This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. BRIC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modelling, analytics, or projections are subject to inherent uncertainty, and any analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change.
Safeguarding your livelihood requires careful planning and strategic decision-making
Pre-build
Client selection
Selecting the right clients can be a critical step in protecting your business. It’s essential to be discerning and focus on identifying your strengths, as well as the market segments that align with them. Accepting projects outside of your expertise can lead to complications and increase the potential for financial strain.
If you suspect that a potential client may present challenges when working with them, it may be wise to reconsider the engagement. Difficult clients can result in prolonged issues, such as delayed progress payments and frequently changing the scope of works. For larger projects, if you have concerns about a client’s financial capacity, do not hesitate to request confirmation from their bank or proof of funds. This proactive approach can help ensure that the project proceeds smoothly.
Getting the right contract
Having a well-drafted contract can be crucial for protecting your interests. While fostering a positive relationship with your client is important, the contract will ultimately serve as the guiding document in any disputes. Consider seeking out contracts created by organisations with builders’ interests in mind, as they are more likely to safeguard your rights.
A comprehensive quoting template may assist in alleviating potential disputes over costs down the line by helping to identify all project components and minimise misunderstandings.
Materials and subcontractor selection
The subcontractors you work with, and materials used can impact the success of your projects.
It is important to ensure that your clients understand your commitment to using high-quality materials. Using subpar materials may lead to structural failures, increased maintenance costs, and ultimately, client dissatisfaction. By committing to high-quality materials, you can not only enhance the integrity of the project but also build a reputation for reliability and excellence.
When selecting subcontractors, it is essential to build relationships with reliable tradespeople. Consider developing a pre-qualification process to assess their workmanship and reliability. Maintaining a list of trusted subcontractors can help you avoid issues later down the track. Additionally, confirm that your subcontractors have their own insurance, and keep a copy on record, as this precaution may protect you in the event of claims arising from their work.
Insurance
As business owner, having insurance can be vital to help with unexpected events that may cause financial and physical loss.
Choosing the right insurance for you can be difficult and time consuming, so it can be crucial to partner with an experienced insurance broker who understands construction risks. Some important insurances to consider are:
- Construction risks – material damage and third-party liability (can include tool cover, and pre-existing structure cover, if required)
- Workers' compensation
- Mobile plant and machinery
- Income protection
- Domestic building insurance (home warranty).
Be mindful that your home and contents insurance broker may not be the best fit for construction-related coverage.
The build
Contract documentation
Once you have prepared thoroughly, it is time to focus on the build. For projects above a certain value, having a written contract is a legal requirement. It may be recommended to have a written contract for all work to ensure clarity.
When finalising the contract, some of the important considerations include
- Identifying the parties involved and verify their legal status
- Establishing a schedule of progress payments that reflects the project’s needs
- Confirming that all necessary building and planning permits are obtained
- Allowing for prime cost items and provisional sums to prevent budget overruns
- Noting any pre-existing structures that require protection under your construction insurance.
Waterproofing and site management
Waterproofing is a critical aspect of construction. Paying close attention to this detail can save you time and money in the long run.
Maintaining a clean, secure, and organised site is also essential. A tidy, and well secured site can prevent accidents and theft. It is important to consider implementing a routine for site maintenance and security measures, such as locked storage containers and alarm systems.
Occupational health and safety
Familiarise yourself with and comply with all Occupational Health and Safety (OH&S) regulations. OH&S regulations are designed to protect the health and safety of employees, contractors, and visitors by establishing guidelines and standards that must be adhered to in the workplace.
Quality inspections
Conduct regular quality inspections to ensure that subcontractors meet your standards. Address any unsatisfactory work promptly to avoid complications later.
Contract variations and payments
Document and obtain client approval for any variations during the build. This practice helps prevent disputes at project completion. Be proactive about financial accountability; if a client delays or refuses to pay, address the issue quickly.
Handover
Once the build is complete, ensure that the handover occurs after the occupation certificate or certificate of final inspection has been issued. Check your construction insurance to understand when 'contract completion' occurs, as there may be a gap in coverage during the handover period.
Post-build
Customer satisfaction
Positive feedback from clients is invaluable for building your brand and attracting new customers. Consider seeking feedback through a short survey to identify areas for improvement in your service delivery.
Home maintenance checklist
Providing clients with a maintenance checklist at handover can be beneficial. This checklist can inform homeowners about regular maintenance tasks, helping to minimise defects in the future. Simple instructions can go a long way in ensuring the longevity of their investment.
Schedule maintenance inspection
Consider offering a scheduled maintenance inspection after a set period, such as two years. This practice can help identify small issues before they escalate and strengthen your relationship with the client.
Capital retention
Lastly, consider retaining a portion of the profit from each project as retained capital. This practice can support your working capital, expansion plans, and equipment acquisition.
Retaining capital can also help meet the requirements of your domestic building insurer, ensuring you have the necessary assets to support warranty limits.
By thoughtfully considering these aspects of your business, you can better protect your livelihood as a builder and foster a successful and sustainable operation.
Next steps
Please feel free to reach out to the BRIC team at any time.
