we're at the Archie Expo . We're actually in a little room built by Jira panel.

If you can't see, it's.

Pretty much been branded everywhere.

What is

Dura panel before we carry on?

So, JIRA

panel, it's a, from my understanding, isn't a compressed straw board,

so it's waste product.

Yeah.

So I know a little bit about it because we've actually had Derek,

on the SBA before one of our webinars, and it's actually waste

product that typically gets burnt.

they bring it in and they.

They heat compress it.

Oh wow.

I didn't know it was waste product.

No, it's all waste product.

And then the lignin within the, so as they steam it up and compress

it, like the lignin within the straw then binds it all together.

So there's actually no binders in here.

there's a lot of products out there.

The expo hamon, I'll probably walk around the next day.

We might even do like a recap at the end of it of just some sort cool stuff we saw.

But there are so many awesome products like this that are

really pushing the market.

I think coming up.

You know, the other thing, I don't know how the fuck we got our

own bloody podcast booth at the

expo and you know, it's just shit work sometimes.

Like, it's just, we put the feelers out.

I think it's probably a good point to start, right?

I, I think sometimes we don't stop and celebrate where we're at and

we're always trying to find that next thing that we want to do.

And we have, and between me and you, there's a million different conversations

going at once and ideas flowing around.

But I Do you know

what I was actually thinking on the car, right?

On the way here.

I actually think it's surprising that we actually get anything done.

'cause I think that you and I have had so many conversations about

yours and mine different roles within the, within the podcast.

And we landed on something and then all of a sudden I'm doing

this and then you are doing that.

And then we've, so anyway, it's happening.

We're in a soundproof.

Box.

Now we are actually gonna have Derek Layfield, who is the owner of Jira Panel.

He's gonna come on and we'll get him to better explain what this is.

But this, from what I understand, is actually a kit.

So if you are interested in, having your own, I guess, soundproof kit,

if your kid plays drums or whatever.

This is, this

is what you want.

Or you just got a screaming baby like I'm about to have and might put one in these

in the middle of my house, screaming room.

Maybe I'll put all three of my kids in there.

Well, they act, they actually joked yesterday.

Um.

The organizer, Ash, who set us up with this, she's like, maybe we can turn

this into a screaming room and charge like $5, $5 a minute if you're just

going nuts trying to get stuff done.

This podcast episode, we are gonna, we're gonna try to keep

this one a little bit short.

It's more of just a bit of an update on where we feel the

industry's at at the moment.

I know Ham, I get a lot of comments about asking my opinion

a lot, especially through social media on where things are at.

I probably take more of a glass half empty approach.

Well, that's great.

'cause I usually take a half glass.

Yeah.

So

I think between this conversation here is a pretty good mix.

I, I have an opinion at the moment that this pricing thing is expensive

and we, we, Hamish and I are trying to really hard to work out how

to navigate this conversation.

It's not an easy one because we know we're gonna get picked apart.

We're probably gonna do maybe a good series with some, some estimators, some

quantity surveyors, people who have maybe built and how they felt like, and just

really try to draw the process out and a big understanding of where things are

coming in and why they're so expensive.

And you know what I was actually thinking, I actually might say some controversial

stuff during this episode as well, which I kind of try and remove myself from.

But I do have something that I do wanna bring up later on, and it's

designers and architects putting their opinion of cost forward,

Let's just start with that.

I actually think it's a really good point.

when we're involved as a project clients, like why do we need you involved?

We've got the architect and it's like.

I always say that we are there to talk about build-ability,

structure, and costings mm-hmm.

That's what we know.

Mm-hmm.

And we know it.

And our expertise and performance.

Yeah.

Yeah.

And I kind of think that's Yes, yes.

But I feel that's assumed now when people come to us.

Yeah.

But the costing is a big one because we, how can we expect architects, and

I think there's an unfair expectation on architects to know what things cost.

Yeah.

I think the issue, what happens is.

They're seeing so many different price and stuff, they just assume

things, oh, this is what it should cost, or this is what it does cost.

Or we think it should cost, but don't actually understand

the behind the scenes stuff.

and look, I, I agree with this sentiment to a point, you know, architect design,

and look, just for the record, this is not about poo-pooing on architect designers.

'cause you know, we all have our place within this pre-construction.

Process, right?

Yeah.

We're not designers.

That's the thing.

We're not designers.

But I think when an architect turns around and goes, well, that's expensive compared

to what?

Well, that's exactly right.

And I think this is what I guess what I want to try and, get to and I think

this is why I was a bit apprehensive about talking about cost with you.

Yeah.

It's a bit of a minefield when we start talking about cost because obviously

we're coming from a builder's point of view and like my initial kind of

response is, well, that's what it costs because we've just costed it.

So that's what the cost is

and, and if this is one thing I always say to clients, like, if I could get

your cost at a point where you are happy with, I would click my thing

and I can click my things and do it.

I'd do it tomorrow because it saves us so much time, the amount of effort

we have to put in to get just, just.

Pull every dollar outta that project to get it on on site.

The value management piece is actually the biggest part of our preconstruction.

It's probably, I would say

it's 50% of my personal time as, as my job.

Well, it's okay.

It might be 50% of your time.

It's almost 80% of Dan's time.

It's probably 30% of Robert's time.

And then you add me in there as well.

Yeah, yeah.

Like that is a huge amount of energy that we put into costing and, and maybe

that's a good thing to touch on because we just don't go, alright, here's a

square meterage, there's the price.

Like we dive deep, we turn rocks over.

We, we try and find the best value for our clients when we're costing a project.

And the reality is we might get to a number which doesn't

fit within their budget.

And I think that's, the budget meets brief.

The conversation is really important.

Um, and it's a really hard one to navigate because I feel so sorry for architects

because from what I understand, I've done a bit of investigation into this recently.

I think they're obliged by their code that they have to design the brief.

Yeah.

So it's not fair to them as well to put pressure on them to say, Hey.

Uh, the clients come to, I want four bedrooms or what?

Three bras and blah, blah, blah.

My next one had a mud room and another one had a theater.

So let's add this all in.

So they draw it all out.

They go, we know you can't afford this, but we're gonna show you.

And then the thing is, they also show them what their, their budget can get them.

But they always fall.

People fall in love with them.

One that they can't afford.

Yeah.

And now they're stuck.

They can't go backwards.

And I really, I really do feel for architects and a lot of

the ones we work with, like.

I'm just thinking of the two girls.

I share the office with Circle Studios, like they're getting builders in instantly

and they are so good at not commenting on price, like we just did a price for them.

I don't think I've got one question back on any number in that line item other than

like, thank you for putting that together.

And they understand where every line item is coming from.

We are also working with a quantity surveyor to run those numbers as well.

So when we get them.

Like, this isn't really my numbers coming in.

I'm getting what industry data tells us we are putting our special touch on it.

Yeah.

Adjusting it going, we don't need that.

We don't need that.

We can change that.

And then we're putting the price together.

Yeah.

Getting some things quoted.

So we'll always send out windows early on.

Yeah.

This is, this is in your kind of, I guess, opinion of cost stage.

Yeah.

And I just, and

I, and the thing is like that's where I'm getting to.

There's so much effort that goes into that conversation and that,

that putting a price together.

For someone to then come out in a whim, like a building designer

and go, oh, that's too expensive.

But they're compared to what?

there's, there's thinking something is expensive.

right now we, we are looking at cars, right?

you know, the cars that I would like to buy now from a growing

family 10 years ago, Ferrari.

That's my car, that's my, that's my quoting car.

Sorry.

You know what I mean?

That mid-age

life, crisis 40, 45 near the convertible.

Well, that's two,

it's two years away.

But you know what I mean?

Like I look at, you know, so we're looking at a 200, 300 series of

anchors The moment, and then even secondhand ones like 120,000.

Yeah, right.

That's a lot of freaking money.

But I don't think it's expensive.

It's just what it costs.

So this is a very good point.

I'm gonna find something that I found recently.

I got sent this Facebook group about, essentially people

talking about costs of building.

And there was one comment in here that, and I can't take credit for, for what

they said, because I was like, this is just one of the most true things ever.

And the person that wrote it's name was Ryan, so I'm not gonna give you his last

name, but, i'm gonna read out what he said because it really challenged my

thinking on building costs, and I've never thought of it this way, but it kind

of answers where I think things are at.

He said asking a custom builder to give a square meter price is like

asking how much a shopping trolley full of groceries is gonna cost.

The only way of knowing exactly how much a trolley would cost is when every item is

in it is known and has been fully costed at the register, and that involves a fixed

price quote from say, the supermarket.

It's the same as a builder.

They go out, they get all their quotes they put together and they

go to their supplies and trades and get the final estimate.

There's no real difference.

Yeah.

I think that, for me that was this big aha moment where in life we're so happy

just to go the supermarket and scan things that have a higher, way, higher

markup rate than we put on our building.

It's just a huge amount of money we have at the end of it.

So I think it was actually merely a Lee who came up with that analysis.

Really?

Because I heard Yeah.

Oh, okay.

It was a while ago.

And what, what's really great about using that analogy is

that we, we all shop, right?

Yeah.

We all go up and down the aisles and we all have a, have a list of the things

that we want when we first go in there.

Yeah.

But Matthew.

Do you just pick up random things along the way because

you're like, oh, I want that.

I

do sometimes, but the thing is I know I'm paying for it.

Yeah.

But what I'm saying is we do this and sometimes even subconsciously,

that the list that we go on, go in with can sometimes differ when we

get, well, there's more on that list when we get to the cash register.

It's the same when we're designing a home.

You might go in with your list of.

You know, likes or wants or needs.

And then along the way the designer might go, well, what about this?

And then what about that?

And this is no, no, no stab at a designer.

But as a designer, their role is to, to put in front of the clients

what they think that they want.

The biggest difference between, going shopping is you can actually

see the prices of these things.

We can't see the prices of those things when we're adding these things in.

When you are going through that design phase, that's where the builder comes

into it, because the builder can then help you understand what impact

those things have on your price.

I don't think the designer can do that.

No, I don't.

And I don't think they, they should, and I'm pretty sure architects aren't

actually able to give advice on pricing.

I'm, I, I also think that's within their like constitution.

And, and look the awesome ones that we work with, like they're pretty good.

Like they'll push you and so they should push us on price to be creative

so they, at the same time, I think the builders just also PPO on an

architect because they go, well, the architect's trying to bust me on price.

It's like, Hey.

Yeah, but if you were to go through that item, that item's quite expensive.

Surely we can, they're not saying do it cheap, but they're saying, how else can

it be creative to get the same result?

Yep.

It's like, and it's using the shopping analogy again, is where

you might go in to buy your pasta.

I might want to go get that beautiful pasta from Italy that's, I know

that fancy one that I sometimes get that's $12 for a pack of spaghetti.

Yeah.

But sometimes like, actually that's expensive at the moment.

Mm-hmm.

You know what?

I'm just gonna go buy the $2 package, but I'm still getting the same thing.

It's a little bit different.

It's probably not as good, but it, it's, you've sometimes gotta settle

and that's my biggest thing to, to clients is you've gotta this,

it's gotta be give and take and.

It's a hard process.

Like we've had, I think I was calculating the other day, seven

and a half million dollars worth of work since November last year.

We've had projects fall over.

Mm. And I know I'm not the only one.

I know that so many people are in this No, same position.

I think building's as hard as it's ever gonna get.

I know there's massive changes coming in from an insurance perspective and the,

owner's first access to insurance and building, I think that's gonna push price

up, especially in the commercial sector.

I think that there's, there's a number of change.

I think the next year gonna really dramatically change the way we look

at building, and you're about to go through building your house, I'm doing

mine at the moment, stuff's expensive.

And I'm looking at it being like, geez, that's very overvalued.

I'm getting looked after very well on some certain things.

I just can't see, and this is why I'm glass half empty.

It's like I just can't see this price increase and it's

not increasing like it was.

I just can't see this price staying the way it is in building for much longer.

My, my glass half full approach to that is, is look, when you're backed into the

corner, it creates innovation and change.

And I think that's where the industry's going at the moment.

So what you're gonna see is you're gonna see more competitive, and

I'm, and I'm talking specifically to the high performance market.

More competitors are gonna come in,

but I don't, I think this is where we get caught.

Caught in the whole high performance market.

I don't think it's custom architecture.

Custom architecture is expensive.

It's the high performance element is not, it's maybe an extra one to 2%.

I'm gonna say passive house is definitely 20% on a build.

Mm. And in most cases.

If it's sometimes, if it's as if you've got a Chase passive

house certification, but do

Do you know what is gonna happen?

People are gonna start looking overseas.

Yeah.

And probably, and we've spoken about it, particularly China.

And then what's gonna happen?

People are gonna start losing sales to China.

It's gonna force innovation.

It's gonna force change, it's gonna force efficiencies.

So I don't think building price is gonna come down.

I don't think it's gonna skyrocket up as it has been or will be.

One thing that I probably will say just a second, back to the designers

thing, and again, take this however you want, designers and architects who are

listening to this, instead of saying that that's expensive, why don't you say,

help me understand that cost, because if we can help you understand that cost.

As soon as someone says that's expensive, like I know I have a

physical reaction to a corner, I'm just like, well, hang on a minute.

No, I'm not the one that designed this.

I'm just costing what's drawn.

But if we can help you understand the cost, then we can work

collaboratively to try and work out how we can find a more cost effective

solution saying it's expensive.

It doesn't get anywhere.

Yeah.

It's, it's the language.

And I remember listening to a podcast and a diary of a CEO and how you've

gotta approach conversations where if you just say to someone I disagree

immediately, they're back in a corner.

Yeah.

Where if you, if you can make that conversation more proactive and,

um, encourage the open sort of Yeah.

Collaborative collabor dialogue.

Yeah.

Like if we can sit there and be like, okay.

You've looked at this cladding, you've been told it's a hundred dollars a

square meter, but we've come in at 300.

The reason why is the clips behind it to install this are

another $50 a square meter.

The rail that we have to use as per the installation guide is this.

Yeah.

The sales person has probably gone out to the architect and told them,

Hey, yeah, this is what the cladding costs for getting to tell them all

the little bits and pieces around it.

Yeah.

And all of a sudden that's not.

The, they, the architect, are being blindsided, so when we run them through

that, they're like, ah, that makes sense.

Mm. Also, labor's so expensive I've started running numbers and I'm probably

saying about 40 to 45% of a whole project's cost is directly to labor.

10% of being GST, the overheads and margin being part of that.

So the, the huge cost of building is actually labor.

And that's something that we can't change unless there's huge innovation,

which we always talk about it.

And it's prefabrication.

It's really, it's stuff like potentially this

robots.

Yeah.

Yeah.

And humanoid humanoid robots.

Yeah, I just think that we're gonna get to a point where there's gonna

be things that like that, and I don't think trades like plumbing are gonna

go into robots or anything like that, but I can, I can, I can see something

like a painter, like there's a machine that goes around and paints, and

I feel that the construction industry's reasonably safe for the next 10

years from AI and robotic innovation.

On site.

On site, yes.

Yeah, on site in backend.

I think there's a lot of changes that will happen.

we're kind of digressing a little bit 'cause you need to touch on, you know,

how we can bring the prices down.

One's prefabrication and one's efficiency in building.

Yeah.

If we can ex expedite the process, remove the red tape.

The red tape's another thing.

the quicker something's done, the less it's gonna cost.

'cause your overheads come down, your supervision comes

down, your risk comes down.

Your risk profile comes down 'cause you're on site less.

So innovation and efficiencies, and whether that's through AI or

whether that's through robotics, is has to be where the, where it goes.

So I've got two things that I think.

One is, I think there's too many people in the last few years who have

tried to get constructions booming and they're adding another layer before we

can get our hands on it as builders.

So you, for example, you buy something from the manufacturer, they sell it

to a supplier, they sell it to someone else, they sell it to someone else,

and then we get our hands on it.

There's four people along the way putting their margin on it.

I see a world coming up very quickly where someone like, for example, a

timber merchant, we don't have to go through say a Mitre 10 or a Bowen.

We can go directly to the timber company because at the end of the day, those

companies can actually increase their, their price on it because they're not

having three or four people along the way.

They can still give it to us cheaper than what we can buy

from anywhere else and just.

Cut in between.

I think there's way too many in between people in construction.

Everyone's trying to make a really quick dollar on it

during, especially during COVID.

Everyone's trying to make it harder to get products, and I think if we can cut people

out along the way, that's a huge one.

I just dunno if that'll happen though, because I feel like I hear what you're

saying and maybe there is some lost efficiencies there from it going from one

person to another, to another, to another.

I can't see that happening 'cause that's how the world's worked in the last

how many?

Yeah.

But construction, I feel, especially in Victoria, like, I think there's

40,000 jobs that are gonna come out of nowhere soon because we don't have any

more tunnel and rail that's happening.

So they're gonna have those people have to go somewhere and those

companies still need to sell concrete and plaster and whatever.

Yeah.

So what's gonna happen is like, I don't know, I've already had people like

borrow and stuff start reaching out to me directly to be like, Hey, like

can we tell you about our product?

Like.

James Hardy directly, like it's like, Hey, you wanna know about me now?

Like, interesting, you don't wanna know about me when you guys

are doing well, it's when you guys are starting to get quiet.

So I can see a world where you just call James Hardy, for example, and we are

gonna buy directly through you guys.

And rather than I have to go through the distributor then go to say the

Mire 10 or someone, and then we gonna hands on it and there's, there's 30%

and then another 30% margin on it.

And then we get it.

And then the reality is, as a builder, we, we've got our margin on it so we can then.

Potentially cut the costs there.

I think that's, I think, and that's a whole probably conversation itself.

I think the other one comes down to massive changes through bank

and legislation, insurances.

And I think this moves in more in line with the rest of the world is where we

have a contract that is, and we've been looking at this a bit recently, is we

can run at a fixed price contract mm-hmm.

With a fixed margin, uh, like a fixed margin.

But it's kind of like a bit of a cost plus where, if the timber, it costs

what it is, we show you the receipt, but our margin is fixed, so we don't

have any benefit if it goes up or down.

We just have our fixed margin.

Yeah.

And I think that's an area where we can start to potentially cut cost.

'cause as a builder, we can reduce our risk on not having to inflate something.

So for example, a project with joinery, you might be on site for 12 months, 13

months before you order your joinery.

You just pay what it's worth.

I think that's, yeah.

This is an

interesting, an interesting one beginning you to touch on the banks there.

Banks are really apprehensive about costing, rising fall contracts

and that is like cost plus.

So.

Cost plus, I think will work for cash clients.

And I don't think it's gonna work for, finance clients.

this is the thing is if we have a fixed price, we don't benefit from it.

And if, if things go up and down, like there's gotta be some form of like, we,

we can't continue to be banks for the, banks, for the clients and the bank.

That's the half the issue.

I agree.

Look, we, we recently completed a successful cost plus project with

exactly that fixed price margin.

Yep.

The cost of material was a cost of material.

We put no markup on it.

It was, it was what it was.

Yeah.

And it, yeah, and I think that's, it allows us to, as builders, maybe

move projects faster onto site.

Yeah.

If we can get really good costings, we can maybe skip that

whole last estimate to something.

We can do a really good early one and keep it moving faster.

Actually

almost feel that going into a cost plus contract.

And if any, is there any clients out there wanting do a cost plus contract with us?

I'm actually gonna spend longer costing your project.

Yeah.

I, I, I'd be, I'd probably set it up in a different way where I'd

want to have all my estimates and show you, hey, this is what we want.

I think on the provision of like, if we go cost plus, it's not,

let's get four plumbing quotes.

It's like, no, we still wanna use our plumber 'cause we trust

him and we know he's gonna do it.

Right.

Yeah.

And we know we can trust him compared to John the plumber up

the road who's half the price.

But we dunno what's included in Yeah.

And how he's gonna deal with people on site.

So I think there's, you know what

that's, you touched on something really interesting there, like.

When we are costing projects, we're typically only putting it out to

one supplier or one trade because we have a known relationship with them.

See, I'm for the first time starting to see what else is out there, and it's

hard conversation to have with your trades, but I think that we need to

like, so I think there's a part where sometimes maybe builders get, we don't

get comfortable, but it's always good having two and as we grow as well, you,

you some, like, I can't have the same joiner doing all my work because I can't

have 'em at two places at once either.

Yeah.

Look, I, I agree with 'em.

I, I agree with you, but what we're not doing, and look, we, and for

disclosure, we've done a, you know, on a couple of larger projects that we've

costing at the moment, you know, they're north of 3 million and I guess for

the client, we've gone out and tested.

The price because we want to benchmark that against something.

But I don't play them off.

I don't tell.

No.

And I'll use my join as an example, just as 'cause I'm looking at some join right

now, but I don't go to, Hey, company A and company B, you're both pricing

against each other come in the cheapest.

I just go, Hey, can you just both price it, get it back and be like, I think

in this case I look at the schedule and go, I think that one will come in here.

Yeah.

And go.

I think that's gonna be the best value at that time for that client.

I know each joiner, I'm just using them as an example.

They might get a Polytech, one might get better Polytech price and

one might get a better lax price.

Mm-hmm.

So it, we just have to navigate that.

Yeah.

Look, price is a tricky one and I think, I think we're gonna

chat with some estimators that we've used in the past coming up.

Yeah, we could do, I think what we could do, we could start

with something like Pro Calc.

Yep.

I know you've worked with Pricer Plan, I've worked with Rapid Qs,

we've got Tara from, art House.

And then we can start to have Avera and we can even potentially try and bring

him in as all as a conversation and let them take the, what they're seeing.

'cause they're kind of across the, the country too.

Like whilst we're in Victoria and then as builders we can have the

conversation like then how do we navigate it and hopefully potentially give.

More understanding on what goes into a project, because I know, I know, I

do know that architects really respect the work that we put in and the stuff

that we'll flag and, and we'll come up with ways to potentially go, Hey,

this is how we could value management.

We don't, I think there's, there's, it's a scary topic to navigate because

people, I think have a misconception that builders are just, they're

just putting so much margin on the project, making so much money.

I'm gonna go on the record right now and say.

the money that drops out the bottom.

At the end of the day, I work so fucking hard for, believe me when I say that

and you know, is there a potential as builders to, earn a good living living?

Absolutely.

But the risk of also going backwards on a project is, can be catastrophic as well.

And look how many builders have gone under in Victoria.

Exactly.

That's showing.

They're not making crazy amount of money.

You want your builder to make money.

You want your builder to be profitable.

So they're around.

So they're there to fix problems in the future and that's why we get awesome

clients, and I know we, we see so many builders being like, oh, my clients suck.

It's the reason we have such good a relationship with our

clients because they value us.

They trust us.

They've paid a good amount of money to get a good build.

They get that, and then we're still around to have that

conversation post construction.

Like a project we just finished, was at mid last year, there was

three other houses being built in the street at the same time.

One of them was being built.

It actually, we, They started before us.

They just finished and the builder said to them when they kept the client being,

this is what the client told me, they kept saying, Hey, how come it's taken so long?

And the builder goes, just be lucky that I'm still around.

My dad was saying at a guy at work, they had, he had quoted timber in the build.

They put aluminum in and he's like, whatcha gonna do about it?

Because they just wanted to get cost back.

Wow.

So the thing is like that also comes at a cost.

Yeah.

I think when we talk about building prices, that what

something might look on paper.

It's also the reputation and we, we go back to the conversation

earlier about the industry and.

The budget meets brief.

I think part of that budget meets brief conversation is speaking to our

clients that how they've done it in the past and how they achieved it.

I think that is a really important thing where most clients will

probably reach out and say, Hey, like what was the bill quality?

Like?

How are they on site?

Like, that's our bread and butter.

That's easy.

The question I'd be asking is like, how do they go getting a project to

budget and what challenges did you have?

Yep.

I think that's a really important conversation to have.

I. What tools were at the disposal?

Was it a stressful process?

Which I can tell you straight away, it is a stressful process.

Yep.

I think the more time you spend in pre-construction, the less

stressful the actual building Yes.

Is gonna be.

Now I reckon we, um,

wrap this one up,

wrap this one up because we have a whole bunch of other podcasts

that we are gonna record.

We got over

the next few days.

We have people like Justin.

Justin, FCP.

Yeah.

From, yeah.

PHCP down Tasie Pro Climb, not Pro Climb Performance Membranes.

We have Devin from Performance Membranes, Jake from the Tous

Tools and Performance Membranes.

David Kustra, the reluctant owner of Fence and Panel coming on.

Yeah, we've got Dura Panel coming in.

Yeah,

we've got, um, interior designer.

Yeah, interior Shivani from

Madison Interiors.

we'll wrap this one up.

We're super excited for the content we're gonna bring you over the next few days.