How a custom builder is different from a volume builder


This video explores how a custom home builder is different from a volume/project builder.

Understanding these differences will enable you to better prepare for what is to come during the many months of your home building project.


Video transcript

Those who think that building a home instead of purchasing an existing one will save them money, are for the most part, wrong.

Going through months of designing, council approvals and construction (while paying rent and mortgage at the same time) is an expensive exercise, especially if you don’t take a well-planned set of steps along the way.

Yet, the possibility of living in a home that’s exactly like you want it is often the primary reason why homeowners choose building over buying.

Quite often, for those building their first or second home, the research starts around volume builders’ display homes and looking at their design catalogues.

Some will be lucky to find a design that fits their block, their budget, and most importantly, includes everything they want in their new home.

Others will find out that while they like bits and pieces of these designs here and there, getting to their ideal home will require working with a builder or designer.

In a future newsletter edition, we will go through a bunch of reasons why involving a builder in the design process benefits the homeowner in so many ways.

But for today, let’s look at the difference between a project/volume builder and a custom home builder and why understanding this difference will prepare you for what is to come during the many months of your home building project.

Although not all project home builders are big companies, almost every big building company is a project home builder, hence volume builders. The business model is what distinguishes a project home builder from a custom home builder like HBC Homes.

This business model has got its merits and is primarily designed to benefit from the economies of scale.

By building homes from a predetermined range of designs with inclusions that remain the same, the builder can produce more homes within a set timeframe. More importantly, they can achieve this output increase without needing to increase their number of employees and other overhead costs at the same rate.

Finally, they can negotiate better deals with suppliers for that specific range of products they use in their builds.

However, building homes is a labour-intensive process. As such, for every dollar spent on materials, at least two dollars is spent on subcontractors (depending on whether the subcontractor is supplying the materials).

With increased output, the builder can demand a lower rate from their subcontractors (using the promise of secured work) and, if they choose, pass over the cost saving to the client.

Now, the volume builders need volume, i.e. lots of clients to build for. To get more clients, they compete on price; or “free” upgrades and a bunch of non-sense marketing gimmicks.

You have probably heard the old saying that competing on price is a race to the bottom. But do not think that the proverbial bottom is these big builders going bankrupt. They probably won’t. Instead, the bottom is the quality level of the homes they build.

Yes, they will comply with the minimum requirements of the Australian Building Standards, but that is typically as far as the quality goes.

A house built using cheap materials, and most problematically, subcontractors hired based on how low they can offer their services, is anything but a desirable home to live your life and raise your family.

Imagine a hospital that employs surgeons based on who charges less to operate their patients!

Quite a few of our clients did build before with one of Adelaide’s project builders. When we asked them what they struggled with the most during the building process, they told us some of the following:

  • We initially liked one of their designs but then asked them to change a few things to better match what we wanted. Not only were we charged hundreds (and sometimes thousands) for these changes, they also took weeks to modify the plans and even missed some of these changes.
  • We signed a contract that we thought was within our budget, and although we planned on upgrading a few things, we later realised that a lot of the inclusions were nothing like we had seen at their display homes. With everything, from electrical to plumbing fixtures, from tiles to joinery, we had to pay thousands to change to the inclusions we wanted.
  • We knew that our footing allowance was on the low end. We had asked our neighbours who told us how they had spent more on their footing. However, only after footing was poured did we learn the footing cost and that variation bill forced us to limit upgrades on things we value and use all the time.

We doubt any business is intentionally set up to offer inferior products and services to their customers, which is the case for most project builders.

The common issues of sub-par build quality coupled with a lack of regular and reliable communication happen primarily due to the size of these building companies. While economies of scale have immense benefits with commodity companies, building new homes, even project homes, is not a commodity.

Building new homes is a project management service where more than the home construction, it is the homeowners’ needs and wants expressed through their communication that needs to be managed to their satisfaction.

For the most part, volume builders are anything but excellent when it comes to customer communication. Just look at their online reviews.

A custom home builder, on the other hand, tends to be a small boutique family-run business.

Working with them gives you direct access to those in charge, typically the business owners, who can quickly make decisions and move the process forward in your best interest.

Compare that to a project builder where you initially deal with a sales agent, and after the sale is made, you are pushed to a myriad of admin people, project coordinators and supervisors.

This difference alone is often enough to motivate a client to only look for a custom home builder.

Here are some other important reasons why more homeowners are choosing to build with a custom home builder and avoiding the volume builders:

  • A custom home builder will work with you to design exactly what you want and encourage you to look at every design detail to determine the best alternative for you.
  • A custom home can and should be designed to your budget through smart land utilisation, purposeful space integration and practical inclusions.
  • You could purchase a sloping, narrow or hammerhead block of land at a discount. However, if you do not couple it with a custom home designed specifically for that block, you could end up with a lot of money wasted on land treatment and make-shift footing when trying to fit a project home.
  • Good, better, best doesn’t seem to cut it when building your dream home. With so many options of fixtures and fittings, a custom home gives you all the freedom to have exactly what you want for those finishes that matter the most to you.
  • Most custom home builders will accommodate a true start to finish service if that is what the client needs. When done through a builder, early tasks like demolition, earthworks, retaining walls and tree clearing, and later external works like stormwater and driveways can save the homeowner a lot of time and money.

So there you have it. The difference between a custom home builder and a volume project builder. What do you reckon? We’d love to hear your thoughts.

Thanks for watching!