The Builder's Blog: Hidden benefits I : Margins tight? How to eek out more profit with EstimatorXpress

It’s tough going making money in building on a good day in a buoyant year! The bad news is that figures from the Federation of Master Builders suggest that 70% of SMEs surveyed believe material costs will rise in the next 6 months, whilst just 20% consider they will be in a position to raise output prices.The inevitable result is a continuing squeeze on margins at both ends. (BM Magazine).

To stand any chance of making some money you have to make sure your initial budget is as realistic and comprehensive as possible. Being able to drill down into the costs of a project allows you to have a complete picture of where your money is going and keep tabs on expenditure.

Analyse your costs - it's worth it!

EstimatorXpress not only helps you build up the cost of the project but it also allows you to analyse all your costs in detail through its reporting tools.

Forgotten costs

As well as properly accounting for the physical build costs, it's vital to allow for the hidden expenses. The legal fees, site surveys and stamp duty (if new build) not to mention local authority charges, insurance, site accommodation and security. These ALL have to be paid for from somewhere so you MUST include them in your budget in addition to the actual construction costs and of course, EstimatorXpress runs you through all of these.

One builder we know never allowed for site clearance, which was actually costing him several thousand £ on every project – the software reminded him of this, and he now quotes his customers for it. Obvious? Not always.

Wear and tear

EstimatorXpress also allows for wear and tear on plant for example and allows a small allowance per job for replacements – what happens when your cement mixer either goes AWOL or breaks down? If you haven’t allowed for it, it will come straight out of your pocket and off your bottom line.

Wastage

Do you allow for wastage on your materials? Again EstimatorXpress helps you account for this by applying a wastage factor to every material in the project.

Average sq m - risky estimating

And who's still using the sq ft or sq m average for pricing jobs? Take the lottery out of your quoting with EstimatorXpress. Cost per square foot rates can be misleading - chances are they don't take into consideration problem sites, architectural details that are inherently expensive to build or your quality of specification. (If you do go down this route you need to carefully consider whether the “magic” square foot cost takes into account garaging, external works, NHBC fees and so on).

Also make sure that you properly understand what the actual square footage of your build is. Does the square footage rule of thumb you use take into account the gross area of the house or the internal dimensions? This is crucial as it can make 10 to 11 % difference in your guesstimate.

Can you afford to drop your price?

Finally, do you find yourself properly prepared to agree a drop in price? From the EstimatorXpress Profit Forecast report you can assess your bottom line accurately. For example, if a job has a profit forecast of £7500 gross, and you know that approx half of this pays for management and office costs - you know that a reduction of more than £3750 will mean a loss on the job. With solid 'evidence' in the report you will feel more secure knowing that a £1500 ish discount would be your max. Knowing your absolute base line makes your ability to be strong in your negotiations.