Why Builders' Margins Relate to Risk

One major variable from builder to builder will be their cost margin. A recent study revealed that the size of builders’ margins actually have a direct impact on the risk of their business, and their customer’s projects.

When embarking on your own home project, it’s important to know the difference between what constitutes a ‘safe’ margin, and an ‘unsafe’ margin — it could be the first red flag that your own project is in danger.

Here’s what the study found:

Low Risk = Margin needs to be more than 20%

Medium Risk = Margin is between 12% – 19%

High Risk = Margin is less than 12%

Why does a low margin mean high risk?

Smaller margins mean that your builder isn’t considering unknown costs that can crop up over the course of your project. A lower margin for error creates a high-risk environment — these builders can often become insolvent (unable to pay their debts) which translates to a direct impact on their projects, sub-contractors and suppliers. This impact could include:

● Low project quality
● Unfinished or half-finished projects
● Mistakes are made and unable to be rectified
● Unpaid tradesmen
● Builders are not insured because their low profit margins put them in a high-risk category
● Bankruptcy, leaving families stranded and deposits lost

Don’t fall prey to a ‘great deal’!

Quite often families are lured by a tempting ‘great value’ with a cheap house and land package — but this can end up costing them a lot more than money with drawn out builds, high stress environments, and broken promises.

Our business model keeps you safe

With Jackson Dwellings you can build your dream home, and not worry about risk. Our experience in the industry and the margins we have established protect us against financial issues that may hinder project success.

We promise you:

● A higher quality home
● Structurally sound and safe
● On-time delivery
● Experienced and qualified staff
● Your home will be built following proven systems and processes — no broken promises
● Finishes and inclusions will be as agreed
● Fully insured for every activity on site

Contact us to speak with one of our experts to see how this information can benefit your project.

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