Introduction
The construction phase of a property development is often where things go wrong—cost overruns, timeline blowouts, poor workmanship, or miscommunication with your builder. But it’s also where you can protect your profit, ensure quality, and deliver a successful project.
In Episode 201 of the Property Mastermind Podcast, Hilary Saxton and Bob Andersen break down the five key stages of managing the construction process. This episode will help you understand what to plan for, how to stay on top of it, and where you can get caught out if you’re not careful.
Episode Highlights
[00:00] Introduction and backstory—this is take two due to audio issues.
[02:45] Upcoming 3-Day Workshop—September 19–21.
[03:43] What inspired this episode: a real-life example of someone choosing the wrong builder.
[04:33] Difference between a builder and a developer—and why most developers aren’t builders.
[06:20] Why builders become developers—and what financiers think about builder-developers.
[10:19] Step 1: Pre-construction planning—why every detail matters.
[12:29] Changing plans mid-build? The risk of miscommunication and undocumented changes.
[13:45] Naughty builders—what can go wrong when builders substitute or skip spec items.
[17:21] Step 2: Selecting the right builder and contracts—what to check and how to do due diligence.
[21:15] What financiers are now checking when assessing builders.
[23:05] Step 3: Builder contracts—HIA, Master Builders, Australian Standards, and common adjustments.
[25:14] Step 4: Onsite management and quality control—site visits, RFIs, and building inspectors.
[27:46] Step 5: Budget and timeline management—fixed price contracts, contingencies, and avoiding cost creep.
[31:19] Using contingency funds well—and what happens when they’re not spent.
[33:05] Time clauses, liquidated damages, and finishing ahead of schedule.
[34:31] Can builders ask for a bonus if they finish early?
[36:04] Final handover and compliance—practical completion, defects, occupancy certificates, and marketing readiness.
[39:56] Unexpected costs—like the surprise swimming pool found during demo.
[41:31] Final takeaway: don’t assume—check everything and communicate clearly.
This episode in brief
Introduction
Hilary:
Welcome to Episode 201 of the Property Mastermind Podcast. This is our second take—we already recorded this once, but the audio file didn’t save properly. We’re back, and today we’re talking about a huge part of property development: managing the construction process effectively.
Bob:
There’s a lot to it. A well-managed build keeps costs down, quality up, and timelines on track. A poorly managed build? That’s where projects blow out, profits disappear, and developers get stressed.
Hilary:
We’ve broken it down into five key areas. But before we dive in—our book giveaway! This week’s winner is Craig Moyles. You’ll receive a copy of Property Millionaires Exposed. Thanks for being part of the community.
Why This Topic Matters
Hilary:
We recently had someone reach out after choosing the wrong builder. It cost them time, money, and a whole lot of stress. That’s what inspired this episode—there’s so much you can do to reduce risk if you manage the process right from the start.
Bob:
There’s a big difference between being a builder and a developer. Most developers aren’t builders. And most builders aren’t developers—though some try to be both. It’s important to know your role and know when to bring in the right professionals.
Hilary:
And banks are starting to pick up on that too. If you’re a builder who’s now developing, lenders may ask extra questions. They want to know you’ve got the right experience and team in place.
The 5 Key Steps to Managing the Construction Process
Step 1: Pre-Construction Planning
Bob:
This is where you get everything ready—plans, permits, specs, consultants. It’s important that all selections are clearly documented: colours, finishes, hardware, lighting—everything.
Hilary:
People make the mistake of thinking they’ll figure it out later. That leads to miscommunication and expensive changes. Or worse—builders substituting lower-quality items because the details weren’t locked in.
Bob:
We’ve seen builders switch products mid-build without telling anyone. Suddenly you’ve got a white PVC pipe instead of copper, or a laminate bench when you were promised stone.
Step 2: Choosing the Right Builder
Hilary:
This is the step people rush. They get three quotes and just pick the cheapest. But communication matters just as much as price.
Bob:
Visit their past projects. Talk to clients. Check how they manage communication, timelines, and quality. And remember—just because a builder is licensed doesn’t mean they’re right for your type of development.
Hilary:
Also be aware: financiers are now checking builder backgrounds too. Your builder’s history, credit, and reputation can affect your funding.
Step 3: Builder Contracts
Bob:
Most builder contracts use HIA or Master Builders templates, based on Australian Standards. But you need to review them—carefully.
Hilary:
We recommend getting a building contract specialist to review yours. There are usually clauses that need adjusting to protect you, especially around variations, time frames, and payments.
Step 4: Site Management and Quality Control
Bob:
Don’t assume the builder will flag issues. You need to stay involved. Site visits, checking quality, raising RFIs (requests for information)—these are all part of the process.
Hilary:
A lot of developers use independent building inspectors at key stages—slab, frame, lock-up, and final. It’s a small cost for a huge return in peace of mind.
Step 5: Budget and Timeline Management
Hilary:
Even with a fixed-price contract, costs can creep. Builders might raise variations, or delays could eat into your holding costs.
Bob:
That’s why we always recommend including a contingency—5 to 10 percent of the total construction budget. And be careful with upgrades. They can add up fast.
Hilary:
If the builder doesn’t spend the contingency, you keep it. But you’ll be glad it’s there if something unexpected pops up—like, say, a hidden swimming pool during demolition!
Bob:
Yes, that happened. A concrete pool no one knew was under the ground. Cost us $10,000 to remove.
Other Tips
Hilary:
What about time clauses and liquidated damages?
Bob:
You can include them in your contract. A typical clause might be $500 per day if the build runs late. But they cut both ways—some builders now ask for a bonus if they finish early. That can be fine if managed properly.
Hilary:
And finally, handover. You want to be ready with your occupancy certificate, final inspections, and marketing material. Don’t forget the final defects list—get it checked before releasing final payments.
Final Thoughts
Hilary:
Construction is where your biggest costs are—and your biggest risks. But it’s also where your profit is protected if you manage it well.
Bob:
Know what to look for, work with the right people, and stay involved. That’s the difference between a smooth build and a stressful one.
Hilary:
And if you want to learn how to manage it all confidently, come along to our next 3-Day Workshop on the Gold Coast—September 19 to 21. Tickets are available now, and they’re included with the Ultimate Bundle.
Bob:
That’s it from us for Episode 201. We’ll see you next week.