Discover why builders shouldn’t quote.
Learn what to do instead [and get paid for doing it]
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At Live Life Build, we teach the PAC Process or the ‘Paid As Consultant’ process. This is the process where builders get paid as a consultant to be involved in a project during pre-construction and to work alongside the client and the designer or architect as an independent consultant providing input on cost and buildability.
Here are our top 6 reasons why builders shouldn’t quote.
1. You Are A Professional
We believe that it is the process that streamlines and solves so many issues for builders in their businesses. It also works incredibly well for clients, and for designers and architects. It’s not charging for a quote, it’s completely different.
It is, though, a way that builders can stop having to quote for free. Which is something that so many builders out there are doing and spending inordinate amounts of time quoting projects that they don’t get paid for, and, may or may not go on to secure.
What made you decide to stop quoting for free?
Because the PAC process is something that I’ve used in my business as an architect. You had been trialling, working and honing the process for your building business. Then we’ve developed together and now teach inside Live Life Build. What made you decide to stop quoting for free, and to start looking at creating a different process for this?
So, I jumped on the ‘charge for quote’ bandwagon. And I was a big advocate for it. And together with somebody else, I flew to a couple of capital cities and spoke at some hardware stores, and I was really pushing for a quote. I went down that path for probably six or eight months. And then I realised, this is ‘garbage’. This is just going to give the industry another horrible name, because you’re going to get builders charging for a one piece of paper, still providing the same terrible quotes with no information.
And just another reason why people hated our industry. We kept working and working on it, because we thought, well, someone’s going to pay us a fee, to provide what we call proposals. I believe our contractors and suppliers provide us quotes, we provide proposals to our clients. So, the reason the whole PAC process developed was just through that process. It just kept growing and growing, because we felt that we had to deliver something. That we have to give the client value.
It grew and grew and grew to the stage it’s at now where, with my input from a building business, your input from the architectural world, and quite a bit of feedback from clients that you’d had to the PAC Process we have in Live Life Build.
It’s an absolute – (I hate the word), game changer. But it has really streamlined so many areas of our business. The main reason it got to that point where I looked for a solution was because I was just sick and tired of wasting my time.
2. Put A Value on Your Time
We speak a lot about time and how people value it and all those types of things.
And when I looked back, it was because I was in that cycle. I was chasing cash flow, there was no money in the bank. Every and any job that came across my desk, I felt I had to put a figure on it. So, we actually went back and did some numbers on it. And there was one year, the year that we decided to make a change, the previous 12 months before that, we had been involved in quoting or tendering, I think it was 43 jobs. And our biggest year up until then we’d done 13. So when you think about how much time, and look, I’ve always been the type of person that we put a lot of time into our proposals. I believe it’s my responsibility as a builder to put a lot of work into it, a lot of effort and make sure that when I give the client a quote, that’s what the job is going to cost.
So it wasn’t as though I’d quoted 43 all jobs, odd jobs, and there had been an hour or two here and there.
It was literally thousands of hours.
By the time you do your scopes of work, you send it out to contractors, you get the quotes back, and the other thing was it wasn’t even my time at this stage. At this point in time, I had a part time admin lady that was helping me out with quotes. So, it was costing me money. And I just thought enough’s enough.
A big part of the PAC process is educating people, delivering value. And for me, it’s getting rid of the clients that I don’t want to work with or that don’t suit the way that my business is going.
3. Streamline Your Business
One of the really interesting things that builders really underestimate with the benefit of the PAC process is just how much it does actually streamline your business overall. And that ultimately can be the true value in implementing it for you, as a builder. We find that lots of builders really struggle with overcoming that challenge of starting to have these kinds of conversations with clients and changing the way that they do business.
So that this is the way that they work, and to stop doing the quoting for free. I know that I tell clients, look, if a builder is quoting for free, that’s got to be paid for in their business somewhere. It’s not like that’s just magic time that doesn’t get accounted for. And when a builders’ revenue comes from the projects that they do, it actually means that the projects that they do are the ones paying for all of the free quoting that they’re doing for all the jobs they don’t get.
So as a client, would you rather that the builder just charge you for what they’re doing for you, rather than also charge you for all the free work they’re doing for everybody else?
I would love, though, to understand a bit more about how you’ve seen the value in the PAC process through actually streamlining your business.
It’s been incredible. I got to a point where I was sick and tired of wasting my time, taking me away from family, all those things, but it’s affecting the entire industry. If a builder isn’t doing quotes correctly, then they’re also wasting their supplier’s time, contractor’s time. So, the amount of time getting wasted across our industry, by clients that are trying to get to the lowest price is enormous. And like in most building businesses, that time is really just getting sucked up by the director or someone like myself.
That goes through to the contractors as well. We’re taking them away from their families. A lot of these guys are on site during the day, doing the plumbing, doing the electrical, and then doing this work late at night.
But the big one is our suppliers and hardwares and similar businesses. A lot of these companies actually have teams of estimators and probably one of the biggest eye openers for me when we started this process. It started a lot of conversations about what we’re doing.
And one of my hardwares in particular had a conversation with me about how they were only winning at the time, about 13% of the jobs that they were estimating work on. And we’re talking about an estimating team of, I think it at the time was, about six or eight staff here in Australia. They also had overseas estimators working for them. So, you’re literally talking hundreds of thousands of dollars a year for one company that keeps getting wasted because everyone wants to price check things.
So for me, the PAC process has been incredibly valuable. Everybody knows it now.
4. It Builds Better Relationships
We discuss educating, setting expectations, client agreements, subcontract agreements. My suppliers and contractors know my process. So they know that I’m getting paid to quote work. So when I send them plans to quote, they know that I’m 95% certain I’m going to get that job because they know the time the effort I put in, in the early days, so we found we get our quotes returned quicker. We found we have a lot better communication with our suppliers and hardware stores.
It flows on through to the job. We might skip a lot of the really long lead times because they know our process is so thorough, they know that the jobs are going to move forward. So they’ll ring us and say, “Hey, when you expect this job might go to contract? Do you want me to book a spot?”
So the flow on effect from this process has not only been incredibly valuable for my business, it’s been incredibly valuable for my contractors, my suppliers, and the most important one, my clients. My clients know that by paying me to get involved to do all the work that we do through the PAC process, by the time we get a contract, it’s fixed price, we’ve sorted everything out. In the work we do, It generally takes between, two and four revisions of costings.
So everyone puts in that time with me, my contractors revise some things, we revise the scopes of work. So by the time we get to contract, I know exactly what I’m doing, my contractors know what they’re doing, the client knows what they’re getting, and everybody’s on the same page. It’s honestly fantastic.
I can imagine that too, having that opportunity to spend time with the client and the designer, we talk about how that gives you the opportunity to really understand. To build that house in your head over and over and over so that you’re then able to strategically plan what’s going to happen on site well in advance. And then also make sure that you’re accurately pricing everything. Because you look at lines on a page for a drawing, and there are so many assumptions in terms of how that’s gone together.
But if you’re sitting at the table with the designer or architect and hearing,
- ‘What’s the client thinking’?
- ‘What’s the designer or architect thinking?’
- ‘What are the deal breakers for them?’
- What do they mean by what they want for that material?’
It means that you can include all of those conversations and all of the decisions around that, you’ve been able to sit at the table and see all of that roll through in your process.
5. Better Outcomes Through Collaboration
You get the opportunity to pick up any discrepancies such as engineering and design plans. Like you said, probably the most important one is, I get to hear the conversations that clients are having during the design process. So, this is probably the most valuable I believe, it’s actually made me a better builder. I understand design more. I understand why things get done a certain way. But I also do get to hear those conversations that sometimes do slip through.
And I only picked them up because I was at a meeting. And so when I’m pricing something, I’m going through the drawings, I can go well, look sorry, this has been missed here. I can send an email.
Everything is sorted prior to the first day on site.
Back in the day, when we weren’t doing this process, so many times, the first day on site would be variations, because there’d be a discrepancy between drawings and engineering or something that the client thought they were getting had been missed. It’s just when I look back, now, I have to laugh, because I just think, how crazy was I to be in a building business for so many years, and not do this process.
Of course, it was going to go wrong, if that’s what you’re setting up in the process, you can’t expect it to not go wrong when you first hit the site. And this is the thing when you’re doing custom projects, they’re unique every single time. A custom renovation and a custom new build is a one off every single time.
So being involved in the PAC process, spending that time on the design with the client, with the architect or designer, and really understanding what’s special and unique about that project. So that you’re not making mistakes in how you price it and how you consider it before you start building it.
It’s all sorted, everything is sorted.
6. Choose Who You Want to Work With
One last thing to touch on with this process is it also gives you the opportunity to walk away. So again, you get that opportunity to, I guess, suss things out, test the waters before you dive into the contract. And over the last three or four years, we have ended up in situations where we have given people their feedback, and we’ve just said, look, I’m really sorry, but this just isn’t working out for us. And we’ve parted ways and to be in a position where I’ve been able to know that situation before going into contract has just saved me so much heartache.
That’s so true.
If you want to learn more about the PAC process, we have our online course the PAC Challenge. It takes you through step by step how to start actioning the PAC process in your business, and provides you with the tools and templates to be able to do it.
It’s a fantastic, efficient, super simple online course to do. We’ve had loads of builders do the course and find it a successful and really useful way to start considering how to use the PAC process in their business and we’d love to be able to help you out. We really think this is the way to do residential in the future.
In summary, here are our top 6 reasons builders shouldn’t quote:
- You are a professional
- Put a value on your time
- Streamline your business
- It builds better relationships
- Better outcomes through collaboration
- Choose who you want to work with
You can read more about this topic in How to Get Paid as a Builder, and our discussion on Turnover v Profit. If you are a homeowner looking for a PAC trained builder, or you want to see what other builders have joined the Live Life Build Process, you can see our PAC Trained builders here.