To maintain financial stability and success, quoting appropriately in the construction industry is crucial for subcontractors.
However, subcontractors within the construction industry are facing a distressing trend of going broke at an alarming rate. The unstable and volatile nature of the current market primarily causes this unfortunate situation. However, there is a solution to mitigate these risks and ensure a sustainable future for subcontractors.
Win-Win Quoting
A study published in the Journal of Construction Engineering and Management examined negotiable subcontract conditions in Australia and highlighted the need for effective negotiation to achieve mutually beneficial outcomes for both contractors and subcontractors. This research emphasised that appropriate subcontract conditions can alleviate elongated negotiations and lead to win-win results.
Another study pointed out that the construction industry in Australia heavily relies on the subcontracting model, with subcontractors responsible for a significant proportion of construction work. This emphasises the significance of accurate quoting for subcontractors to ensure their financial viability in the market.
How Can We Help You?
Stylequity specialises in managing tenders to contracts, providing subcontractors with the crucial opportunity to price the risk element into their contracts accurately. This strategic approach allows for proper evaluation and allocation of the risk, enabling subcontractors to protect their business interests effectively.
There are 3 areas of focus:
- Clarify the contract terms and conditions as well as the scope of work
It is essential for subcontractors to have a clear understanding of the service terms and conditions outlined in the written agreement. This includes scope of work, timelines and payment terms. A well-defined contract helps establish a strong foundation for the working relationship between the subcontractor and the head contractor. - Foster positive relationships with all stakeholders
Building strong relationships with all stakeholders can be vital for a successful project. Trust and effective communication are key factors in ensuring smooth operations and resolving any issues that may arise during construction. By maintaining positive relationships, subcontractors can enhance their reputation and increase their chances of securing future projects. - Determine a Fair Price
Finding a fair price for the work done is essential for quoting appropriately. The subcontractor should determine the cost of labour, materials, and any resources required to complete the job and calculate the proposed price accordingly. It’s important to ensure that the final quote is both reasonable and considers all aspects associated with the project.
Are you tendering at an 8-10% gross margin?
Consider the significance of this factor when seeking contracts and weighing your options in the market.
Stylequity brings invaluable assistance in terms of contract management and resource schedule management. By utilising our services, subcontractors can secure a winning pipeline that will guarantee their business’s long-term viability and prosperity. Trust us to navigate the challenges and uncertainties of the industry and pave the way for sustained success.
Learn more about Deal Structuring & Negotiation
Sources:
1. https://www.sciencedirect.com/science/article/abs/pii/S0263786321000569
