Marcus Jefford, managing director of Build Aviator, shares advice on how builders can stay in the black and keep more of their hard-earned profits to themselves.
For some builders, financials are their Achilles heel. However, to avoid denting your profitability, ill-will with a customer, or worse still, payment disputes, there are ways builders can protect themselves and their bank balance. Likewise, for those who are more at home with a spreadsheet than a sheet of ply, there are ways to guard your profits and make sure estimating doesn’t need to eat up all your time.
Start with the scope
The first step in ensuring better profitability is the customer’s brief. Here there’s a delicate balance needed between not enough information and too much, and it’s easy to make assumptions and then underprice or overprice a job.
If you’re faced with a wealth of information, don’t assume you’re needed for all of it. Are they expecting a completed shell or a turnkey finish? Investing time here will stop you spending hours quoting for work that’s not needed or won’t be done by you.
On the other hand, without the full picture, oversights can start to creep in. Did you ask about existing drains or manholes? If you’re only delivering some aspects who’s accounting for scaffold?
Easier estimating
Once you know the remit of a job, the estimate is the next critical step as it’s the foundation of the project’s budget.
If you’re busy it can be tempting to use a price per square metre, or a previous job, but think back to the times when you’ve been left out of pocket or with an unhappy customer arguing the toss over a final invoice. Intelligent estimating services and software, created by ex-trades, limit this possibility.
Working with a dedicated estimator, they’ll take plans and work through each element to create a report that’s based on specifics. They will look for the details such as the right thickness of plaster and how many boxes of fixings you’ll need. They will also base costs on current materials pricing and produce a full, professional report, with a full materials list, schedule of work and an estimate using your defined labour rates and profit margins.
While conscientious builders might take a similar, manual approach working this way is time consuming and certainly isn’t fool proof. In our research, we found that most builders spend up to 40 hours per month estimating. That’s an extra working week. With outside help, you can swap hours of quoting in the evening for a short phone call.
Expect the unexpected
Another benefit of producing a thorough, accurate estimate versus a simple text message or email is that when the unexpected happens, you’re in a better position to have an open conversation with the customer.
Changes and ‘can you justs’ are part of a job, but if they aren’t part of your original estimate, they can be overlooked or mean your customer gets an unexpected invoice.
If you’ve used a leading estimating service at the start of a project however, you’ll have a clear picture of what the price is based on. Better still, changes to a report can be made quickly to show you and the client the difference between having to go down another six inches on the foundations or swapping material spec. This makes justifying an alteration to your invoice much easier and helps your client make an informed choice about whether they want to go over budget.
In the reports we generate for builders to pass on to their clients, we also make sure it states that estimates are valid for 30 days. Many builders forget to include that condition on their estimates, which can again backfire if a job happens three or six months later.
For added protection, leading estimating services also provide a free re-estimate before a job begins that will take into account any changes in material prices and provide a profit check report. Again, this can be used to have an open conversation with your client, making sure they’re clear on what to expect when the final invoice lands.
Value your time
While many builders hate forking out for things that they can’t or don’t want to pass on to their clients, be it new tools or an estimating service, it’s important to remember that your time is money. Spending several hours quoting a job is time you could be charging elsewhere, therefore paying for an external service can often work out more cost effective, especially as some providers now offer lower cost fixed price options.
For more information visit buildaviator.co.uk
