what was provided on documentation upfront. Remember, Builders take a risk when offering fixed costs, so whilst on some they will win some margin, there's always another job around the corner that gets hit with unexpected costs that some (not all) builders will cover at a loss.

Common Misconception

Land agents or developers may suggest site costs will be a certain amount. Be cautious here – they’re not builders and can’t account for builder-specific processes or risk tolerance. Site costs can only be confirmed by your builder, based on your design, your lot, and your documents.

Key Takeaways

• Site costs vary between builders due to slab class, inclusions, engineer advice, and risk appetite.

• Always compare overall packages, not just one line item.

• Ask your builder to break down site costs and explain what's included.

• Don’t let a $5K or $10K variation sway your decision if you're sacrificing trust, quality, or long-term cost.

• Let your consultant walk you through each item, and don’t be afraid to ask questions.

Glossary of Terms

• Site Costs: Costs associated with preparing land for building.

• M Class / H Class Slab: Different slab types based on soil reactivity. H is more robust and expensive.

• Allowance: An estimated cost that may change later.

• Retaining Wall: A structure used to hold soil in place on sloping sites.

• Engineer Slab Design: A design that determines how the slab should be built for your home.

• Waffle Pod / Raft Slab: Types of concrete slab construction.

FAQs

Q: Is a cheaper site cost better? A: Not always. It may be missing essential items like rock removal or retaining walls, which you might have to pay for later.

Q: Can I get the same site cost from two different builders? A: Rarely. Each builder works with different engineers, processes, and inclusions.

Q: Should I trust site cost advice from a land agent? A: Take it with caution. They don’t know the full scope of your build or your builder’s processes.

Q: What if my builder over-engineers my slab? A: It may cost more, but it's often safer and can reduce the risk of future issues.

Ready to Learn More?

Listen to the full episode: Why are site costs different between builders?

About the Home Building Hub Podcast

The Home Building Hub podcast, hosted by industry experts Colin Bischof and Darren Brennan, is Australia’s premier resource for new home buyers. With weekly episodes featuring special guests, the podcast provides objective, high-quality insights into the home building process—completely free and without sales pitches. From understanding financing options to navigating the complexities of building a new home, each episode is packed with actionable advice and tips.

Explore more episodes at http://www.homebuildinghub.com.au and join our growing community of informed home buyers.

Disclaimer

Whilst we’re all about providing value to you, this article should not be considered as legal or financial advice. It contains general information only and is based on the content discussed during the podcast episode. This information is relevant to the episode’s release date and may not be applicable at the time of reading. Always seek independent professional advice tailored to your personal situation before making any legal or financial decisions.