FROM NZCB —
Mike Craig NZCB Board Member Director
What’s happened to our industry? As a builder of 40 years, I am finding this year to be one of the most challenging of my career to date. No one has the answer to solve the building supply shortages the construction industry is facing, rather just reasons as to why we have arrived in this situation. Personally, I think the shortages will be around for a while, perhaps until the global supply chain has a chance to recover, and COVID-19 becomes under more control. So, what do we do to survive the crisis builders are finding themselves in? I haven’t got all the solutions, but what I can do is share with you what I intend to do with my own business and offer you some insights that might assist you with your business decisions. I have decided to slow my workload down and spread the work out more. I intend to keep multiple jobs going, so when the materials come in, I have the flexibility to move my employees between jobs. I would recommend having serious conversations with your clients upfront about the realistic timeframe for jobs. For instance, now it will not take six months, but maybe 12 months for a new home to be completed. Up-front conversations will help limit any frustrations your clients may have with project delays.
Put in a contingency above what you would normally use to help your client and yourself to keep within your price estimate. If the contingency is not used, great, happy client. Due to your forward planning, you may even receive a great reference from your client, which could lead to a new project. On the flip side, update your client on the increases to the project, if any, to keep communication channels running smoothly. Inform your client about procurement, as you may need to pay for product before you start a build. It’s also important that your client knows what has been paid for is secure. Ask your client to talk to their mortgage lenders, as they will also need to work as part of the build team if money is needed. It’s not the builder’s responsibility to fund for early procurement. Get started early on the individualised choices clients will need on their new home for example; choosing the colours, carpets, bathroom and kitchen amenities. Making these decisions prior to build commencement, will not only assist in keeping your clients engaged until you can start the job, but will save time when building begins.
In my business, I have also pushed starting jobs out to six months from the signing of the contract, to give my business more time to procure the required building products. Alongside open communication channels, forward planning is needed. If you have capacity, increase the time dedicated towards your project management. For my business, the time I’ve dedicated to project management has increased well above what it normally was pre-COVID, due to the extra follow-up communications with suppliers required about the status of material and supply orders. Additionally, allow for increases in your charge out rates, as we now have an extra public holiday, and extra sick leave entitlements of five days to consider. When working out costs, think about lost hours from your employees not being productive, as this is also considered a lost income over a year.
Clients Give your clients more information when presenting your pricing estimate. I have found an honest breakdown of pricing works will give your client confidence in the budget and your ability to deliver. It also gives clients more accurate referencing when you bill them.
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Additional tips Talk to your sub-contractors about ways to keep ahead of price increases. Extend Contract Works Insurance out well ahead of your expected finish date, as it will work out cheaper than continually extending it past the finish date. Plan your sites so scaffolding is not sitting around unused. It has been hard to get answers on delivery dates from sales reps and suppliers, as the whole system has been overwhelmed with inquires. It seems no response from suppliers is more common than not due to the uncertainty of the situation. Going forward, I would like to see suppliers work to generate better solutions for communicating matters of supply. For instance, Winstone Wallboards have adapted their approach to GIB shortages, in the hope to achieve more fairness for customers. In the meantime, all we can do is be resilient – all the best out there.
