Costs coming down for 2011?

tdiman

I'm surprised and disappointed by some of the posts here. The country is undergoing the worst recession since the formation of the state, yet some people feel it is fine that the same pricing structures exist now that were in place a couple of years back at the height of the boom. Despite the % of construction jobs that are gone, and the price cuts in larour....Maybe its a case of sour grapes by those that paid the big dollars back in the day?

For me, I held off building as we simply could not afford the prices some contractors were charging during the boom days. Direct labour is not really an option for us as we live in Dublin, a long distance from our site. But the range in prices we did get when we were looking (for exactly the same spec) gives a good insight to the different margins different builders were making.

What stikes me as odd from some posts here is, the level of contruction staff out of work, reduced to part time, etc - does not seem to be reflected in the prices drops. Are you seriously telling me that you cannot bargin more with someone who is now not juggling 3 -4 jobs at a time? I work in a very different business. I'm involved with buying services and selling these to our end clients. The level of price drops and competition is incredible out there. Clients in our industry which are a mix of financial, insurance, hardware manufacturers, software providers, etc are heaping pressure on us to reduce pricing across the board. But there can be no compromise on our quality - we have to become more efficient and innovative as well as getting use to working with lower margins. The building game is no different.

I'm looking forward to revisiting some of these contractors, and discussing the level of discounts they will be providing. Its no secret that labour costs in contruction have dropped by over 50% in some cases. Its time we saw these passed on to us, the consumer....

When house prices have fallen by over 50% nationwide, that tells you the prices of the past were inflated. Time we saw the falls in the construction prices...

Maybe it needs to be a separate thread, but I'd love to hear about the discounts people have experienced who have priced in the last 2 - 3 years are back revisiting now.

muffler

Above post moved to new thread

brendankelly

The guy with the 09 V W . His price is down considerably if he is still in business. The guy with the 99 transit his price is the same if not gone up a bit. The same applies to builders. The good builder will always be busy.

galwaytt

tdiman wrote: »

I'm surprised and disappointed by some of the posts here. The country is undergoing the worst recession since the formation of the state, yet some people feel it is fine that the same pricing structures exist now that were in place a couple of years back at the height of the boom. Despite the % of construction jobs that are gone, and the price cuts in larour....Maybe its a case of sour grapes by those that paid the big dollars back in the day?

For me, I held off building as we simply could not afford the prices some contractors were charging during the boom days. Direct labour is not really an option for us as we live in Dublin, a long distance from our site. But the range in prices we did get when we were looking (for exactly the same spec) gives a good insight to the different margins different builders were making.

What stikes me as odd from some posts here is, the level of contruction staff out of work, reduced to part time, etc - does not seem to be reflected in the prices drops. Are you seriously telling me that you cannot bargin more with someone who is now not juggling 3 -4 jobs at a time? I work in a very different business. I'm involved with buying services and selling these to our end clients. The level of price drops and competition is incredible out there. Clients in our industry which are a mix of financial, insurance, hardware manufacturers, software providers, etc are heaping pressure on us to reduce pricing across the board. But there can be no compromise on our quality - we have to become more efficient and innovative as well as getting use to working with lower margins. The building game is no different.

I'm looking forward to revisiting some of these contractors, and discussing the level of discounts they will be providing. Its no secret that labour costs in contruction have dropped by over 50% in some cases. Its time we saw these passed on to us, the consumer....

When house prices have fallen by over 50% nationwide, that tells you the prices of the past were inflated. Time we saw the falls in the construction prices...

Maybe it needs to be a separate thread, but I'd love to hear about the discounts people have experienced who have priced in the last 2 - 3 years are back revisiting now.

Well, there's a couple of factors at work here, which you're not taking on board.

First, materials. In general, in 2010, all of them went up - and they went up in 2009, as well. You have to remember that outside a few key staples, every building material is imported. And whilst demand has dropped in EU to a certain extent, production of materials has been reduced - but in order to maintain a functioning business (i.e., pay it's way..) - prices per-unit have been increased. Also, demand for some products has not diminished world-wide at all - timber, for instance is still sought-after, and will continue to be so. Energy-intensive-to-manufacture products (concrete and cement is a prime example) have not seen a fall to any great extent, mainly due increased cost's of production. In Ireland in particular, that means energy. Having the dearest (iirc) electricity in the EU (global prices for power-generation coal, for example, is at a 3-year high now....), and now the phoney 'carbon tax', which affects both the product, and it's delivery - it all moves on trucks, btw.......haven't seen any scope for savings there, either.

And it's not over yet: we've been advised here to expect price increases in timber and insulation again in 1st quarter this year - and we just had a round of increases in September......

All the main metals used are up as well: Aluminium, Copper in particular (think of all the wiring and plumbing.......), and Steel (which is projected to go up 5% this week alone).

So, then we come back to labour. And here I do challenge your statement that " Its no secret that labour costs in contruction have dropped by over 50% in some cases". Which means you need to understand how much labour content there is in any project. If labour was say, 10% of a product, then, in a €100k product, and you reduced labour costs (somehow) by a half, then the actual saving in such a €100k project, would be 5%. Not 50%. We can juggle these number's all day, but no matter, you still won't get the price of your product down by 50%, just by cutting wages.

Looking at it objectively, any given tradesperson needs €xx/hr to sustain a living. There is a maximum you can charge of course, which the 'market' will take care of (or you won't get any work) but there's also a minimum. We see near-riots over people being asked to take 5% and 10% reductions in, say the Civil Service, so practically, there isn't 1/2 to be saved in labour unit costs, in the private sector. It's simply not there. Show me where you can cut anyone's wages, anywhere by 50% ? Can you cut yours ?

On top of this, then, is the 'Muddy Factor' - that is, that the construction industry is, even at the best of times, in a very un-even operating arena. It's one of the few where the prices charged by formal, official channels (i.e. recognised, insured, legitimate) companies, compete day-to-day with those charged by the Black Market. Everyone knows that Black Market costs are lower - issues of tax evasion, social welfare subsidised (because that's what it often is...social welfare 'topped up' by nixer's..), quality, reliability, insurance, warranty are all happily sacrificed - to save a €. Then, when it goes pear-shaped..........well, that's why we have boards.ie, isn't it ?
You state yourself that you're into selling, against competition, "Clients in our industry which are a mix of financial, insurance, hardware manufacturers, software providers, etc are heaping pressure on us to reduce pricing across the board" - which I completely understand. But you're not competing against the Black Market with clients' like those, so you need to start comparing apples to apples when it comes to building. If a rival to you walked into one of your accounts and said I can do that for 50% of what tdiman charges you, you'd be closing your doors tomorrow.

It's hard to, but if imagine if someone said they could do your 9-5 job, for your employer, for 50% less - what would you do ? Indeed, what could you do ?

Finally, there's the issue of margin's. Now, I can only speak for myself and what experience I have, but I have seen tender's prepared by builders in 2010, for 2.5% margin over cost, and still being told they're 'too expensive'. And as for builders have 3 or 4 jobs on at the one time - I haven't seen one of those in a long, long time. Right now it's one-at-a-time, and usually with a big gap between them, as well. Yet some builders will take on a job below cost, just to generate income, and hoping that it will carry them on to a subsequent job, which may have a better return (and I'm aware of a big job relatively locally on just such a basis...) Basically, it's robbing Peter to pay Paul. It can only go on for so long and at some stage you will either get a job that does pay, or you hang up your tools, and you'll inflict pain on suppliers etc in the process (who won't get paid). It's yer typicall Madoff scheme, really.....

You see, and as we are all becoming wiser to now, thanks to the economic climate, the bailout's etc etc - all the 'big profits' of the Celtic tiger were, basically, false. It was all just borrowed money which they were spending, and shuffling it about, and putting everything, from jeeps to diggers to helicopters, on finance. The truly 'Never-Never'. Now we know where the the phrase came from.

But guess who has to pick up the tab, eventually? That's right - You and I. And by that I don't mean the Black Economy btw.

The issue of house prices however, needs to be somewhat divorced from building costs. House prices include the price of land - and that's where the biggest bubble of all was. When a site made up 30% of the price of your house (or more), and VAT and other taxes made up another 30% (staying legit, here..), then the actual cost of your house was somewhere less than 50% of the price you paid. Which is exactly where you're trying to get, now.

They were talking about this on Newstalk yesterday, and the fall in building prices now to €90/sq ft. Well, there's a good 2010 prices thread on boards here, and show me where (in any posted examples) that there isn't value to be had now.

DOCARCH

Very good summary there galwaytt.

mrgaa1

As Galwaytt put it - prices are going up and will continue to do so. The rest of the worlds costs are up and with the UK VAT rise today items will be costly to buy and deliver. And when the USA starts moving again and oil prices go up, again, items will be more costly. You may have to weigh up building as opposed to buying something.

wirehairmax

Compliments on your well put post. A little bit of realism is welcome here. I typed up a similar post to reply to the OP on Sunday night but when I went to submit it, I was logged out for some reason and the entire post got lost.
Anyway, from my experience it is getting more expensive to do business in this country and you are doing well to break even as a Building Contractor these days. All our overheads have gone up, insurance, fuel, materials have all risen dramatically and we are being undercut by the black market all the time. I have now decided to report anyone that I know of working for cash no matter who they are. The black market is booming and is killing the genuine and legitimate business.

galwaytt

wirehairmax wrote: »

The black market is booming and is killing the genuine and legitimate business.

...+1

Indeed, I lost an 'order' some time ago for a house because I couldn't do it sans VAT.:rolleyes: It's not a fridge or a microwave - it's a whole house !! :eek:

galwaytt

wirehairmax wrote: »

Compliments on your well put post. A little bit of realism is welcome here. I typed up a similar post to reply to the OP on Sunday night but when I went to submit it, I was logged out for some reason and the entire post got lost.lack market is booming and is killing the genuine
and legitimate business.

[OT] - actually tip for that, if you're doing a long post: do what I do: type the whole thing on your PC (word/notepad/whatever), and then just copy and paste it in. No fear of you being time out etc [/OT].

gears

Now I know some might see this as nit picking an excellent post from galwaytt, I'm not.
What the op may be talking about in terms of building labour costs is the often talked about cost of a block layer and their rate per block and using this as a yard stick for the entire industry.
What was this rate a few years ago and what is it now?? 50% less... More??

sinnerboy

tdiman wrote: »

Direct labour is not really an option for us as we live in Dublin, a long distance from our site.

I'm looking forward to revisiting some of these contractors,

This is what the OP posted . Please keep on topic .

paddy147

Best way to get building work done in this day and age is...............


Tender it out.;)

mail

Gears you cant judge the cost of a house by what people are charging per block, a lot of those so called block prices are cash and dont represent the true cost. Everyone knows the price of blockwork ,its like women gossoping. The true cost hasnt changed, there is still insurance,pension stamp,holiday pay,employers prsi and transport to be factored in. Sorry for going a little off topic but the drop in prices is due to claiming social welfare and working , where a self employed person cannot, so his overheads are the same. Buy the way great post galwaytt

imitation

I think galwaytts post sums it very well, theres a big difference between building a house and buying now. A typical built house has suffered a price drop across its land and the building itself, houses seem to have a pretty ephemeral value anyway (which might be for the best considering the construction quality of some).

Labour does seem to have come down a fair bit, but I think the unseen factor is the cost of quality guys, which has also come down a fair bit (not nixer cheap or anything).

Also there could another new thread born from this one on VAT, did somebody really expect to build a whole house without paying VAT ?

paddy147

imitation wrote: »

Also there could another new thread born from this one on VAT, did somebody really expect to build a whole house without paying VAT ?

Interesting thought indeed.

You know the saying though,"cash is king".

galwaytt

imitation wrote: »

Labour does seem to have come down a fair bit, but I think the unseen factor is the cost of quality guys, which has also come down a fair bit (not nixer cheap or anything).

Also there could another new thread born from this one on VAT, did somebody really expect to build a whole house without paying VAT ?

paddy147 wrote: »

Interesting thought indeed.

You know the saying though,"cash is king".

I'm afraid so........and whilst the scale of that request is unusual, I'd say I get asked 8 times out of 10 what 'can I do' about the VAT ? If I was a man-in-a-van, I could understand, but when theres a bloody huge factory, there's 40+ people that have to be paid every week......

Anyhoo, on VAT- another thing which I've mentioned on here before, and came up on us shipping a system to the UK a short while ago. One-off building in the UK is entirely VAT free. That is amazing - I thought the client was making it up, tbh, but no, I checked, and indeed, he gets to reclaim every cent of VAT incurred in the building of his house. Since yesterday, then, that's either 20% more to spend on his build, or, he can build for 20% - take your pick.

What lateral thinking, eh ?:(

galwaytt

gears wrote: »

Now I know some might see this as nit picking an excellent post from galwaytt, I'm not.
What the op may be talking about in terms of building labour costs is the often talked about cost of a block layer and their rate per block and using this as a yard stick for the entire industry.
What was this rate a few years ago and what is it now?? 50% less... More??

My own experience is that I got blockwork done in 2007 and it cost €1.00/block. I got some done last summer and it was €0.80 a block. That's 20%. In my entire house, that only represents €1,500 out of a contract for €326,000, which means that 20% drop only registers as 0.46%. These are hardly the scale of the savings in numbers OP is trying to get. As I am saying, wages is not the problem.

tdiman

Am I right in assuming GalwayTT is a builder? or involved in the industry?

Alot of the posts here back up my OP - in particular with regards to being shocked at people's attitude.

Firstly, I'm not talking about the black market. I'm talking about registered builders and trades. I had put my build out to tender with three contractors and contacted a couple more afterwards. They had a very detailed spec, the aim of which was to keep all things equal. Huge variance. I had one builder tell me 'you can expect another 30k' on a certain builders quote - even though they share many of the same tradesmen and buy from the same builders providers. Hency my margin point.

I understand that materials for the most part have not come down (some have too). It's more the trades that have come down, well down - in many cases over 50%. And understand that doesn not equate to the overall price coming down by 50%. But I'd expect alot more than what folks are posting here. Good builders are the those that are still standing - but they have changed their pricing in many cases - some significantly.

To a question further back up the thread, yes had to take a pay cut in the region of 20% - between salary and quarterly commission. Happy to take it to have an income to support my family instead of having no job - so the there is more to the choice than some posters are making out. Is it different for builders? We've all been forced to take a drop in living standards and disposable income - are builders any different?

Appreciate the comments and feedback. Would be interesting in starting a separate thread to find out just what level of decrease there has been over the past 2 -3 years and in which areas people have seen these decreases.

sinnerboy

tdiman wrote: »

Am I right in assuming GalwayTT is a builder? or involved in the industry?

Alot of the posts here back up my OP - in particular with regards to being shocked at people's attitude.

No "attitude" has been displayed in my opinion. Please don't read iny "attitude" into this post either. Consider that GalwayTT being in the trade seems a double edged sword in this context . In other words you appear to want to dismiss his input as "biased" it seems. Perhaps you would prefer comment from someone not in the trade - and what value would you put on that ?

Again , I am not posting this "smart-Aleky"

tdiman wrote: »

Firstly, I'm not talking about the black market. I'm talking about registered builders and trades. I had put my build out to tender with three contractors and contacted a couple more afterwards. They had a very detailed spec, the aim of which was to keep all things equal. Huge variance. I had one builder tell me 'you can expect another 30k' on a certain builders quote - even though they share many of the same tradesmen and buy from the same builders providers. Hency my margin point.

.... this is how a free market operates .

tdiman wrote: »

I understand that materials for the most part have not come down (some have too). It's more the trades that have come down, well down - in many cases over 50%. And understand that doesn not equate to the overall price coming down by 50%. But I'd expect alot more than what folks are posting here. Good builders are the those that are still standing - but they have changed their pricing in many cases - some significantly.

There is a point beyond which prices cannot drop and business remain profitable. Companies then fail - witness Pierce Construction.

tdiman wrote: »

To a question further back up the thread, yes had to take a pay cut in the region of 20% - between salary and quarterly commission. Happy to take it to have an income to support my family instead of having no job - so the there is more to the choice than some posters are making out. Is it different for builders? We've all been forced to take a drop in living standards and disposable income - are builders any different?

Hardly . But operating at a loss is not in a builders , or clients , interest. Consider a builder going broke in the middle of your build. Ouch - for both of you.

tdiman wrote: »

Appreciate the comments and feedback. Would be interesting in starting a separate thread to find out just what level of decrease there has been over the past 2 -3 years and in which areas people have seen these decreases.

I think that's a good idea - why don't you start a "Build Cost 2011" thread to follow on from the 2010 thread.

tdiman

Thanks sinnerboy. When I say attitude, I dont mean people getting sarky or smart arsey, more how they approach the topic, likewise my posts are not intended to come across as anything except honest.

The companies I am talking to are usuaully small outfits - 5 - 10 people working in them, not the larger crew like Pierce and co.

I'm still there is better value to be had. I've seen some decent reductions in trade rates (from chatting to block layers, chippies, plumbers, sparkies, etc.). I just wondering how much of these savings the contractors are passing on.

brendankelly

The good builder/tradesman is like a dentist, he will always have work. You can get a tooth out any Saturday night for small money sometimes even for nothing. But if you want a tooth pulled properly you go to the dentist.

I used to be sorry for people that got bad lime plastering done so I put videos on u tube to show how it should be done and what the finish should look like. Now we charge 20 Euros a meter for taking down cracked plaster and an extra few Euros for the embarrassment of been seen near some jobs.

bruschi

tdiman wrote: »

Thanks sinnerboy. When I say attitude, I dont mean people getting sarky or smart arsey, more how they approach the topic, likewise my posts are not intended to come across as anything except honest.

The companies I am talking to are usuaully small outfits - 5 - 10 people working in them, not the larger crew like Pierce and co.

I'm still there is better value to be had. I've seen some decent reductions in trade rates (from chatting to block layers, chippies, plumbers, sparkies, etc.). I just wondering how much of these savings the contractors are passing on.

there is definitley value to be had out there, its a matter of finding it. but theres getting a job cheap, and there's getting value for money. It could depend on what you are building. if its expensive products and trades, then it wont seem like value for money, but it might well be.

as is said above, there is no point in builders losing money., there are too many out there going under because they are underpricing jobs and not paying subbys and they all go bust.

you say you cant go direct labour, but there are lots of project / contract managers out there who are running jobs for direct labour. in effect they become the foreman and the person respnsible for the day to day handling of a project, whilst you have input in the selection of subbys and materials. It might be worthwhile to have a look at this option.

but costs have come down a lot, a huge amount. but quality and quality of material is increasing. I built a house last year, and theres no way it would have cost what I paid a few years before that. I got a much better spec house for the money I paid, than if I was building even a year previous. so although the house remained the same cost, it was a hugely superior build. it just seems to me that people are spnding similar if a biut less, but getting far more quality.

tdiman

a very valid pioint Bruschi and well made.

Must admit I am skeptical of PM's. I've considered this option, but have serious concerns about finding someone that 1. I would trust and 2. that would have the same standards and 'skin in the game' that I would.

My architect offered this service, but there is no way I'd ever consider him - he was impossible to get during the planning stage and I had to correct several errors on the plans myself.

Any idea of rates for PM's - guessing it is around 10% of the build?

bruschi

depending on where you are, and to be honest, I'd get away from fixed percentage rates. think of them as a salary rather than as percentage of the house. I had one for times on my build when I couldnt be around, and it varied depending on the time spent on site, but roughly €300-€500 a week.

the thing about the standards is a moot point, as whether its a builder or a PM, either way, the standard is more in their hands than yours. the only thing is I'd find a PM would be better, as he is working for you, and effectively his job is to co ordinate the subbys quality to your needs, whereas a builder does it to his own standards to get things done.

Personally, I'd feel you'd get a better handle on standards with a PM as you choose the subbys and materials, whereas most builders will go their own route.

I'd agree with not having the architect as PM. And I know there are a few here and probably will tell me I'm talking crap, but I feel a contracts manager or foreman has a better handle for on site issues and technical details of the actual construction. Only my opinion, though, and just from personal experience of any I have dealt with so it wouldnt be true for the whole situation I'm sure.

What region is the house being built in?

galwaytt

tdiman wrote: »

Am I right in assuming GalwayTT is a builder? or involved in the industry? I understand that materials for the most part have not come down (some have too). It's more the trades that have come down, well down - in many cases over 50%. And understand that doesn not equate to the overall price coming down by 50%.

Yes I am 'in the trade', but not as a builder (as you understand it). However, I do spend most of my days dealing not only with my job in Construction, but also liaising with those who come before and after us, clients themselves, but also the likes of other industry professionals, and have a general interest in the whole arena. I regularly get, and respond as comprehensively as possible to, pm's on all manner of construction-related questions: those I can answer, I do, those I can't, I'll do my best to point them in the right direction. To me, my job is incredibly enjoyable, and I'd like people who set out on their Dream Project to enjoy it, and if some info helps avoid the pitfalls, all the better.

And it is in that context, I posted: to 'open up' the doors to fact's, as distinct from anecdotal.

Can I ask you to elaborate on what you mean by 'trades down by 50%' if you don't mean wages ? Or am I missing something here ??

bruschi wrote: »

there is definitley value to be had out there, ...

+ 1

bruschi wrote: »

but costs have come down a lot, a huge amount. but quality and quality of material is increasing. I built a house last year, and theres no way it would have cost what I paid a few years before that. I got a much better spec house for the money I paid, than if I was building even a year previous. so although the house remained the same cost, it was a hugely superior build. it just seems to me that people are spnding similar if a biut less, but getting far more quality.

Now that is interesting. I buy a lot of raw materials for use, and for the key ones I use, there has been no reductions in the cost of them, over time. But, I insist on, and still do, on a certain quality of product. There have always been cheaper alternatives, and as the celtic experience has shown us (Chinese so-called WPB being just one.........and that'll come back to bite a lot of people yet........), there's been a lot of quality product substitution in that time, but no corresponding reduction on the prices, because it was a sellers/builder's market. What you are seeing now, is that the quality you SHOULD have been getting anyway, is now more accessible, competitively, as it is now a buyer's market. That you see that now as a lift in quality is no more than it should have been in the first place, but at least it's happening.

imitation

Talking with some tile people, there seems to be an interesting dynamic going on here, shops currently have two kinds of tile, old stock made up of european tiles that were quite pricy a few years back and are now marked down and budget chinese tiles. The market for expensive stuff has fallen through the floor it seems, so more low quality stuff is working its way onto the market.

I wonder is this dynamic going on in other places too, will people building now benefit from marked down quality stuff and people in the future be plagued by junk quality stuff, wondering how the latter managed what they did on such a low budget ?

bigmanhole

The OP arguement is illinformed in my opinion, the costs of regulation/H&S etc... and trying to run a proper construction company are enormous and the boomtime costs have not decreased.

Construction materials have not decreased and in fact increased in many cases, as has diesel, insurance etc...

Profit margins in tender bids are at 0% (at a maximum) and indeed many tenderers submit tenders slightly below cost and hope to be able bargain further with the subcontractors to try and make it pay. I know this as a fact as I consult for a number of medium and large contractors.

A lot of people think they should get a high quality building\extension for ridiculously low prices. You get what you pay for so buyer beware.

*WKD*

Just bowsing through this thread and just thought it was interesting.
We started our "building" process about 3 years ago, but bw not getting planning and then not getting a mortgage we got very delayed.
Anyways when we put it out to tender last May, we got all sorts of quotes back as you do. From 300k - 190k. We then sent out again for turnkey and again got all sorts of prices back. So the builder we went with was charging 230k, and then while we were having trouble getting our morgage asked him to look at his pricing again at the end of the year. So he repriced leaving out tiling, patio and a couple of other smaller things and repriced at 190k.
He also said if we get tiles he will do them for us. And has been very accomodating. So after lots of hardship and stress we are finally commencing our build in two weeks. Although of course for 40k less for our builder!!!

sinnerboy

To keep thread on topic some posts have moved to here