Home – New Forums Starting your journey Extension Building Company

  • This topic is empty.
Viewing 9 posts - 1 through 9 (of 9 total)
  • Author
    Posts
  • #997065
    NathanBoxa
    Participant
    • Total posts: 34
    Up
    0
    ::

    Thought id start a new thread

    Journey Started 2013
    Starting a Residential Building Company

    And again in 2015
    Building Company – Waters Tested

    Hi all, ive learnt a lot from the advise ive gotten here, and now im here for some more.

    Main things i need help on now are dealing with clients and should i charge for quotes.

    I recently spent around two weeks gathering up prices for a client, some of the estimating i did myself and some from tradesmen i even got a professional estimator to do a BoQ for $330 dollars (if there any estimators here from Victoria, say hello). I gave the quote to the client, and as a courtesy i even gave the costings at a reduced markup. After looking at it he said thats double what he had budgeted for, his budget when he told me was no where near enough to do anything he wanted, it was nearly half what i quoted. Also this potential client had all the plans and engineering drawn up, this would have cost him around 4k, 4k for plans he may never be able to afford to build from.

    Im not sure i learnt anything from the above, as a couple days ago i got a call from a guy, he had all the necessary plans, engineering and soil report. He wanted a quote, thats fine, i then asked what his budget was, he says you quote first, this made me angry i said to him do you know how long it takes to quote, he said 2-3-5 days, that made me a bit angrier i said no, 14 days. I then said no worries ill look at your plans now and give you a price(it would have been a fair rough price, high none the less) he eventually told me his budget of 100k (roughly 50k less than what he needed to do job) i said thankyou, he hung up. On a side note the guy has contacted me again after i sent him some information on current costs. Again this guy would have spent 4k plus on all his plans/engineering/soil report

    Im just wondering how i can filter the time waisters, will charging for a quote be ok? How would that work, a quote to gain a quote, seems odd. Or as a builder should i be able to spit out a quote in four days and even if that where possible, when would i find time to run the company. Also should i be asking for a budget and if so how?

    Im off to spend time doing a site visit tomorrow, its an awkward site, slopping, long narrow driveway, very poor access, complicated stepped footings. I don’t know if the client has a clue about pricing, and it wont be a cheap job, also he has detailed architectural plans with engineerng, those are about 8k.

    Any advise would be appreciated

    #1210223
    alliedib
    Member
    • Total posts: 453
    Up
    0
    ::

    How do you filter the time wasters? You can’t unless you know roughly what the cost will be up front and can explain that to the client.

    I am an insurance broker and I currently get about 15 enquries a week in a niche market i do a lot of work with:
    – 1/3 never respond to my response email (thanks for getting in touch – fill this out and I will get a quote for you. Based on what you are telling me the premium is about X);
    – 1/3 fill out the form and return to me, but never go ahead (even though I tell them what the premium will be and it is almost always what I say).
    – 1/3 end up as clients.
    It is interesting that some prospects are way under what the cost will be, some are way over.

    I don’t charge for quotes unless the client specifically wants involved research or the risk they have is something that I need to spend a large amount of time sourcing terms for (away from the mainstream insurers). For these I contract the client so there is the intention for them to pay – I then charge an hourly rate with an invoice presented at the time the quote / research is presented. I then deduct the amount paid from the insurance amount payable if they go through with the cover during the time frame (where I don’t need everything redone). Realistically though these are about infrequent and they usually have a reasonable budget (it involves risk management departments etc)

    It is hard and in a ‘want something for nothing’ world, people are out to get everything they can for $0.

    Regards,

    Mark

    #1210224
    Greg_M
    Member
    • Total posts: 1,691
    Up
    0
    ::

    After well over 40 years in building and construction, I think you’ll really kill off your potential clients if you try to charge for quoting…unless what you deliver is so unique people just want you no matter what you charge…I know of a few in this category but they’re rare beasts, have been around a long while and are exceptional craftsmen that do work of a standard that few can hope to achieve.

    Estimating and quoting is a tiresome and expensive overhead, all you can do is streamline it as much as possible.

    First up, do you use software to measure your jobs? Some packages are expensive and none of them perfect but being able to handle all the documents digitally does speed up the process.

    You also need to build up a “library” of per metre costs, either through historical job cost analysis of your own jobs, or industry publications that can give you “indicative” or average rates for the industry, these are available for all sectors including renovations and extensions.

    If you’ve got these you can compare your own “actual” costs against what the “average” rate for your sector is and adjust accordingly.

    Once you have all this, it should be fairly quick to turn out a realistic “budget” price…not a hard quote.

    Give your potential client a realistic budget quickly, and the “tyre kickers” will fade away fast, genuine ones may proceed to a full quote…the industry is full of dickheads trying to get something for nothing or under the odds…worse still is if an Architect (who usually doesn’t care) has given them an unrealistic idea of what their latest fantasy can be built for.

    Experience helps, I’ve worked with residential extension and reno specialists that could price work over $250K within 5% just looking at a drawing over coffee.

    I still do “single trade” take offs for a couple of clients (commercial subcontractors) who work on contracts up to about a $million…typical would be $250K…they only expect to win maybe 1 in 4 in the open market, and when they do win one the first question they ask is “what did I miss”. Ask them how expensive and time consuming quoting is.

    The old saying “practise makes perfect” holds true imo…the only other option as I see it is to only work “cost plus”…you’ll still need a reputation as being able to predict reasonable budgets, or deliver such exceptional work that cost is irrelevant (a VERY niche market).

    Good luck with it.

    Edit: Ha Ha, just realised I opened my mouth in the original thread…not too sure if there’s any new insights in this post, but good luck with it anyway…if you DO find a simple solution, get in touch, I think I can make us both wealthy :)

    #1210225
    arrowwise
    Member
    • Total posts: 641
    Up
    0
    ::

    Good point Greg. Nathan, if you can turn your quoting process into a faster & streamlined system you should be able to pump out a lot more quotes much faster. This should translate to more time and increased conversion rates, purely against the number of quotes.

    As said there will be software to help you automate your quoting or build a system yourself which should quickly pay off itself through increased time and business.

    If its too hard to automate more complicated quotes, you can have a first level quote with more estimations and variables within. Then if you filter them down to being close to or an actual client then you can justify spending time in creating 2nd or 3rd level quotes of much higher accuracy and customisation.

    Contact the house and land package companies and their 1st level quotes are very generalised and open ended, but it works as a first step in the greater sales process :)

    #1210226
    Paul – FS Concierge
    Keymaster
    • Total posts: 3,488
    Up
    0
    ::

    I would just add to [USER=38207]@Greg_M[/USER] excellent post, that you could put sample prices on your website based on jobs you have completed and industry standards.

    The aim is not to win jobs off the prices but it will help you build trust (through being transparent) and it will also help you filter out people that do not have the budget.

    Cheers

    #1210227
    NathanBoxa
    Participant
    • Total posts: 34
    Up
    0
    ::

    Thanks Greg for the re-calibration, the charging for quotes thing was an emotional response to an ill-informed customer.

    Ive streamlined process a bit, ill give a rough price now and see where it goes from there.

    Im do my estimating with adobe professional and excel, I know there are better programs but there an unnecessary expense at the moment, I have access to one program and i can see how handy it could be in future.

    I also have Cordell Housing Cost Guide 2017, that’s an awesome book, it prices everything and so far its prices have matched up well to quotes I have received from trades

    Im amazed at draft/architects, im seeing plans from people who have spent 4-6k on them and they’ll never be able to use them, or they’ll have to spend 2k more on having them amended. When all I really need is an a4 piece of paper with some measurements on it to give a rough price.

    As for cost plus contracts there only aloud for works over a million in Victoria (was 500k up to 1 August 2017)

    A big worry for me is if i quote wrong ill lose a lot of money and i seem to be dropping my margin to get a lower price for people. Is building such a cut throat industry? My markup so far is 10% up to 100k, 15% over that.

    #1210228
    alliedib
    Member
    • Total posts: 453
    Up
    0
    ::

    I see a lot of insurance repair quotes with ‘builders margin’ at between 19% and 25%. Not sure if this is relevant…

    #1210229
    Greg_M
    Member
    • Total posts: 1,691
    Up
    0
    ::
    NathanBoxa, post: 251049, member: 46158 wrote:
    Thanks Greg for the re-calibration, the charging for quotes thing was an emotional response to an ill-informed customer.

    Ive streamlined process a bit, ill give a rough price now and see where it goes from there.

    Im do my estimating with adobe professional and excel, I know there are better programs but there an unnecessary expense at the moment, I have access to one program and i can see how handy it could be in future.

    I also have Cordell Housing Cost Guide 2017, that’s an awesome book, it prices everything and so far its prices have matched up well to quotes I have received from trades

    Im amazed at draft/architects, im seeing plans from people who have spent 4-6k on them and they’ll never be able to use them, or they’ll have to spend 2k more on having them amended. When all I really need is an a4 piece of paper with some measurements on it to give a rough price.

    As for cost plus contracts there only aloud for works over a million in Victoria (was 500k up to 1 August 2017)

    A big worry for me is if i quote wrong ill lose a lot of money and i seem to be dropping my margin to get a lower price for people. Is building such a cut throat industry? My markup so far is 10% up to 100k, 15% over that.

    Hi Nathan

    I don’t think it matters what tools you use, as long as they work for you and you’re not the Lone Ranger if a client really get’s up your nose…one of the nice things about getting to this stage in life (read old) is, if I don’t like the smell of them they just get told to F**Off before I do anything.

    It is a VERY tough industry in my experience, not too bad when it’s booming but very ugly when it’s not.

    My knowledge of current markups is probably too rusty to be of much use, but I do know there can be a lot of bullshit going on with what people claim their markup is.

    I would have thought 10% is pretty good if you can get it…when I was doing the theory many years ago the rule of thumb was 1% to 3% for contingency, 10-15% for gross profit (fixed overhead to come out of that).

    Hate break the news, but there’s heaps of builders and subby’s working way under that. I’ve worked on projects (on the site side of things) where I’ve had budgets of under 2% for contingency and profit – on jobs worth several million. I’ve even worked for major commercial builders where they know they’re in a loss situation before they start.

    In the domestic stuff you’re up against volume builders, and some of them I’ve been involved with are chasing hard to get 3% nett and they’re often holding the land as well. I once asked a supervisor with a fairly large long term survivor volume builder how they were going to react to what seemed a the time a slipping order book (I was subbying to them on site). He told me company policy was to just keep dropping the price till they started winning, they then just force down the rates for subbies and suppliers till they’re back at their margin.

    The only truly successful builders I’ve known have developed niche markets doing quality work, clients with money will wait for the right contractor, usually a direct referral from a happy client or someone wanting your “brand” on their house, just like they want it on their cars, jeans and the architect they use…the rest are usually wannabe’s that can’t or don’t pay their bills.

    The best clients I ever had doing anything were poor but honest, give them a fixed price, deliver what you promise and they’ll expect you to get a margin and pay you on time, probably even make you a cup of tea.

    Another possibility is the insurance side, as Mark mentioned the margins on that work can be very good…tougher ground rules, but some companies specialise in it and do very well…they also generate very good leads on new work doing it (if they’re good operators).

    Bit of an essay, hope it assists.

    Cheers

    #1210230
    NathanBoxa
    Participant
    • Total posts: 34
    Up
    0
    ::

    Back again

    I was wondering if anyone could offer any advise on Building/Construction Franchises

    Im very close to signing up with one, they have all the bells and whistles in place, estimating, marketing, systems, training and support. What they do is provide “Leads” that i quote off, thats how we all make our money they take a percentage of the job cost.

    when i initially spoke to the franchisor the numbers he was throwing around where pretty big, i can understand his position though trying to sign up another franchisee (pissing in my pocket). What he did say though was that its in his and my best interest to get jobs, that way we all make money, also the guy i have as a manager contacted all the other franchisors and they all had positive things to say. So at face value they come across as pretty good.

    Im still a little reluctant though, my concern is, what if they fail to provide a decent amount of leads that eventuate into jobs, also the area i have been allocated is pretty small considering how far tradesman/contractors travel for work.

    Any advise would be appreciated.

Viewing 9 posts - 1 through 9 (of 9 total)
  • You must be logged in to reply to this topic.