Well written Jazz. Makes a change from those posters saying all...

First 64 Last

Share
Profile

Follow
Sailor FNQ

20,477 Posts.

28/08/22

18:00

Post #: 63369376
Share

Originally posted by Jazz101 ↑

Builders were initially faced with what looked like a looming recession, well before increasing supply cost were evident. As a result they signed jobs where possible, sometimes at close to break even ("break even" based on the then current and historical supply costs).
The double whammy was that workload and costs increased well last break even. Keeping in mind that a builder is contracted to supply materials at todays price, often a year or more later. The perfect storm erupted. This contract is bound by the building contracts act and thus provides very little scope to recoup these losses, without breach of contract.
At the time very few people if anyone, were predicting the supply crunch cost escalations. Economists, bankers, politicians, none of them. What chance does a builder have of foreseeing this?
Even once the cost increases were well underway, and continue to be. They are so far past anything ever seen before that most expect the peak to be near. Maybe it is maybe it isn't.
For a builder to simply stop signing contracts for an undefined period is effectively closing the door on the business.
The root of this problem is not just the cost escalation of materials. It is that the current contracts do not allow the current cost of materials to be paid by the client.

Expand

Well written Jazz.

Makes a change from those posters saying all builders are like used car salesmen.

From my earlier post
In a rapidly rising cost of materials world, fixed price contracts are crazy.
Builders should be protected by using cost plus contracts.
Trouble is - the banks who provide the mortgage, need an end of price figure before committing to lending.

Last edited by Sailor FNQ: 28/08/22
6 Upvote

Reply

Top Stories

The Rising Tide: How institutional adoption is shaping the future of crypto

CC9

Chariot locks in high-potential drill target at Black Mountain, one of the USA's largest lithium landholdings

The business of sport: Warren Tredrea's take on this week's news

Week 34 Wrap: HotCopper's top watched; Oz banks cut saver interest; Kamala’s 28% corporate tax; AI’s back

SER

How flooding did Strategic Energy Resources a favour: Four holes down in 'redesigned' gold & copper campaign

There are more pages in this discussion • 94 more messages in this thread...

First 64 Last

Well written Jazz. Makes a change from those posters saying all...

The Rising Tide: How institutional adoption is shaping the future of crypto

Chariot locks in high-potential drill target at Black Mountain, one of the USA's largest lithium landholdings

The business of sport: Warren Tredrea's take on this week's news

Week 34 Wrap: HotCopper's top watched; Oz banks cut saver interest; Kamala’s 28% corporate tax; AI’s back

How flooding did Strategic Energy Resources a favour: Four holes down in 'redesigned' gold & copper campaign

Featured News

Featured News

Well written Jazz. Makes a change from those posters saying all...

Top Stories

The Rising Tide: How institutional adoption is shaping the future of crypto

Chariot locks in high-potential drill target at Black Mountain, one of the USA's largest lithium landholdings

The business of sport: Warren Tredrea's take on this week's news

Week 34 Wrap: HotCopper's top watched; Oz banks cut saver interest; Kamala’s 28% corporate tax; AI’s back

How flooding did Strategic Energy Resources a favour: Four holes down in 'redesigned' gold & copper campaign

Featured News

Featured News