Understanding Fixed Site Costs

October 03 2020 admin Uncategorized

Understanding Site Costs can be a complicated process. Most home builders will build using a waffle pod slab system. The slab for your new home is designed by a structural engineer. Each slab design is engineered differently based on the characteristic of your land. Part of the process of identifying the characteristic of the land is by obtaining a Soil Report by a Geotechnical Engineer who goes out and tests the land.

Overview:

Things that the engineer will take into consideration is;

  1. The reactiveness of movement of your land

    Depending on what type of soil your land comprises of it will be classified based on its likely reactiveness to movement.

    Some examples of Soil Classifications are;

    “M – Moderately Reactive”,
    “H- Highly Reactive”,
    “P – Problematically Reactive”.

    Based on the reactiveness of the land to movement the structural engineer will design a slab to ensure it can handle your soil condition. For example, a slab designed for a “H” class site will be structurally higher performing then a slab designed for a “M” class site as the reactiveness is reduced.

  2. The slope of your land

    Obviously, the concrete slab of your home will need to be placed on a flat land surface therefor depending on the slope of your lot, excavation works will need to be carried out to construct a flat building platform for your home. This can include excavating and removing of soil and filling and compacting of soil where applicable.

    In addition, drainage of rainwater will be considered during the design phase to ensure the building platform and surrounding area of your home are drained properly.

  3. The amount of fill on your land / soil strength

    During the development of Land Estates, lots will be graded to certain levels depending on the existing land surfaces. Part of the process involves excavating and removing soil in areas which are deemed as too high and adding soil (known as fill) in areas which are too low.

    Depending on how much fill is added to the land and the compaction process your land will be tested for bearing capacity. This is effectively the strength of the soil and how much weight it can handle.

    The structural engineer will design the slab to ensure footings / piers reach a depth that meets the bearing capacity needed for your home.

  4. Surroundings that may affect your land

    Anything that can alter soil conditions or have an adverse effect on the concrete slab design will be taken into consideration. Things such as adjoining properties and trees will be considered during the design phase of the concrete slab.

  5. Easements

    Easements on lots will come into effect if the home is within close proximity of a side or rear easement. There are two reasons for this;

    1. So that the services within the easement are not affected in anyway which could cause potential damage and
    2. So that the integrity of the slab is not affected by the services

    This is carried out by achieving what is known as an “Angle or Repose” which effectively means that the depth of the footing needs to conform with the depth of the services within the easement to ensure there is no potential ramifications.

What’s normally included in the base price of a home?

Most builders will have the following inclusions in their base price to ensure that everyone is getting even pricing;

  • M Class Slab Design
  • Up to 300mm across the lot
  • Up to 500mm of fill on the lot

Standard service connections on a lot up to 500m2 in area

Effectively once the builder has information of your particular lot they can then proceed to work out the Site Cost.

Calculating Site Costs:

Now that the builder has details on your lot, they will be able to refer to the Land Estates Earthworks engineering and work out your site costs. Site Costs are worked out as follows;

1. Assessing your Site Classification (ie. If your property is required a H Class Slab or P Class Slab design”)

2. Assessing how much fall your land has (ie. the earthworks involved in preparing a building platform for your new home and ensuring adequate drainage provisions are included)

3. Assessing how much fill your land has (ie. if additional piers will be required to a depth to ensure bearing capacity is met)

4. Assessing any surroundings that may affect your soil conditions (ie. neighbouring buildings, trees, etc.)

5. Assessing weather your home will be in close proximity to easements (ie. do they need to upgrade the slab to ensure they meet angle of repose?)

6. Assessing the size of your land and how far away service connections are (ie. on a larger lot of land the stormwater connection might be further away than a standard lot)

As you can imagine based on the above these costs can differ substantially and can start from anything as low as $5,000 and go up to as much as $40,000 or more depending on what’s required.

Rock Removal:

Another part of site cost which need to be considered is the unforeseen cost or rock removal during excavation works and service connections. Rock removal is a very difficult and slow process which in turn makes it costly.

Ideally you want your builder to incorporate Rock Removal in the Fixed Site Costs price they provide you to ensure there are no surprises during construction.

So how do builders allow for Rock Removal when they have no way in knowing how much Rock, if any, there will be?

Effectively most builders offer Fixed Site Costs with all Rock Removal Included within the price. They do this by charging all their clients an average of what they anticipate each job will incur on rock removal.

For example, if a builder built 20 homes in the past 12 months in a particular area and had a total cost of $100,000.00 for rock removal, they will effectively charge each new customer who is building in that same area $5,000.00. Over the 20 homes they will have charged $100,000.00 for rock removal.

Effectively as a customer you need to look at it as an insurance policy to some extent. Yes, you are potentially paying $5,000.00 for rock removal and not one rock may come out of your land during earth works, but you are potentially also saving a whole lot of money as in many cases when there is quite a bit of rock on a site, the costs can very easily exceed $15,000.00 in rock removal.

Tread cautiously if Rock Removal is not included in a builders Fixed Site Costs as you can be put in a position to get a shock if rock is found out onsite during construction are you are charged for it.

So why do fixed site costs vary among builders so much?

Each Builder has a different way of calculating Site Costs which makes it difficult as a customer to know what a fair price should be.

Unfortunately, some builders tend to use Fixed Site Costs as a marketing tool. This is done by them lowering the base price of their homes and then adding the shortfall on Site Costs.

Scenario 1: A builder’s base price is $190,000.00 for a 20 square single storey home

Their site costs are $12,000.00 for the home on your land.

Scenario 2: A builder’s base price is $184,000.00 for a 20 square single storey home which is $6,000 cheaper than the other builder.

Their site costs are $20,000.00 for the home on your land which is $8,000 dearer then the other builder

Effectively the builder in Scenario 2 has an advertised base price which is much lower than the 1st builder but overall, they end up being more expensive once you add their site cost. By not approaching the Builder with the slightly higher base price as you have made an assumption that overall, they are more expensive you potentially could be paying more.