Paid As A Consultant
Value adding to the design process
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Duayne
At Live Life Build we’re really proud of the PAC Process. I know for me and my own business, the PAC Process has made an incredible difference to the way we operate, the quality of projects, and the type of clients we have. This is how we teach you to get paid as a builder.
Getting Paid as a Builder [aka a Consultant]
Duayne
One of the things that we do get asked, and I want you to give some builders a bit of an insight into what you think it is, but what should builders say to homeowners who are worried that doing our PAC Process will prevent them from getting the best price?
Amelia
Our PAC Process is the ‘Paid As A Consultant Process’. And that’s where a builder gets involved during pre-construction as a paid consultant, and works in collaboration with the client and with the architect and designer to provide input on cost and buildability as the design is developing.
They’re independently contracted to the client through a preliminary agreement that’s separate to the building contract and they work alongside the architect and designer. And it’s a really fantastic process.
The Pitfalls of Competitive Tendering
What I really encourage builders to help homeowners understand, and what I teach homeowners, many homeowners think that the way that they’re going to get the best price from builders is to do competitive tendering. And a lot of architects and designers think this as well.That they need to pit builders against each other, and price the project, go out and get a myriad of quotes from builders, before they’re ready to start construction. And that’s the only way that they’re going to understand that they’ve got the best price for their project.
Time and time again though, and I’ve seen this in my own experience as an architect and in the work that I do with homeowners:
competitive tendering doesn’t actually get you the best price for your project.
What it actually gets you is a price that’s often based on assumptions and inaccuracies. When you’re doing custom residential projects, the main difference that happens in pricing is through the business model of the builder, and what their overheads and expenses are in terms of their running costs. And what that might mean for how they structure the financial side of delivering their businesses.
What the other difference is, is when builders have made a series of assumptions about what is in your project and in your drawings, or they’ve actually inaccurately estimated what the cost of delivering your project is, and they’ve just left things out.
Builders Adding Value
Now, that second bucket of stuff, the assumptions and the inaccuracies, that’s more often the reason for the difference between the prices. I remember putting projects out to tender when I did it years ago, same set of drawings, same set of specifications, and I’d get a price between $550,000 and $1.3 million. And you can’t tell me that the same type of business model can deliver projects. It’s not like builders are getting things for different amounts of money. I think homeowners don’t necessarily understand this, unless they’re educated about that. And also understand that handing a builder a set of drawings at the point of pricing, quoting, getting ready to sign a contract, that’s a lot to ask a builder in terms of wrapping their head around exactly what you’re wanting, what is communicated in those drawings and what you’re expecting from the standard and finish of your home.
Duayne
Yeah, without any personal contact and involvement through that design stage, it’s impossible to know all that. But there’s so much more value that the PAC Process adds. There’s so many things that even we’ve learned through my business doing it more, and our members doing it more.
It adds value to the builder’s business. But it also adds a lot more assurance that the client is going to get a much better quality project, they’re going to get what they want, the expectations are going to be met. And they build a relationship.
Amelia
Homeowners will know, and builders can talk to homeowners about this, about all the stories of homeowners who have worked for months and months and months on a design, gone to tender and found that it’s two, three times over the budget that they had to spend on it.
Architects, and designers don’t always know what everything costs, unless they’re building projects like that on a regular basis and seeing them through to completion, they won’t have a handle on regular costs, because they’re not at the coalface of it.
For a homeowner to have a builder at the table during those design discussions makes such a big difference for them. It enables them to make informed decisions about the design, whilst having that cost and buildability input.
And especially when they’re trying to decide between different materials or between different structural systems or between particular arrangements on a challenging site that might have difficulties with access or those kinds of things. I mean, scaffolding can be a massive expense in a project and just looking at how you can streamline construction to reduce the amount of scaffolding that’s required or the time that it’s needed on site.
That strategic understanding, and planning by having a builder at the table during those design conversations can make a really big difference.
Would You Build A Home for Someone You Don’t Know?
It also is really useful for a homeowner to actually get to know the builder, and be able to build a relationship with the builder as well. You know, it’s a lot to expect of a homeowner, to really be getting to know the builder and like you’ve said in the past, oftentimes, the first time you would be meeting a homeowner, before building their home is sitting down and signing the contract with them. And that’s a big undertaking to be stepping into. And that’s the first time you get to see, can you communicate? Can you relate to each other? Do you like each other? You’re going to be spending so much time together.
Duayne
Look it’s, to me, it’s no different to going on a first date with someone. Figuring out you don’t like them, and then having to live in the same house with them for six to twelve months, so it’s the same situation.
The PAC Process has just become so valuable to my business. And again, because my projects are now chosen by the types of clients we can work with. The PAC Process gives us that opportunity to literally spend months together, through all the preliminary work up until signing a building contract. So, both sides of the table can figure out what type of person you are, personality, are you going to be able to get on, how well you’re going to communicate and all those types of things. It’s an incredibly valuable process that I believe everyone’s focused on the price is overlooking that it actually adds far more value to both sides than just the price.
We also talked about what can happen when builders, client’s and designers aren’t on the same page in our discussion on Communication Tips for Residential Builders and Building Good House Designs.
Client’s Need Trust, Not Just Price
Amelia
I think that homeowners can be really focused on just trying to get the most amount of home for the least amount of money that they can spend on it. And at the same time, you’ll say to them, well, do you want a good quality home that lasts you a long time, you may not achieve that by chasing the cheapest price. And if unfortunately, there are builders out there who will craft contracts that push a lot of the pricing into the provisional sums and PC items, knowing that that builds in the capacity for them to pass on any price changes to the homeowner through variations. The industry has built up a bit of a reputation for that, unfortunately.
And for homeowners whose biggest concern is can I actually trust this person to deliver my home? The PAC Process gives them an incredible opportunity to see, are you as a builder trustworthy? Do you actually follow through on what you say you are going to do? Do you operate in an honest and open and transparent way? Can they build this trusting relationship with you before they’ve signed on the dotted line of a sometimes six, seven figure contract.
And I think explaining that to a homeowner, that they will get the opportunity to get to know you over a period of time. See that you are trustworthy so that they can be assured that you’re going to build them a fantastic quality home that delivers for them in the long term.