How to Check the Financial Stability of Your Builder
In today’s construction landscape, it’s understandable that homeowners might feel a bit uneasy. With rising costs and the challenges many builders face, it’s important to make sure the builder you choose is financially stable. Doing so can help ensure your project is completed smoothly and on time.
This guide will walk you through the steps you can take to assess the financial stability of your builder, so you can move forward with confidence.
The Building Industry in Australia: A Snapshot
The construction industry in Australia, like many others, is facing its share of challenges. Factors such as rising interest rates, inflation, and supply chain disruptions have made it more difficult for some builders to maintain cash flow. However, this doesn’t mean all builders are at risk. Many, like Eltcon, are financially secure and take pride in their stability, offering transparency to reassure their clients.
Simple Online Checks for Peace of Mind
The internet is a powerful tool for conducting initial financial checks on your prospective builder. Here are some steps you can take:
1. Search for News Articles and Reviews:
Conduct a simple Google search using the builder’s name. Look for any news articles, reviews, or forum discussions that mention the builder. Pay close attention to any mentions of financial difficulties, project delays, or insolvencies.
2. Check ASIC Records:
The Australian Securities and Investments Commission (ASIC) provides access to public records, where you can check if the builder has been involved in any insolvency proceedings. You can also verify the company’s registration status, which can give you insights into its legitimacy and history. Click here for more information.
3. Verify Builders’ Licences:
Visit the Victorian Building Authority (VBA) website to verify that the builder holds a valid licence. The VBA site also lists any disciplinary actions taken against builders, which could be indicative of past financial or operational issues.
Key Questions to Ask Your Builder
In addition to online research, it’s important to have open and honest conversations with your builder. Here are some questions to guide your discussions:
1. Can You Provide References from Recent Clients?
Ask for references from clients whose projects have been completed recently. You can also look at Google reviews to get an understanding of what past clients have had to say about their experience with the builder. You can read Eltcon’s Google reviews here.
2. How Do You Manage Cash Flow for Projects?
Understanding how the builder manages cash flow is essential. A financially stable builder should have a well-organised system for managing payments, subcontractors, and material purchases. They should also be able to explain how they ensure that funds are allocated appropriately throughout the project. This is something that Eltcon goes through in detail with every new client as part of the initial meetings.
Eltcon’s directors, Kyle and Jared, have backgrounds in construction management and site supervision respectively. Based on these attributes they have been able to create a business that focuses not only on quality construction but also on ensuring that risks to the client are mitigated by having strong, highly systemised internal commercial controls.
3. What Insurance and Guarantees Do You Provide?
Ensure that the builder offers appropriate insurance, such as Home Warranty Insurance, which protects you if the builder goes out of business. Additionally, inquire about the guarantees they offer for their work and materials. A builder who provides robust guarantees is more likely to be financially sound.
4. Have You Received a Detailed Quote?
It is important to receive a detailed quote for your building project as this will give you a clear understanding of how the funds will be allocated. There are a variety of ways to quote for a building project, we delve deep into quoting in this article: Understanding Your Construction Quote.
5. Have You Faced Any Financial Difficulties Recently?
While this may be a sensitive question, it’s crucial to gauge the builder’s honesty. A reputable builder should be transparent about any past financial challenges and how they’ve addressed them.
Moving Forward with Confidence
Choosing a builder who is financially stable is essential for a smooth and successful project. By conducting thorough research and asking the right questions, you can make an informed decision that brings you peace of mind. Eltcon, for example, is proud of its financial health and is happy to provide information to reassure clients.
Remember, a financially secure builder is not only more likely to complete your project on time and within budget, but they also provide the confidence that your investment is in good hands.
If you have any specific questions or need further guidance on your renovation project, book in a time to chat. We would love to assist you in any way we can.
