How Builders Really Price Your Construction

Written By Matthew Carland

“There’s no such thing as a quick estimate.” 

The moment you treat estimating like something you can knock over in a couple of hours, you start making decisions off half-truth numbers, and you push the mess downstream to your trades, your client, and your margin.

Following along from our previous articles around the pre-construction phase of building, we’re tackling the part most builders get wrong. Estimating. This is the part that decides whether the job is viable before you have sunk months into drawings, selections, and back and forth.

Rick Hughes from Estimating Online breaks it down in a way that makes sense. Estimating can be simple or complex, but either way it needs context. Site conditions, access, documentation quality, client expectations, and the type of build all change the number. A renovation in Moonee Ponds is not the same game as a custom architectural home, and neither of those behave like a spec build.

We talk about why builders keep getting burned by shiny tools. Software can produce a bill of quantities fast, but it cannot fix bad inputs. If the person feeding the tool does not understand construction, or does not know what to look for, you get a clean looking estimate that is still wrong.

Rick’s four-step process is the backbone of his estimation process. Step one is the quick gut feel estimate, usually a phone call, based on reference projects and real data. Step two is rapid estimating using software, where you punch in key variables and get a bill of quantities fast. Step three is a detailed bill of quantities where the builder sense-checks quantities, complexity, and rates before anyone goes out to trades. Step four is costing, where the client is committed, documentation is resolved, and you go to trades to lock in real prices.

The big warning is about trade fatigue. Builders keep asking for quotes on jobs that are not verified, and trades get sick of it. They start adding a luxury tax, or they stop quoting properly, because too many of those jobs never go ahead. Rick’s point is that step four is where you earn the right to ask for proper quotes, because it is a real job, not a fishing expedition.

We also get into the awkward truth about estimating styles. Being ultra precise can price you out if the market is full of loose estimates and aggressive numbers. Being too loose can leave you exposed if you sign fixed-price contracts on detailed plans. No single method is right. The right method depends on your business model, build type, and risk tolerance.

Builders need proper tools to make good decisions, and the discipline to review the output instead of outsourcing responsibility. Estimators can support the process, but the builder still has to own the number, because the builder is the one signing the contract and carrying the risk.

LINKS:

Estimating Online:https://estimatingonline.com.au/

Our Sponsors:

Pro Clima - https://mindful-builder.captivate.fm/proclima

MEGT - https://mindful-builder.captivate.fm/megt

Biz Tech Guru: https://www.biztechguru.com.au/


Connect with us on Instagram:@themindfulbuilderpod

Connect with Hamish:

Instagram:  @sanctumhomes

Website:  www.yoursanctum.com.au/

Connect with Matt: 

Instagram: @carlandconstructions

Website: www.carlandconstructions.com/

  • [00:00:00] Hamish: We have been, uh, talking about pre-construction the last few episodes, and obviously- 

    [00:00:05] Matt: Hold on. Our first of our sponsors 

    [00:00:07] Hamish: Ah, ProClimer. ProClimer. Where would we be without ProClimer, Mattie? 

    [00:00:13] Matt: Um, so ProClimer Studio we're recording out of. And again, thanks to Kaya for letting us use his office to record our podcast.

    [00:00:19] Hamish: I told you we were a bit loose, Rick. 

    [00:00:21] Rick: I like it. I like it. I think in the day it's, it's just, it's a conversation, really. This is 

    [00:00:25] Matt: a good- And we've got to introduce the guest, which we 

    [00:00:27] Hamish: always forget to do. Oh, yeah, no, no, but let me get to that first, let me get to that in a second. So, so we- we're, Matt and I have been doing this pre-construction, uh, series, and estimating's probably arguably the biggest part of pre-construction, and probably one of the things that most builders get wrong.

    [00:00:41] So today we've got in, I would say, probably one of the best estimators in Australia, and that is Rick from Estimating Online and- Oh, you're too kind And Bluebeam And Blue... What? Blue Level. Blue Level. Blue Level Estimating. Yes. So Rick, I'm gonna let you introduce yourself because I didn't even, one, know today that you're from [00:01:00] Perth, and two, that you're, like, eight foot tall.

    [00:01:02] I'm 

    [00:01:02] Rick: not 

    [00:01:02] Hamish: eight foot 

    [00:01:04] Matt: tall. I've just shrunk. 

    [00:01:06] Hamish: Well, actually I did compare you next to Matt, which actually made you look- That's not fair ... like a fucking giant. Fucking 

    [00:01:10] Matt: short jokes, as if I haven't heard that one before. 

    [00:01:12] Rick: Well, I mean, yes, my name's Rick Hughes. I have a company called Estimating Online, and yes, I am quite tall.

    [00:01:18] I think most people see me through the camera. 

    [00:01:20] Matt: Yes. 

    [00:01:20] Rick: So I'm either sitting down or I've got the perfect angle so it just gets my face and you don't see who I am. Well, you're not sitting there with a 

    [00:01:27] Matt: tape measure next to you on the, behind me. No. Like, "That's how tall I am." 

    [00:01:30] Rick: Well, I don't, yeah, I don't have the, the graph.

    [00:01:32] I mean, sorry, the, uh- The giraffe ... the gir- ... the giraffe chart with centimeters next to me. That's not something that I wanna brag about. But, um, look, I think just touching on your topic of estimating, I think estimating is critical. I think a lot of people are starting to take more notice about it. Um, and to be honest, it's more important than people think.

    [00:01:51] Matt: So where do we all go wrong with it? Because it's something I... So how I learned to estimate is I broke my arm when I was an apprentice. My boss just threw me in the office, [00:02:00] and they were like, "Here, here's a ruler. Start using the plans." And I'm like, "You can use computers here." And so from there I actually just learned, and they're like, "Well, you can do it faster."

    [00:02:07] But I just learned off their mistakes. How did you learn? 

    [00:02:10] Hamish: I, I just work out how many square meters were and just put a square meter out to it. 

    [00:02:14] Matt: And so we're not taught, and I think this is a big thing 

    [00:02:16] Hamish: because- That was a, that was a joke, Rick. 

    [00:02:17] Rick: Yeah. 

    [00:02:18] Hamish: No, no. 

    [00:02:19] Rick: That 

    [00:02:19] Hamish: was a joke. No, no, 

    [00:02:19] Rick: I actually- That was a joke. No, I've got a story- But that's how-

    [00:02:20] that's related to that, and I hope I can, I can share, so. 

    [00:02:25] Hamish: Yep. 

    [00:02:25] Matt: Yeah. So where do we go wrong? 

    [00:02:26] Hamish: Sh- share, share as much as you want. I feel like, um, estimating's such a big topic and, like, there is so much noise about estimating right now. Mm-hmm. Like, and I'm sure we're gonna get to AI, I'm sure we're gonna get to modeling, I'm sure we're gonna get to all of it today, but I think that in this current environment where there's all these shiny distractions, like, what are the things that we really need to take notice of when we're estimating?

    [00:02:50] Because everyone, the, the, i- in my opinion, even these AI stuff and the model stuff, there's still a huge amount of work that needs to go in from the builder's side to make sure that [00:03:00] that data's right. 'Cause shit data in is shit data out 

    [00:03:03] Rick: I mean, first of all, there are so many different pathways you can go down with estimating.

    [00:03:07] Um, and it is super confusing, it is over-analytical, there is a bunch load of information, and you gotta process it. And you gotta forward think, you gotta think backwards, you gotta think right now, you gotta think left, you gotta think right, you gotta think- And 

    [00:03:24] Hamish: context too is really important as well. 

    [00:03:26] Rick: Yeah.

    [00:03:26] Yeah. Yeah, I agree. Um- 

    [00:03:28] Matt: Do you need to know how to build to estimate? 

    [00:03:32] Rick: Well, I'm proof that you don't need to know how to build. 

    [00:03:34] Matt: Okay. 

    [00:03:35] Rick: Okay. So I, I'm pretty open and honest about this story. I spent probably half a day on site in my whole career of the building industry. I was a brickie, and- 

    [00:03:47] Hamish: For half a day?

    [00:03:48] Rick: Half a day. 'Cause I got kicked off site. 

    [00:03:49] Hamish: Okay. 

    [00:03:50] Matt: What did you do? 

    [00:03:53] Rick: For a brickie to kick you off site, it's gotta 

    [00:03:54] Hamish: be something 

    [00:03:54] Rick: pretty bad. Well... He 

    [00:03:57] Hamish: put- D- d- hang on. I, I reckon I know what's happened. He came with a [00:04:00] packed lunch, and it was healthy and had salad in it. Oh. 

    [00:04:03] Rick: He was just like, "

    [00:04:03] Hamish: Get off." Hell no. "

    [00:04:04] Rick: Get off."

    [00:04:04] I was the tall, skinny guy who could eat whatever I like. Um, not, not, not now. Um, this guy puts a... Well, the, the owner puts a heap of bricks in the wheelbarrow. I pick it up, move forward, it tips over, he kicks me off site. I was just a little lanky, weak sort of dude, and... And that's, that's all my site experience is.

    [00:04:22] But that doesn't mean I think that I don't understand construction. Yeah. So my whole journey is, is I've spent my entire career in the office. 

    [00:04:31] Matt: Yeah. Okay. 

    [00:04:32] Rick: So working alongside the construction manager, building manager, project manager, estimating manager, contracts manager, managing director, whoever be, just basically learning the aesthetics of business, and learning and reading engineering drawings, and architectural drawings, and all different types- Were 

    [00:04:51] Matt: you project manager or construction manager, or it was actually always the estimation side?

    [00:04:55] Rick: Yep. 

    [00:04:55] Matt: Okay. 

    [00:04:56] Rick: Always estimating, scheduling, counting bricks, [00:05:00] linears of skirting. 

    [00:05:01] Matt: Yep. 

    [00:05:01] Rick: You know, from start to finish. 

    [00:05:04] Hamish: Tertiary educated, uh? 

    [00:05:05] Rick: No. 

    [00:05:06] Hamish: No. 

    [00:05:07] Rick: I... I'm pretty proud about this story, to be honest. I had to have my girlfriend in year 12 write my English essay for me to pass school. 

    [00:05:17] Hamish: Right. 

    [00:05:18] Rick: And I really do believe that I'm a product of hard work and determination because I was such a failure.

    [00:05:26] Matt: It's probably such a common thing within- 

    [00:05:27] Hamish: Can I, can I maybe unpack that a little bit? Like, what... So was there dyslexia? I'm not saying that's a deficiency at all, 'cause I actually think that... So I'm neurodiverse. I'm sure you are. I'm sure you are as well. Like, I like to see all of these as, like, absolute superpowers, and I think if you look at, um...

    [00:05:45] Well, I, I'm not gonna name names, but I know someone who's dyslexic, autistic, and ADHD, and he is fucking kicking arse- Yeah. I think- ... 'cause he sees the world 

    [00:05:53] Rick: differently ... well, show me a business owner that doesn't have, you know- Some sort ... some- something next to 

    [00:05:57] Hamish: it. 

    [00:05:57] Rick: Yeah, yeah. You 

    [00:05:58] Hamish: know, I think that if he- Crazy.

    [00:05:58] So it wasn't a criticism. I wasn't- [00:06:00] 

    [00:06:00] Rick: No, no, no. I get it. I know ... I wasn't saying... I wouldn't have said it. Yeah. Yeah. I honestly... Look, I've never been diagnosed or I've never been- Yeah, we, 

    [00:06:06] Matt: we just know by, by oursel- yeah. 

    [00:06:07] Rick: You just know- Yeah ... that there's something not right with Brett. You know? Well, there's 

    [00:06:10] Matt: something different- Th- 

    [00:06:11] Rick: th- the-

    [00:06:11] I 

    [00:06:11] Matt: think, with all of us. Yeah. But sure. 

    [00:06:13] Rick: Well, I think you have to be different. Yeah. Um, to be honest, I mean, I think my journey is, is an interesting one because I failed at school. Yep. I couldn't concentrate. All is what I wanted to do was play sport. 

    [00:06:26] Matt: Yeah. Okay. 

    [00:06:27] Rick: My choice was baseball. Um, and then in my 20s I sort of, I had a talent, but I didn't use it.

    [00:06:35] So I was very good at baseball. Yeah. 

    [00:06:37] Matt: Yeah. 

    [00:06:37] Rick: Um, and I just wanted to party and enjoy myself and be with my friends and, and drink beer and, you know, do the whole nightclub and girls thing. And there was just a light bulb moment where, you know, I said, "I've got to stop wasting my career, and, and you got to put your head down and you got to do it."

    [00:06:54] And I think that that's a lot about business as well. You've just got to put your head down and do it. Now, whether that's [00:07:00] estimating or that's learning how to be a builder or- 

    [00:07:03] Matt: Picking flowers ... 

    [00:07:04] Rick: picking flowers or whatever you want to do, y- you got to concentrate and you got to do it, so. 

    [00:07:08] Matt: So you, so you, so did your learning time to understand construction, then you opened your own business?

    [00:07:14] Like, did you- Yeah ... did you, like most of us, go into it pretty early on, like, kind of fake it till you make it? Because that's what I did. 

    [00:07:22] Rick: Yes, there was a point of fake it till you make it. Yeah, yeah. I think everyone's got a story of- 

    [00:07:26] Matt: Yeah, yeah ... fake 

    [00:07:26] Rick: it till you make it. 

    [00:07:27] Matt: Yeah. 

    [00:07:28] Hamish: I'm still faking it. 

    [00:07:30] Rick: Nah, come on.

    [00:07:30] Be honest. 

    [00:07:31] Matt: No, I'm- No, but, but we are, though. We are, though ... no, in some 

    [00:07:33] Hamish: things. 

    [00:07:33] Matt: Yeah, 100% we are. In some things, for sure. Like, yeah, y- yeah, definitely. I, like, my first passive house, I had no fucking idea what I was doing. 

    [00:07:40] Hamish: But fake, fake it till you make it, failing forward, same thing, right? Yeah, yeah. There's things that there's always this progression of the unknown.

    [00:07:46] Yeah, true. What, what's that next step? All right, well, I'm just gonna try something and hope it works. So I mean, I... Your story is not too dissimilar to any other entrepreneur out there. 

    [00:07:54] Rick: Correct. 

    [00:07:54] Hamish: Yeah. Okay, cool. So then as far as, like, estimating goes, you've [00:08:00] obviously been in the game for a long time by the sounds of things.

    [00:08:02] So can I ask, like, over your career as being an estimator, h- h- uh, have the fundamentals s- remain true, or has it changed and evolved as different building methodologies have come in, code changes and all that stuff, or are the fundamentals still the same? 

    [00:08:20] Rick: I think the basics of estimating are still the same.

    [00:08:24] I started 2007, and I think there's still some core fundamentals of doing an estimate which is exactly the same. 

    [00:08:33] Hamish: Can you maybe, can you maybe expand on that just a little bit? Like running a linear meter or running a square meter 

    [00:08:37] Rick: or- Well, we all know about, you know, the quick rapid fire estimate. You know?

    [00:08:41] Yeah. You, you, you dump some information into either a spreadsheet or a digital platform, or you, you pull an old square meter rate. But you could also go into such a deeper element of estimating as well, and I think, um, [00:09:00] there's, there's, there's pieces of estimating that you can go really technical, you can go really easy, but it all comes down to what you're trying to achieve.

    [00:09:10] I think I might have confused my words a little bit there, but it's, it's can be really complex or it can be really easy. A lot of people overthink estimating, but then a lot of people just under-think it and don't- I 

    [00:09:22] Matt: was gonna say, I think people under- ... go deeper into it ... so I think people under- the under-think it because they just wanna...

    [00:09:28] So there's a number of things. They either wanna please the client's budget straight off because- Oh ... because it's like... And I saw something the other day, like, and I constantly say this to everyone, "Your, your budget is your build cost." That's what it costs, like, what it costs to build is what was designed And, have I word that right?

    [00:09:44] But, and so people just wanna get there as fast as possible. They'll try please a client to be within their budget. They'll miss a number of things. You've got an architect putting pressure, be like, "Well, this person charged this. Why isn't it this?" And then all of a sudden, th- people don't know how to put it together.

    [00:09:59] Hamish: So I, [00:10:00] I'm just gonna... I, I agree with this, but I also, can I go back to one of the things you were saying before about, like, the, the really quick stuff and- Yep ... the more detailed stuff. Yep. And I actually think it all has its place because- Correct. 

    [00:10:10] Matt: Yeah ... 

    [00:10:10] Hamish: you know, the, the quick stuff, i- like, in my, in my opinion- Yeah

    [00:10:14] there's three types of estimating. Well, there's three tiers of estimating that we do within our business, right? Makes sense, yep. There's that really quick feasibility estimating. Yep. And it is getting a bunch of data, putting it into a model or doing square meterage, and just testing the budget. Yep. And it's a range.

    [00:10:29] Rick: Yep. 

    [00:10:30] Hamish: This is where the industry's kinda benchmarking it. Do you feel comfortable with that to take the next step? 

    [00:10:34] Matt: And prior to COVID, a square meter rate was semi, not accurate, but, like, it was a lot easier to be- I think it was accurate 

    [00:10:39] Hamish: enough ... 

    [00:10:40] Matt: it was, it would work because you look at the ABS data and it was 1 or 2 point per year going up.

    [00:10:44] There was a lot, there was a lot more consistency prior to COVID. Yeah. You knew it was 1% going up per year, like- Yeah, yeah, yeah ... and so you knew kind of it would work, like roughly. You could gauge. Now, you just don't fucking know. But I, I agree with you. So I'm the same- I 

    [00:10:55] Hamish: think there's, there's, there's a, there's a sense checking, um, I'm not even gonna call it an estimate.

    [00:10:59] Well, [00:11:00] maybe it is the true word of an estimate because we're just, "Well, this is where we think it's gonna be, in this range." Actually a 

    [00:11:04] Matt: really good way of putting it. 

    [00:11:05] Hamish: The next one is more a detailed costing, whereas I'm separating the terms estimating and costing, 'cause I think the second one, you're actually going through and doing the legwork.

    [00:11:15] Mm. You're, you're going to trades, you're getting a model done or you're doing your 

    [00:11:19] Rick: takeoffs. I don't think that's, I think that's step number three. Okay. So maybe there's four steps 

    [00:11:22] Hamish: to it. Yeah, yeah. Yeah, okay. Well- 

    [00:11:23] Matt: Well, how would you 

    [00:11:24] Rick: think it 

    [00:11:24] Matt: looks? 

    [00:11:24] Hamish: Well, yeah, I- I'm interested to see what youse do. 

    [00:11:25] Rick: Well, I think with technology that's available, there's no such thing as a quick estimate.

    [00:11:32] A quick estimate now is more like a detailed bill of quantities. 

    [00:11:36] Hamish: Yep. 

    [00:11:37] Rick: Because of what's available- 

    [00:11:38] Hamish: Yep ... 

    [00:11:39] Rick: with software platforms, it's so easy to create a full detailed bill of quantities. 

    [00:11:45] Hamish: Yep. 

    [00:11:46] Rick: For example, we can see a specific platform out there where you can punch some data into a system and it gives you a 10-page estimate- 

    [00:11:53] Hamish: Yep

    [00:11:54] Rick: within, what, 20 minutes. 

    [00:11:55] Hamish: So you, the, the one that you do, 'cause I wanna talk about what, what you're doing. Yeah. 'Cause you, you have a, [00:12:00] a similar one where you can put in a certain data, square meterages and stuff like that. Estimating online. Yes, which is estimating online. Which I've used too. Sorry, 

    [00:12:06] Matt: you now.

    [00:12:07] Hamish: And it, and it actually gives you a huge amount of information. 

    [00:12:11] Rick: Well, you gotta- It 

    [00:12:12] Matt: gives you the right information ... 

    [00:12:14] Rick: you gotta understand what estimating is, and there's so many different ways to do estimating. Like, for example, there's a technique where you can say, "What's the size of your laundry?" So if you have a five square meter laundry, you don't have 15 meters of cabinets in your laundry.

    [00:12:30] So you can create preset buttons that have a list of bill of quantities when you press that one button. Now, you could do that in Microsoft Excel if you want to. Like for example, you can go, um, H1 equal... If, if H1 equals one, then this equals yes, and then that equals- This, yeah ... what goes into a spreadsheet.

    [00:12:49] So you just got to be a little bit of a nerd with- Yeah ... Excel. And that's what was, you know, probably prior to 2023. But there's so many different ways you [00:13:00] can skin a cat. Yeah. 

    [00:13:00] Matt: So I think, I think what I want to go back to firstly- 

    [00:13:03] Hamish: S- c- sorry, can I, I just want to close out one more thing before. Yeah. 'Cause you said, um, when I said I'm going out to trade in that second costing- Yep

    [00:13:09] you, you were saying that maybe not, not 

    [00:13:12] Rick: necessarily. Well, I believe, I mean, everyone's got their own strategy with estimating. Everyone has their own process, and I think that's what the best part about business is. Because there's no right way to do estimating. There's no wa- no right way to run a business.

    [00:13:24] Hey, I'm a product who, like I said at the start of this conversation, my girlfriend Passed me through school 

    [00:13:32] Matt: Yeah 

    [00:13:32] Rick: There's no, there's no right and wrong way 

    [00:13:33] Matt: And some people will just do one estimation and it's the final 

    [00:13:37] Rick: Yeah. Well... 

    [00:13:39] Matt: That, that, but the thing is, like, we, yeah, I've got three, you're saying four.

    [00:13:42] Some people are like f- four. 

    [00:13:43] Rick: All right, so I'll give you, I'll give you my four. 

    [00:13:45] Hamish: Yeah, great, yeah. 

    [00:13:46] Matt: Yeah. 

    [00:13:46] Hamish: Very keen. 

    [00:13:47] Rick: You've got the number one being the quick rundown sort of estimate. Yeah, give me square meter rates. 

    [00:13:53] Hamish: Feasibility, whatever 

    [00:13:54] Matt: it might be. Blah, blah, blah. That's the phone call conversation. Yeah.

    [00:13:56] That's the, "Hey, I've got this, what do you think?" "Ah, I think 1.2." 

    [00:13:58] Rick: Yeah, okay. But that's [00:14:00] also based off some reasonable data. So you don't just pluck that number out of the air. Estimation number two, and I think this is what's coming available in the industry at the moment, which is that rapid tool estimating platform.

    [00:14:15] Yeah. Now, whether that is through a software, that, whether that's through, um, AI or however it is, that is still producing a bill of quantities. 

    [00:14:25] Hamish: Mm. Hey, Mattie, I've been talking to a few people recently and they're like, "You know what? You've been building with a Pro- Proclima for years. Like, how do we get to where you are?"

    [00:14:34] Matt: So we all started at level zero at one point, and we got there. But one of the things that Proclima have on their website is they have a library of so many details, from wall to roof to subfloor to window assemblies, for multiple different windows, on how to use their product and install it correctly, and is one of the, the best resources that you can find online to learn how to do this.

    [00:14:54] And if you're an architect and you're not sure how to draw something, they've probably got the answer already. 

    [00:14:57] Hamish: And I think about, you know, 2018, [00:15:00] 2019, when we f- we, we first started getting into this, we had to trawl through all kinds of different documents. We had 

    [00:15:06] Matt: to make it up. 

    [00:15:06] Hamish: We, we, we had to make it up.

    [00:15:08] It's all there for 

    [00:15:09] Matt: you. Yeah, the answers are free now. And social media's great, there's so many awesome videos and content out there, but the ultimate source of truth is the Proclima website. They have every single detail that you can imagine. And you know what? If they don't have it, you can email them and they'll help you solve it.

    [00:15:23] Hamish: Damn 

    [00:15:23] Matt: right. So use Proclima, proclima.com.au if you need to reach out to them

    [00:15:31] So with that there, is that for the builder? Is it for the client? Is it for the architect? Like, who should be doing that stage? 

    [00:15:36] Rick: That's, that's a builder. 

    [00:15:36] Matt: Yeah, okay. Yeah. Because 

    [00:15:37] Rick: there's no- Hang on. If you wanna go deeper, that is technically for anyone. 

    [00:15:41] Matt: Yeah, no, that's why I asked the question because, like- It's anyone

    [00:15:43] this, c- who should be doing the estimations? This is the other part. 

    [00:15:46] Hamish: But, but, but I think you're gonna agree with this comment. Let's just say you're putting it into an AI tool. It still requires someone to sense check the data that's coming out. Oh, you don't wanna go down the AI 

    [00:15:57] Rick: path. 

    [00:15:57] Hamish: But, uh, all I'm saying is [00:16:00] let's hypothetically if you did, like I don't...

    [00:16:01] I think it's dangerous for someone without the knowledge that we have as builders to just accept the numbers that are coming out. 

    [00:16:08] Matt: And this is why I asked the question originally, h- like, what knowledge do you have? And it's the, the person putting in the information is super important. Because if I go, if I put it in who I s- my job and my r- my business right now is estimator.

    [00:16:19] If I go give it to Kayla, who's my contract admin, we're gonna get very different numbers. 

    [00:16:24] Rick: Mm. Well, I could have th- well, I have had three different estimators in my company, and you will get three different prices. 

    [00:16:31] Matt: Yeah. Okay. All 

    [00:16:32] Rick: right, so go back to topic number two, so estimate number two. That's, that's a bill of quantities based on some variables.

    [00:16:38] For example, like that, pressing that button of what size is your laundry, and then that produces a bill of quantities. And then I believe estimate number three is where I think external estimators come into play for this situation. 

    [00:16:50] Matt: Yeah. 

    [00:16:50] Rick: They are preparing a detailed bill of quantities where you see the linear meters of the skirting, you see the cubic meters of the slab.

    [00:16:59] You know, [00:17:00] you see how many taps, how many ovens, all that sort of stuff, and then the builder needs to do their thorough process of checking those quantities. You're not going to the trades and suppliers, I don't believe, at this point of step number three, because you wanna confirm that they can build that price.

    [00:17:15] They can build... Sorry, the homeowner can pay that 1.1 or, you know, 2.6. 

    [00:17:19] Matt: Shouldn't that have been the stage before, though, with that, that... So just so I got this right, your stage two would be what I would use as estimating online right now? 

    [00:17:27] Rick: Yep. 

    [00:17:27] Matt: Okay. 100%. Shouldn't that be at that point? Yes, like to me, I use your estimating online is, client comes to me, go on to an architect, we have a design, and I go, "Their budget's 1.2."

    [00:17:39] I kind of don't care. I don't need to ask the client anymore what their budget is, because I can put it into your tool and I go, "Hey, this, this plan that has been designed for you come in between 1.5 and 1.75. Can you afford it? Yes. No." It's, to me, it's as basic and simple as that, because if you can't afford that range, and I'll always say, "Go the home-" 

    [00:17:58] Rick: That's conversation number one.

    [00:17:59] Hamish: Yeah. So [00:18:00] I, I've just written this down and, and I think, I think what you're saying is almost rings true to how we do it except for this step three. But I- 

    [00:18:07] Rick: There's 

    [00:18:07] Hamish: a 

    [00:18:07] Rick: kicker on step three that I haven't explained. 

    [00:18:09] Hamish: Yeah. Yeah, that's why I was- So just, just, just before we get that summary, so estimating one is like a phone call.

    [00:18:13] It's kind of a gut feel. 

    [00:18:14] Rick: Yeah. Yeah, yeah. That, that- You're referencing a price. That- 

    [00:18:16] Hamish: Ma- meter squared ... that is an estimate. Yeah. That's, yeah. So I, I, for example, I had a phone call yesterday saying 160 square meters worth of livable space. They've got a budget. He's like, "I really wanna spend under a million."

    [00:18:25] Oh, no. I'm like, "Well, it's 1.1." 

    [00:18:26] Matt: Yeah. 

    [00:18:27] Hamish: I'm telling you now, without even looking at it, it's 1.1. Yep. And I know this because I've been doing this for the past 20 years. 

    [00:18:33] Matt: You're using reference projects. Yeah. So, so at that point I'm using, if you want that, this is the closest thing we have. 

    [00:18:38] Hamish: Yeah. Estimating two, rapid s- software, whatever you wanna do in that one.

    [00:18:42] Correct. E- estimate three is more the detailed bill of quantity. Correct. So I'll let you keep going. 

    [00:18:46] Rick: So I don't believe we should be going to our trades and suppliers at step number three. Now, I think this is a big problem that's been happening for four, five years. 

    [00:18:59] Hamish: Yeah. 

    [00:18:59] Rick: [00:19:00] Step number three, where we're not giving a client a detailed price, but we're asking all our trades to quote it.

    [00:19:09] Hamish: Mm-hmm. 

    [00:19:09] Rick: Okay? So put yourself in your shoe, in, in, in a position if you're the concreter I haven't got a verified budget from a client, but can you give me a quote? 

    [00:19:21] Matt: But I've given you a concept plan of engineering 

    [00:19:26] Rick: Okay. Now let's go back another step. Over the past three, four months, this concrete has quoted six or seven jobs that never have gone ahead What happens if the concreter received an email saying, "Please provide a quote," but this is a verified budget and it's a project ready to go?

    [00:19:47] That's what I believe step number four is. 

    [00:19:48] Hamish: Okay, so, so there's more motivation for... You're not, you're not... Yeah, I understand what you're saying. 

    [00:19:53] Rick: We want the concreter to quote a real job. Yeah. We don't want the concreter just to quote it because we're trying to get to a budget. 

    [00:19:59] Matt: Yes. [00:20:00] I, so I, I, yeah, I'm not trying to hit a budget.

    [00:20:02] Yeah. What, for me, is I'm going, "Hey, we've got enough information here. Can you give me..." I love what you call, like, ironically, this is still es- we call estimating. This is an estimation, so I'll be like- Yeah ... "Hey, here's everything we have. It's enough information to get pretty accurate," 'cause my stage four is like, can you just refine it now off the final set?

    [00:20:18] That's correct. Could I, I mean- So you've already done the bu- you've done the legwork That's correct. Is, your price should 

    [00:20:22] Rick: be 

    [00:20:22] Matt: somewhere. 

    [00:20:22] Rick: So, you know, so when I was doing estimating in, in the early stages, we would call that a pre-construction agreement. 

    [00:20:28] Matt: Yeah. That, that's actually- '

    [00:20:29] Hamish: Cause, 'cause I was, I was just about to wrap a little bit more context around these stages.

    [00:20:34] Yep. At stage one, estimating one, like, we haven't been signed up in ACI. It's really, there's a phone call. Yeah, it's just a 

    [00:20:41] Rick: pho- it's conversation. 

    [00:20:42] Hamish: Est- estimating two, this rapid tool thing, there's engagement. 

    [00:20:46] Rick: That's correct. 

    [00:20:46] Hamish: Yep, so there's engagement with me. I'll be 

    [00:20:47] Rick: close. 

    [00:20:48] Hamish: Yeah. Yeah. Or there's engagement with the client.

    [00:20:49] I need some real data, yeah. Some, well, but there's also money that's being exchanged between me and the client as well. 

    [00:20:54] Rick: Uh, I don't believe that should happen because I think that 

    [00:20:58] Hamish: there's- Oh, don't say, don't say, don't say that too loudly 

    [00:20:59] Rick: because there's some managers. No, no, no, I [00:21:00] will, I'll say it at step number three 'cause that's step number three.

    [00:21:02] No, so, so, 

    [00:21:02] Matt: so step number two, I definitely should be charging for your estimating 

    [00:21:05] Rick: online. Yeah, but this is what my buzz is. There are tools out there that can do step number two really, really quick. 

    [00:21:14] Hamish: Yep. I agree with you. 

    [00:21:15] Matt: Yeah, I know, but, like, I've still gotta pay for your program. I've still got an hour meeting with the client.

    [00:21:19] I'm still reviewing the plans. There's still four or five hours of my time. 

    [00:21:23] Hamish: Just to put a bit of more context around it, step number two, I'm 

    [00:21:26] Rick: charging- If you're spending four or five hours on a little quick, quick price, you, you're, you're using the wrong tool. 

    [00:21:32] Matt: But they're pretty refined by... Okay, it's also hard because the projects I'm getting are still pretty refined by that point.

    [00:21:37] Then I'm not getting a, a hand-drawn set of plans. 

    [00:21:42] Rick: Yeah, but also let's, let's just... I'd like, I've always wanted to raise this conversation. When we're talking about estimating, we're not always talking about the most high-level detailed house. And- It's a, it's a broad construction conversation. 

    [00:21:55] Matt: And, and, and, well, there's also, there's new builds, there's, like, the volume spec, there's the, [00:22:00] the duplex townhouses.

    [00:22:01] That's correct. There's als- there's also then the renovations, which are a whole different ballgame themselves. So I 

    [00:22:04] Rick: understand, I understand your game- Yeah, yeah ... because your plans are different. 

    [00:22:07] Matt: Yeah, yeah. 

    [00:22:07] Rick: The way you operate versus the way someone else operates builds and all that stuff, they're all different process.

    [00:22:11] Yeah. That's why there's no one unit plan. 

    [00:22:13] Matt: And this is what I'm starting to learn because, like, you have a spec home. It's like they just need the allowance for the j- for the joinery, and you have this allowance. Pick, build within that. Pick, your selections- Yeah ... have to be within that. 

    [00:22:23] Rick: Yep, and with, like, a spec home, there's project builders out there who are building, you know- Yeah

    [00:22:28] sort of spec homes. Yeah. And, and their step number two estimate is using data and, and preset buttons and preset calculations to get to what is a bill of quantities. It's not perfect. 

    [00:22:41] Matt: No. 

    [00:22:41] Rick: But it's giving me a better visual process, and that's what I'm trying to say is just like there's tools out there that can do that really quick.

    [00:22:50] However, if you go to your style of houses, you know, the, the Carlin special, um, you can't just do a quick slap together estimate, 'cause that doesn't work. [00:23:00] 

    [00:23:00] Matt: And the reason I say that is that, 'cause why if we don't charge it, what's the client going, "Here's a new design." Okay. "Here's a new design." Yeah. "Here's a new design."

    [00:23:05] That's- And it's like, well, when do I stop? 

    [00:23:06] Rick: That's correct, and that's where you got to understand what game you're sitting in. Mm. Step number two, you might charge. 

    [00:23:13] Matt: Yep. 

    [00:23:13] Rick: But step number two, another builder's like, "I don't need to." They will do that step number three. We got some builders out there who's not even charging at step number three.

    [00:23:20] Man. I agree with charging for estimates. 

    [00:23:22] Matt: Yep. It's so much time. 

    [00:23:25] Rick: Oh, 

    [00:23:25] Matt: yeah. And, and, and we'll get to that on how estimation works in a second, because- ... I've learned, having a few conversations with you recently, and trying to wrap my head around how it actually works, because it's, um, well, they alway- I used to get told was it's a, it's a, it's an art.

    [00:23:39] It's a, it's a, it's a f- it's a, it is a big art estimating. 

    [00:23:42] Rick: Strategies. 

    [00:23:44] Matt: Yeah, but you, you're looking at so many different... You, you have to forecast it, and the issue that we have specifically in Victoria is you get it wrong, or the contractors, you miss out on that money. 

    [00:23:55] Rick: Yep. 

    [00:23:56] Matt: Like, you, it's not like I can go to the client and 'cause I missed something and go, "Hey, I missed that."

    [00:23:59] [00:24:00] We, you just don't. That's not how this works, and that's why these e- these estimates have to be fucking dialled in. 

    [00:24:05] Rick: Yep, correct. 

    [00:24:06] Hamish: So let's, let's close out e- estimate three, so then we can go to estimate four. So, so we've got detailed bill of quantities, but, but in, but in your opinion, we're not gonna trade at this point in time.

    [00:24:16] Rick: Correct. Uh- Because, I mean, what we've built- 

    [00:24:19] Hamish: Yeah ... I 

    [00:24:19] Rick: don't, I don't wanna specifically, like, brag on estimating online this, that, and the third. No, I think you can. No, no, you- No, I don't ... that's the, that's- That's just not my style. Yeah. What I believe is a builder should have tools so they can make good decisions.

    [00:24:30] Matt: Yep. 

    [00:24:31] Rick: Okay? So you have a detailed bill of quantities that tells you the excavation cubic meters of the footing. Yeah. The, the, the concrete that's gotta go in the footing, the reinforcement, the labor, the concrete pump, right? You should be able to reference back on your history, and referring to the site, to understand that, hey, I can't put a standard rate to pour footings on this job.

    [00:24:56] Yeah. So I have to increase my price, because that's what my concrete is gonna [00:25:00] do. 

    [00:25:00] Matt: Yeah. 

    [00:25:00] Rick: It's like when you go to pour a job in Richmond or Hawthorne, but the concreter lives down in Mornington. 

    [00:25:07] Matt: Or you got a council that won't let you do certain things in a certain way. 

    [00:25:09] Rick: That's correct. So you gotta increase your rates.

    [00:25:12] Matt: Yeah. 

    [00:25:13] Rick: And that's what I'm trying to say with step number three is, is like, assess the site, assess the project, assess the client, assess the documentation. 

    [00:25:23] Matt: But that, isn't that on, for me, I'll kick back here, 'cause if I send this to, say, for example, my roofer, he can start to look at the box gutters. He can go, "Hey, that's not gonna work."

    [00:25:32] You, you get the flat, you're getting their expertise on the project too by looking at it, rather than, uh, you, you're looking at it from... 'Cause they'll look at it at a very blinkers on, "I'm only looking at my roofing." 

    [00:25:42] Rick: Okay, so then what's a builder? 

    [00:25:45] Matt: We're, we're, we're potentially the, the puppet that pulls all the strings.

    [00:25:49] We're the, we're the people that manage it. But 

    [00:25:51] Rick: isn't the homeowner investing in the builder because they know- Yeah ... that the builder can deliver? 

    [00:25:56] Matt: Yeah, and but up, but for me it's the, um, I like to be the dumbest guy at the table. I will [00:26:00] put people around me who are better at what they know, so I... But I know enough to ask very good con- I 

    [00:26:04] Hamish: can, 

    [00:26:04] Matt: I can- 

    [00:26:04] Rick: Okay, so- I can, I can- 

    [00:26:06] Matt: I get what you're saying.

    [00:26:06] Rick: I, I, I- Yeah, but who am I... Like, when I buy a house from you, sorry, Hamish. Yeah, no it's all right. When I buy a house for you, why don't I have a list of all who your trades are so I know who I'm investing in? If you want 1.6, $1.9 million on me, I'm investing in you. I'm not investing in- 

    [00:26:20] Matt: Because we have knowledge, and the thing is if I was to give you my list of trades, you can just go to Owner Builder and go to all my trades.

    [00:26:25] Rick: Oh, look, if, if your trades are silly to allow that to happen. 

    [00:26:29] Hamish: Yeah, I don't, I don't think- 

    [00:26:30] Matt: No, no, no, we don't, but like it's also- I don't, I don't think you handle this well ... there's also, there's also n- that we know, and I, what I say to sort of, this is sort of external to this conversation, so I don't refer, I don't...

    [00:26:40] Like, when I have a friend go, "I need a plumber," I might also love my plumber Cam, I'm not gonna give him the number to my friend because at the end of the day, I work with Cam well, I know how Cam functions, I know how his team function, 

    [00:26:52] Rick: he knows how- So who's the, let's go back to this one then. Who's the client investing in?

    [00:26:55] Matt: They're investing in- The builder ... the 

    [00:26:57] Rick: builder. So the builder should understand the process, right? [00:27:00] And they're the best person who 

    [00:27:01] Hamish: knows about it. Do, and, and this, I, I think this is a really good conversation- It's a good question ... by the way, 'cause I think it's, I think it, everyone's getting challenged, and I actually think there's things that are rolling around in my brain right now with how we do things that may change after this conversation.

    [00:27:11] So I'm really enjoying this. Which is, which is good. But I, I think that at step three, and again, this is absolutely my opinion. 

    [00:27:17] Rick: Yeah, 

    [00:27:17] Hamish: yeah. Whether or not we go out to trades to quote or whether or not we just get on the phone with them and have a conversation and say, "Hey"- 

    [00:27:26] Rick: I think a conversation is good

    [00:27:27] Hamish: this is where, like roof plumbing for example, "Hey, you know, based off our last four projects together, your square meter rate is X." 

    [00:27:33] Rick: Yep. 

    [00:27:33] Hamish: You know, I'm gonna lead in with a provisional sum of $40,000 to reroof this. Good. Yep. Does that feel right for you? 

    [00:27:40] Rick: That's cor- That is 100% correct. Yeah. 'Cause what you're actually doing is you're diving into what they feel the complexity of the project is.

    [00:27:48] Hamish: Yeah. 

    [00:27:49] Rick: You know, you're not asking them to commit to a price because we wanna go back to the client and say, "Hey, I've done some firm numbers. I've done some research. We're sitting at [00:28:00] 1.7." And that's what I believe would be like a pre-construction cost agreement. 

    [00:28:03] Hamish: Yeah. 

    [00:28:04] Matt: Should that number be a fixed number?

    [00:28:05] Because, like, the s- button, range, uh, estimate two is a range. 

    [00:28:08] Rick: It's a, it's a fixed number. Yeah. Like, I would be saying to you, "Matt, if you want me to build your property, you know, we're going 1.257." 

    [00:28:15] Matt: Yeah. 

    [00:28:15] Rick: Then I'm gonna say, "But- 

    [00:28:17] Matt: Yeah ... 

    [00:28:17] Rick: what I'm gonna do in the next part is is I want four to six weeks." 

    [00:28:22] Matt: Yeah. 

    [00:28:23] Hamish: Is 

    [00:28:24] Rick: this step four?

    [00:28:24] Six. This is step number four. No, you need six. 

    [00:28:25] Hamish: Yeah, yeah. 

    [00:28:26] Rick: Okay? Yeah. 

    [00:28:27] Hamish: Four to 

    [00:28:27] Rick: six, yep. Six to eight, doesn't matter where you come from. Yeah, yeah. Depends on what style of building. Yeah. Because I wanna go to the concreter, I wanna go to the roofer, and I wanna get a quotation, and if that budget of $78,000 for my roof is not correct, it's either gonna go up or down.

    [00:28:44] Matt: Yeah. 

    [00:28:45] Rick: But if it goes down, Mr. Client, that works in your favor because the final construction price comes down. But what I believe the best part about this process is, that I'm trying to educate, I mean, my community. 

    [00:28:56] Hamish: Yeah. Yeah. 

    [00:28:57] Rick: Trades always get asked [00:29:00] to request for quote. Now, after rejection, after rejection, after rejection, after rejection- Mm

    [00:29:07] do you continue to quote properly? 

    [00:29:09] Matt: No, I agree. 

    [00:29:10] Hamish: Yeah. 

    [00:29:10] Matt: I actually agree with 

    [00:29:11] Hamish: you. And this has been something that's come to, like I've been thinking, you know- 

    [00:29:13] Matt: I'm finding it harder to get numbers out of trades more than ever. And these, they get the job on every one 

    [00:29:17] Rick: of them. What I think the trades are actually doing is, is they're sick of quoting for builders and not winning, because obviously everything's expensive.

    [00:29:23] Matt: Yeah. Yeah. 

    [00:29:25] Rick: They go offshore, they get quantities done, they come back with a price, and then they put a luxury tax on it. 

    [00:29:31] Hamish: Mm. 

    [00:29:33] Rick: Because we keep going over and over and over again because the builder doesn't wanna do the numbers, homeowner doesn't wanna pay for the estimate, and the builder doesn't have the structure to be able to put together a detailed costing.

    [00:29:45] Matt: I 

    [00:29:45] Hamish: agree with you on that. You know what, you know what I'm liking out of this conversation is I think how you and I estimate and cost is on the, very much on the right path. Mm-hmm. And I think the... Well, I, I guess we might be a little bit more unique when [00:30:00] it comes to the trade- All these guys are, yeah ... w- w- when it comes to the trade relationships, because we've been dealing with our same trades for years, and for the most part, they're getting a good chunk of our work.

    [00:30:09] Yeah. So they, I think they feel value in quoting our projects. I guess I, I just wanna put this out there, 'cause I know there is homeowners that listen to this 

    [00:30:18] Matt: pod- this- So maybe the better way to do it is, like, for the roofer, "Hey, I've got this little media- this much square meters, I've got this. Can you just put a number next to it for me for the minute?"

    [00:30:26] Rick: What about you go the, go the other way around and saying, "Based off my numbers and calculations, I've got X amount of linear meters of gutters, X amount of downpipes, rain head pipes, box gutters." "Here's where the job is. Here's the complexities, here's the problems. Do you think that this is suitable?" 

    [00:30:40] Hamish: Yeah, I, I, I like this way, which is just h- what I said before.

    [00:30:43] You- you're leading them with a number, 'cause they're either gonna say yes or they're gonna say no. From Rolex. 

    [00:30:49] Matt: It's how, they, they then they go, "Send me the plans." They then, like, I, like, I look at a- But I think you can't do that either ... 

    [00:30:53] Rick: yeah, they don't, yeah The project's not ready for you to have the plans.

    [00:30:55] It's impossible. Because Mr. Roofer, I wanna give you the plans when we're ready to go, 'cause [00:31:00] I want you to give me the best price. 

    [00:31:02] Matt: The ha- the hard thing is, like- That's it ... so I look at a job we just did recently, and so it wasn't, it's definitely not, it was about two, two and a half prop mil we came in at the first estimate, and they, they'd specified a special fancy as fuck brick.

    [00:31:16] It was $9 a brick. Which is only 40 mil high. So- So by 360 long or something like that. So how do I get my brickie to go, 'cause that's, like, double the install rate at least. It's the- 

    [00:31:30] Rick: Well, let's apply common sense 

    [00:31:31] Matt: there ... yeah, so, so, so, so to me, that's why I go, "Hey, can you, here's the brick. Can you go, can you give me a number?"

    [00:31:35] Rick: Well, why can't we just apply common sense? Like, this is estimating, okay? Yeah. Let's start talking about estimating. If a normal brick is, what is it, 110 by 290? 

    [00:31:44] Matt: Yeah, yeah. 

    [00:31:44] Rick: Right? And if that costs $3 to install, and you're talking about your fancy brick here- Yeah ... why can't you just make an educated decision because you are a qualified and skilled builder to say- I have no 

    [00:31:55] Matt: idea how 

    [00:31:55] Rick: much Yeah, but this is what I'm trying to get to.

    [00:31:56] Yeah. Hear me through. Why don't we just put in $12 a brick for labor? '[00:32:00] 

    [00:32:00] Matt: Cause what if I get it wrong and then the client's like- 

    [00:32:02] Rick: But that's all, that's step number three, remember. Like, step number three is putting a budget to the client that's realistic. "Hey, I've allowed for-" 

    [00:32:09] Hamish: Actually, I actually think $12 a brick i- in that scenario is realistic.

    [00:32:13] Matt: I think it would end up being a lot more than $12 a brick. You reckon? 

    [00:32:16] Rick: It could be. 

    [00:32:17] Matt: Yeah, yeah. 

    [00:32:17] Rick: It could be. Yeah. It depends, it depends what, 

    [00:32:20] Matt: what's involved. Cuts, it's all the cuts and stuff and, like... So there's cer- I think, I think I agree with you on 50... I think the times you actually have to go to the tradie and go, "I just got no idea what happens here."

    [00:32:29] That's correct, and there are some things, yes. "Can you, can you give me something?" I also think the part that I liked, I guess, like if I went to the bricky and go, "This is the square meterage I've roughly got right now. This is the spec. Just put the number next to it in an email for me at least." The pro- problem is I, like, wonder, build how I can just send out my quote request now.

    [00:32:46] It's just so easy. Mm. But- Good ... but the problem is, I also don't have problems a lot of the time with getting tradies to quote at that stage, because I let them know, "Hey, w- this is, like, the first estimation. Do the grunt work now because the second part is the plan's probably only gonna [00:33:00] change. I just need refinement," or, "Can you just confirm your price?"

    [00:33:03] Hamish: So h- how we do it, which is very similar to you, yeah, at step three, and, and I'll just maybe just give you- Yeah ... some, again, context around how we do it. Step number three, I go to two electricians, two sparkies. Which we're doing for the first time now. So two, two electricals, two, two plumbers, two... And f- in my, in my mind, it's about creating value for the client at that stage.

    [00:33:22] The, at estimation four- 

    [00:33:24] Rick: Mm ... 

    [00:33:24] Hamish: we're only going to one of those. We're not putting them together again. We've selected the person that we're using as- 

    [00:33:30] Rick: Well, I think that's, that's... So step number four, that's where I believe you should be paid

    [00:33:40] I mean, there's a price that could be said between $1,500 to $6,000 to $10,000. Yeah. Yep. Because you are paid at that process to negotiate- 

    [00:33:49] Matt: Never ... 

    [00:33:49] Rick: the trades and suppliers. Yeah, yeah. Yeah. Okay. Go to three or four different electricians. I know you said one. Yeah. That's okay. You do what works for you. 

    [00:33:56] Matt: Well, we're doing, 

    [00:33:57] Rick: we're doing- But you're also- 

    [00:33:57] Hamish: We're, we're doing two at step three though 

    [00:33:59] Matt: So [00:34:00] my stage four is almost my stage three.

    [00:34:02] Rick: Well- 

    [00:34:02] Matt: It's almo- 

    [00:34:03] Rick: almost- 

    [00:34:03] Matt: You're 

    [00:34:03] Rick: paid 

    [00:34:04] Matt: to, you're paid to 

    [00:34:04] Rick: negotiate ... 

    [00:34:04] Matt: the flip. It's almost the, it's almost the flip. Like- Yeah ... like I've kind of- Yeah ... got mine the almost opposite side around to a point where it's- So, 

    [00:34:10] Hamish: so do I. 

    [00:34:11] Matt: Yeah. I think, I think- Which, 

    [00:34:11] Hamish: which is interesting, which is 

    [00:34:12] Rick: inter- But there's nothing to say that my process is right.

    [00:34:14] No, but it's, it's- This is what the best part about building is, is like there's, there's- 

    [00:34:17] Hamish: Yeah. But actually, but I, I think both have merit though. Yeah. And I, I, I'm actually hearing what you're saying, 'cause I think step number three, you know, to kind of really dive into what you're saying, it's really g- making sure that the builder knows the quantities and the builder has a good handle on what things cost.

    [00:34:34] Matt: It's costing 

    [00:34:34] Hamish: so- So I actually think that that's not a bad way to do it, but I still think that there's conversations in there when we're leaning on specialty trades, licensed trades to get their feedback. I 

    [00:34:44] Matt: also think it's also, like, choose your own adventure at that point, depending on the plans you have or the type of build.

    [00:34:48] Like, if it is a custom architectural home, I think that there's so many things that you need to send it out. But then if you're got, hey, there's a lot of choices to be made later on, I think then ultimately [00:35:00] you ha- it should be your way. I actually think if you've got, like, "Oh, we, we don't know what we want to do- But that's-

    [00:35:06] the kitchen and we, we, we, we haven't got an interior designer and we kinda wanna work it out as we go and have a provisional sum," your way's 100% the way to be running it. 

    [00:35:15] Hamish: Hey, I'm about to go on a journey with systems, and I'm working 

    [00:35:17] Matt: with James from BizTech Guru, who, he was a guest on our podcast. 

    [00:35:21] Hamish: He was, and I've actually done a lot of work with James in the past, and it has transformed my business from just being this classic clusterfuck of a building company to a systems orientated focused business.

    [00:35:34] Matt: And what he's, from understanding, it's all focused on builders and- Yep ... we're going to be doing a live webinar with him coming up- Yep ... as part of this, and it's gonna be a big introduction to systems and how it can improve your business. 

    [00:35:45] Hamish: And you know the beauty about it? It is gonna be absolutely free.

    [00:35:48] Yeah. So keep an eye out for the dates. Uh, this is gonna be a really incredibly valuable workshop to not miss out on. 

    [00:35:55] Matt: Yeah. So either shoot us a DM, um, check the show notes, but we'll [00:36:00] put a link below here to show you how to sign up. So- Cheers ... make sure you sign up

    [00:36:07] Rick: But this is where, let's go back to step number two and even step number one. You've got to learn about your customer. 

    [00:36:13] Hamish: Yeah. 

    [00:36:13] Rick: Because I think as a custom builder business, there are multiple different avenues that you need to take. Like, I think you shouldn't just have one strategy for costings. You should have different ways to achieve a construction price, because at step number two, you're learning about the customer.

    [00:36:30] If you're an accountant or a lawyer, that is possibly a different approach to what it might be for Someone retail shop or- 

    [00:36:42] Matt: Yeah ... 

    [00:36:42] Rick: something different. Yeah. I'm not trying to be- But 

    [00:36:44] Matt: we, we, we do have two, so we get two different... So we use you, and you use someone else, and we bring the numbers together, and then use our data as well as 

    [00:36:51] Rick: the- Yeah, we're talking about different steps in the process.

    [00:36:52] Yeah. A- whether you go one to three. Some builders have the verbal conversation, and then they go straight to step number four. 

    [00:36:59] Hamish: Mm. '

    [00:36:59] Rick: Cause [00:37:00] that's their process, or that's what that specific client wants. 

    [00:37:03] Matt: Or they- they've got so far advanced plans they've come in right at the end. There's, there's no point running that third.

    [00:37:07] You may as well just go straight to the end and save 

    [00:37:08] Rick: the time and effort. Well, if we're talking about early builder engagement, which is what needs to happen- 

    [00:37:14] Matt: Do you 

    [00:37:14] Rick: think- ... then, then you need that four-step process- Yeah ... or three-step process, or a detailed process to cover it. Yeah. Yeah. 

    [00:37:19] Matt: So someone that's probably completely independent to builders and architects, what are your thoughts on tenders?

    [00:37:26] Rick: Ask the question again. 

    [00:37:27] Matt: So you're independent. You're not a builder, you're not an architect. 

    [00:37:29] Rick: Yep, 

    [00:37:30] Matt: yep. You're, you're not a, you're not a client. Do you think people should be going to a tender? Or how do you think? Because you're... Well, 

    [00:37:38] Rick: here's- Do you know what I mean? Like- ... yeah, I, I wanted to bring up this conversation and hear youse guys' thoughts on it, 'cause I like to find examples and then replicate processes.

    [00:37:50] What I don't understand in construction, and we're talking about tendering. 

    [00:37:53] Matt: Yeah. 

    [00:37:54] Rick: The construction industry is the, one of the very few, I'm not gonna say only because I don't know. [00:38:00] Yeah. We design first. You know where I'm going with this? 

    [00:38:05] Hamish: Yeah. I know exactly where you're going. Yep. 

    [00:38:07] Rick: We then do our selections, then we bloody price.

    [00:38:12] Hamish: Yeah. Yeah. Yeah. It's fucking brilliant. I, I, I know. 

    [00:38:17] Rick: Like, tell me what other industry does that? 

    [00:38:19] Matt: I know. So I actually was reviewing for someone yesterday a architectural, um, they're engaging an architect, so someone that I know, and I was going through their price guide. And there clearly it says, "Client budget, $1 million."

    [00:38:33] So they've gone, this is what the client wants to spend is $1 million. They've based their pricing off a $1.5 million build. I'm like, but then, but the price is one million. Like, I, I'm, I'm confused here. Like, aren't you designing to 1 million, not 1.5? 

    [00:38:47] Rick: You can't design to a number. I don't, I don't believe you 

    [00:38:50] Matt: can.

    [00:38:50] And, and I'm not having a crack at architects here. I agree. I don't th- Yeah. It's hard because- Yeah ... you also, you speak to architects and they're like, "The client's gone, 'We want this, this and this.'" And they're like, "Yeah, but that's two [00:39:00] mil. You're one... You've got a million dollar budget, though." 

    [00:39:02] Hamish: Yeah. 

    [00:39:03] Matt: I, I- But the, the architects can-

    [00:39:04] I 

    [00:39:04] Hamish: agree you can't design to a number, and then I also am gonna re- reiterate, this is where this step of estimating and costing is really important, and also to re- reiterate something you said, you need to get a builder involved early. 

    [00:39:17] Rick: Correct. 

    [00:39:17] Matt: So how 

    [00:39:18] Hamish: would you- Like, that's the only way to, to get to budget Well, I 

    [00:39:19] Rick: mean, okay.

    [00:39:20] Matt: Ideal world, how do you think it should work? Like, I know you've sort of just sort of said it, but you- So 

    [00:39:24] Rick: I had a, I had a conversation with someone last night at the APB dinner awards night, and I said, I said the story of, you know, design, select, cost. When you go and buy a new car, right? Let's say we're gonna buy a Mercedes.

    [00:39:40] You go to the website and it gives you a base model price, and then it can tell you how much the upgraded spoiler is, the carbon fibre, V6, V8, twin turbo, all that sort of stuff. In the construction industry, there's nothing. Actually, sorry, there is. It's that we avoid it. 

    [00:39:55] Matt: Design and construct. 

    [00:39:58] Rick: No. We avoid [00:40:00] learning what the prices of things are before we go into the design phase.

    [00:40:04] So from a c- from a 

    [00:40:04] Hamish: client point of view? 

    [00:40:05] Rick: From a client point of view. From, yeah. Because there's- 

    [00:40:09] Matt: Do you want to expand on that a bit more?

    [00:40:14] Rick: I believe if we know the true cost of construction early, projects will never get built 

    [00:40:21] Matt: This is, this probably flows into then a conversation s- bes- I don't know if this bridges a little bit. And I know this is how everyone else in the world functions. Wouldn't it just be simpler if it's cost plus and not like with an estimate- Mm

    [00:40:34] and a fixed, like a number on it? But the fixed price estimate kind of complicates a lot of things. 

    [00:40:39] Rick: Oh yeah, it does. Well, I mean, let's talk about fixed price versus cost plus. I've got a bee in my bonnet with tradies who know that it's fixed- uh, sorry, with tradies who know that it's cost plus. 

    [00:40:52] Matt: No, they still have to price it.

    [00:40:54] Rick: Sorry. When, when tradies know it's a cost plus project, do they quote correctly? 

    [00:40:59] Matt: [00:41:00] Well, the, the cost plus contract from my understanding, you still have to follow the plans and that, and anything outside that is still a variation. The plans have the information. 

    [00:41:07] Rick: Okay. So, oh, God. 

    [00:41:10] Matt: So I, I know, I actually agree with what you're saying, though.

    [00:41:11] I hear, I hear, I hear what you're saying. Yeah, I actually agree with you. I hear what you're saying. So in a, in a, in a real world example, I like how it should work is what I should be saying. 

    [00:41:23] Rick: Yeah. 

    [00:41:23] Matt: But reality is what you're saying is correct. 

    [00:41:25] Rick: And I think that's where a lot of people get me confused.

    [00:41:29] Because I mean, I'm here as an independent, you know, I, I don't profit from a build. I don't, you know, I'm not invested in, um- 

    [00:41:40] Matt: You're a numbers guy ... 

    [00:41:40] Rick: I'm a numbers guy. So I'm here to try to say what the real, real truth is for a number. I know for a fact that if a b- I believe... Well, I wouldn't say a fact. I believe that if the plumber calls the builder and the, and the builder says it's a cost plus project, [00:42:00] is he gonna quote correctly?

    [00:42:02] Or is he gonna quote more correctly if it's a fixed cost contract? 

    [00:42:05] Matt: No, the, i- the contract is fixed between myself and the client, it's a cost plus contract. Yeah. Between myself and the, the tradie, it's on a cost plus contract. 

    [00:42:14] Rick: How's he gonna quote most accurate? You, you're telling me that they quote the same.

    [00:42:19] Matt: I wouldn't tell them, I wouldn't tell them personally. I know in my back end, and I'll say this openly, like for example, if I had a concrete, a concrete go, "Hey, actually you missed like three lengths of mesh," I can like, we, we, it's a, I can work this one out. I wouldn't directly... Because I also think it like, the same problem if, flows if as a builder, if we can't have all these numbers and make it right, we also need to be fair to the tradies that, you know what, they sometimes accidentally miss something.

    [00:42:46] And I'm so much happier for them to be like, come in at a nice price that's right, and then go, "Hey, hand up, I missed something." And I can go, "You know what? We can work that out." 

    [00:42:54] Rick: Yeah. 

    [00:42:55] Hamish: So, so let me, let me- Within reason. Within 

    [00:42:56] Matt: reason ... 

    [00:42:57] Hamish: let me, let me just clarify where you're going. So are you s- [00:43:00] because I think I agree with you.

    [00:43:00] Are you saying that if tradies know that it's cost plus, they're not gonna be as accurate with their pricing because they know that it's- They're gonna 

    [00:43:06] Rick: get 

    [00:43:07] Hamish: paid ... they know they're gonna get paid? Yeah. Are they? And I don't dis- and I don't disagree with you. 

    [00:43:11] Matt: I, I actually kind of want to kick 

    [00:43:12] Rick: back on this.

    [00:43:13] Well, I, I have a friend who prefers comp- cost plus contract because he knows the build's gonna get built 

    [00:43:18] Matt: I actually, but I want to kick back because it ultimately- 

    [00:43:20] Hamish: As in a tradie friend? 

    [00:43:22] Rick: No, no, no, a homeowner friend. A 

    [00:43:23] Hamish: homeowner, yeah. 

    [00:43:23] Matt: The, the thing is, like, I, I'm gonna kick back a bit here because, like, the, from a, from a legal sense, I have a contract with the client that's cost plus.

    [00:43:30] My contract and my trade agreement with the trade is not cost plus. I should still be doing my due diligence for the client to have fixed pricing. This is, this is the very tight fixed budget we should be coming in with roughly. 

    [00:43:43] Hamish: I, I'd probably, I'd probably spend more time- Yeah ... on a cost plus 

    [00:43:47] Matt: project.

    [00:43:47] I'd be too scared because that's where everyone gets sued. 

    [00:43:49] Hamish: Yeah. 

    [00:43:50] Rick: Okay, so then let's, let me ask yous guys as experienced builders If you have a cost plus project, you're required to get three quotes. Is that correct? [00:44:00] 

    [00:44:00] Matt: Not necessarily, because I think there's enough, as you go back to your question originally- 

    [00:44:03] Hamish: I, I don't, I haven't done enough of 

    [00:44:04] Matt: them to- No, I haven't, I haven't done them, but, like, I'm just thinking logically, like, you as a client come to me as a builder, I have trades that, um, I know are gonna get the job done and it's- 

    [00:44:16] Hamish: I, I would still go through exactly the same process- 

    [00:44:20] Matt: Yeah, yeah, I, I would-

    [00:44:20] Hamish: that we're, that we're saying, yeah ... the 

    [00:44:21] Matt: contract is just different. Well, I tell you, I reckon there's 

    [00:44:23] Rick: builders out there who just give a, a ballpark price, slap together a couple of budgets- 

    [00:44:29] Matt: I- ... 

    [00:44:29] Rick: for trades and suppliers and go cost plus straightaway. 

    [00:44:31] Matt: And I reckon that would be, o- out of our bubble, I reckon that'd be 90% of 

    [00:44:35] Hamish: them.

    [00:44:35] I actually, I, I don't know, and maybe I'm unique and maybe you're unique here, I could not sleep at night if I did that. Oh. 

    [00:44:40] Rick: Yeah, but- 

    [00:44:41] Matt: I'd want everything so documented 

    [00:44:43] Rick: cost plus ... that's, that's why, that's why youse guys are different as builders. 

    [00:44:45] Hamish: Yeah. 

    [00:44:46] Matt: Okay? And our bubble is different, too. Remember that. The people we speak to would also most likely do the same.

    [00:44:50] Hamish: And, and I'm saying, I'm saying I'd be anxious, one, not the fact that, like, I know that my money would be safe because I- ... 'cause it's cost plus and legally, whatever it [00:45:00] costs, they're gonna pay. As long as it's 

    [00:45:01] Matt: as per plan. 

    [00:45:02] Hamish: But I would be scared about the relationship breaking down. 

    [00:45:05] Rick: Well, if I was a homeowner, I would want my builder to negotiate as hard as possible to get the best price possible for every trade and supplier.

    [00:45:11] Now, if that is down the fixed cost route or that is down the cost plus route, it doesn't matter. That's the end goal. 

    [00:45:17] Hamish: I agree. 

    [00:45:17] Matt: Yeah. 

    [00:45:17] Hamish: I agree. 

    [00:45:18] Matt: I- And, and, and y- and we do. Like, for the first time ever now, I shop around because I'm like, "I think they're taking the piss." 

    [00:45:22] Hamish: I mean, I, I have, I have a homeowner at the moment and he knows, 'cause we're starting the project soon.

    [00:45:26] Uh, you know, there's been many conversations, is this cost plus or is it not? And, and we- we're oscillating between one or the other and I'm like, look, I think from a relationship point of view, I'm much more comfortable with a fixed price because we've got a great relationship now and what does that look like in an 18-month build that's- Yeah

    [00:45:42] multiples of millions of dollars if it goes over 10%, 20%? I, I don't feel comfortable with that. Let's be really robust with our costings now, make sure the drawings are really spot on and that we're getting POs out to our trades really early and locking everything in so we know that the price is locked in.

    [00:45:59] I just don't [00:46:00] feel comfortable, like, just going, "You know what? We've done all this work, let's just fucking send it with a cost plus." No. I 

    [00:46:05] Matt: also think there's more money to be made in a fixed price con- a fixed price contract if you do it right. Of course there 

    [00:46:09] Hamish: is. 

    [00:46:09] Matt: Yeah. Of 

    [00:46:10] Rick: course there is. 

    [00:46:10] Matt: I think, I think that's another reason why building's so expensive because as a builder, our risk is so high that we have to account for it somewhere along the line.

    [00:46:18] It's not that we're necessarily accounting for ourself, the trades are also accounting it for themselves and then so have you got the supplier putting a contingency on, then you've got the trade putting a contingency on, then you've got a builder putting a contingency on. Oh, don't, don't talk about a double down.

    [00:46:33] No, I know, but like- Don't talk about a double down ... but, but, but, but you're never gonna- That got me 

    [00:46:34] Rick: in trouble. 

    [00:46:35] Matt: But you're never gonna find out though if they are. 

    [00:46:37] Rick: No, no, no. 

    [00:46:37] Matt: You don't- You're never ever gonna find 

    [00:46:38] Hamish: out. Can I, can I, I'm gonna a- ask you this, Rick. How can we, and I don't know if we can even answer this now, how do we- create the fairest price for our clients so the trades make money, so that we make money and the client gets a good, um, end result Builds can last.

    [00:46:58] Like, what's the, what's the secret [00:47:00] sauce? 'Cause I don't know if it's just a sim- I don't know if it's simple. 

    [00:47:02] Rick: It's not. It's not. Like I said at the start, there's so many different ways to do estimating. There are so many different paths. Um, there is no secret recipe. Yeah. To make construction affordable, gosh, there's, there's so many different conversations we can have about this one.

    [00:47:17] How does everyone make money? Well, what is a fair profit to make? 

    [00:47:23] Matt: This is the good question because what happened, yeah. 

    [00:47:26] Rick: Why does it cost $6 for a can of Coke now?

    [00:47:31] Matt: I, because we have CEOs and who are... Everyone's on KPIs and they need to show a certain revenue and turnover and budget, so they're incentivized for their own wages to go 

    [00:47:40] Rick: up But because the cost of living's gone up for everything, so does my trade quote, so does my builder's price and all that sort of stuff, and it just flows on, flows on.

    [00:47:47] Matt: Yeah. Yeah, yeah. I know, I agree. But the problem, every- everyone wants to earn more, and a lot of- Correct ... people's wages are turn, are, are based on revenue and turnover and hitting a certain number and KPIs. So if they don't hit [00:48:00] it, that they obviously sell more, but then things have to go up because everyone else, everything else will just go up along the way as well.

    [00:48:07] So it's not just our, this is not just our industry, it's everywhere. 

    [00:48:12] Rick: And- I don't think there's an answer 

    [00:48:13] Matt: No, there's not. There's no answer. And, and it, it, it's something- We- ... completely beyond economics of my understanding. 

    [00:48:17] Hamish: So how, how do we, then, so then how do we work really closely with our trades, whether it's at step three or whether it's at step four, to make sure that they're pricing really fairly?

    [00:48:29] Matt: I have an answer, but no one's gonna like it. 

    [00:48:31] Rick: I've got an answer no one's gonna like as well. 

    [00:48:33] Hamish: Great. I wanna hear both of them. 

    [00:48:34] Matt: So my answer is, if I'm a client, I'm gonna give an extra 3, $4,000 and go, "I want you to pay every single one of those trades to price it." 

    [00:48:42] Rick: Yeah. Okay. 

    [00:48:42] Matt: I go, "Hey, I'm gonna, I'm gonna increase my E- ECI fee, but every single one of them need to be paid, and I want a full breakdown."

    [00:48:50] Hamish: Huh. Yeah, okay. Because- I don't, I don't hate that ... 

    [00:48:53] Rick: because, because- I'll flip you, I'll flip you and go a different way. Why do we always outsource the carpentry? 

    [00:48:59] Matt: I don't. [00:49:00] 

    [00:49:01] Rick: I know you don't. And, 

    [00:49:02] Matt: um, be- 

    [00:49:03] Hamish: because- I, I, I do, I do a mixture. 

    [00:49:04] Matt: Yeah, I, I've done a mixture. I do a mixture. But I, the re- the reason being is people are expensive to hire, and I can out- Why 

    [00:49:11] Rick: can't you employ them?

    [00:49:12] Matt: 'Cause if I outsource it, depending what it is because so if I 

    [00:49:14] Rick: was- 'Cause if you employ them- 

    [00:49:15] Matt: Yeah ... 

    [00:49:16] Rick: we had a little conversation about contingency- 

    [00:49:19] Matt: Yeah ... 

    [00:49:20] Rick: that goes into a trade quote, and there's a contingency that goes into the builder's quote. If we employ that, aren't we stopping the contingency going on the trade?

    [00:49:29] Hamish: Yeah. Okay. So I- Yeah, I agree ... I understand that. Yeah. But, but that, that also ra- that- I, I do that to a plumber and I can't do it to a- Okay. In, in this- Yeah ... in this current climate, in our experience, where it, like your pipeline is quite lumpy. Like it's not as linear as it once was. Okay? Yeah. Well, that, this job's gonna finish here and then this one's gonna start.

    [00:49:46] There's 

    [00:49:46] Matt: so much red tape. We don't 

    [00:49:47] Hamish: know when the hits happening. There's, there's so many variables at the moment, which is kind of dictating when a project starts. As a builder, if we're employing 20 carpenters, we've still gotta hold that overhead if we've got a two-week break. 

    [00:49:58] Matt: We had a job that was six weeks [00:50:00] with the bank to tick it off.

    [00:50:01] Hamish: So, so I hear what you're saying, and I agree with you. I think it's, it is more cost effective we can bring carpent- all of carpentry inside. Okay, 

    [00:50:07] Rick: carpentry's only one conversation. 

    [00:50:09] Matt: Imagine if I could have a plasterer and I could have a tiler, but I'd have to have, I'd have to have so many- 

    [00:50:13] Rick: Okay. So then can someone who smashes...

    [00:50:18] Matt: Jobs 

    [00:50:18] Rick: No. He s- he smashes the vanity and does the demolition. Yeah. Can that person also do the painting? Can that person- No ... also- 

    [00:50:30] Matt: Yeah ... 

    [00:50:30] Rick: cut, so those 5.4 lengths of skirting- Yeah ... can he cut that skirting because the lead guy said, "I need this length, this length, this length"? S- so, the answer- So I'm talking about a general labour.

    [00:50:42] So employing a general labour to do general tasks in construction. 

    [00:50:47] Hamish: Mm-hmm. 

    [00:50:47] Rick: Is there enough tasks in construction- So y- yeah ... for a general? 

    [00:50:51] Matt: Um. 

    [00:50:52] Hamish: Yeah, but I think the natural transition from a general labourer is to make them a carpenter. Yeah. Yeah, 

    [00:50:56] Matt: I, I, yeah. I, I hear, I hear all of it. I, and this is- But are you gonna do it as good quality?

    [00:50:59] 'Cause it's all about repetition, so my team don't do framing as much, so they're a little bit slower. Yeah, but they're- So if they're not painting all the time... 

    [00:51:06] Rick: Yeah, but let's not get caught up in the bubble of your style of construction. We're talking a, a broad level of construction. Yeah. Like, I understand your game.

    [00:51:14] Your game, you can't do what I'm proposing. Yeah. And this is why I think businesses- 

    [00:51:19] Matt: So we're talking, so we're talk- ... freaking awesome ... let's just talk, this is volume builder spec we're talking 

    [00:51:22] Rick: about. Not, not necessarily volume builder spec. Like, if we've got a renovation in Moonee Ponds, it's just a three-bedroom extension.

    [00:51:31] Matt: Yeah. 

    [00:51:32] Rick: Standard spec. Yeah, you could probably go to a volume builder, but you don't wanna do that 'cause you want a more of a custom, personalised experience. That builder Why can't he just employ general contractors who is multi-skilled? 

    [00:51:45] Matt: Because we're not taught... Th- th- this goes back to an apprenticeship system.

    [00:51:49] They spit out a carpenter in three years and they know fuck all now. Like, like the reality is like how are we now only expecting them to plaster, to t- stop up- Yeah. I- ... to hang a tile, to do some waterfront. I agree there's [00:52:00] certain things like- 

    [00:52:00] Rick: But what training do we provide as a business? 

    [00:52:03] Matt: Zero. Are we expected to 

    [00:52:03] Rick: provide training?

    [00:52:04] Hamish: So he, he... Okay. This cappy kid. I'm gonna, I'm gonna, I'm gonna maybe kind of illustrate why this wouldn't work. So say, uh, c- what's a carpenter costing? Cost to business maybe 50 bucks an hour. Like e- even if- No, 

    [00:52:15] Matt: no, no. A carpenter? 

    [00:52:17] Hamish: A cost to business at an apprentice. 

    [00:52:19] Matt: Oh yeah, yeah, yeah. Oh yeah, you're 

    [00:52:19] Hamish: back to- And a cost to, cost to business- Yeah, yeah, yeah.

    [00:52:19] 50 bucks. Yeah ... an apprentice is about 50 bucks an hour.

    [00:52:23] Matt: Yeah. 

    [00:52:23] Hamish: Cost of business for a carpenter is maybe 70, 75 an hour. 

    [00:52:26] Matt: Yeah. 

    [00:52:28] Hamish: You're probably gonna pay a general labor maybe 60 bucks an hour. 

    [00:52:34] Rick: Why not pay 80 and get better? 

    [00:52:37] Hamish: Yep. Okay, I'm hearing all of this, but then why not let... But can't make them... Like what you're then talking about now is a carpenter, or what you're talking about is, uh, an apprentice who does their carpentry with someone like us, where we're doing end-to-end builds where they're learning everything.

    [00:52:53] Matt: So we'll do the membrane, we would do the- Yeah, yeah ... insul- we can do the insulation. But that, 

    [00:52:56] Rick: that's a completely- Yeah ... your game is different to- 

    [00:52:58] Hamish: Yeah. And, and I hear what you're [00:53:00] saying, but I, I'm, I'm just sort of trying to work out- Actually if they- I agree, 

    [00:53:02] Rick: I agree on your side. You can't have a general labor working in 

    [00:53:04] Matt: your business.

    [00:53:05] No, but actually if, no, I actually think more than... If, I think it's actually the opposite. I think in our way we do things, we'd have more general labor because I look at my carpenters, they can do, technically they could probably do everything concreting except screed it. They could do the waterproofing if

    [00:53:22] they really wanted to. Um, we could do the, hang the sheets if we really wanted to in the plastering. 

    [00:53:23] Hamish: I, I guess I'm saying is what, what, what we've got in our business almost replicates the model that you're talking about and w- and building's still expensive. 

    [00:53:30] Matt: The problem is, I think on the flip side, if you want to go back to the other home, I actually think we need more people coming to industry being specific like in America, and we've spoken about this a number of times, like you were just good at a fix.

    [00:53:41] That's it. You can do it so efficiently, so fast, so you, you can make so much money at a less rate because you can do it so quick. That's as Brad was saying the other day, he's like, "To install a door might be just $1,000. If you're fucking shit and it takes you three days, that doesn't mean you charge, if your day rate's $1,000, it's now $3,000.

    [00:53:59] The door [00:54:00] is $1,000." Yeah. Whether you do it in three days or you do it in a minute. 

    [00:54:02] Hamish: Mm. 

    [00:54:03] Matt: And I think that's the problem is if we can have more trades like plumbing that's broken up into licenses as smaller individual things like a fix, a frame, a lockup specialist, a cladding specialist, they will get so damn quick and so efficient because they have the right tools, the right systems, the right processes for what they know.

    [00:54:20] And it doesn't mean that you have to have people being taught 7, 10, 15 years to know everything. They can just know this within three to five years and know that system well. And I think then you can see repetition very quickly because they're a lot cheaper because that's their skill. 

    [00:54:35] Rick: I got a story for you I did a estimate.

    [00:54:39] It was a luxury high-end renovation, single story. Monster, okay? And my price came out to 2.4 mil. It's a true story. And I released it to the builder, and we caught up and did a Zoom call with the builder. 

    [00:54:56] Matt: Yeah. 

    [00:54:57] Rick: I said, "Mate, you got [00:55:00] like," I don't know, "15, 20 pieces of steel connected to each other." When 

    [00:55:06] Matt: was this year, what, like was it pre-COVID, post-COVID?

    [00:55:09] Rick: No, no, this was three months ago. 

    [00:55:11] Matt: Okay, 

    [00:55:11] Rick: cool. Yeah. Two months. Oh, maybe two months ago. Yeah. Okay? So we've put the steel budget together, the concrete budget- Yeah ... because we expected everything to be outsourced. We expected the concreter to apply a contingency because it was actually quite complex, same as the steel In the Zoom call with the builder, and we're talking about how it's gonna be built, and we're talking about how his company is structured.

    [00:55:37] I change that price at the end of the conversation from $2.4 million down to $2 million because he employs a group of construction workers who do the demolition, who put together the staircase, who does the structural steel, the welding, the carpentry, and he does some elements of the plastering as well.[00:56:00] 

    [00:56:00] That's going from 2.4 to $2 million based on how his company works. Now, this specific builder came from a background of that lower level tier construction, I think. Yep. And then he's applied that to custom home building. So how can we have a price at $2.4 million and then go down to two based on a style of how you run your business?

    [00:56:26] Matt: S- I, I, and I think we're already kind of semi doing that anyway. 

    [00:56:28] Hamish: S- so I, I'm gonna challenge that. I, I, l- I understand where you're coming from. Yeah. Um, however, this is all theoretical at this point because it hasn't been built yet. 

    [00:56:39] Matt: Yep. 

    [00:56:39] Hamish: What would be great to understand is if he signed a contract at $2 million- Yeah, yeah, yeah.

    [00:56:44] I, I know ... what, what's the, what... Okay. Hey, hey Is he making money? 

    [00:56:47] Rick: All right. So then let's, let's- Yeah ... try another one. It's like, how's an estimator supposed to get that right? Oh f- We have such a bad name in the industry. We are dragged over the coals, all that sort of stuff, but I've just proved to you [00:57:00] 2.4 to two.

    [00:57:01] Hamish: Do, do you know, do you know why I think that is? No. And, and, and, and I'm, and I'm probably gonna jump to your defense here because I think builders are going, "I'm so busy I can't do my estimating, Rick. Estimate my job." And then, and then what, and then what's happening is they're getting the number back and they're going, "All right.

    [00:57:17] Great. I'm not even gonna look at this. I'm just gonna give this to the client." Yeah. "Please sign the contract." Yep. That's where the fucking problem is- Oh ... because the builder is not- That's another conversation. But do you know w- No, but- Do you understand what I'm saying? I think- It's a builder, it's a builder problem.

    [00:57:27] But- It's the builder's problem because the builder should still be getting your data. They should be getting V2Es data. They should be getting Hayden from Price A Plan's data and critiquing it and making sure that all those little fucking line items actually work for the business. So, s- s- And I think that's what's not happening.

    [00:57:42] Matt: So this is good because it kinda leads into the que- how you explained, you explained to me how estimations happened recently. Mm-hmm. And how it used to happen and how you were taught versus what it is now because I was asking the question to you is, like, I have 10 emails a week in my inbox be like, "Hey, we're an estimation company."

    [00:57:56] "We can do your estimations for $500." And I'm like, "How?" Because [00:58:00] I physically my own self can't do that. 

    [00:58:03] Rick: Yeah. 

    [00:58:03] Matt: Explain how you were taught to estimate and then how it works now and how, how the profitability of an estimating company works too 

    [00:58:12] Rick: How I was taught to estimate, I had a really tough time understanding in the early start of my career.

    [00:58:19] I was under the impression, and I was taught, that inside an estimation you should put the exact quantity of bricks, the exact quantity of tiles, the exact quantity of grout 

    [00:58:34] Matt: These, and if you've got multiple different tiles, it's the exact of each one. 

    [00:58:37] Rick: That's correct. 

    [00:58:38] Matt: Yeah. 

    [00:58:39] Rick: I then went on a rampage where it was like, the best estimator is the best scheduler.

    [00:58:46] 'Cause if the guy knows how to schedule the project- 

    [00:58:49] Matt: Yeah ... 

    [00:58:50] Rick: we're gonna get the best construction price. But then after doing that myself for a long time, let's say, I'm gonna pick a time period which I think I did this [00:59:00] between, it was 2012 all the way through to 2015. I used to have that approach of, like, the exact bricks, the exact linear meters of the steel.

    [00:59:10] Like, I would, you know, for example, I would measure 230 bearing. So if I'm putting- Yeah ... a T-bar over an opening- Yeah ... right? 230 bearing, the exact opening, plus the 50 mil cavity and the 90 mil column, and then another- Yeah ... 50 mil or 90 mil cavity- Yeah ... whatever, however it is, right? And putting that exact linear meters in.

    [00:59:27] Matt: Yeah. 

    [00:59:29] Rick: But what happened at the end- 

    [00:59:30] Matt: That's how I actually estimate right now. Legit, like I'll literally go through every single beam and go, "That's that length, that's..." But in order size too. 

    [00:59:39] Rick: Don't, don't get me started. You are not charged that way because the steel guy will just go, like, "Eight meters. Why are you going so precise?"

    [00:59:49] Matt: Oh, no, that's for my timber when I do my 

    [00:59:51] Rick: timber. Okay. So, 

    [00:59:52] Matt: yeah. 

    [00:59:53] Rick: Anyway, I'm getting off topic. Yeah, yeah. Right? So I adopted this strategy of such a perfect estimation with quantities. [01:00:00] 2015, I was doing that same process for a custom builder. Now, I believe that myself and the business owner, we were doing the best estimation possible.

    [01:00:11] We kept losing the estimate. 

    [01:00:14] Matt: Yeah. 

    [01:00:14] Rick: We kept losing on price. Thinking it through a little bit and knowing what I know now, we were too true with our pricing. We were too accurate. We were too... There was too much information inside the estimate, and the guy who kept winning was just a lower price Fast forward 2000, late 2016, I worked with a, another builder.

    [01:00:41] He had a very, very loose approach to estimating. Loose. X square meters, just throw it in there. 

    [01:00:50] Matt: I know a few like that. I, 

    [01:00:52] Rick: I know it sounds a little bit silly, but I'm actually adopting that process right now. Um, looking at the cabinets and just saying, "Yeah, 20 [01:01:00] meters." And then he's negotiating when he gets into construction, like trying to go, "This is my estimate budget.

    [01:01:07] This is, this is what I've got to build it for. Okay, here's my quotation. What do I got to do to make that happen, to make that work?" So then what I learnt was there's, there's these two different styles of strategy of estimating. There is the, the Matt Kyle and 3.62 linear meters- Yeah ... of a PFC steel. 

    [01:01:27] Matt: Yeah.

    [01:01:27] Rick: And then there's the Rick of four meters. 

    [01:01:29] Matt: Yeah. 

    [01:01:29] Rick: And then it's Rick saying to the builder, saying, "Look, just go make it work." And both strategies work My problem that I've got is, is when you be too accurate and you're too refined, your price is generally gonna possibly be more. But then it could also work in the other way round.

    [01:01:48] There's no right or wrong answer. 

    [01:01:50] Hamish: My, my biggest concern with the way that you were saying before, particularly around the joinery, un- unless your joinery is a provisional sum, which it might be, [01:02:00] and that's okay. But generally a lot of the time the documentation that we're get- I can only speak to our projects- Yep

    [01:02:07] is really dialled in, like down to the, to the shadow lines and the finger pulls and everything. 

    [01:02:12] Matt: Yeah. 

    [01:02:12] Hamish: Like

    [01:02:17] that's- Soft close ... you know what, so- Yeah, like literally everything ... so, so w- I can't in my business go, "Just about 20 meters worth of joinery there. We're just gonna make it work in construction," because I'm signing a contract based off the plans. 

    [01:02:26] Matt: There's like 150, 200 pages of drawings that we have to add into a contract.

    [01:02:29] Hamish: Yeah, so I see what you're saying. Yeah, no, I get it. I, I, I get it because, you know, that, that is not a, you know- That's a spec ... un- that's an unusual way to... It's not unusual way for a lot of people to do it. They're, 

    [01:02:38] Matt: they're- That's a drafty type of plans that I have an allowance that we need to make work.

    [01:02:41] Hamish: And they're ge- and they're getting letting gains- Yeah ... during construction, all that kind of stuff. I understand all that, but I just don't know when I'm thinking about our audience, whether or not that strategy would work. I think it needs to be accurate. 

    [01:02:51] Matt: Yeah. 

    [01:02:51] Rick: I agree. Yeah. I, I agree. When I do an estimate for, for anyone who has a very [01:03:00] complex approach to building, you can't just be, you know- Loose

    [01:03:05] you can't, can't just be loose. Yeah. But there are builders out there and there are processes where it does work. Yeah. Yeah, 

    [01:03:10] Hamish: yeah, yeah. Yep. 

    [01:03:11] Rick: And I think that going back to, you know, 2015 and when I was so particular refined in that particular company I was working for, that didn't work for that builder. Um, but everyone's got their own approach, everyone's got their own style and what works for them, it's what works.

    [01:03:28] But I truly believe just going back to joinery, you know, when you put in 1.8 linear meters of cabinets for, I don't know, let's say the laundry, you're not charged at 1.8. Your cabinet maker's not gonna charge you 1.8, he's gonna charge you two, maybe even three. Yeah. 'Cause that's the length of the carcass.

    [01:03:44] Hamish: Yeah, yeah, yeah. Yep. 

    [01:03:46] Matt: I'm- Yeah ... conscious on time too here for a second, so I'm- 

    [01:03:49] Hamish: Can we rewrite out estimate four? We haven't even got the estimate four.

    [01:03:54] No, but this is good, 'cause I kinda feel like there's a, there's a nice rhythm of the things that we're talking about. Because we're, we're, we're then, you know, [01:04:00] diving down little rabbit holes and kind of answering questions and, and problem-solving as we go. So estimate four is, is resolve documentation.

    [01:04:07] Final 

    [01:04:07] Rick: construction price. 

    [01:04:08] Hamish: Yeah, and so final construction documentation can go to contract and get building permits, and its final contract price. And are we getting locked in trade prices? Are we... Yeah, okay. So there's a- estimate four is where we're going out to trades to lock in 

    [01:04:24] Rick: their prices. I don't think there's, there's, I don't think there's a lot of estimating companies out there doing estimate number four.

    [01:04:29] Hamish: Yeah, that's 

    [01:04:30] Rick: the builder. So then you spoke to me about that, Matt. Yeah. How do I do these X tiles perfectly? How do I do all those bits and pieces perfectly? 

    [01:04:36] Hamish: Yep, yep, yep. Okay. 

    [01:04:37] Matt: And, and so 'cause you were telling me that pretty much what happens now is they just drag a button, linear meters, this spits out within that linear meters is the skirting, the tiling, 

    [01:04:45] Hamish: the- 

    [01:04:45] Matt: It's Bixonomania lines, yep.

    [01:04:45] Yeah. 

    [01:04:45] Hamish: Which, which is, which is, kinda goes to the point before St- step four shouldn't be called estimating, it should be costing 

    [01:04:53] Rick: Correct. 

    [01:04:53] Hamish: Yeah. 

    [01:04:54] Matt: Oh, I like 

    [01:04:54] Rick: that. It should even be a different word, to be honest. Yeah. I don't even think... It's not estimating, it's... 

    [01:04:59] Matt: Step one and two are [01:05:00] estimating, step two is 

    [01:05:02] Hamish: costing- I'd say, I'd s-

    [01:05:03] three is contract pricing ... no, no, no, I'd, I'd say step one, phone call. Correct. Step two- Estimating ... rapid estimate. Step three, detailed bill of quantities. That's all estimating. Yeah. Step four is costing. 

    [01:05:11] Rick: That's correct. Yeah, yeah. I, I've built my whole business, and businesses, around step two and step three.

    [01:05:20] There's not much value in creating bus- There's- We, we, we don't get involved too much in step number one, and step number four is extremely complex. 

    [01:05:28] Hamish: Yeah, I agree. 

    [01:05:28] Matt: So I've got a question for you, and this one really might get a lot of architects wound up right now. Go there. No, no, no. No, do it. It's gonna be, it's gonna be a good one.

    [01:05:36] So if I have a, an architect- We've got 

    [01:05:38] Hamish: an architect, we've got an architect coming in in two minutes ... 

    [01:05:39] Matt: yes, the plans, uh, that we would get are quite detailed. There's 100-plus pages. Why do I need to show a trade breakdown? Why can't I just go, "As per plan, as per spec, this is 1.8," because I'm following it? Why do I have to give how much my mechanical ventilation is, how much my tiling is, how much my caulking is?

    [01:05:58] Doesn't it just make sense to be just like, "Here's a [01:06:00] number," because at the end of the day, on that fourth estimate, it is as per plan. 

    [01:06:03] Hamish: I agree with you. 100% agree with you. Estimate three should have lots of- Yeah, yeah ... 

    [01:06:09] Matt: breakdown of 

    [01:06:09] Hamish: numbers. It should 

    [01:06:09] Matt: be, it needs a breakdown. Yeah, yeah. But st- estimate four should just be like- A number

    [01:06:11] "This is a number as per plan." 

    [01:06:12] Hamish: Yep. 

    [01:06:13] Rick: Correct. 

    [01:06:13] Hamish: Yep. 

    [01:06:14] Matt: I think, yeah. But this 

    [01:06:14] Rick: is the beauty of the construction industry. If it works for you- 

    [01:06:19] Hamish: Yeah ... 

    [01:06:19] Rick: that's how it is. If you are going to sign a contract based on your approach, go for it. 

    [01:06:25] Hamish: Yeah. 

    [01:06:26] Matt: We have a segment- 

    [01:06:27] Hamish: I've got one. 

    [01:06:28] Matt: Oh, cool, 'cause I've got one too. Yeah. We've got two.

    [01:06:30] So we have a final segment end of each episode, the MEGT Mindful Moment, Australia's leading apprenticeship experts. 

    [01:06:37] Hamish: Yep. 

    [01:06:37] Matt: Got that 

    [01:06:37] Hamish: right? Can I go first? Yeah, 

    [01:06:38] Matt: go first. 

    [01:06:38] Hamish: Can I go first? You know what I love about your story, Rick? Is the, like, the, the- there's not a, like, a linear path that you've taken to get to where you are, and I know I've done the same thing too.

    [01:06:50] Yeah. Private school, university, traveled, and then go, "You know what? I fucking love carpentry, so I'm gonna do carpentry." And I act- I almost feel like the most successful and [01:07:00] fulfilling jobs, like, I don't wanna do anything else. You sound like you don't wanna do anything else. Matt's got a similar story. Uh, and there is a point to this little ramble.

    [01:07:08] Like, I think at 16, 17, 18 years old, you shouldn't need to know or you shouldn't know what you're gonna do in life 

    [01:07:15] Rick: You're a sponge. 

    [01:07:16] Hamish: You need to go and do stuff and experience stuff. Correct. You need to go and be a brickie for a day and, and, you know, spill a, spill a bucket of bricks and- Do you know what I mean?

    [01:07:25] I think, I think there is a, there's a lesson in that. Like- Yeah ... I think if you're 16, 17, 18 and don't know what you want to do, that is actually fine. That is 

    [01:07:32] Rick: 100% 

    [01:07:32] Hamish: fine. Go and pack a bag and fuck off overseas for a year or two. Yep. Like, and I, and that's my mom for 

    [01:07:37] Matt: my business. I actually, I actually think you should be, it should be law once you finish high school.

    [01:07:40] You should have to have a 

    [01:07:42] Hamish: year. You should just can't go and do- Geez, law- laws a, law's a big word. 

    [01:07:43] Matt: Um, and it- It's pretty aggressive. So my actual mom for me question to you, and it relates to estimating. If you were to... You finish your apprenticeship, I go out by myself and I have to estimate, but I haven't been taught.

    [01:07:57] Where do you start to learn? What is the first [01:08:00] thing you would do if you were that person? So I've never done it before, what do- where do I learn?

    [01:08:08] Hamish: fuck up and find out? 

    [01:08:10] Matt: That, that's what we did. But that's, is there a like, is there like a resource or something like, "Go watch this YouTube video," or, "Go watch... Go, go do this course," or? 

    [01:08:19] Rick: It's, everyone's gonna jump on AI to ask that question. 

    [01:08:26] Matt: Yeah, but we, there's one thing we know- But you 

    [01:08:27] Rick: need to c- ... AI can't estimate 

    [01:08:28] Matt: plans yet

    [01:08:29] you need, you need, 

    [01:08:29] Rick: yeah, you need to, you need to go into the trenches and learn. 

    [01:08:33] Matt: Yeah, 

    [01:08:34] Hamish: I think that- You know, AI's a great tool, but if you, like- It's widely known you 

    [01:08:38] Matt: can't estimate ... shit 

    [01:08:39] Hamish: data in- Yeah, yeah ... shit data 

    [01:08:40] Rick: out. That's what is gonna happen. That's what they would do. 

    [01:08:43] Matt: Yeah. Yeah. And, uh, we've got, um, Tim Fairley coming on the podcast soon, who- Mm

    [01:08:48] is big on YouTube and practically AI and construction, and his videos is like, it can't estimate. It can do a lot. 

    [01:08:54] Rick: It, it's like what I've said today, it's there's so many different ways to [01:09:00] estimate. You gotta work out what works for you. 

    [01:09:04] Hamish: You said something which I wrote down. It says, "Builders should have tools to make good decisions."

    [01:09:09] And I r- and I thought that, I think that is brilliant because each step of this, this four-step process, if we, that's what we wanna call it- ... is different tools. Yeah. And they all produce different outcomes. Yeah. So I think that there is a tool for all of these different- Correct ... and maybe AI, i- in my opinion, and I could be wrong, I think AI does play a part in- Step one

    [01:09:32] a step one or step two- Step, step one, step, step three ... maybe. 

    [01:09:33] Rick: Step three and 

    [01:09:34] Matt: step four, but like helping brief in trades and stuff. 

    [01:09:36] Hamish: Step three and step four, I would not go anywhere near AI, because I think that's much more detailed. That's correct. Yeah. You 

    [01:09:41] Matt: gotta know how to use it. You are correct. So, uh, Rick, if you- This has been a good chat.

    [01:09:46] Yeah. I've really enjoyed this. So Rick, if you wanna, if you wanna, um, if people wanna reach out to you, I, I'll be honest here, y- your estimating online's been one of my secret sauce for the past year and a half, and I don't tell many people, 'cause I don't want selfishly people wanting to, 'cause it's so fucking [01:10:00] good.

    [01:10:00] Uh, 'cause I, it is such a good tool. Um, how do they reach out to you? Uh, estimating online. 

    [01:10:06] Rick: Oh, look, I mean, estimateonline.com.au, um, Instagram, LinkedIn, um- 

    [01:10:13] Matt: It- it's honestly- ... 

    [01:10:14] Rick: just normal channels. Yeah ... i- 

    [01:10:14] Matt: if you're doing that feasibility side of things, um, I would highly, highly recommend, I've tried a number of programs over the years, and I'm not saying this just 'cause you're here, uh- I 

    [01:10:28] Hamish: think Matt's trying to angle for a get a free estimate here.

    [01:10:30] Matt: No, no, I've- I think he wants a 

    [01:10:31] Rick: free subscription. 

    [01:10:32] Hamish: I think 

    [01:10:33] Matt: he wants a free sub- No, I've re- no, fuck, no, honestly, I, I feel every value worth of what I pay for it- Well, I think- ... tenfold over. In, in, in, in- Once again- I'm not just saying 

    [01:10:41] Rick: that because you're here ... it's gotta, it's gotta work for you 

    [01:10:41] Matt: You got- 

    [01:10:42] Rick: My, my advice is it's gotta work for you.

    [01:10:43] Matt: And the other advice I'll give you is don't fucking give a VA to do it. Do it yourself. Or I get Rick and his team to do it for me, because they know how to use the program correctly. So I, I'll just finish on that. 

    [01:10:54] Hamish: So, so, yeah, okay. Well, I mean, that, that almost started a whole another- Yeah, 

    [01:10:58] Matt: I know ... 

    [01:10:58] Hamish: bloody topic there.

    [01:10:59] You, you, yeah, you [01:11:00] dived in somewhere there. Oh, man. 

    [01:11:01] Matt: Yeah. We, we'll get you back for episode two for that one. Hey, 

    [01:11:03] Hamish: Rick. Thank 

    [01:11:03] Matt: you. Thank 

    [01:11:03] Hamish: you. That's been really informative. Cheers, guys. Thanks, mate. Cheers.

Matthew Carland
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The Building Project That'll Ruin You Financially