There are three drivers to the cost of a project – structure, scale, and finishes. There’s a limit to how much money you can save by choosing more affordable finishes. You can change a brick wall to a timber wall, a concrete slab to a timber frame, but you’re limited to how much money you can save. Often, the only way to get the cost down is by making your project smaller.

Builders price risk. Rather than eat all of the pie ourselves, we cut up the pie and ask all of the sub-contractors to eat a little slice of that risk. The electrician is far better at pricing the electricals than we are – we’re not electricians and their price will be more accurate. The same applies for the plumbing, joinery, painting, windows – everything really.

We then analyse all the sub-contractor’s fees to make sure they’re exactly what we expected them to be, nothing more, nothing less.

Next, we work out what it’s going to cost us to build in terms of having a foreman on site, how long we’ll need to be there, whether or not we need an office and how much scaffolding we’ll need, amongst other factors. We then apply a margin for our supervision and overheads, and we consider what the prices are going to be like in two years’ time or whenever we’re finishing. That’s our end price.

Sometimes, an architect or homeowner will see a huge spread of fees when they go out to tender. When someone says to me that another company can build it for 20 per cent less – more often than not, someone has made a mistake.

Either the builder with the low fee has missed something, or the builder at the top end has interpreted it differently and allowed for something that they didn’t need to allow for. Builders don’t make 20 per cent profit, so it can’t be that they’re just charging more to do the same job – it’s a different job.

Ideally, if you’ve got three prices that are very similar, you know everyone’s interpreted it the same way.

I always encourage both architects and homeowners to ask for references for the builder. Talk to the last two clients that the builder has worked with, so you get a real sense of who you’re going to deal with on a day-to-day basis. Also ask for trade references – it’s always a good indicator of how professionally they’re managing jobs. Consider a builder’s experience. Are you confident the builder will stand by their work in years to come if any issues arise? Usually a builder who has been in the business for a long time is more likely to continue to be in business a number of years after your build.

A good idea is to target properties with obvious defects, or properties that don’t meet current tastes and fashions for living. Archicentre’s Victorian state manager David Hallet says houses that don’t conform to an ‘open-living’ style are often worth a look. “If you can find a house that’s been well-built but badly renovated, you can often find that by reorganising the walls and windows within the fabric of the building, you can actually get a 21st century home at an affordable cost.”