Building Contractors as a Sector of the Australian Service Industry
This group of professionals is made up largely of self-employed people working on a variety of projects in the domestic housing and commercial construction sectors. They can perform a number of functions including:
- Provision of construction contractors to build both domestic and commercial projects;
- Provision of general construction services; and
- Provision of construction consultants who provide general and specialist advice for the construction service providers generally.
This building construction sector which includes residential, apartments, commercial construction and engineering construction makes up a portion of Australia’s services industries which have become the most substantial sector in the Australian economy. Today services account for 75% of Australia’s output; more than a quarter of the nation’s total exports and almost 4 in every 5 jobs created!
The building construction sector is a major contributor to the total services industry in Australia at approx >10.5% despite market trends showing that the building construction sector is likely to remain weak this financial year (2011/2012), with residential building falling for the 13th month in a row. All sectors recorded heavy declines and the general view is this is because there is still nervousness in the market following the Global Financial Crisis and uncertainty in the future.
What does all this mean to the building contractors? In the first instance getting work is harder and there is certainly pressure on pricing. There is strong competition between the service providers as there is limited work available. The key is to differentiate yourself and win work competitively but at the same time not undermining the industry by price cutting to a point where you lose money.
Finding the Right Building Contractor(s)
Finding the right building contractor is critical if you are going to undertake a building or renovation project. You are likely to want to hire the best but finding this person or company can be difficult. If you have not done this before you are unlikely to know what you are doing. Making the right choice involves a few critical steps:
- Meet the builder face to face to see if they are someone you can work with.
- Undertake some financial evaluation of the company they operate.
- Get references on the builder, and make sure they are legitimate and not just friends/family.
- Check with the local building authority to see if there have been complaints about the contractor you are considering.
- Check with the building licensing authority for information to determine whether there have been complaints and or issues with the regulator.
- Talk to the subcontractors they are recommending as this will tell you a lot about how they work and how they interface with you and the people who will actually do some or all of the work.
- Get legal advice on the building contract so you know what the builder has to do for you and what your rights and obligations are.
- Look at how your contractor wants to be paid – if they are asking for cash you might question what sort of job you will get done – there will be no warranty or recourse if things go wrong. Likewise, if payment is to be upfront, be cautious as this is not the normal practice where deposits are paid with ongoing progress payments.
- Look at the discount structure if offered – if any – this may lead you to find that the contractor has cash flow problems so be careful not to end up with only part of your project because they go into administration/liquidation.
- Monitor the work in terms of progress and quality and tackle issues quickly if they arise as this will reduce the dispute and/or reconciliation of work at the end.
Marketing Guidelines for Building Contractors
Construction contractors will each have a unique approach and service, but generally speaking construction services are all the same. This is not true of construction consultants who are likely to specialise in a particular area/areas. In addition, this is an industry with plenty of competition. If you have a marketing plan, your actual advertising approach should be tailored to match this. If not, creating a marketing plan is a good start. Key strategies should include:
- Know if you have marketing capability. If you lack this expertise/capability get help.
- Know your market – ie who are your customers and who are your competitors. Keep records of who your contacts are.
- Keep in touch with your customers and they will make referrals to your business.
- Establish a market brand/logo for yourself that quickly identifies your business and can establish brand loyalty and or brand recognition.
- How do you differentiate yourself – if you know, promote this?
- Finding you should be easy and not difficult, so advertise in various ways, and mediums. Remember not everyone will use the internet.
- If you use the internet, also use social networks.
- Keep your information up to date – believe it or not some contractors forget to update their telephone numbers and addresses etc when they change – keep records of what you have advertised so you can keep it current.
- Have marketing material available at all times – eg business cards, brochures etc.
- Obtain referrals and keep testimonials and/or actively obtain testimonials from happy clients for use with potential customers.
- Send thank-you notes to your customers and potential customers as this provides them with a good last impression of you and your service.
- Deliver the services you promote yourself as providing.
- Don’t take on too much work as clients will remember what you don’t do well far more than what you do well and people with negative viewpoints are likely to tell friends and family. Negative press spreads far quicker than positive news.