Bigger construction jobs usually mean people work to a lower equivilant rate (per m2 or similar).
In theory it makes sense:
- Less headache placing labour
- Single mob / demob
- Less admin vs multiple small jobs
And a few other benefits. But that’s just the issue - these “benefits” get wiped when you then do the job for less (like for like).
If your rate is usually £100/m2 and a typical project is 100m2 / £10k, then moving on to a £100k project should mean 1,000m2 in simple terms.
But then business owners get in their own way and start giving daft discounts, thinking its continuous work, no downtime etc.
So you erode any savings made and efficiencies it brings by wiping big chunks off the value.
To build a bigger job rarely costs less as well - especially these days.
If anything I’d much rather have 5 x £20k jobs, than a single £100k job a lot of the time.
If you do £100k of work and discount it to £85k (sounds a lot, but very common to see 15% to 30% chopped), then you’ll probably wipe a good 3/4 of the profit, too.
If not more!
If 5x £20k jobs were priced at 20% net and then you did a £100k job (assuming it costs the same) at £85k as above - then you’d make £5k net now and not £20k.
£5k of an original £20k margin is 75% profit wiped.
You now need to do £400k of work to make £20k profit, not the £100k originally if this was 5 smaller jobs.
This is the first downfall in many construction companies.
You’d think it would be easy to notice, but mix in multiple projects, staff and day to day issues. Not so easy anymore.
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