Insane Estimates

[Ferdinand]

16 hours ago, sameulepapi said:

Very comprehensive, thanks @Ferdinandmuch appreciated. I think the point that was most scary to me was a new gov taking my cash (not that I am in anyway a Tory fan to be clear!)

 

 Also @jack we did indeed think along the same lines, smaller and better is probably the trick. 

 

Thanks all. Plenty to think on here.

 

You won't know that until it happens.

 

I'm expecting definite (and imo necessary, des[ite being a dyed in the wool small government man) hits on:

 

- Electric cars. The govt needs, based on past tax, about £2.5k per car per annum, from somewhere around VAT / VED / fuel. And posh, big, expensive or new cars will pay more than the average.

- Income taxes to be raised, though we have had that flagged already and there's a lot of fiscal drag coming in.

- Capital gains tax and other capital taxes. Allowances are already coming down.

 

I'm not clear whether Self build tax breaks will be reduced, as we currently do quite well from those.

 

Personally I want the sort of wealth tax regime they have in Switzerland - which is low but progressive rates paid by a very large number of people, rather than eg soak the 0.1%. I'm also a fan of addressing various housing market distortions to tame the housing bubble, starting with CGT Main Dwellings exemption; no idea if we have any politicians with the balls to do that - but once it's done it won't be reversed.

 

Whatever happens, Labour will tax/spend more than Tories. And electric cars will be hit from 2025 imo.

 

You need to allow for the possibilities in your project, as further potential risk.

 

F

[saveasteading]

On 17/11/2022 at 08:35, Conor said:

a house size threshold that once you go over, the quotes get exponentially higher.

I just saw this, flagged up by the system.

I don't think so. There will be an OG curve. Generally projects get cheaper £/m2 as they get bigger, but then it flattens off. Of course bigger projects tend to be flasher, but that won't be a sudden step, and it will be a similar curve but higher up the £ scale.

Also big projects need bigger companies, to handle the cashflow but again, there is no threshold.

 

[larry]

On 17/11/2022 at 08:20, JohnMo said:

500m2 is a small hotel.  Will be full of rooms you never use, bathrooms you never use but have to clean.  Hope you are getting a full time cleaner.

 

You should start with a reality check on what you need and what you want - very different.

 

You can quite easily sink £50k into lightning, the same into smart stuff that will be old news by the times it's built.

Agreed. Our house feels massive for a large family and it's about a third of that size! 

[Jilly]

On 17/11/2022 at 09:18, Kelvin said:

 flexibly designed so we’ll use it as a two bedroom house but it could be used as a four bedroom house. 
 

Y

Please could you post your floor plan?

[Kelvin]

16 minutes ago, Jilly said:

Please could you post your floor plan?

Happy to. I’ll post elsewhere though rather than here and let you know. 

[IATM]

On 17/11/2022 at 10:46, BenP said:

Architect here - you're quite right! We tend to use square meter rates to give an idea of cost scale. A lot of our clients aren't always aware that an 8 metre deep extension will significantly challenge their budget over a 4 metre extension!! 

 

We're experiencing some horrific numbers at the moment (SE). However I do think some cost consultants are over egging it. Being in the process of building our own self build we can see that generally they are 25 pc overcooked. Screeding rates were double. I clad our house myself and going by their rates I would have been earing 2-3k a week doing it!!!

On 17/11/2022 at 10:46, BenP said:

 

I think this is the crux of the problem here. I am pricing up a build at the moment and for the life of me I cannot get to the figures a contractor quoted me for, even for materials.

I can only assume they don't shop around, they have a cut on it, they are adding a healthy margin in their own role and in the labour required. If you trim the fat I honestly don't see how it still can't be done for far less around 1500 per sqm. I might be deluded though!

 

A simple rudimentary example of this is I once had a company come in to quote to redo all our bathrooms, the quotes came in around 8-10k a bathroom. I then got a smaller tradee in but well known to bring in all materials and build a design you wanted. it was down to around 5-6k a bathroom. I then went even further to source all the materials myself, find a separate tiler and plumber and managed to get it all done for around 2.5-3k a month.

[jack]

Perhaps some in the trades are padding their quotes by extrapolating increased rates over the last couple of years out into the future. Perhaps some have been burned by having to meet their quotes despite massive increases in materials and labout costs.

 

Also, if labour is still tight, there may be an element of needing to be able to offer high rates to be sure they can get the subbies in at reasonable notice.

All speculation on my part.

[saveasteading]

2 hours ago, IATM said:

I can only assume they don't shop around, they have a cut on it, they are adding a healthy margin in their own role and in the labour required.

An interesting subject. Having been Engineer, estimator, architect with small e, and contractor, sometimes all at once,  I have knowledge of this.

A.

1. they don't shop around. Well no, they won't. They are preparing an estimate, using a lot of time without payment, so generally they will use the going rate at the moment, or perhaps what is expected in a few months. A small builder usually only has a few accounts with merchants so can't shop around anyway, unless paid in advance. Adding 10% waste is the norm, through mistakes, offcuts, damage  and being bothered to spend the time making best use.

2. They have a cut on it.  Yes of course they do. They will be buying, involving admin, then handling, and taking the risk on damage or shortages.

Imagine somebody asking you to get them some bricks. You would charge something I expect.

You can offer to buy the materials, and save this margin, but you are then responsible for it turning up, being suitable and for all waste.

3. adding a healthy margin in their own role. That is business. they otherwise might as well sit at home or work as a charity. 

What is healthy? 

 

B.   On top of all this, there are layers of cost.

Cheapest of course is diy, if you have the time, resources and skill. Let us call this best price. =£1 per hoojamaflip.

Next level you hire some specialists, on a series of small fixed price contracts. If you can remove their risks, and they work fast and well, then you only pay for their time. Say £250 /day. which you pay them from your taxed income.

Next are packages of work. Contractors have to quote for these jobs, getting perhaps every 5th one. This takes time. If successful, they then employ workers and have admin and overheads. and they will add a percentage on everything. Probably about 20%. 

Then there is the full project by a main contractor. They need an additional level of overhead and profit, and a lot of management. Their margin is on top of margins already applied by others. Your job at £1 is now somewhere about £1.7. 

Add for risk. who is paying for unforeseen problems? If you want the contractor to take it then add 5% if he likes you and the designer. More if wary.

And every 10th client , or so, doesn't pay the last bill; not because of faults but  because that is how they behave. Unfortunately everyone else ends up paying some of that.

 

C. If everyone had the same ability and cost structure, then you would need only one quote. But they don't, so some will be genuinely better at a particular project than another. Do they charge less, or more? It varies.

 

Combine A, B and C and your £1 can become £2 or even more.  There is no right answer.

 

then there is D,  how good / flash is the design?

and E: weather

and F, G , H : inflation, competition, access....

 

 

On the £/m2 issue. I could tell a potential client the approximate cost of a project, based on known £/m2 from experience. I didn't always because they might pass that on, or think it was too cheap. 

And then that was for our price, with our own control of everything. But any involvement from outside, such as inefficient design, fancy features, nasty contract terms,  would likely add.

So the advisors are rightly cautious on the question, until they know you, the project and the current market. 

The RICS and some other bodies publish tables £/m2 for different types of building. But , as C,  they all need to be well designed and go to tender.

 

If you think I have left out any issue do remind me.

 

Edit: of course this all assumes that we have already decided the method of construction, and have made the right choice.

Edited February 17, 2023 by saveasteading

[ProDave]

I have said this before but I seem to be a lone voice.

 

I don't give quotes. I give estimates, am open with my hourly rate and materials cost.  Most jobs turn out lower than my estimate.

 

If i am forced to give a quote (usually commercial customers)  i have to think of absolutely everything that can go wrong to make the job take longer and price on that.  Almost always the job takes less time than what I have allowed.  But it is a quote so that is what they pay.

 

People on here tell me customers don't like paying by the hour because they then expect you to just sit and drink tea while charging your hourly rate.  Some might, but surely they would never be recommended?  I don't and all my work comes from recommendations, I don't advertise.

[Mattg4321]

1 hour ago, ProDave said:

I have said this before but I seem to be a lone voice.

 

I don't give quotes. I give estimates, am open with my hourly rate and materials cost.  Most jobs turn out lower than my estimate.

 

If i am forced to give a quote (usually commercial customers)  i have to think of absolutely everything that can go wrong to make the job take longer and price on that.  Almost always the job takes less time than what I have allowed.  But it is a quote so that is what they pay.

 

People on here tell me customers don't like paying by the hour because they then expect you to just sit and drink tea while charging your hourly rate.  Some might, but surely they would never be recommended?  I don't and all my work comes from recommendations, I don't advertise.

You’re not alone. That post could’ve been written by me, almost word for word. It’s all about trust. I’m nearly always cheaper on my day/hourly rate than if I price. 

[Gus Potter]

On 17/02/2023 at 17:29, saveasteading said:

An interesting subject.

 

What a brilliant, well articulated post.. thanks.. I learnt a lot from that, thanks.

[saveasteading]

5 hours ago, ProDave said:

But it is a quote so that is what they pay.

But I bet some of them complain that they are overcharged because it didn't take long.

[Mattg4321]

If they do, they find somebody else to do the work next time. 

[ProDave]

8 hours ago, saveasteading said:

But I bet some of them complain that they are overcharged because it didn't take long.

Never yet.  It is usually some admin person that pays the invoice, and they were not present when the job was done.  The person that was present and witnessed the job done to their satisfaction probably does not know the details of the quote.

[saveasteading]

On 17/02/2023 at 17:29, saveasteading said:

If you think I have left out any issue do remind me.

The 'likes' are gratifying, and makes the thought and writing of it feel worthwhile.

I have also thought to save it, and can just paste it the next time someone asks about the quotation process.

It is probably my main USP, (linking engineering, construction and finance) so do ask if there are any questions.

 

I'd like to know what the op thinks. 'Trimming the fat' struck a nerve. In contracting, esp on large projects,  there is a huge risk, and the possibility of losing money to the extent of your sanity and home.

Also, estimating is a particular skill and requires a thick skinned mindset. Most builders don't have it, and why should they?

[Haylingbilly]

On 17/02/2023 at 17:29, saveasteading said:

An interesting subject. Having been Engineer, estimator, architect with small e, and contractor, sometimes all at once,  I have knowledge of this.

A.

1. they don't shop around. Well no, they won't. They are preparing an estimate, using a lot of time without payment, so generally they will use the going rate at the moment, or perhaps what is expected in a few months. A small builder usually only has a few accounts with merchants so can't shop around anyway, unless paid in advance. Adding 10% waste is the norm, through mistakes, offcuts, damage  and being bothered to spend the time making best use.

2. They have a cut on it.  Yes of course they do. They will be buying, involving admin, then handling, and taking the risk on damage or shortages.

Imagine somebody asking you to get them some bricks. You would charge something I expect.

You can offer to buy the materials, and save this margin, but you are then responsible for it turning up, being suitable and for all waste.

3. adding a healthy margin in their own role. That is business. they otherwise might as well sit at home or work as a charity. 

What is healthy? 

 

B.   On top of all this, there are layers of cost.

Cheapest of course is diy, if you have the time, resources and skill. Let us call this best price. =£1 per hoojamaflip.

Next level you hire some specialists, on a series of small fixed price contracts. If you can remove their risks, and they work fast and well, then you only pay for their time. Say £250 /day. which you pay them from your taxed income.

Next are packages of work. Contractors have to quote for these jobs, getting perhaps every 5th one. This takes time. If successful, they then employ workers and have admin and overheads. and they will add a percentage on everything. Probably about 20%. 

Then there is the full project by a main contractor. They need an additional level of overhead and profit, and a lot of management. Their margin is on top of margins already applied by others. Your job at £1 is now somewhere about £1.7. 

Add for risk. who is paying for unforeseen problems? If you want the contractor to take it then add 5% if he likes you and the designer. More if wary.

And every 10th client , or so, doesn't pay the last bill; not because of faults but  because that is how they behave. Unfortunately everyone else ends up paying some of that.

 

C. If everyone had the same ability and cost structure, then you would need only one quote. But they don't, so some will be genuinely better at a particular project than another. Do they charge less, or more? It varies.

 

Combine A, B and C and your £1 can become £2 or even more.  There is no right answer.

 

then there is D,  how good / flash is the design?

and E: weather

and F, G , H : inflation, competition, access....

 

 

On the £/m2 issue. I could tell a potential client the approximate cost of a project, based on known £/m2 from experience. I didn't always because they might pass that on, or think it was too cheap. 

And then that was for our price, with our own control of everything. But any involvement from outside, such as inefficient design, fancy features, nasty contract terms,  would likely add.

So the advisors are rightly cautious on the question, until they know you, the project and the current market. 

The RICS and some other bodies publish tables £/m2 for different types of building. But , as C,  they all need to be well designed and go to tender.

 

If you think I have left out any issue do remind me.

 

Edit: of course this all assumes that we have already decided the method of construction, and have made the right choice.

Another layer of cost is wastage/mistakes - they aren't perfect so will waste materials and make mistakes and have to do rework, stuff get stolen and generally go missing on site- not many clients (none) will pay for this and hard to pass on to subbies and anyone on a day rate so any builder has to absorb them. 

[Drellingore]

On 17/02/2023 at 19:35, Mattg4321 said:

You’re not alone. That post could’ve been written by me, almost word for word. It’s all about trust. I’m nearly always cheaper on my day/hourly rate than if I price.

 

For what little it's worth, this is how I used to run my IT consultancy. Daily rates, no fixed-fee work, complete and utter transparency as to what my team were doing at any point, with zero-notice termination if we don't keep the customer happy. It kept the difficult customers away and avoided a huge amount of faff. I doff my cap to others doing business the same way.

[saveasteading]

55 minutes ago, Andy brown said:

not many clients (none) will pay for this

A good point. There are some risks that the client will never accept. Days lost through weather has to be down to the contractor too, if there is no work possible. 

 

45 minutes ago, Drellingore said:

zero-notice termination if we don't keep the customer happy

did that work in reverse too?