Builders Sentiment Towards Projects Affects Pricing – What to do…

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Builders’ sentiment towards your project has always been difficult to quantify leading to uncertainty about your project’s attractiveness to the market and the effect on pricing…wonder no more.

Cost of materials, labour availability and materials availability all affect pricing but what about less tangible elements that drive project appeal to builders? We discuss factors that drive builders’ sentiment to help support builder engagement for your projects.

Pipeline of Work – Builder’s Context

Thinking of individual builders, if they’ve just had a project drop out of their pipeline (eg change in circumstances for their client) they’ll be looking to top it up and possibly discount their price a little to secure the work.

However, if they’re enjoying a plump pipeline with lots coming through, they’re probably running at capacity for the foreseeable future. That means if they were to take on another project, that would require them to work more than their standard work week, possibly attracting high pricing to support the extra effort required.

If you’ve been using the same builders for some time, and they’re booked up with work you’ve provided to them, you may need to add some new builders to your list to support your practice.

Got a Project to Estimate? Take a Free 4 Week ProCalc Trial

Structure of Builders Business

A builder who’s ‘on the tools’ running one job at a time will have a very different pricing structure to the builder who runs several projects at once across various suburbs.

The smaller operation will have less overheads typically leading to more competitive pricing.

The larger builder may also have the capacity to deliver a smaller job if it’s close by to an existing larger project they have.

Client Characteristics

What’s the client like? Will they be easy to work with or onsite every night taking photos after the builder’s gone home?

A competent, experienced builder will allow for the time required to manage specific client needs.

Type of Contract

Different contracts require different levels of management (time) from the builder.

So, a contract with retention, liquidated damages and significant paperwork will attract different pricing to one that doesn’t.

Builders need to cost the project for the cost of money (retention interest), risk of liquidated damages and how much time is required to manage the contract.

Tender Process

A negotiated tender with one builder vs a truly competitive tender will produce significantly different tender prices.

An open tender can see the highest price often being 20% higher than the lowest price.

Access/Complications

Access and complications such as party walls, challenging neighbours, council requirements can often impact pricing.

Hopefully, this will help you better understand various drivers for builders to help drive more successful projects.

Got a Project to Estimate? Take a Free 4 Week ProCalc Trial

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