Opinion: Housebuilders screw subbies to cut costs

Aaron Morby 14 years ago

Boasts by Britain’s house builders about their success in driving down building costs must strike a raw nerve with subcontractors.

Both Taylor Wimpey and Persimmon claim to have driven down costs by 9% and 14% from peak.

Taken at face value, it would seem house builders have delivered in a few tough years what Government and commercial clients have been striving to do for decades.

This would be no mean achievement if these gloriously big savings were achieved through hard graft, efficient work planning, innovative construction and better central buying of materials.

But this isn’t the full story as every trade contractor knows.

Every client has the right to strike a hard-bargain on building work, but the methods used by house builders must be called into question because they make Stalin look even-handed.

One house builder’s tough price negotiation is a trade contractor’s gun to the head.

The housing industry has been often accused of suffering from a short memory, but wasn’t it just over a year ago that subcontractors were handed diktats to slash prices by 5% and 10% or else.

Many of those firms who felt forced to comply are probably no longer around to talk about the experience.

This isn’t good long term business practice, even for hard nosed developers.

Of course, low building costs have given house builders confidence to start up new sites even while the recovery remains fragile. But counting on costs staying low looks optimistic, if not foolhardy.

In mainstream construction, consultants have been telling clients to get a move on with building plans while costs remain ultra competitive. Cost consultants for once have proved the contractors’ ally in this respect.

The tide is turning, mainly because there is better paid, more reliable maintenance work elsewhere. Carillion, which manages to just about scrape a 1% margin on main construction activity, has had enough for one.

It is prepared to see turnover dive to claw back a respectable margin. Others will follow as everybody strives to give clients a reality check.

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