Where margin goes between deposit and handover

Most builders don’t lose margin when they quote. They lose it slowly, one hand-off at a time.

A contract is signed at a fixed price with a margin that looks healthy on paper. Then the job moves through estimating, contracts, purchasing, scheduling, site and accounts – often over the best part of a year. Every one of those steps is a place where a little of that margin can slip away without anyone noticing.

Margin is set at signing, but earned over months

It’s not unusual for the time between deposit and handover to stretch. According to the Productivity Commission, in 2023–24, the average time to complete a detached house was about 10.4 months, up from about 6.4 months a decade earlier. Every extra month is another month of exposure to price movements, site overheads and supervision costs.

And those costs are still moving. The ABS reports house construction output prices rose 5.9% in the year to the June quarter 2026, with fuel surcharges, delivery costs and trade shortages all playing a part. On a fixed-price contract, increases that happen after signing generally sit with the builder unless the contract says otherwise.

Making matters worse, there isn’t much room to absorb them. Net margins on volume housing are thin, so a few small leaks on each job can wipe out the profit entirely.

The pressure shows up in the numbers

Construction continues to account for a large share of company failures in Australia. ASIC data puts construction at 3,472 of the 14,152 companies that entered external administration in 2025–26 – that’s roughly one in four.

The reasons external administrators give for these failures are telling. In ASIC’s 2024–25 data for the construction industry, inadequate cash flow was nominated in 56% of initial reports, trading losses in 48% and poor financial control, including lack of records, in 40%. These aren’t only pricing failures. They’re failures of control during the build.

The Reserve Bank made a similar point when costs surged in 2022. It found margins on existing fixed-price contracts had compressed substantially, and that delays had pushed back when payment milestones were reached – squeezing cash as well as profit.

Where the leaks actually happen

Margin rarely goes in one big hit. It tends to drain away through a handful of everyday gaps:

• Re-entry of data and hand-offs. When the same job details are typed into systems again at each stage, a spec item drops out, a stale price is carried forward or an upgrade never reaches the purchase order.
• Unbilled extras. A change is agreed on site, the work gets done and nobody raises a formal variation. The builder quietly absorbs the cost.
• Delays. A week lost waiting on a trade or an inspection doesn’t show up as a line item, but supervision, insurance, finance and site costs keep running.
• Cost creep. Extra labour days, a supplier invoice that comes in above quote, materials ordered without a purchase order. Each one looks minor but together they add up.
• Late claims. A stage is complete but the claim goes out days later, stretching the gap between paying trades and actually getting paid.

True overhead is bigger than it looks

Many builders recover overhead as a fixed allowance per job, based on an assumed build time. When a job runs two or three months longer than planned, that allowance no longer covers the supervisor, customer service, admin and warranty time the job actually consumed. Overheads continue whether or not claims have been paid, and delays only add to the bill.

Work out what your overhead costs are per house, per week of build time. Once you can put a dollar figure on a week’s delay, slippage stops looking like a scheduling problem and starts looking like a margin problem.

What good looks like

The builders who hold their margin tend to treat it as something to manage across the whole build, not just something to set at contract. In practice that means:

• One accurate record of each job, entered once and carried from contract to handover, so details aren’t re-keyed at every stage.
• Budget, committed and actual costs tracked per job and reviewed at each stage – not discovered at final account.
• No variation work starting without a written, priced and signed variation, and every approved variation landing on the next progress claim.
• Purchase orders raised against the budget before work starts, with supplier and trade invoices matched to them.
• Build time tracked as a cost driver, with delays costed using a realistic weekly overhead figure.
• Claims issued as soon as each stage is reached.

None of this is complicated. It’s mostly discipline, visibility and process – making sure the information that protects your margin doesn’t get lost between the people who need it.

See how connected workflows can protect your margin

ClickHome brings job information and workflows together across the building lifecycle, helping residential builders cut re-keying, keep extras billed and protect margins.

Want to see how ClickHome can help your business work more efficiently? Get in touch.