I had a conversation with one of our other tribe members this week and he was in a situation – it’s a big reno of $700,000. This guy’s done a number of these, it’s a holiday house. I wish I could spend that much on a holiday house. But it’s 15 months and over the last 12 months particularly, all his labour costs, all these subbies have gone up. In some cases, they’ve doubled. You guys have be experiencing the same thing I guess as well.
It was a roof situation where he’d used an estimator for a previous builder that was basically identical and so he just rather pay for a second estimator. He just used that for his quote and when the roof arrived, the frames were there but the purlins apparently wasn’t included in the quote. So it was a lot of money, extra on top, so he was out of pocket about $44,000 with that and other stuff that had been happening.
So he had this big conversation with the client yesterday and the good news was that he negotiated 10% overall plus $44,000 for the thing he was out of pocket. So he got it all back and he’s going to keep his profit margin. He’s really happy and we talked about strategies for negotiation.
So it’s important that particularly with those jobs that are longer term, this was 15 months, yours was 9 months Broodie. Make sure that you understand what’s going to happen if things go out of control and at the moment, we’re seeing the Australian dollar doing a nosedive, so any imported stuff that you’re bringing in particular from the States or or it’s even the Euro against that, you can expect that the price is going to go up significantly not for anything that you’re doing wrong or anything like that, it’s just simply that the Australian dollar has been devalued.
They’re saying it’s going to go under the 60 cent U.S., so we need to make sure in our contract and when we do that, you clarify about variations and all of those sorts of things that may impact on your profit. So you can then go back and have a discussion with your client to say, “Okay, well look this has happened, you know we need to look at a variation there”, it’s really important.