Key Takeaways

• Many experts, including the Australian Government, advise that, when undertaking home renovation/rebuilds, "using a qualified designer is typically well worth the investment".
• Designers/architects not only provide design services but also project management services. Alternatively, a suitable professional can be engaged to perform the project management.
• Drew Muirhead, a former DJ, bought a Sydney property in 2005 for A$1.7 million. He subsequently engaged an architect to design a $3.0 to $3.5 million new home. Unfortunately he failed to engage a suitable project manager, deciding to perform that task himself, as well as performing some building work, despite his total lack of building experience.
• The project ran massively over-budget. By the end-2010 the work was not completed. Muirhead was forced to resort to high cost finance to finish the work.
• Unfortunately, when the work was completed, Muirhead and his family could not afford to live in the house.
• Muirhead eventually sold the property in May 2013 for only A$3.35 million This sale price compares to the A$1.7 million he originally paid for the property in 2005, plus the cost he paid for the renovation work that was significantly more than $3.5 million, not to mention the high financing cost and the years of personal time he devoted to the project.

Introduction

Case Study — New Home Build at Cottage Point, Sydney, NSW, Australia

• This case study highlights that it is important to consider not only appointing an architect/designer to design the renovation/rebuild, but also to appoint the architect/designer, or suitable alternative professional, to project manage the work.
• The property is at 5 Notting Lane, Cottage Point, a small riverfront suburb in Sydney, NSW. It sits on a 1,300 square meters steeply (45 degrees) sloping site with limited access. It overlooks Cowan Creek, as shown in the image below, that feeds into the Hawkesbury River and features access to a boat shed, small private beach, and deep water jetty with floating pontoon

 

Source

 

• The project was covered in the Grand Designs Australia 50-minute television program, Series 1, Episode 8, first broadcast on Australian television on 2 December 2010.
• The program is now freely available to view on ABC iView.
• It is also available on YouTube here, but sits behind a paywall.
• This newspaper article and this magazine article provide a partial summary of the video content.

• The property was purchased by Muirhead, a Sydney-based entrepreneur and former DJ, in 2005 for A$1.7 million. He eventually decided to build a home on the property and engaged architect Richard Cole to design a 5-bedroom, 5-bathroom, Bali-inspired resort-style structure on a planned budget of A$3.0 million to A$3.5 million. The plans included an infinity edge swimming pool, spa, steam room, and private nightclub.
• The Grand Designs program was invited by Muirhead to document the building work.

• Despite hid total lack of building experience, Muirhead decided to project manage the work himself. That proved to be a costly mistake.
• The Grand Designs program explains how that decision contributed to huge delays and the project running massively over budget. Muirhead was forced to halt work since his principal funding source refused further finance. Muirhead was eventually able to secure sufficient funding to complete the work, but that funding came at the very high cost of 3% per month interest rate.
• Sadly, he and his wife plus 2 children could not afford to live in the completed house.
• He initially made the property available for lease as the 'Bora Bora House' and was able to rent it out at A$20,000 per week during the peak summer season.
• Meantime he worked with specialist advisers to prepare a sale contract under which he would sell the property on a 'fractional ownership' model, based on a 2012 valuation of A$7.8 million. The property was marketed with each of 12 portions listed at A$650,000 part ownership shares.
•  Fractional ownership is a common model used in the US and Europe. The idea was that each of the 12 owners of the Cottage Point property would have a deeded share of the title and could use their share for their own holiday stay, or rent out their time to guests.
• That proposed fractional ownership sale failed.
• Muirhead eventually sold the property in May 2013 for only A$3.35 million to Catherine Verschuer, wife of Paul Verschuer, Westpac Bank managing director of foreign exchange, commodities, carbon and energy. This sale price compares to the A$1.7 million he originally paid for the property in 2005, plus the cost he paid for the renovation work that was significantly more than $3.5 million, not to mention the high financing cost and the years of his personal time he devoted to the project.

Examples of Small-scale Home Renovation Design Failures in the US

• Several extreme cases of small-scale home renovation design failures in the US are provided by University Fox.
• They are very short descriptions, involving an image and one paragraph of text that provides glib commentary rather than any real details of the project.
• One example is the image below, depicting an extremely steep driveway.

 

Source

 

• This driveway example is from University Fox which appears to be a college e-zine compiled by US college students to cover subjects of interest to college students.

Advice by Australian Government

• The Australian government provides the following advice:

• The government goes on to say that a designer will consider not only the building but the overall site as well::

• Choosing the right designer is an important step. The home renovator must think carefully about the services they want the designer architect to provide. Different designers offer a different range of services.
• Some work only on the concept design.
• Others can provide both the concept design and detailed design work.
• Those with a broader range of skills can work through the whole process form concept design to detailed design and on to project manage the building work, overseeing all the trades people (plumbers, carpenters, electricians, plasterers, painters and so on).
• Some renovation projects may also need highly specialized input from specialist consultants like a geotechnical engineer, structural engineer, accredited energy assessor, sustainability consultant, interior designer, and landscape designer.
• Many designers like to provide both design and project management services. The home renovator must develop a clear understanding of the trades skills and professional services needed on the project and then decide whether the designer has the skills needed to manage the project.
•  An alternative is to appoint a separate professional project manager.

Research Strategy