THE BUILDING CONTRACTOR - Leading Construction and Building Group

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Building contractors range from one man businesses to large national organisations.

The smaller contractor takes on the challenges of a highly complex industry with minimal resources. The contractor ultimately wears the hat of the salesman, quantity surveyor, accountant, buyer and project manager. Very little professional assistance has been used by smaller contractors in the past and in particular, assistance with pricing a project accurately. The success or failure of a contractor depends largely on his ability to quote profitably and work efficiently.

Bearing in mind that a contractor will quote a fixed contract price, which generally includes materials and labour, the margin for error is great. It is human nature to push for a bargain and the result is generally that one party will lose. The ultimate scenario is where the homeowner is paying a fair price, and the contractor is making a fair profit. The onus falls on the homeowner to check the market rates with respect to labour and materials.

Contractors generally charge a percentage of the total project cost and yet again, these percentages can vary radically. This obviously affects the final quotes tendered by contractors.

If a contractor has not allowed for overheads in the contract cost, a small percentage markup is usually applied to the contract price after the profit mark up.

The profit is dependent on market conditions, complexity of the work and the risk involved, to name a few. The contractor should concentrate more on establishing an accurate cost and then applying what he feels is a reasonable profit.


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