Skinny Margins & Building Disputes

To avoid building disputes a builder must quote properly and then build:-
1. on time
2. on budget
3. as agreed and
4. according to Code and law.

As the person for whom the work is being done, you must
1. pay and
2. allow the builder/ contractor to do the work.

Over the years, I have seen many building disputes come across my desk. And in nearly every case, the dispute between the builder or contractor and the person for whom the work is done boils down to one (or more) of these 6 items.

We are in an era where quotes are prepared with the skinniest of margins. The chances of making money if anything doesn’t go according to plan is almost zero – and there is not point in working for a loss as doing this means that you may become one of the ever increasing number of insolvent builders.

So a cultural shift is required. I have two suggestions.

Firstly, do not treat subcontractors like cannon fodder. They too need to make money. You cannot do or expect quality work if you are not prepared to pay for it.

The expression “pay peanuts, get monkeys” applies as much to the construction industry as any other – though where poor quality is the issue, the costs of rectification can be very, very high. This means that the strategy of making money on variations or pushing subcontractors to do more and more for less and less money has to end.

Secondly, variations should never be seen as a cash cow and each and every agreed variations must be paid for. Contractors are wising up and know that they might not get paid even if variations have been agreed to in writing. Home owners pushed to their borrowing limit by rising house prices have less money to spend at a time where they would traditionally be significant contributors to the industry – they will no longer be willing to pay for variation.

Eventually the stream of builders and contractors willing to work for less and less money will come to an end and the industry will lose its attractiveness as one in which a good, honest living can be made. To prevent this, a cultural shift is required. Please be part of that change.

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