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Bob Day building company collapses

Discussion in 'General Property Chat' started by marty998, 17th Oct, 2016.

  1. marty998

    marty998 Well-Known Member

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  2. House

    House Well-Known Member Premium Member

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    Ah so that's why Bob Day was trending... Seriously thought it was a day dedicated to people named Bob :rolleyes:

    image.jpeg


    Looks like the indicators were there...yet they kept taking money and making promises
     
  3. Brady

    Brady Well-Known Member

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    Bit more in this article...

    Bob Day quits Federal Parliament after his building company goes bust | Daily Mail Online

    Some pretty interesting comments made by Bob - not your usual comments when someone goes belly up in this country

    'As I have always agreed to sign personal guarantees to creditors, this closure also has serious implications for me and my family.'
    'I will be working closely with the liquidator and offering a proposal to enable me to find a way to pay back every debt fully, no matter how long it takes.'
    'I made two big mistakes - buying Huxley Homes and going into politics without putting in place a proper management structure for the business,'
     
  4. marty998

    marty998 Well-Known Member

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    Good on him for taking personal accountability, rather than just walking away flush while the trail of destruction ruins everyone else.
     
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  5. Tenex

    Tenex Well-Known Member

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    This is not sign of anything to come.

    The building industry and the way it works with it's customers in this country is extremely under-regulated. There is no available information, no reliable database of trades no regulation on what can or cannot go into a contract. It's wide open.

    It is in fact a way of making money for a lot of builders to go bankrupted. Think about it, if you collected 100 million dollars over the years from different customers but only delivered 50 million dollars worth of work, is it easier for you to declare bankruptcy or continue working and delivering in the hopes that at some point in the future you will clear a 50 mil net profit?

    Its so bad, builders (mostly the ones with family members who know and trust each other) form groups and take turn on going bankrupted.

    If one knew whats actually involved in building a house, they would realize the very premise of needing a builder at all to do it is absolutely redundant.
     
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  6. bob shovel

    bob shovel Well-Known Member

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    What about the fancy letterbox, stone benchtop and wifi like the jones' have!? :p
     
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  7. Scott No Mates

    Scott No Mates Well-Known Member

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    You'd realise what was involved with being a builder - compliance with hundreds of Australian/NZ/ISO standards, budgeting, guesstimating, tendering, cost control, finance, contract administration, project management, HR/construction industry EBAs/Awards, programming and a few other things too.
     
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  8. dabbler

    dabbler Well-Known Member

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    The govt also makes you do a quasi builders course if you want to botch it on your own...

    building is not easy, but lot of people think it is for some reason.
     
  9. LifesGood

    LifesGood Home Building & Development Consultant Business Member

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    Not boom times over here in WA that's for sure! They've been struggling here for years.
     
  10. Casteller

    Casteller Well-Known Member

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    Yes, unlike Donald Trump who has destroyed many lives and businesses by not paying hundreds of contractors.
     
  11. Tenex

    Tenex Well-Known Member

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    Less than 10% of "builders" actually do the above right or at all for that matter.

    I am not talking about high-rises here. I am talking about one or two houses. To your points:

    Building standards: You have engineering inspections and private certifier, absolutely no need for a builder to even set foot on the premises.

    Budgeting and guesstimating: Anyone with an IQ above 100 should be able to do a couple of weeks worth of homework to be able to know how much things costs and then there is also the quantity surveyor that can make that job easier.

    Finance: Not a part of the builders job, the money comes from the customer and by extension from the bank. Most builders are paid well before they do any thing any way.

    Project management: most builders are pretty bad at it, you can do a 2 day course of project management and I promise, you will be better than 90% of builders out there in doing the PM work.

    Contract administration: you write a contract, check licenses etc, no different to a customer that administers a contract with the builder any way. Its just a few more contracts that need to be managed.

    For the above you can save yourself hundreds of thousands of dollars, avoid a lot of frustrations and delays and wont risk paying a builder that is going to pull the wool over your head.


    As I said, high-rises and multi stories are different in that you need expertise (not necessarily builder but rather more sophisticated project management), but for a house, duplex or a small number of town houses, anyone with half an intelligence could do it. No need for a builder what so ever and in most cases the builder can actually mean delays and variations any way.
     
    Last edited: 18th Oct, 2016
  12. Brady

    Brady Well-Known Member

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    Interesting read @Tenex how are you financing these owner builds???
     
  13. Scott No Mates

    Scott No Mates Well-Known Member

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    That is total disrespect to builders. It is a bit late when the inspector gets to site and picks up that the toe of the footing has 100mm insufficient cover, that dampcourse hasn't been installed, flashings are running into the building, insulation has insufficient separation, floor wastes fall in the wrong direction, setdowns are in the wrong places, wrong timber grades have been used for framing, termite barrier wasn't installed, sand blinding was skimped upon, joints in waterproof membrane weren't taped, CFC was not used for wet area flooring etc

    Who looks after WHS? Who takes the rap if you chip a toenail and die of tetanus? Who ensures that the plant hire has been inspected? Who reviews the SWMS? Who looks after build quality? You can't trust illiterate subcontractors nor can you delegate legislated obligations.

    There's absolutely nothing to estimating, that's why many of the chief estimators that I know earn at least $200k. Maybe they're just good looking.

    Projects always run to schedule, variations are always paid in advance of the works being commenced/completed. There is absolutely no reason that a builder needs a relationship with a bank after all, they have their client who pays cash on the day for everything. Likewise builders never pay their subbies on time and still get them to perform miracles on the hope that they will get paid in 60-90 days. More like if turnover is $1m/month with several jobs running simultaneously, you don't get paid until the middle of the month after the progress claim has been lodged & approved by the client's bank & QS so the builder is lucky to receive payment 45 days after work has been done yet is under the obligation to the contractors to pay within contract terms or get penalised under the security of payments legislation. The builder signs a statutory declaration to the effect that they have paid all outstanding claims prior to the bank or the client releasing money for progress claims. Builders invest heavily in plant and cashflow. They need strong financial support and overdraft to keep the business running.

    Buliding is easy, people make it difficult. The skill is in the coordination of trades, getting countless organisations with umpteen different business strategies to work together to complete your project. Easy as P!$$ing in a bucket (into the wind while wearing a blindfold and both hands tied behind your back). Most builders are shockers at people skills not at building, after all they've trained to be builders.

    If you aren't a member of an industry group, you don't have access to construction contracts (fair trading contracts excepted). If you do have access, then they need modification so that you can use them as the definitions will not apply. When you need mediation, they will be messy. You will need legal advice to ensure that any modification made to these contracts are valid. Not every two bob lawyer is an expert in construction of contracts nor in the construction of construction contracts. This is fraught with danger for would be if they could be builders.

    There must be a few holes in your documentation if it is costing you hundreds of thousands of $$ per project to engage a builder - you might be better off engaging a project manager who is going to charge you 5-8% on a $1m project and it will still cost less than $100k

    Builders of multi-storey buildings don't require licences but you do to put up a piddly house. Obviously consumers need to be protected from themselves.
     
    Last edited: 18th Oct, 2016
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  14. jim1964

    jim1964 Well-Known Member Premium Member

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    Bob took his eye off the ball and look whats happened.Lucky for us he is not running the country............
     
  15. Joynz

    Joynz Well-Known Member

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    Hi Tenex

    You must not know many builders, based on your assertions!
     
  16. Tenex

    Tenex Well-Known Member

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    I am not certain what you mean, is the builder paying for the build and if he wasnt there it wont get paid for?

    Customer always pays out of his pocket, either directly or through the bank. Some banks do lend to owner builders, others dont. We need a change whereby the existence of a builder is not mandatory for a bank to lend. Regardless of that, the builder by no means is financing anything. He is taking money from one hand, takes his cut first and then (hopefully) pays the subbie. In this case that OP has brought up the second part of that transaction clearly wont take place.
     
    Last edited: 18th Oct, 2016
  17. Tenex

    Tenex Well-Known Member

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    I am not sure who does the jobs you speak of but most carpenters know how to read engineering drawings and you dont necessarily need to call the engineer or certifier after work is done. You can always call them before and their visit is pocket change compared to what you are paying the builder.

    You can even opt to ask a builder inspector who charges $250 for a visit which in most cases wont even be necessary to do.

    Every license tradie has to have insurances in place. Did you think if a Tradie hurt themselves on the job, the builder is going to pay for it? Their insurance must pay for it period and purchasing workers comp for a site is as easy as purchasing any other form of insurance any way.

    Not sure what you are trying to say. You brought up the estimation part as builder's duty. If there is any cost guesstimates involved for a house or a duplex, it is not a hard task at all. Most builders I have seen are not good at it any way and charge you anywhere from $500 to $3500 to get their office manager ring around and get prices. Thats how they tender.


    I am curious which builder does this?

    They charge you a 10% deposit to even sign you up and thats before they have lifted a finger, majority of work is paid for in advance. I dont know what kind of builder you have worked with but they will charge you well in advance plus their margin and if they dont get paid in time (they have it in their contract) that they will drop everything until you pay.

    No builder I have come across will pay for your project in the hopes you will pay them one day. That is besides the point that for the period of the project they actually own your site.
     
    Last edited: 18th Oct, 2016
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  18. Tenex

    Tenex Well-Known Member

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    People dont make anything difficult, shunky builders make it difficult by trying to be too smart for their own good. Learning how to give excuses for different things is one of the unspoken secrets of the trade.

    Thats why they have a whole section at Fair trading and tribunals and hearings dedicated to solving disputes and building contracts and thats not including the many cases that end up in the local court. The trouble is, it is so under regulated they have a whole section of government dedicated to remedy but a few simple fixes will save a lot of troubles.



    No, you can purchase them for $60. HIA contract or master builders contract can be purchased and most builders are a member of one or the other and can give it for free any way.

    Regardless, you can grab a piece of paper and write your own contract if you wanted to. There is very few limitations or regulations on what can or cannot be written into it.

    Builders have minimum 20% margin. On a typical million dollar project thats a "minimum" of 200k. Thats what they will tell you but the real number is much, much higher and thats not including how they will milk the variations.



    Using a builder should be made optional and not mandatory for a build and money should never be given directly to a builder. They should go into a trust account whereby tradies are paid, builder is paid and if no work is done it can be returned to the customer. That alone will avoid Huxley homes situation and many, many other small or large situations with builders.
     
    Last edited: 18th Oct, 2016
  19. Scott No Mates

    Scott No Mates Well-Known Member

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    You obviously have not been involved in business in any form other than barter, cash economy or COD. In most businesses, the supplier takes the credit risk ie that they will get paid on time, anything beyond that time costs them interest charges (nominal or real).
     
  20. Scott No Mates

    Scott No Mates Well-Known Member

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    A carpenter is not a licensed builder. The Builder is the one who has the ultimate responsibility for the project, though there may be some limited recourse to the carpenter however most framing is preassembled offsite in a factory not by the chippies, site labour erect trusses & frames.



    You have no understanding of the builder's liability when it comes to WHS and the duties of the Principal Contractor. You cannot insure for personal/corporate liability.

    With respect to home building, Home Warranty Insurance is the only mandatory insurance policy, all other policies are advised. If the worker is employed by a company or sole trader the employer is also obliged to have a workers compensation policy in place for its workers (self employed persons cannot get workers compensation insurance for themselves however may effect income protection insurance).

    They've seen you coming.

    Pretty much every first, second and third tier building company

    Deposit is mandated in the terms of the contract, so is the payment schedule. Everything other than the deposit is paid in arrears. Banks will not pay for materials which are not on site or fixed.