9 Sep 2005

On prices in the Housebuilder's Bible

Matt Latter writes:

Firstly, can I congratulate you on a fantastic book for anyone who wants to understand the options when building or just improving a property. I have found your book invaluable for grasping what is technically required for a multitude of projects on my house, in order to organise any kind of contractor or even DIY work.

I have the 2002 edition of The Housebuilder's Bible and do however have a concern about general pricing. I have pretty much read your book cover to cover and have always thought that your price estimates looked very optimistic based on any quotes I've ever had from any contractors. I do try to allow for the fact that I live on the South Coast (Hampshire) and there has been quite a lot of increase in labour rates in the last 3 years, but even with this considered, I can't get estimates from any contractor even close to your tables.

A specific example is that you estimate 8 hours / £200 for a plumber to install a boiler, and 4 hours to install a cylinder. Even then, you state £25 per hour is probably too HIGH, but allows for a typical mark-up on the supplied units. I have just been quoted £3300 and £3500 by 2 plumbing firms to replace my boiler and replace my copper cylinder with a Mains pressure system. There is no primary pipework to run, just the local connection pipework to adapt, and the boiler isn't moving location so the flue vent is already there. I know I can buy the boiler (Potterton 24KW), Cylinder (Megaflo 210ltr) + flue kit for £1700 inc., so that means they're making at least £1600!!! I can't see the job taking more than 2 days, (probably more like 12 hours) including removing the old units. That says they are making £100 to £135 per hour! That's up to 5x your "generous" £25 per hour.

Other smaller plumbing job quotes also seem to reflect this ridiculous labour rate, so am I in the wrong job or am I just picking outlandishly greedy plumbers?

I've also had various quotes over the last 2 years quotes for UPVC DG, and general building work, which come in at anything from 3x your reckoning in the Bible, upwards. When I have questioned pricing, no contractor has ever agreed to reduce the price, usually insisting they'd be making a loss if they reduced it. How can a 3m stud wall with a door fitted cost £1000? !!

I notice the property developer and self-build programs on TV, and
magazines like "Build it" all quote success stories from people who "built a £300K house for £80K" or "completely renovated, extended and loft converted for £40K". I wouldn't even get close to this price for the amount of work involved in these projects based on the estimates I get.

Why is there such a disparity? Is South-East really that far out with the averages you seem to work from? Would it have something to do with me having a big house and therefore any contractor thinks we're "loaded" and therefore we won't flinch at these stupid prices?

Let me know your thoughts. Perhaps there is a formal study of the pricing in the building contractor industry across the country that can help answer my questions?

Still a great book though and better than anything else out there! Can't help think there's room for a bigger section on evaluating how "reasonable" a quote is and maybe a rolling addendum specifically to adjust prices for different areas, kept up to date.

Best Regards,

Matt Latter

Mark replies:

Thanks for the warm comments, Matt. As to your concerns, it's difficult to comment on individual quotations as I don't know the extent of the works but it does look as though your are ignoring the whole issue of the contractor's mark-up, which gets progressively larger as the job gets smaller. My labour and materials prices in the books are just that, labour and materials, and should not really be used to work out quotations. On small refurb jobs, in particular, it's quite usual for contractors to add on 50% to labour and materials to cover the "hassle factor." There may be things in the way, access may not be easy, there may be all kinds of extra work to undertake, the installation may not work as planned from day one, there are guarantees and call backs to factor in, plus the overheads of running small businesses which are significant. These are deliberately ignored in the costings in the Bible, which looks at how much it should cost to build a house, not what you would be charged for having that work carried out by a builder.

For instance, earlier this year, I replaced an ancient and knackered mains-pressure cylinder with a new 210lt Megaflo. The plumber took the best part of a day to get the new Megaflo in (there was carpentry work involved in adapting the airing cupboard), but he also took nearly four hours getting the old one out (draining down the system, adjusting the pipework). Plus he had (and needed) a mate. So when I say that a Megaflo can be put in in 4 hours (it's actually gone to 6 in the new book), it can, be but it can also take much longer.

> I notice the property developer and self-build programs on TV, and
> magazines like "Build it" all quote success stories from people who "built
> a £300K house for £80K" or "completely renovated, extended and loft
> converted for £40K". I wouldn't even get close to this price for the amount of work involved in these projects based on the estimates I get.
> Why is there such a disparity?


A combination of poor maths and ignoring soaring land prices during the duration of the job.


> Is South-East really that far out with the
> averages you seem to work from?


No. It's maybe 20% more expensive on labour rates; materials are the same nationwide.

>Would it have something to do with me
> having a big house and therefore any contractor thinks we're "loaded" and
> therefore we won't flinch at these stupid prices?


No, I don't think so, though it's surprising how many people think this. If you have got a lot of work, then perhaps you should consider hiring guys on a cost plus basis. You effectively take the risk on your own shoulders if things go wrong. The rates should be dramatically cheaper but you will find yourself in one or two contractual knots when people make cock-ups (they will) and you have to pay them twice for doing the job they should have done right first time around but didn't. Once you go to fixed price quotations, on small jobs, the price rockets. This doesn't make the tradesmen greedy; it's simply a realistic assessment of the risks taken on in giving fixed price quotations.

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