When Builders Shy Away From Fixed Prices
You’ve probably been wondering why it’s been a bit quiet on the home front…. I have one word for you – COUNCIL.
We’ve been pottering away doing the things that we can that don’t require consent, but the good old authorities ended up holding onto our plans for an entire year…. And that’s just for a small extension.
So, for all of you guys out there that feel my pain in regard to your projects with delays like these, I salute you in solidarity!
delays cause HEAPS of problems with clients
- The home owner doesn’t understand why there are delays, they might be a bit needy and take up your time as you go through the process to help them get the job across the line
- You can lose sub-contractors if things get delayed too much, which can alter the cost as you have to get new quotes from someone who is available
- Time management becomes almost impossible, meaning your own planning for work moving forward becomes difficult, and this can affect cashflow
- Extra time to think can create scope creep….. so the paper trail for variations from the original can be more difficult to manage
So, how best to manage all of these issues that can crop up? How do you navigate how to quote this type of work for a client without cutting yourself short? You know that jobs like these are the ones you will end up losing money on if you aren’t careful….
- Charge up. This is where charge up can work well. BUT, you need to be careful. You need to make sure the client understands that even if you give them a cost indication before starting, it is entirely dependent on how smoothly everything goes. If the council send through RFIs that create extra cost, they need to be willing and ready to pay for it. You need to make sure the client understands that any time you spend running around sorting things like RFIs will be on charged, what the hourly rate is, and how often you will be billing. DON’T be that guy who send through three bills in a week, and then nothing for 2 months. Your clients will appreciate consistency.
- Fixed Price. If you client is wanting a fixed price for the work, then ring fence it. For instance, with our place there was a heap of work we could do without a consent, and then there is the work with a consent. There is no reason why we could not have asked for a partial fixed price contract for the non-consentable works, and then asked for another fixed price contract once the consent was issues. DON’T fall into the trap of providing a fixed quote for plans that are not consented. Be clear in your tags that any work over and above (such as running around after RFIs) will be charged as a variation on an hourly rate.