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  • Refurbish/Develop

    Small Development Tips

    On the monopoly front I´ve seen that in action on local authority jobs. The council decided not to go ahead with the project I was working on in the end as the prices that came in on the bills of quants were outrageous. It was much easier for builders to do that because it was based on a framework list - so at each tender the top 5 on the list would be invited, then the top two put to the bottom of the list and for the next top five to be invited in the next round - it was easy to know who the competition was and the jobs were rolling in and for very large contract values. I wouldn´t say this is something that architects are not aware of, but it is difficult to avoid. I´m surprised though that this would be the case on smaller projects.
    There must be a way to control costs in a rudimentary way on small jobs that doesn´t require the expense of a professional. Or perhaps you could find a sole practitioning QS who might be willing to do a group of jobs for a reasonable price? Do you or does anyone else reading this have a tried and tested technique for controlling costs?
    On other threads we´ve talked about CAD programmes. I mentioned Revit and Archicad and their additional benefits - these are many and complex, but one of the potential benefits, which i must admit to not having used yet, is the ability to give quantities to all materials and develop a spreadsheet which could then be used to control costs. I´m not sure if the licence costs of the programme would be offset by the advantages of this but it is an interesting development in CAD.
    I asked about the open plan because I wondered if there was some sort of regulation you needed to meet that I wasn´t aware of relating to HMO, or if it´s easier to let rooms when there is a separate kitchen to living room?
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    "I’ve seen that in action on local authority jobs…" funny that ;-)
    Couple of random comments to think about:
    One possible solution to control costs on smaller jobs is to open your own accounts with suppliers and take an active role in the purchasing of materials. Then get the builder to quote for labour only. Opening up accounts just to get an appreciation of the cost of materials will enable you to better discuss prices with your builder.
    The purchasing of materials is one of the more obvious ways a builder makes additional cashflow - nothing wrong with this as driving about trying to find a match for a discontinued light fitting is both time consuming and costly. This is also open to creativity on behalf of the builder or mistakes in arithmetic if you prefer.
    My broad view is, the more hands on you are, the more you can control costs. Not always feasible so just an idea.
    "I’ve seen that in action on local authority jobs…" still funny!
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    Richard Greenland said:
    I fear that all this talk of price fixing cartels amongst builders may create a lot of unnecessary anxiety.
    Absolutely agree with Rich’s comments and wish I hadn't been so candid in this thread, can of worms anyone? Although I have repeatedly said that this occurs in only a small segment of the industry I think people have naturally leant towards the lurid, understandable and entirely my fault. When I originally wrote this I included other examples of plays that I then removed as I thought people might use the ideas negatively, and that made me uncomfortable. I've mentioned the ideas to people from the forum this week and they instantly understood why, so good call perhaps.
    What I am especially uncomfortable with is how this looks to my dust munching brethren, I feel a tad guilty. Builders in general are utter diamonds and should not be tarred with a negativity brush because of the actions of a few sad apples. So let me make a distinction: I would call the builders Rich refers to jobbing builders, hard working folk that have no problem getting dirty and on the whole mean well. In contrast, the tiny unscrupulous segment will be company owners or people in a position of power and not on the tools. Just to drum the point home, I can think of no example here mentioned where the perpetrator was a jobbing builder, none!
    Best wishes
    Marcus (Feeling builder's remorse)
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    The whole idea of recycling cash tends to imply there is a fixed pot of cash rather than the process creates cash. As Marcus and others are discussing here the focus should be on creating extra cash. To force up the value. To create money thru good decisions, applying knowledge, time and effort.
    The days when a person could site on the sidelines wait for the market to rocket up and then a naive lender would cheaply allow the person to pull out the new 'paper profits' are in the past. A similar period might happen again in the future. That said it is better not to wait for chance if you can create a repeatable model that depends on your skill.
    John Corey
    Follow me on Twitter -> https://www.twitter.com/john_corey
    https://www.ChelseaPrivateEquity.com/blog
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    I have to agree with you Rich.
    One of the reasons so many contractors go bankrupt is because they aren´t making as much profit as they need - you don´t usually get into that situation because you´ve been price rigging!
    Multi million pound projects that have a restricted pool of large scale contractors are the targets for this kind of thing, I would be really surprised if it affected small to medium sized developers.
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