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If you’re like most people, you probably think smaller builders are a riskier bet. On the surface, this makes sense. They lack the resources of larger firms, which, in theory, leaves them more exposed to market fluctuations and economic downturns.
Yet, if you do a quick Google search, you’ll find several large construction firms buckling under financial pressure over recent years.
Porter Davis is a case in point: they were one of Australia’s largest home builders, focusing primarily on new residential properties. Yet in March 2023, they entered voluntary administration, shocking the construction industry - and leaving hundreds of customers with unfinished homes.
And they are certainly not alone.
Here’s Why Larger Builders Can be Just as Vulnerable, if Not More, to Financial Woes
When they commit to many fixed contracts and material costs soar (like they did in the COVID-19 pandemic), they are exposed to a far greater risk than a small or medium-sized builder.
The way inflation has soared over recent years certainly doesn’t help.
For instance, due to the skyrocketing cost of timber, I personally lost about $500,000.00 during COVID-19.
This is a substantial hit to anyone.
But imagine a larger builder dealing with thousands of projects; they often rely on volume and efficiency to make profits (and tend to operate on thin margins across multiple projects), so that number could quickly spiral into the tens of millions.
What Size Builder Should You Choose?
While large builders can face risks from fixed-price contracts and narrow profit margins, a builder who’s too small might lack the resources to handle your project efficiently, leading to potential delays and quality issues.
The ideal builder often lies in the middle—large enough to have reliable management systems but small enough to maintain flexibility and a more personalised approach.
Obviously, it goes deeper than choosing a mid-sized firm. Here are a couple of other things to check to ensure you’re choosing the right builder.
- Check Their Online Reviews and Testimonials
Online reviews and testimonials can provide real-world evidence of how a builder manages projects and client relationships and offer insights into their communication skills, problem-solving capabilities, and ability to deliver on promises.
- Watch How They Operate
It doesn’t matter how glossy your builder's marketing material is, the success of your project is about how they manage their business from the ground up.
Are their employees well-presented and knowledgeable?
Do they operate from a professional office or manage everything from the back of a van?
The appearance of their work sites, the condition of their vehicles, and even how they handle paperwork can tell you a lot about their stability, operational efficiency, quality of their trade relationships - and whether they have a well-run business that values customer service and excels in project management.
There’s so much to consider when choosing the right builder for your dream home. That’s why I created this detailed guide, which you can download.
Build with Confidence - 7 Things You Must Know Before Designing a New Home
It’s completely free and will help you avoid the mistakes homeowners make every year. Download it now to ensure your home is perfect from the ground up.
