Builder Annual Report

State of Residential
Construction Industry
ANNUAL
REPORT
2023
Commissioned by:
Sponsors:
Contents
what’s inside…
01
Executive
Summary
03
Key Issues
06
Profile of
15
Sales
& Snapshots Participants
26
Marketing
33
Advertising
43
Projects
52
Technology
64
Financials
82
Planning
85
Team
90
Training
100
Glossary
Executive
Summary
The State of Residential The material price increases that had hit the
industry hard in 2021 continued throughout
Construction Industry
2022, however they were further compounded
(SORCI) Report was prepared by supply shortages and increases in the cost
by the Association of of labor. Additionally, in Australia fixed-price
Professional Builders (APB) contracts that did not contain cost escalation
clauses and extreme weather presented
that surveyed residential additional challenges for builders.
home builders operating in
the United States, Australia, The consequences of these factors resulted in
large numbers of construction companies failing
Canada and New Zealand. while owing millions of dollars to creditors.
APB works exclusively with the owners and While the spike in building company failures have
directors of medium-sized residential home only been seen in Australia so far, we expect
building companies that specialize in new homes the trend to spread to other countries in 2023
or large renovation/remodeling projects. In as rising interest rates continue to dampen
particular, builders who are looking to systemize consumers’ appetites for risk and reduce their
their businesses, grow their margins and/or their capacity to borrow.
sales revenue and deliver a better experience to
their clients. However, one thing that will serve as an
encouraging sign to sub-$100 million residential
APB’s goal is to improve the construction industry building companies is the way in which these
for both builders and consumers by helping companies have been able to adapt quickly to the
more building companies to become systemized. changing environment and side-step a lot of issues
APB provides the processes and templates for that are taking down their larger counterparts.
builders to implement in order to streamline their
building companies and attract the best clients As a result, we are proud to report that many
who understand value rather than simply looking of those builders have reported a record year
for the cheapest builder. for revenue, gross profit and most importantly,
net profit.
This report was commissioned to gather a
deeper insight into the residential construction It’s not only the lag indicators that are performing
industry and spot emerging trends in order to above expectations. Many builders have reported
enable building company owners to benchmark signing contracts at record margins during the
their own businesses against industry standards. last quarter of 2022 even as the market softened.
1 Association of Professional Builders

EXECUTIVE SUMMARY
A combination of record low unemployment and

unprecedented demand has resulted in key staff
being head-hunted by large companies offering
outrageous salaries in order to fill vacant positions
created by ’The Great Resignation’.
However, it’s been far from plain sailing, even administrative work associated with the constant
for those companies enjoying financial success. rescheduling of subcontractors and deliveries to
Labor has become a major issue during the year site every time a project was delayed.
as employers struggled to recruit and retain staff.
It was an unsustainable way to operate and the
A combination of record low unemployment cracks started to appear midway through 2022
and unprecedented demand has resulted in as increasingly more builders reported feeling
key staff being head-hunted by large companies exhausted, burnt out and anxious.
offering outrageous salaries in order to fill vacant
positions created by ’The Great Resignation’. By the end of 2022, a quarter of the builders that
participated in the survey were honest enough to
The most cited reasons for employee admit that their mental health had deteriorated
resignations were wage stagnation amid rising during the year.
costs of living, limited opportunities for career
advancement, hostile work environments, lack of This has contributed to a record number of
benefits, inflexible remote-work policies and long- building companies being voluntarily closed down
lasting job dissatisfaction. by their owners.
Some economists have likened The Great Those that remain in the industry will face new
Resignation to a general strike. However, with challenges in 2023 even as supply chains get
data close to, or in many cases often exceeding back to normal and unemployment increases
the pre-pandemic rate, it seems that instead of again to a healthier level for business. Rising
remaining out of the workforce for extended interest rates now mean the ‘easy sales’ builders
periods (which can be financially difficult, have enjoyed over the past two years will
especially at a time of high inflation), many now once again have to be earned from great
workers have been simply swapping jobs. marketing and a repeatable sales process.
The dire staffing situation has been further The best operators will continue to grow,
compounded by record levels of absenteeism profitably. However, the larger building
in the workplace. This has forced a significant companies whose reserves have been
number of building company owners to fill the destroyed as well as the average builders that
gaps themselves by resuming onsite duties in have no marketing strategies both face an
order to keep jobs moving. uncertain future.
Even those who have not found themselves

back onsite have still had to deal with additional
State of Residential Construction Industry Annual Report 2023 2

Key Issues
& Snapshots
KEY POINTS
$
57.7%
Despite the The #1 sales Builders’ financial

obstacles, 57.7% of challenge was understanding
builders delivered generating continues
homes on time. quality leads. to improve.
Cost escalation clauses exposed

As 2022 unfolded one thing became very clear, The situation has highlighted just how important
cost escalation clauses were going under the it is for builders to understand their own
microscope. contracts, and to enforce them preemptively with
clear and open communication.
In Australia, cost escalation clauses were rarely
considered before 2021, however, they became There have been too many examples over the
the number one reason why so many building past 12 months of builders falling foul of their
companies were collapsing. Even in New Zealand, contract agreements. However, as a result of
Canada and the United States where the majority disputes being raised, more and more builders
of builders were protected from price increases are seeking proactive rather than reactive
that were out of their control, implementing legal advice.
those clauses got harder possibly due to the size
of increases filtering through.

KEY ISSUES & SNAPSHOTS
In Australia, 33% of builders declared their The #1 challenge was quality leads
contracts incorporate special conditions to
include cost escalation clauses. This number The biggest challenge felt by builders both in
still lags behind New Zealand’s builders terms of sales and marketing was the quality of
where 85.5% have protected themselves, the the leads they generated.
United States with 61.8% and Canada 44.1%
covering themselves. In terms of sales, twice as many builders cited the
quality of the leads as being a bigger challenge
The benefit for consumers signing a contract than closing the sale or even qualifying the leads.
that includes a cost escalation clause that
protects their builder is that they won’t have With regard to marketing, no other challenge
huge contingencies loaded into their fixed-price came close.
contracts. Business is all about pricing risk, so
for a builder to enter into an agreement where
they accept all the risk would mean increasing
the contract price by around 33% based on
recent history. Given the choice, around 95%
of consumers prefer to accept the risk with a
A resounding 41% of builders
cost escalation clause rather than pay for it in indicated that they struggled with
contingencies of a fixed-price contract. the quality of the leads they were
generating compared with only
10.5% of builders who admitted they
Despite the obstacles 57.7% of struggled to generate enough leads.
builders delivered homes on time
In spite of all the challenges faced by builders The solution to these challenges is a lot simpler
in 2022 including material shortages, labor than these builders may realize.
shortages and extreme weather conditions,
57.7% of builders reported that the majority of Placing quality content in front of an audience
their projects were delivered on time. produces educated leads. Leads always appear
to be more qualified when they are realistic about
This is quite an achievement considering the their expectations, which is why posting blog
length of the delays builders were faced with for a articles on a website and then promoting them to
number of different materials throughout the year. a wider audience on social media works so well to
attract new leads. The next step is to continue to
The key difference between 2021 and 2022 follow up with those new leads by providing them
wasn’t the fact that the supply chain improved with informative emails. This approach continues
- in fact a lot of builders would argue it got a their education until they are ready to ascend to
lot worse - it was down to builders becoming the next stage in the sales process.
better organized. As of the end of 2022, 74.1% of
building companies now use dedicated project This strategy has been utilized and proven to
management software to keep on top of their work time and time again by building companies
jobs, up from just 64.8% a year ago. of all sizes.

Despite this fact, a whopping 64.1% of builders Only 8.9% of builders could demonstrate they
never create any blog articles and 59.6% of builders understood the meaning of this significant
admitted they never email their prospects, while number. Which would indicate that 91.1% of
social media activity throughout 2022 was down for builders are either calculating this number
all builders in all countries compared to 2021. incorrectly or not calculating it at all.
The upside is that a massive opportunity awaits This should be a serious concern for everyone in
those that wish to take it in 2023. the industry, especially as 71.7% of the builders
who thought they knew how to calculate work in
progress believe it to be either the value of work
they have completed or the un-invoiced amount
Builders’ financial understanding remaining on their contracts.
continues to improve
As both of these figures are assets it means
A key trend that continues to confirm what builders are seriously overstating their profits
most people inside the industry already suspect each year resulting in them paying tax on profits
is that builders are not only becoming more they did not actually make.
professional year on year, they’ve improved their
understanding of financials better than any other Additionally, it means builders could be operating
point in history. as a construction Ponzi scheme that creates
unfair competition for professionally run building
Financial understanding has not been at the level companies that are operating on sustainable
it needed to be for builders in previous years, profit margins.
however that is clearly starting to change.
Even more encouraging is that 70.5% of builders

truly understand the difference between markup
and margin. We know that for a fact because we
tested those that answered yes!
Almost three quarters of builders (74.8%) know

their fixed expense ratio, which is calculated by
dividing total expenses by revenue. Over half
of the builders surveyed (57.3%) are producing
60%
monthly financial reports and 60% monitor the
gross profit margin on every job on a monthly
basis enabling them to have their finger on the
pulse of every single job. monitor the gross profit on
every job on a monthly basis
While this is all great news and a big
enabling them to have their
improvement compared to the data collected in
2021, there is still a lack of understanding of the finger on the pulse of every
most critical number within their accounts. Work single job.
in progress.

PROFILE OF PARTICIPANTS
Profile of
Participants
Over 1,000 builders from the Another important trend was the number of
building companies building new homes that
United States, Australia, Canada
follow the design and build business model
and New Zealand took part in (72.9%) as opposed to quoting clients’ existing
the 2022 SORCI survey revealing plans (19.5%). The exception to this trend
detailed insights into their was in New Zealand where 43.6% continue to
quote plans with only 48.7% following the more
building companies. profitable design and build model.
This was a significant increase on the 720 builders The benefit of new home builders managing the
that took part in the 2021 survey, largely due to design process was clear with 28.9% of design
the efforts of our industry partners who all played and build companies marking up their projects
an important part in the data collection process. by over 25%, whereas only 17.2% of builders that
quoted clients’ plans managed to reach this level.
All of the information compiled in this report has
been provided by owners, directors, presidents A new question introduced to the 2022 survey
and senior managers who have access to detailed looked into the fixed-price versus cost plus/open
information across marketing, sales, operations and book debate. The data revealed that around two-
the financials of their respective building companies. thirds (68%) of builders opt for fixed-price contracts
while one-third (31.7%) prefer the perceived
Approximately two-thirds (63.7%) of the
security of a cost-plus contract. The exceptions
respondents predominantly focused on building
being Australia where 82.5% of builders use fixed-
new homes, while one-third (36.3%) focused
price contracts and New Zealand where builders
on large scale renovation projects, all with an
are almost evenly split between the two with 46.8%
average contract value in excess of $100,000.
and 53.2% respectively.
Interestingly there was a drop in the percentage
of new home builders in Australia when The reason APB recommends fixed-price
compared with the 2021 data. It’s possible this contracts, despite the perceived risk, is because
decline is a consequence of the number of new they have always delivered higher gross margins
home building companies going into liquidation to APB members even with the material price
as a result of having already been committed to increases that have hit the industry over the past
fixed-price contracts that failed to include cost two years.
escalation clauses.
That claim has been corroborated by the 2022 data
Similarly to 2021, Canada once again had a split which showed that 30.8% of builders using fixed-
that was closer to a 50:50 ratio of new homes price contracts were able to add over 25% gross
versus remodeling/renovations specialists. markup to their projects while only 18% of cost‑plus

builders enjoyed the same margins. Worryingly, value in excess of $1 million. The data revealed
25.3% of cost-plus contracts were signed with less that 23.3% of builders reached that milestone
than 15% gross profit which is unlikely to cover the with a staggering 31.1% of builders in the United
fixed expenses for the business. States now enjoying a $1 million-plus average
contract value.
Another new question asked in the 2022 survey
analyzed the differences between builders The most remarkable statistic to come out of the
belonging to a franchise versus those builders United States was that only 66.7% of residential
operating under their own brand. Franchising home builders belong to a national association.
appears to be most popular in New Zealand with In examining this statistic, APB was excluded from
almost one in ten respondents (9.7%) taking the the results as it is an international organization.
franchised route which was three times higher
than the average across all countries. A similar trend emerged in Canada where
just 61.8% of builders belonged to a national
The vast majority of builders that took part in the association.
survey (72.2%) took on less than 13 projects a
year which was only a slight increase from 71% However, the results were very different in
in 2021. This indicates that despite the massive Australia where 91.8% of residential home
amount of opportunity that existed, builders builders belonged to either Master Builders
remained rightly cautious and avoided over or the Housing Industry Association (HIA)
stretching themselves. and in New Zealand where 75.8% of building
companies belong to at least one of the national
Unsurprisingly, average contract values increased associations.
from 2021, however, what was unexpected
was the steep incline in the number of building In all countries, memberships with national
companies that achieved an average contract associations increased during 2022.
Very closely matched to 2021’s figure was the

number of building companies with a website
with the 2022 data showing that 87.2% of
building companies had a website compared to
2021’s figure of 86.7%.
Once again the data revealed that

the builders that were without a
website struggled to match the
profit margins being achieved by
the companies with a website.
This further promotes the notion that margins

are linked to marketing.

Which country do you What is your age?

operate in?
New
Zealand Under
25
0.2%
12.0 %
Canada
25 - 29
6.6% 2.7%
United
States
30 - 39 23.9%
43.7 %
40 - 55 47.6%
Over
Australia
55 25.6%
37.7 %
What is your role in the business?
OWNER/DIRECTOR/PRESIDENT SENIOR MANAGEMENT
New New
homes
62.5% homes
75.0%
Remodeling / Remodeling /
renovations
37.5% renovations
25.0%
ANSWERS BY LOCATION:
OWNER/DIRECTOR/PRESIDENT
CHOICES UNITED STATES AUSTRALIA CANADA NEW ZEALAND
New homes 71.6% 54.5% 51.6% 61.0%
Remodeling / renovations 28.4% 45.5% 48.4% 39.0%
SENIOR MANAGEMENT
New homes 83.3% 61.1% 66.7% 100.0%

What type of work do you
primarily target?
New homes
63.7%
Remodeling /
renovations
36.3%
New homes 72.9% 55.2% 52.9% 62.9%

What is your business model?
65.8%
28.5%
4.7% 1.0%
Design Quoting I don’t
Spec homes
& build plans know
NEW HOMES
Design & build 79.3% 70.1% 83.3% 48.7%
Quoting plans 9.8% 27.1% 11.1% 43.6%
Spec homes 10.4% 1.9% 5.6% 7.7%
I don’t know 0.6% 0.9% 0.0% 0.0%
REMODELING / RENOVATIONS
Design & build 78.7% 37.9% 87.5% 21.7%
Quoting plans 18.0% 62.1% 6.3% 73.9%
Spec homes 0.0% 0.0% 6.3% 0.0%
I don’t know 3.3% 0.0% 0.0% 4.3%

What type of building contract do you use?
68.0%
31.7%
0.4%
Cost plus /
Fixed price I don’t know
open book
NEW HOMES
Fixed price 62.8% 87.9% 61.1% 59.0%
Cost plus / open book 37.2% 10.3% 38.9% 41.0%
I don’t know 0.0% 1.9% 0.0% 0.0%
Fixed price 60.7% 75.9% 62.5% 26.1%
Cost plus / open book 39.3% 24.1% 37.5% 73.9%
Do you belong to a franchise?
NO 96.7%
YES 3.3%

How many projects do you What is the contract value

start each year (on average)? of those jobs each year
(on average)?
$100K -
1-5 36.5% $299K
19.0%
$300K -
6 - 12 35.7% $599K
29.3%
$600K -
13 - 25 15.1% $999K
27.8%
26 - 49 8.0% $1M+ 23.3%
I don’t
50 - 99 3.7% know 0.6%
100+ 0.8%
I don’t
know 0.2%

What associations are you a member of?*
27.4% 27.4%
26.0%
19.2%
14.6%
6.2%
3.7% 4.3%
1.6%
National Association of Home Builders (NAHB) 61.8% 0.0% 5.9% 0.0%
Association of Professional Builders (APB) 20.4% 36.6% 41.2% 16.1%
Master Builders Australia (MBA) 0.0% 68.6% 0.0% 1.6%
Housing Industry Association (HIA) 1.3% 49.0% 0.0% 1.6%
Canadian Home Builders’ Association (CHBA) 0.4% 0.0% 52.9% 0.0%
New Zealand Certified Builders Association (NZCB) 0.0% 0.0% 0.0% 51.6%
Registered Master Builders (New Zealand) 0.4% 0.0% 0.0% 33.9%
None 22.2% 5.7% 17.6% 12.9%
I don’t know 3.1% 0.0% 0.0% 1.6%
*Respondents were able to select more than one option in this question so results will not equal 100% when doing calculations.

Does your business

have a website?
YES 87.2%
NO 12.8%
Yes 86.2% 88.7% 97.1% 80.6%
No 13.8% 11.3% 2.9% 19.4%

Sales
While it’s disappointing that only 50.3% of Charging for quotes also results in higher
building companies have a documented sales margins, although it must also be pointed out
process, it is an improvement on 2021 when only that 8.2% of building company owners that didn’t
45% had one in place. charge quotes also didn’t know their margins
which should be a big red flag for any consumer
looking for a free quote!
However, of the builders that are charging for

quotes 14.1% are marking up their projects by
What is significant however is over 33% which is something only 5.7% of the
that companies that have a builders providing free quotes are able to do.
documented sales process in place The number of builders holding regular sales
are approximately four times more training remained similar to 2021 with just
likely to achieve industry standard 20.2% of companies committing to this strategy.
The number of building companies with an
gross margins of 25% and above.
objections manual in place is still below the
2020 SORCI survey benchmark of 8.7% with
As sales continue to slow in 2023 it will be
just 8.2% of respondents claiming to have one in
interesting to see how many builders implement
place. This is most likely a direct reflection of the
a structured approach to selling and how it will
lack of objections encountered by salespeople
affect the margins of those that don’t when they
throughout 2021 and 2022 as consumers
are forced to drop their prices in order to win jobs.
continued to chase builders rather than the other
Another sales tool that continues to get overlooked way around.
is sales scripts. After a positive uptake in 2021,
However, as forewarned in the SORCI Annual
which resulted in 23.4% of building companies
Report 2022, objection handling could become
making sales scripts a part of their sales process,
forgotten knowledge if it is not documented,
that figure only increased to 25% in 2022. This
and it’s a skill that will need to be resurrected
is likely a direct reflection of the abundance of
during 2023.
opportunities in 2022 enabling salespeople to
easily achieve sales targets. As per 2021 and even 2020, generating quality
leads is still considered to be the biggest sales
There was definitely a missed opportunity in 2022
challenge for residential home builders with
for 47.4% of building companies who continued
40.4% of building companies now suffering from
to provide free quotes to consumers. While
this issue.
charging for quotes can still be implemented at any
time in the future, there probably wasn’t a better
time than the past two years to have introduced
this strategy which helps to eliminate time wasters
and allows builders to get paid for their time.

SALES
However, this does not appear to be a problem The rate of growth in new contracts
for builders when dealing with prospects that
signed slowed in 2022 with only
have been referred to them with 61.2% of
respondents claiming they sign at least one 46.8% of builders expanding their
contract for every three prospects referred. operations compared to 55.6% in
Despite this incredible conversion rate from a 2021, which is understandable given
channel that costs little to nothing in order to
what we now know about supply
implement, 54.4% rely on word of mouth for
their referrals rather than engaging in proactive chain issues and price increases.
strategies that would generate even more
opportunities. Another expected outcome was that 28.7% of
building companies actually signed less contracts
Almost half (48.9%) of the builders surveyed are in the last 12 months compared to 10.7% in
not measuring their paid leads to contract ratio 2021’s survey data. This is probably due to the
which makes it difficult for them to establish backlog of work building up and that so many
a budget for their paid lead generation. It’s a builders are now booked out from 6-18 months
simple key performance indicator (KPI) to record, into the future.
however, it’s something that continues to get
overlooked with 46.4% admitting to not knowing The outlook from builders looking ahead to 2023
this figure in the 2021 survey which could be a remains quite similar to 2022 with 46.2% of
sign of complacency arising from a red hot market. respondents expecting to sign more contracts
than they did in 2022.
Do you charge for quotes (either as part of a design process,

or as a standalone service)?
YES 52.2%
NO 47.4%
I DON’t KNOW 0.4%
Yes 48.4% 58.8% 44.1% 50.0%
No 51.1% 40.7% 55.9% 50.0%
I don't know 0.4% 0.5% 0.0% 0.0%

Do you have a documented Do you use sales scripts?
sales process?
I don’t know I don’t know

1.6 %
2.3%
No No
48.2 %
72.6%
YEs YES
50.3% 25.0%

SALES
Do you hold and/or participate Do you have an objections

in regular sales training? manual?

0.4 %
3.7%
No No
79.4% 88.2%
YES YES
20.2% 8.2%
What is your biggest

sales challenge?
Generating
quality leads
40.4%
Qualifying
leads/ 20.6%
inquiries
Closing
sales 19.0%
I don’t
know
11.5%
Other 5.4%
None 3.1%

What percentage of your sales
are from referrals?
41.9%
22.3%
10.1% 9.1%
6.0 % 6.4 %
4.1%
0% 6% 11% 21% 51% I don’t

100%
- 5% - 10% - 20% - 50% - 99% know
How many referrals do you need

in order to sign one contract?
61.2%
23.5%
12.0%
3.1% 0.2%
0.0%
I don’t
1-3 4-9 10 - 24 25 - 99 100+
know

SALES
What percentage of your leads are sales

qualified leads?
6.6% 4.7% 5.4% 10.3%
0% - 1% 1% - 3% 4% - 9% 10% - 15%
10.9% 31.8% 4.3% 26.0%
16% - 24% 25% - 99% 100% I don’t know
0% - 1% 6.2% 6.2% 2.9% 11.3%
1% - 3% 3.1% 6.2% 8.8% 3.2%
4% - 9% 6.2% 5.2% 2.9% 4.8%
10% - 15% 8.9% 10.8% 17.6% 9.7%
16% - 24% 13.8% 8.8% 11.8% 6.5%
25% - 99% 31.6% 34.0% 32.4% 25.8%
100% 4.0% 4.1% 2.9% 6.5%
I don’t know 26.2% 24.7% 20.6% 32.3%

How many paid leads do you need
in order to sign one contract?
48.9%
44.3 %
4.7%
1.7% 0.4%
1 - 50 51 - 100 101 - 200 201+ I don’t

know

SALES
Did you sign more or less contracts in

2022 compared to 2021?
46.8% 28.7% 21.6% 2.9%

Same I don’t
More Less
know
More 45.8% 41.8% 58.8% 59.7%
Less 29.8% 29.9% 29.4% 21.0%
Same 20.0% 25.8% 11.8% 19.4%
I don’t know 4.4% 2.6% 0.0% 0.0%

Do you expect to sign more or less contracts
in 2023 compared to 2022?
46.2% 20.4% 27.8% 5.6%

Same I don’t
More Less
know

MARKETING
Marketing
There was a big surprise in the 2022 data Looking at the statistics for marketing activity,
when it came to social media marketing with a it’s very flat with very few building companies
massive drop in usage for builders everywhere taking advantage of the opportunities
except in Canada where there was a reversal of that exist. This could be considered
the trend and usage significantly increased for understandable behavior when consumers
both Facebook and Instagram. have been climbing over each other to reach
builders like they have over the past year.
Builders across all four countries did however However, it is nonsensical that 40.4% of
continue to utilize YouTube as a platform with builders report lead quality as being their
builders in Canada once again leading the way number one sales challenge and 41% claim
with 20.5% of building companies uploading at that generating quality leads is their biggest
least one video per month. marketing challenge when the data illustrates
little to no action is being taken to overcome
Publishing content on a blog remained similar
those challenges.
to the 2021 data with 64.1% of building
companies not creating any content over the
past 12 months. Of the builders that do publish
content, 63.6% do it in-house while 35.8%
outsource the task.
Blog articles, social media posts
Incredibly 55.5% of builders still do not have
and regular emails help to educate
a customer relationship management (CRM)
system to manage and follow up on their prospects and turn them into
leads, but of the ones that do utilize a solution, qualified opportunities, and yet so
there were no clear winners in terms of a many builders continue to overlook
preferred provider.
these powerful strategies.
Unsurprisingly given that 55.5% of builders
do not have a CRM, 59.6% of builders never It’s more than likely the reason why the few
email their databases which is a huge missed builders that are marketing correctly are
opportunity. Currently, just 6.6% of building finding it so easy to sign so many contracts
companies are emailing their databases at at higher and higher margins as there is very
least once a week and even that figure is down little genuine competition for those more
from 2021. marketing-savvy building companies.

Marketing: The Achilles heel
of new home and remodeling
companies
By Rick Storlie, Chief Lead Converter of Builder Lead Converter
For the last couple of years, builders’ marketing Approximately 41% of builders report their
efforts, or lack thereof, are now the Achilles heel biggest marketing challenge is generating
of new home and remodeling companies. A quality leads. Yet, 55.5% generate 50 or less
year ago interest rates in the United States were leads annually. Lead generation is a numbers
3.13% and today they’re 6.33%, down from over game. It matters where they come from and
7% in October and November of 20221. Fears how long they’ve known about you. Quality leads
of a recession are real and inflation rates have are not found by chance, they’re developed
calmed, but still topping 7% in many markets. systematically, over time and more importantly,
the vast majority are captured organically, not
The list of marketing ‘nevers’ is concerning with through paid ads.
41.2% and 43.7% never posting on Facebook
or Instagram. Additionally, 86.2% reported they The builders that are poised to grow revenue
never post on YouTube utilizing video - a builder’s and profits in 2023 and 2024 are those with a
most powerful story-telling tool. The data further basic to advanced marketing strategy that will
revealed that 64.1% of builders don’t blog and produce high quality leads, regardless of local
59.6% never email their databases. Is it any market conditions.
wonder over 55.5% of builders don’t even use a
CRM to manage their databases? Learn more about Builder Lead Converter.
How do builders define marketing? I contend

marketing is a coordinated process a builder
undertakes to show their leads they are the best
company to help them realize the life they want
to live in their home. That process begins with
activities to capture new leads, establish trust,
build value and convert conversations to contracts.
1 Freddie Mac, 30-Year Fixed Rate Mortgage Average in the United States [MORTGAGE30US], [online] FRED,
Federal Reserve Bank of St. Louis. Available at https://fred.stlouisfed.org/series/MORTGAGE30US.

MARKETING
How many times do you post on the

following social media platforms?
Facebook: ANSWERS BY LOCATION:
Never 39.1% 44.3% 26.5% 46.8%
Once per week 36.0% 30.4% 35.3% 38.7%
Between 2 - 6 times per week 18.7% 19.6% 29.4% 9.7%
7 or more times per week 1.3% 2.1% 2.9% 0.0%
I don't know 4.9% 3.6% 5.9% 4.8%
Instagram: ANSWERS BY LOCATION:
Never 45.3% 39.2% 17.6% 66.1%
Once per week 28.0% 33.5% 29.4% 21.0%
Between 2 - 6 times per week 17.8% 19.6% 47.1% 9.7%
7 or more times per week 1.8% 2.6% 2.9% 0.0%
I don't know 7.1% 5.2% 2.9% 3.2%
YouTube: ANSWERS BY LOCATION:
Never 84.9% 87.1% 79.4% 91.9%
Once per month 6.2% 9.8% 17.6% 4.8%
Between 2 - 3 times per month 4.9% 0.5% 2.9% 0.0%
4 or more times per month 1.3% 0.5% 0.0% 0.0%
I don't know 2.7% 2.1% 0.0% 3.2%

How many articles/blog posts Who writes your
do you publish each year? articles/blogs?*
None 64.1%
1 5.0%
63.6%
2-6 16.3% In-house
7 - 11 6.8%
35.8%
Outsourced
0.6%
12+ 5.8% I don’t know
*This data excludes respondents who selected ‘None’ and ‘I don’t know’ in
I don’t
know 1.9% the question, “How many articles/blog posts do you publish each year?”.
How frequently do you email

your database?
59.6%
18.3%
10.9%
3.1% 2.1% 4.7%
1.4%
Once per Once per 2 - 6 times

Never Sometimes Daily I don’t know
month week per week

MARKETING
What Customer Relationship Management (CRM) system do you use?
55.5% 27.2% 5.0% 5.0% 2.7% 4.5%
Active
None Other Hubspot Mailchimp I don’t know
Campaign
What is your biggest marketing challenge?
41.0 %
Generating quality leads
11.8%
Return on
investment
(ROI)
6.2% 4.3%
None
Other
6.2%
Wasted
10.5% advertising
Generating spend
enough leads
20.0%
I don’t know
Generating enough leads 8.9% 12.9% 11.8% 8.1%
Generating quality leads 38.2% 39.2% 55.9% 48.4%
Wasted advertising spend 6.7% 6.7% 8.8% 1.6%
Return on investment (ROI) 14.7% 10.3% 2.9% 11.3%
Other 4.4% 5.2% 0.0% 3.2%
I don’t know 21.8% 19.1% 20.6% 16.1%
None 5.3% 6.7% 0.0% 11.3%

What is your primary marketing strategy
(eg your lead magnet) for generating new leads?
Consultation 26.4%
Contact us
page
20.4%
Free guide 9.1%
Free quote 6.0%
Plan range 5.2%
Other 14.6%
I don’t know 18.3%

Advertising
Builders in Canada continued to lead the way in Despite the amount of money being invested in
terms of utilizing paid advertising just like they marketing, 61.4% of builders do not have a clear
did in 2021 alongside New Zealand. This past idea of what they can afford to spend in order
year however saw a decrease in the number to acquire a lead. This percentage aligns with
of New Zealand builders using paid advertising data revealed in the Sales section where almost
which may be linked to the devastating impact of half (48.9%) of the respondents did not know
material shortages that caused thousands of jobs how many paid leads they needed to generate in
across the country to grind to a halt. order to sign a contract.
There was a clear downward trend in the number

of builders advertising on Facebook during the
year which was likely attributed to the Apple iOS
14.5 update which launched in 2021. The update
limited the data available for targeting and as Understanding important KPIs, such
a result severely impacted results for a lot of as average contract value and leads
advertisers in the following year.
per contract, enables the owner of
Another significant find was the increase in the a building company to establish
number of builders now paying to advertise on a target budget per lead for the
Instagram. It’s possible that builders chose a
marketing team to work with.
deliberate switch in strategy during the year as
their ads began to achieve improved results from
It’s also the only way to scale up a building
this channel.
company safely and securely without
Interestingly, almost two-thirds (59.3%) of overspending on advertising.
builders managed their own paid advertising on
Slightly more respondents (66.6%) didn’t know
Facebook while 36.8% outsourced that work.
their actual cost per lead compared to those that
When it comes to managing Google Ads and
didn’t have a target for lead acquisition (61.4%).
paid advertising on YouTube, those trends were
This suggests that 5.2% of builders that have a
reversed with approximately one-third (36.5% and
budget for lead acquisition, are not measuring
30% respectively) undertaking the work in-house
their results, which is the only way to measure
and approximately two-thirds (62.7% and 60%
the performance of advertising channels and
respectively) outsourcing to the experts.
campaigns.
Canada not only had more builders advertising
John Wanamaker (1838-1922) famously said, “Half
than the other countries, but they also spent a
the money I spend on advertising is wasted; the
far larger percentage of revenue on advertising
trouble is I don’t know which half.” However, that
with 20.6% of building companies spending
was then. With all of the tracking now available to
the APB recommendation of 3% or more on
us, it does not have to be like that. Builders can
marketing their businesses in 2022, which was
almost double the average.

ADVERTISING
expect to see a return on every dollar they spend Conversely, a building company that receives 80%
on digital advertising. of its leads through paid advertising is in greater
control of its sales funnel and construction slots
There has been a slight trend in moving away from and can therefore turn things up or down at will.
search engine optimization (SEO) strategies in 2022
with 61.6% of builders now choosing to ignore SEO Another factor to consider for builders relying
as a strategy compared to 56.2% in 2021. too heavily on referrals, is that their margins are
suffering. Builders that generate over 90% of
One of the most worrying statistics in the their leads through other strategies have much
advertising data was the fact that 50.1% of the higher margins than those that generate most of
building companies surveyed are relying on their leads from referrals.
referrals for more than half of their leads. While
referred leads are typically of great quality and
are more likely to result in a contract signed at
higher than normal margins, it’s a dangerous
situation to be reliant on them for sales. This is
because if referrals are being generated by, as
an example, word of mouth (which the survey
results indicate that most are), then the building
company’s future is out of the owner’s control.
Where do you spend

money on advertising?*
Facebook 24.9% 31.4% 38.2% 38.7%
Instagram 12.0% 26.8% 50.0% 24.2%
Google Ads (search & display campaigns) 26.7% 19.1% 35.3% 27.4%
YouTube 1.8% 2.1% 2.9% 1.6%
Houzz 10.7% 4.6% 23.5% 4.8%
Radio 6.7% 1.5% 5.9% 8.1%
TV 2.2% 2.1% 2.9% 3.2%
News/magazines 19.6% 9.8% 26.5% 16.1%
Sponsorships 19.6% 12.4% 20.6% 24.2%
Other 16.0% 8.2% 14.7% 12.9%
I don’t advertise 33.3% 40.7% 20.6% 32.3%

Where do you spend money
on advertising?*
Facebook 29.9%
Instagram 21.6%
Google Ads
(search & display
campaigns)
24.5%
YouTube 1.9%
Houzz 8.5%
Radio 4.9%
TV 2.3%
News/
Magazines 15.9%
Sponsorships 17.5%
Other 12.6%
I don’t advertise 35.1%

ADVERTISING
Who does your paid

advertising on Facebook?*
59.3%
36.8%
3.8%
*This data excludes respondents who did not In-house Outsourced I don’t know
select ‘Facebook’ in the question, “Where do you
spend money on advertising?”.
Who does your paid advertising on Google Ads

(search and display campaigns)?*
62.7%
36.5%
0.8%
*This data excludes respondents who did not select In-house Outsourced I don’t know
‘Google Ads (search and display campaigns)’ in the
question, “Where do you spend money on advertising?”.
Who does your paid advertising on YouTube?*
60.0%
30.0%
10.0%
*This data excludes respondents who did not In-house Outsourced I don’t know
select ‘YouTube’ in the question, “Where do you
spend money on advertising?”.

What percentage of your revenue did you
spend on marketing in 2022?
0%
3%
2% 4%+
26.8% I don’t
5.0% know
1%
11.8%
6.0%
10.9%
39.4 %
0% 25.8% 30.9% 11.8% 25.8%
1% 36.4% 38.7% 44.1% 50.0%
2% 14.7% 10.3% 8.8% 8.1%
3% 6.2% 3.1% 8.8% 4.8%
4%+ 7.6% 3.1% 11.8% 6.5%
I don’t know 9.3% 13.9% 14.7% 4.8%

ADVERTISING
Did you spend more money on marketing

in 2022 than you did in 2021?
26.8% More
13.0% Less
53.2% Same
7.0% I don’t know
What percentage of revenue do you plan

to spend on paid advertising in 2023?
28.3%
20.4%
18.6%
15.7%
9.7%
7.2%
I don’t
0% 1% 2% 3% 4%+
know

What is your target/budgeted What is your actual
cost per lead? cost per lead?
$1 - $24 16.9% $1 - $24 12.4%
$25 - $49 9.1% $25 - $49 5.4%
$50 - $74 2.7% $50 - $74 3.9%
$75 - $99 2.5% $75 - $99 3.1%
$100+ 7.4% $100+ 8.5%
I don’t I don’t
know
61.4% know
66.6%

ADVERTISING
How much do you spend on Search Engine

Optimization (SEO) services per month?
61.6%
11.3% 11.8%
8.0%
4.1% 3.3%
$0 $1 - $350 - $750 - I don’t

$1,250+
$349 $749 $1,249 know
How many leads did you

generate in 2022?
55.5%
14.4%
9.5% 10.7%
6.8 %
2.5% 0.4% 0.2%

301 - 1,001 - 2,501 - I don’t
0 - 50 51 - 120 121 - 300 5,001+
1,000 2,500 5,000 know

What percentage of your leads
are from referrals?
0% - 4%
I don’t know
8.3%
7.2% 5% - 9%
6.8%
10% - 19%
80%+
10.7%
31.1%
20% - 49%
16.9%
50% - 80%
19.0%
0% - 4% 8.0% 7.7% 5.9% 12.9%
5% - 9% 8.4% 6.2% 5.9% 3.2%
10% - 19% 12.4% 9.8% 11.8% 6.5%
20% - 49% 19.1% 13.9% 17.6% 17.7%
50% - 80% 17.3% 20.6% 26.5% 16.1%
80%+ 27.6% 34.5% 26.5% 35.5%
I don’t know 7.1% 7.2% 5.9% 8.1%

ADVERTISING
What is your #1 strategy for increasing the

number of referrals you generate?
Word of
mouth 54.4%
Architects 15.3% Gifting 2.5%
I don’t
Realtors 8.7% know 8.2%
Events
(either
holding or 5.8% None 5.0%
attending)

Projects
Despite all the challenges being faced by builders Delivering more projects on budget presented
around the world in 2022 due to extreme more challenges for building companies with
weather, staff shortages and supply chain issues, 38.3% of projects finishing up over budget
an incredible 57.7% of projects were delivered compared to 28.7% in 2021. This is most likely a
on time. Even though this is a marginal decline result of builders taking more drastic actions in
from 63% in 2021, considering the severity order to keep projects moving which most often
of the challenges experienced in the industry results in higher prices being paid to secure
worldwide, this is still a very positive result. subcontractors on site, in addition to the price
escalations of materials.
This is clear evidence that while the situation did
not improve in 2022 and arguably got even worse While taking extra measures to keep a project
than in 2021, builders adapted and planned moving forward might have been a solid business
accordingly. decision in that it reduces the costs associated
with delays, it also exposes the reason why
builders need to frequently update the timelines
in their estimates and quotes in order to ensure
an accurate amount is being allowed for fixed
expenses in their costs. This is a fundamental
It’s incredibly important for builders principle that APB members use when pricing
their jobs using the Pricing 4 Profit method, as
to know their fixed expenses per-
opposed to the traditional method of applying a
job-per-day particularly when 35.1% markup to the cost of labor and materials.
of projects ran late. Fortunately, the
There was a big decrease in the number of
majority of builders (51.7%) now building companies that did not know their
do know that number compared to invoiced costs at the end of each project with
49.1% in 2021. the figure reducing from 7.4% to 3.1%. This is
great news for the industry as it shows that the
However, it remains a concern that so many residential sector is continuing to become more
builders still do not fully understand how much a professional year on year.
one-day delay is costing them, especially as that
Subcontractor delays continued to be the
money comes directly off their bottom line. Even
primary challenge for 37.1% of builders in 2022.
an average $750,000 build with delays can lose a
For New Zealand builders, this situation overtook
builder around $670 per day, in which case, with
difficulties in sourcing materials which was their
so many builders taking on projects valued at $1
biggest concern in 2021.
million or more, that figure will be significantly
higher with a one-week delay costing them
thousands of dollars in hard cash.

PROJECTS
A sign of the times we now operate in prompted This is largely due to the fact that Australian
a new question for 2022 which delved into the banks calculate lending ratios that overleverage
controversial topic of cost escalation clauses the consumer, rather than including a buffer
in contracts. Understandably, due to different amount to cover additional costs such as contract
government legislation in different countries, variations and of course, cost escalations, which
the percentages were vastly different depending is something banks across New Zealand and the
on where building companies operated. New United States all factor into their numbers.
Zealand led the way with 85.5% of building
companies protected by cost escalation clauses More evidence that proves our industry
(also known as rise and fall clauses). continues to become more professional each
year was revealed in the fact that 54.2% of
Most builders in the United States (61.8%) were builders now have a documented handover
also protected by these clauses, however just process in place compared to 48.5% in 2021.
44.1% of Canadian builders and a mere 33% Promisingly, more builders are now performing
of Australian builders have included these post project completion audits, an exercise that
clauses as special conditions to their contracts, analyzes budget, timeline and client feedback,
highlighting the cultural difference in Australia with 52% of building companies now performing
that has put so many building companies at risk this process compared to just 42.6% in 2021. The
over the past two years. reason these audits are so important is because
the information can be used immediately to
In order to provide more context to this number, improve the accuracy of all future estimates
it must also be noted that Australian builders and quotes with regard to the budget and job
in the states of Victoria and Western Australia schedule.
are prohibited from adding cost escalation
clauses to building contracts with a value of less Collecting a net promoter score (NPS) for clients
than $500,000. Regardless of the restriction, it is also on the increase, however it still remains
would be wise for more builders in Australia to a small percentage of builders (7.4%) who are
adopt these clauses in order to protect their pursuing this feedback from their clients.
businesses, even if that means they need to
adjust their business models to focus on larger
contracts in order to avoid being legislated into
bankruptcy.
Another reason a lot of builders in Australia

struggle to implement these clauses is because
the financial institutions tend to reject them,
preferring instead to place all of the risk on the
builder rather than on their client and ultimately
themselves.

Why builders are still optimistic
about the future of construction
– despite a looming recession
By Dan Houghton, CEO and Co-founder of Buildertrend
It’s now been three years since the world was According to APB survey results, Buildertrend is
rocked by the emergence of COVID-19, but the industry leader in construction management
the construction industry at large still feels its solutions. The data shows 81.1% of teams plan
effects. Inflation, labor shortages and supply to continue investing in software – and 26%
chain constraints are just a few of the hardships actually plan to invest more than the previous
construction businesses have endured since year. Software can help with the main project
2020. Despite these continuing difficulties that challenges builders are facing today due to
remain largely out of their control, our builders macroeconomic hurdles, according to the survey
are still optimistic about the future. results. Here’s how it can help address them:
Buildertrend survey results show that 53% of • Subcontractor delays: the labor shortage
builders who use our platform say they have due to the construction boom has empowered
more work than they can handle and 47% subcontractors to be pickier with the jobs
expect to increase profits in 20232. APB also they bid on and which general contractors
shows 72% of builders surveyed have a higher they choose to work with. To attract the best
revenue target for 2023 than the previous year. trades, general contractors need to strengthen
The fact that a majority of builders anticipate their relationships with subcontractors – and
success while in an economic downturn is a construction technology is the key. With
testament to the efficiency of a construction tech on their side, general contractors can
management platform. communicate better, send clean bid invitations
and rely on stable cash flow.
2 Buildertrend (2023), 2023 Residential Construction Outlook, [online] Buildertrend.

Available at: https://buildertrend.com/ebooks/construction-outlook-2023.

PROJECTS
• Cost overruns: as we face an economic Survey results from APB show only 15.3% of
downturn and a looming recession, it’s builders work less than 40 hours a week on
important for builders to have a full average, while 13.4% work 56-60 hours. This
understanding of their business’ financial shows it’s time to make necessary changes,
health. Those that succeed through uncertain and learn to work simpler with construction
times know their numbers inside and out. technology.
Without visibility into costs and financial
management, budgets go over, profits are lost That’s exactly how Tass Construction Group, a
and businesses suffer. Financial tools such custom home builder in Sydney, Australia, was
as estimating and takeoff software ensure able to get more organized and prevent potential
numbers are accurate and help builders avoid delays by planning ahead.
unwanted surprises.
“Buildertrend really lined up with our service and
• Material delays: supply chain constraints has allowed us to catch client changes early on,
have derailed construction timelines for so we’re not incurring any further costs,” Ryan
far too long. It’s up to builders to start Jenkins, Supervisor of Projects, recently told
planning ahead and increasing productivity our team.
throughout other stages of the project to stay
The future of construction is looking up – even
on schedule. Project management software
with tough times ahead. Invest. Plan. Change.
allows for better project planning, so builders
Make your business better. With innovative
can forecast what’s to come and prepare for
technology in your tool belt, you’re equipped
potential delays. They shouldn’t be working
to tackle the coming challenges of 2023 with
solely on the current project – they need
confidence and optimism.
to plan ahead for the next job in the pipeline.
Successful builders are committed to pivoting

and investing in their businesses. Always striving
to get better. That’s what we at Buildertrend
are doing, too. In 2023, our main goal is to get
serious about investing in our platform to make
it even better at solving the hurdles builders will
face in the future.
As Buildertrend’s CEO and Co-founder, I get

an inside look at how innovative technology
helps construction teams calm the chaos
in their business. Managing projects with
spreadsheets and paper files is only adding to
the stress of keeping a company afloat during a
fluctuating market.

Are the majority of your projects delivered
by the agreed finish date?
I don’t know
Ahead of time (early)

1.0%
6.2%
On time
57.7 %
Overtime
(late)
35.1%
On time 59.6% 53.1% 58.8% 64.5%
Overtime (late) 34.2% 38.1% 35.3% 29.0%
Ahead of time (early) 5.3% 7.7% 5.9% 4.8%
I don’t know 0.9% 1.0% 0.0% 1.6%

PROJECTS
Do you know your fixed Do the majority of your

expenses per job per day? projects meet the budget?
I don’t know
7.8%
No 47.8% On budget
40.6 %
38.3% Over budget
YES 10.9% Under budget
51.7% 3.1% I don’t know

What is your biggest challenge in
terms of running projects?
37.1% 13.2% 15.7% 9.7%
Subcontractor Sourcing materials Cost overruns Cash flow

delays delays
11.2
8.5%% 6.0%
2.1 3.3%
0.9 2.3%
9.5
Client selections Building approvals/ Weather Employee

decisions permits absenteeism
11.2
2.7%% 0.8%
2.1
2.4 0.6%
2.1
Other None I don’t know
Subcontractor delays 38.7% 38.7% 29.4% 30.6%
Sourcing materials delays 18.7% 5.7% 14.7% 16.1%
Cost overruns 13.3% 15.5% 14.7% 25.8%
Cash flow 7.1% 13.4% 2.9% 11.3%
Client selections decisions 10.2% 7.2% 20.6% 0.0%
Building approvals/permits 5.8% 6.2% 8.8% 4.8%
Weather 0.9% 6.7% 0.0% 3.2%
Employee absenteeism 2.2% 1.0% 5.9% 4.8%
Other 1.3% 4.6% 2.9% 1.6%
None 0.9% 1.0% 0.0% 0.0%
I don’t know 0.9% 0.0% 0.0% 1.6%

PROJECTS
Do you include rise and fall clauses or cost

escalation (CE) clauses in your building contracts
either as standard or as special conditions?
YES
52.6 %
NO
I don’t know
43.9%
3.5%

Do you have a documented Do you perform post project
completed home handover/ completion audits?
final walkthrough process?

0.8 %
2.3%
No No
45.0 %
45.6%
YES YES
54.2% 52.0%
Do you ask your clients for a

Net Promoter Score (NPS)?
I don’t know
6.6%
No
86.0%
YES
7.4%

TECHNOLOGY
Technology
In terms of software, Buildertrend strengthened in 2021 to 36.4% in 2022. Considering it has
its position as the number one solution for been well documented that 88% of spreadsheets
project management, enjoying gains across contain errors3, it’s surprising that more builders
all countries. However, whilst 30.5% of all have turned to spreadsheets as a solution. The
respondents now use the platform, Buildxact exception to this trend was in Canada where only
continues to be the top choice for builders in 24.2% of builders now use spreadsheets for their
Australia and Builda Price is now the number estimating compared to 52% in 2021.
one choice in New Zealand after taking market
share from CoConstruct. When it came to takeoffs, the story was similar
to estimating with 85.2% of building companies
The use of spreadsheets for this important and performing the work in-house with 29% of
complex task continued to drop in 2022 with just builders in New Zealand bucking the trend by
16.9% of respondents using them compared to preferring to outsource the task.
21.6% in 2021.
Interestingly approximately half (50.6%) of
It wasn’t that long ago builders only had one viable all building companies even use software to
option for using software, and that was MS Project. complete this task creating a big opportunity for
builders to gain efficiencies while simultaneously
However, these days builders have a mountain presenting an opportunity for software providers
of different options to choose from according to to improve sales.
their budget and requirements, and as a result,
74.1% of building companies have implemented Buildxact was the most popular choice among
dedicated project management software into builders for both categories, in particular,
their businesses which is up from 64.8% in 2021. builders in Australia where 37% of respondents
Without question, this is a major factor that use the platform for estimating and 38.6% use it
enabled more builders to deliver more projects for takeoffs.
on time in 2022.
Builda Price enjoyed similar success in New
During 2022, 91.3% of builders handled their Zealand with 33.3% of builders using the software
estimates in-house, however in terms of for their estimating.
outsourcing it was New Zealand’s builders that
led the way with 22.6% of builders trusting a There were some extreme variations across
third party with this time consuming task. building companies in different countries when
it came to managing health and safety (H&S) in
A baffling trend emerged in terms of the number the workplace which revealed a stark difference
of builders now using spreadsheets to compile between builders in Australasia and builders in
their estimates which actually rose from 31.1% North America.
3 Olshan, J, 2022. 88% of spreadsheets have errors. [online] MarketWatch. Available at: https://www.marketwatch.com/
story/88-of-spreadsheets-have-errors-2013-04-17.

One of the reasons why builders in North
America are so far behind builders in Australasia
in terms of managing their H&S obligations could
be connected to the availability of easy-to-use
New Zealand’s builders led the software that can manage the tasks for them.
way with 60.5% of them utilizing In terms of H&S software being used, there were
dedicated software to manage this no clear winners in either Canada or the United
complex task, followed by 37.5% of States. However, it was a very different story
in New Zealand with 96.2% of builders using
builders in Australia. Incredibly, only
HazardCo and 56.1% of builders in Australia also
6.7% of builders in Canada and just using the same platform. No other workplace
4.7% of builders in the United States H&S solution came close to being used by so
are using dedicated software to deal many builders.
with all the paperwork. Overall, 37.9% of builders invested more money
into software in 2022 with 26% of respondents
The amount of builders using a paper system to expecting to spend more again in 2023.
comply with their legal obligations was 28%, with Canadian builders are leading the way with
the data highlighting similar results across all 32.4% of respondents committed to improving
countries. This means that a staggering 67.5% of their systems.
builders in the United States and 50% of builders
in Canada do not have an established system in
place to manage H&S, exposing themselves to
prosecution, fines and even jail time if they fail to
comply with H&S requirements.

TECHNOLOGY
Maximizing profitability in
construction: tips and strategies
for managing costs and risks
in 2023
By Julian Krishnan Nair, Senior Partner Manager at Buildxact
There are a range of factors, both within and Two critical tips to plan your projects better to
outside your control that have the potential to maximize profitability are, to build out a detailed,
significantly affect the profitability of new builds accurate project estimate, and to take the time
or remodeling/renovation projects and 2022 to collaborate with your supplier or dealer to get
demonstrated just that. Whether it is inflationary better control over your material cost inputs.
pressure on material and labor pricing, or delays Both are critical requirements, uniquely solved by
impacting supply chain or labor availability— using the leading construction software platform
which alone can cost you well over $1,000 a from Buildxact.
day—getting the profitability of your projects
under better control must be a focus in 2023. From job prospecting to takeoffs, estimates,
It will not only ensure the livelihood of your quotes, project management, cost tracking
business, but provide you with a clear pathway to and more, Buildxact provides a comprehensive
growth and prosperity. platform designed to give home builders, trades,
and suppliers control of their businesses to win
The 2022 SORCI data shows 45% of respondents more work profitably and get jobs done.
were operating on between a 2.5% and 10%
net margin. What’s more, Buildxact estimates Learn more about Buildxact.
that only one in three construction projects
come within 10% of the planned budget upon
completion! Those uncontrollable external
factors, or worse, making a mistake on your own
estimating or project management pose a serious
risk and can lead to you losing serious money.

What project management
software do you use?
30.5% 11.8% 12.4% 4.3% 2.9%
Buildertrend CoConstruct Buildxact Builda Price MS Project
12.2% 16.9% 8.3% 0.6%
Other Spreadsheets None I don’t know
Buildertrend 39.1% 23.2% 44.1% 14.5%
CoConstruct 16.4% 7.2% 14.7% 8.1%
Buildxact 0.9% 29.9% 8.8% 1.6%
Builda Price 0.0% 0.5% 0.0% 33.9%
MS Project 3.6% 2.1% 5.9% 1.6%
Other 8.0% 16.5% 14.7% 12.9%
Spreadsheets (eg Excel or Google Sheets) 20.4% 14.4% 8.8% 16.1%
None 11.1% 5.7% 0.0% 11.3%
I don’t know 0.4% 0.5% 2.9% 0.0%

TECHNOLOGY
Who does your

estimations?
In-house
91.3% Outsourced
8.3%
I don’t know
0.4%

What estimating software
do you use?*
14.9% 6.8% 11.3% 3.6% 0.4%
Buildxact CoConstruct Buildertrend Builda Price Cordell
16.6% 36.4% 9.6% 0.4%
Other Spreadsheets None I don’t know
Buildxact 0.5% 37.0% 15.2% 0.0%
CoConstruct 9.3% 3.5% 12.1% 4.2%
Buildertrend 16.2% 4.6% 27.3% 2.1%
Builda Price 0.5% 0.0% 0.0% 33.3%
Cordell 0.0% 1.2% 0.0% 0.0%
Other 7.9% 26.0% 15.2% 22.9%
Spreadsheets (eg Excel or Google Sheets) 50.9% 22.0% 24.2% 31.3%
None 13.9% 5.8% 6.1% 6.3%
I don’t know 0.9% 0.0% 0.0% 0.0%
*This data excludes respondents who did not select ‘In-house’ in the question, “Who does your estimations?”.

TECHNOLOGY
Who does your

takeoffs?
In-house
85.2% Outsourced
13.4%
I don’t know
1.4%

What takeoff software
do you use?*
17.8% 6.4% 1.6% 1.1%
Buildxact PlanSwift Buildsoft STACK
0.9% 22.8% 46.5% 3.0%
Procore Other None I don’t know
Buildxact 1.1% 38.6% 16.7% 7.0%
PlanSwift 6.8% 8.0% 3.3% 0.0%
Buildsoft 0.0% 3.4% 0.0% 2.3%
STACK 1.6% 0.0% 6.7% 0.0%
Procore 1.6% 0.6% 0.0% 0.0%
Other 20.5% 23.3% 20.0% 32.6%
None 65.8% 23.3% 50.0% 53.5%
I don’t know 2.6% 2.8% 3.3% 4.7%
*This data excludes respondents who did not select ‘In-house’ in the question, “Who does your takeoffs?”.

TECHNOLOGY
Do you use software to manage health

and safety in the workplace?
Yes
23.4%
No - I use a paper
system 28.0%
No - I don’t have an
established system 45.0%
I don’t know 3.6%

How much did you invest
in software in 2022?
30.5%
27.4%
21.2%
12.6%
3.5% 2.5% 2.3%
$0 - $2K - $5K - $10K - $20K - I don’t

$36K+
$2K $5K $10K $20K $36K know
How did your software spend in 2022 compare

with your software spend in 2021?
37.9% More
5.8% Less
53.0% Same
3.3% I don’t know

TECHNOLOGY
How much do you plan to

invest in software in 2023?
More
26.0% than 2022
Less
8.3% than 2022
Same
55.1% as 2022
I don’t
10.5% know

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FINANCIALS
Financials
Builders around the world had a similar A common misunderstanding when it comes
experience in terms of the salaries they drew to construction financials is the difference
from their businesses with 36.1% earning more between markup and margin. The percentage
in 2022 than they did in 2021. More than half of builders that truly understand the difference
(53.6%) of the builders that participated in the between markup and margin stood at 70.5% in
survey expect to pay themselves more again 2022 which, while far from being ideal, was an
in 2023 which is promising because the 36.9% improvement on the 2021 data when only 69.8%
that expect to pay themselves the same amount of builders knew the difference.
are going to struggle to maintain the same level
of earnings due to the effect of inflation on Although the level of financial understanding
their incomes. in our industry is on the increase, the fact that
almost one-third (29.5%) of builders still don’t
The 2022 survey also asked builders whether understand the difference between these two
they were recording their salaries in their fixed numbers remains a very big concern.
expenses reports as opposed to taking it as a
loan or a dividend. It was encouraging to see A better understanding of construction finances
that 73.2% are now doing this which means they leads to improved margins and that is certainly
are producing an accurate total for their fixed what the data for 2022 revealed with 30.1% of
expenses while the remaining 26.8% are most builders marking up their projects by 25% or
likely underpricing their jobs. more during the year. More than half (50.1%)
are planning to achieve those margins in 2023.
The increases in builders’ salaries appear to be
more than justified given that 58.1% of builders
experienced an increase in sales revenue in 2022
and 72% are expecting revenue to increase in 2023.

Another promising statistic was that only 6.8% Fixed expenses is another KPI that needs to
of builders did not know their gross markup in be monitored closely by builders. To be more
2022, which is an improvement on 2021 when precise, the fixed expense ratio—which is
9.2% of respondents admitted to not knowing fixed expenses depicted as a percentage of
that figure. revenue. The sweet spot for a residential building
company’s fixed expenses is approximately 15%
of its revenue and should include salaries for the
owners, plus a healthy investment in marketing
and sales.
While only 13% of respondents were found to

When it comes to monitoring the
be at that level, it was encouraging to see that
gross margin for projects on a the number of builders that did not know this
monthly basis, a very impressive number was down from 29.6% in 2021 to 25.2%
60% of builders revealed they in 2022.
are doing exactly that which is However, after all the good news that was
especially important in these unveiled from the 2022 data, a sobering
challenging times. revelation was uncovering the number of
builders who still do not understand what work in
progress is.
The key metric for every business is net profit and
understandably this figure was hit hard in 2022
Almost half (49.2%) of all builders believe it
as price rises and delays eroded profits, resulting
relates to either the amount of work in the
in just 22% achieving the industry benchmark of
pipeline, or the uninvoiced amount remaining
double-digit net margins, compared to a year ago
on their contracts, while 27.9% believe it relates
when the figure was 25.4%.
to the value of work completed. When the
builders who admitted to not knowing what
As the supply chain normalizes in 2023 we
work in progress is are factored in, the findings
expect to see a significant improvement in
uncovered that 80.8% of builders are calculating
that percentage next year especially given
this number incorrectly which means their
the improved understanding of construction
financial reports would be incorrect.
financials by more and more builders. As it
stands, 43.3% of builders expect to achieve
Despite the number of builders now producing
a 10% or more net profit benchmark in the
monthly financial reports increasing from 49.4%
year ahead.
in 2021 to 57.3% in 2022, that figure is of little
consolation when the information that drives
Sadly 5.4% of building companies lost money
decisions is inaccurate.
during the year. The figure is potentially closer
to 20% due to the fact 15% of respondents are
unsure of their actual net position. History shows
that these are the building companies most
susceptible to going into liquidation within the
next 12-18 months.

FINANCIALS
Preparing for an economic downturn: Why

processes and relationships are the answer
By Brian Pavlick, Chief Operations Officer of CBUSA
Companies, large and small, have faced many To compete in today’s industry, builders should
challenges over the last two years. Fortunately for first have a software solution—without it, running
the construction industry, business has continued a construction business is nearly impossible. And
to boom. So much so that 61.4% of builders second, they should be a member of some kind
surveyed by APB allocate less than 25% of their of purchasing group.
time to work on their business rather than in it.
APB’s survey found that 84.5% of builders aren’t
Now more than ever, it’s more important for members of a buying group. Which means there
builders to work on their businesses. Systems, are hundreds of builders who aren’t taking
processes and setting themselves up for success advantage of the opportunities available to them.
should be top of mind. Heading into an uneasy
economy, taking advantage of opportunities, A group purchasing organization (GPO) gives
buying right and being competitive is critical. builders power to negotiate better pricing, service
levels and account representation from material
Data from APB found that 72% of home builders vendors and manufacturers. They simplify buying
have an even higher revenue target for 2023, which processes for their members and allow them to
is a great sign. In the new year, builders should be compete with large national companies.
disciplined. They should focus on structure and
invest in processes that increase efficiencies for GPOs also make it possible for builders to form
their businesses. Although it’s great to see optimism relationships and network with industry professionals
amidst the unknowns, there are two challenges that they wouldn’t have been able to otherwise.
will continue to cause problems—cost overruns and
“It’s because I’m a part of this group that I have
sourcing materials. Two factors that are essential for
the opportunity to sit down with people like David
project planning and increasing productivity.
Kohler, head of Kohler, and have a discussion,”
Builders should take advantage of this slowdown said Jon Showalter, Chief Operating Officer at
to build a structure that will give them freedom. Homes by Dickerson. “The doors are open to so
Business owners say, “I don’t have time,” to adopt much more networking than any one business.”
a platform, reevaluate vendor relationships or look
Builders benefit from discussing challenges with
for cost-savings. Well, I’m saying, “Now’s the time.”
their peers and having that trusted network is
Builders can scale. With the right tools. Builders becoming an irreplaceable business advantage—
can grow. With the right processes in place. especially now. If builders can come out of this
Increasing purchasing power, simplifying processes environment having built those relationships,
and being able to compete should be the focus this having defined processes and price points, they
year. So, where’s the best place to start? should see the next 12 months as an opportunity.

How much did you pay yourself in
2022 (ie your total drawings)?
$0 - $60K 17.5%
$60K - $120K 41.7%
$120K - $180K 22.1%
$180K - $240K 7.6%
$240K+ 8.0%
I don’t know 3.1%
$0 - $60K 19.6% 17.0% 17.6% 11.3%
$60K - $120K 32.0% 47.4% 58.8% 50.0%
$120K - $180K 20.4% 24.2% 14.7% 25.8%
$180K - $240K 10.7% 4.6% 2.9% 8.1%
$240K+ 13.8% 3.6% 2.9% 3.2%
I don’t know 3.6% 3.1% 2.9% 1.6%

FINANCIALS
Were your drawings included as a salary

in your fixed expenses?
YES 73.2%
NO 20.2%
I DON’t KNOW 6.6%

How did your total drawings in 2022
compare with 2021?
36.1% More
11.5% Less
48.2% Same
4.3% I don’t know
How much do you plan to pay yourself

in 2023 (ie your total drawings)?
More
53.6% than 2022
Less
4.3% than 2022
Same
36.9% as 2022
5.2% I don’t know

FINANCIALS
What was your sales

revenue for 2022?
$0 - $1M 18.4%
$1M - $3M 37.3%
$3M - $6M 20.6%
$6M - $12M 11.1%
$12M - $20M 6.0%
$20M - $50M 4.3%
$50M+ 0.4%
I don’t know 1.9%
$0 - $1M 15.6% 19.6% 8.8% 30.6%
$1M - $3M 28.4% 44.3% 47.1% 41.9%
$3M - $6M 21.3% 19.6% 29.4% 16.1%
$6M - $12M 16.4% 7.2% 5.9% 6.5%
$12M - $20M 8.4% 4.6% 2.9% 3.2%
$20M - $50M 7.1% 1.5% 5.9% 1.6%
$50M+ 0.9% 0.0% 0.0% 0.0%
I don’t know 1.8% 3.1% 0.0% 0.0%

Was your sales revenue more What is your revenue target
in 2022 than it was in 2021? for 2023?
More
58.1% More 72.0% than 2022
Less
14.2% Less 6.0% than 2022
Same
24.9% Same 19.2% as 2022
2.9% I don’t know 2.7% I don’t know
Do you understand the difference

between markup and margin?
Not sure
7.8%
No
5.2%
YES
87.0%

FINANCIALS
To achieve a gross margin of 25%, how

much will you mark up your project by?*
CORRECT
ANSWER
25% 33%
7.4 %
20%
76.2 100%
5.7 % 1.0%
I don’t
0% know
0.8% 8.8%
0% 0.9% 0.6% 0.0% 1.7%
20% 6.0% 5.6% 6.3% 5.0%
25% 10.6% 3.9% 3.1% 8.3%
33% 71.3% 80.6% 87.5% 75.0%
100% 1.4% 1.1% 0.0% 0.0%
I don’t know 9.7% 8.3% 3.1% 10.0%
*This data excludes respondents who selected ‘No’ in the question, “Do you understand the difference between markup and margin?”

What was your gross
markup for 2022?
26.4%
23.3%
20.0%
13.4%
8.0% 6.8%
2.1%
I don’t
0% - 15% 15% - 20% 20% - 25% 25% - 33% 33% - 50% 50%+
know
0% - 15% 15.1% 7.2% 14.7% 25.8%
15% - 20% 24.0% 31.4% 11.8% 27.4%
20% - 25% 22.7% 26.3% 20.6% 17.7%
25% - 33% 20.0% 20.6% 23.5% 16.1%
33% - 50% 9.3% 6.7% 17.6% 1.6%
50%+ 4.0% 0.0% 2.9% 1.6%
I don’t know 4.9% 7.7% 8.8% 9.7%

FINANCIALS
What is your target gross

markup for 2023?
32.8%
24.5%
15.9%
14.0%
6.0%
3.5% 3.3%
I don’t
0% - 15% 15% - 20% 20% - 25% 25% - 33% 33% - 50% 50%+
know
Do you monitor the gross margin

on your jobs every month?
YES 60.0%
NO 37.1%
I DON’t KNOW 2.9%

Yes 55.6% 66.5% 61.8% 54.8%
No 43.6% 29.4% 35.3% 38.7%
I don’t know 0.9% 4.1% 2.9% 6.5%

What was your NET profit margin during 2022
(after all expenses and your own drawings)?
15.1% 14.8% 15.1% 14.8% 15.0%

12.6%
7.2%
5.4%
I don’t
<0% 0% - 2.5% 2.5% - 5% 5% - 7.5% 7.5% - 10% 10% - 15% 15%+
know
What is your target NET profit margin in 2023

(after all expenses and your own drawings)?
26.2%
21.4%
17.1%
13.8%
12.0%
7.4%
1.9%
0.2%
I don’t
<0% 0% - 2.5% 2.5% - 5% 5% - 7.5% 7.5% - 10% 10% - 15% 15%+
know

What percentage of your revenue did you spend on
fixed expenses in 2022 (including your drawings)?
<5% 5% - 10% 10% - 13% 13% - 17% 17% - 20% 20%+
I don’t
know
4.5% 17.9% 16.9% 13.0% 9.5% 13.0% 25.2%
<5% 6.7% 3.1% 5.9% 0.0%
5% - 10% 19.1% 14.9% 14.7% 24.2%
10% - 13% 19.6% 16.5% 2.9% 16.1%
13% - 17% 12.9% 13.4% 20.6% 8.1%
17% - 20% 7.6% 9.8% 17.6% 11.3%
20%+ 12.0% 15.5% 17.6% 6.5%
I don’t know 22.2% 26.8% 20.6% 33.9%
What is your budget for fixed Do you produce monthly

expenses in 2023 (including financial reports?
your drawings)?
I don’t know
1.6%
0% - 5% 4.7% No
41.2%
5% - 10% 16.1 %
10% - 13% 19.4%
13% - 17% 16.9% YES

17% - 20% 8.2%
57.3%
20%+ 7.6%

FINANCIALS
Do you know how to calculate your Work In Progress

Accounting Adjustment (WIPAA) figure?*
YES 46.6%
NO 38.8%
I DON’t KNOW 14.6%
The WIPAA figure is:
CORRECT
ANSWER
5.4% 43.8% 27.9% 19.2% 3.8%

The un-invoiced
The amount of work The value of work None of I don’t
amount remaining
in the pipeline completed the above know
on all contracts
*This data excludes respondents who did not select ‘Yes’ in the question, “Do you know how to calculate your Work In Progress Accounting Adjustment (WIPAA) figure?”.

How often do you calculate your WIPAA?*
My accountant
Yearly does it
10.3% 13.6%
Never
Monthly
25.2%
34.8 %
I don’t
know
16.1%
BREAKDOWN OF BUILDERS WHO DO NOT REGULARLY CALCULATE WIPAA:

NEW HOMES
My accountant does it 24.7% 17.4% 22.2% 45.5%
Never 45.4% 43.5% 77.8% 22.7%
I don’t know 29.9% 39.1% 0.0% 31.8%
My accountant does it 20.0% 24.5% 28.6% 33.3%
Never 47.5% 52.8% 42.9% 44.4%
I don’t know 32.5% 22.6% 28.6% 22.2%
*Monthly or yearly WIPAA calculations are considered regular and therefore respondents who selected either monthly or yearly are not included in this table.

FINANCIALS
What accounting software do you use?
43.5% 36.3% 5.4% 9.3% 3.7% 1.7%
QuickBooks Xero MYOB Other None I don’t know
How much working capital do you have

in your building company?
35.5%
21.4%
12.0%
8.7% 8.9% 9.5%
3.9%
$0 - $100K - $250K - $500K - I don’t

<$0 $1M+
$100K $250K $500K $1M know

How much cash do you have in
your building company?
44.5%
20.8%
9.1% 8.2%
6.2% 6.6%
4.7 %
$0 $100K - $250K -
<$0 $500K - $1M $1M+ I don’t know
- $100K $250K $500K
Are you a member of a buying group?
YES 12.0%
NO 84.5%
I DON’t KNOW 3.5%

PLANNING
Planning
More builders are seeing the importance of having an organizational chart
for their building companies with 48.3% of respondents having created one
compared to just 36.1% in 2021.
Business planning is also becoming a higher An important yet simple calculation building
priority for builders with 37.5% of respondents company owners should do is divide their salary
creating a plan for the next three years, which by the average number of hours they work in
is a big increase compared to just 26.6% in the order to understand the hourly rate they are
2021 data. paying themselves. The next step is to compare
that figure to the hourly rate they are paying
Despite 67% of builders putting in 46 hours a subcontractors and their own staff. Completing
week or more, only 11.7% are able to spend at this exercise typically results in a realization that
least half of their time working on the business builders are grossly underpaying themselves for
instead of in the business. This means an the work they are doing, and that something in
enormous opportunity exists for a large portion the business needs to change.
of work that is currently being undertaken by
the owners of building companies which could
and should be delegated to employees or
contractors. This would create more capacity
for builders to focus on higher level items and
strategic activities.

Do you have an organizational How many hours a week do
chart of your business? you work on average?
I don’t know
0 - 30 5.0%
2.1%
No 31 - 40 10.3%
49.5%
41 - 45 17.1
YES 46 - 50 27.2%
48.3 % 51 - 55 16.5%
56 - 60 13.4%
61+ 9.9%
I don’t know 0.6%
How much time do you allocate in your calendar

to work on the business rather than in it?
25% - 49%
Less than 25%
18.3%
61.4% 50% - 79%
8.2%
80% - 99%
1.9%
100%
1.6%
I don’t know
ANSWERS BY LOCATION: 8.7%

Less than 25% 59.6% 64.9% 61.8% 56.5%

25% - 49% 16.4% 18.6% 20.6% 22.6%
50% - 79% 8.9% 5.7% 8.8% 12.9%
80% - 99% 2.7% 0.5% 5.9% 1.6%
100% 2.2% 1.5% 0.0% 0.0%
I don’t know 10.2% 8.8% 2.9% 6.5%

PLANNING
Do you have a business plan covering

the next three years?
No
61.2%
Yes
37.5%
I don’t know
1.4%
Yes 36.9% 34.0% 44.1% 46.8%
No 62.7% 63.4% 52.9% 53.2%
I don’t know 0.4% 2.6% 2.9% 0.0%

Team
Recruiting and retaining key staff has been a major headache for
businesses in all industries in the last 12 months as low unemployment,
employee burnout and stress have contributed to The Great Resignation.
With inflation continuing to erode the real value written job descriptions (29.9%) and performance
of employees’ salaries, it has become more appraisals (43.3%). Builders are investing in these
important than ever for builders to not only have strategies for long-term benefits.
the strategies in place to attract the best staff,
but to also implement retention strategies as Interestingly, while more builders implemented
more and more competitors attempt to lure away weekly huddles, the number of builders running
good employees. daily huddles decreased to 19%, down from
22.8% in 2021.
Therefore it has been encouraging to see
that 27.2% of building companies now have a In terms of how residential building companies
documented process in place for recruiting staff manage their carpentry teams, there was a big
compared to 20.7% in 2021. difference between builders in the United States
whereby 61.8% use subcontractors whereas
The 2022 survey showed an increase in builders in Canada, Australia and New Zealand
the proportion of builders with onboarding favor employing carpenters directly or using a
processes (35.3%), employee handbooks (35.5%), combination of employees and subcontractors.

TEAM
How many staff does your company employ?
1-5
58.8%
6 - 10 25.6%
11 - 49 14.0%
50+ 1.4%
I don’t
know 0.2%
Is your carpentry work completed by

subcontractors or in-house employees?
40.2% 24.7% 35.1%
Subcontractors Employees Both subcontractors

(ie on your payroll) & employees

Do you have a documented What is your revenue per
process for recruiting new employee?
staff?
I don’t know
1.2% $0 - $250K 25.8%
No
71.7% $251K - $500K 18.6%
$501K - $750K 6.6%
YES $751K - $1M 7.4%
27.2% $1M - $1.5M 5.8%
$1.5M+ 4.9%
Do you have an onboarding Do you have an employee

process for new staff? handbook/company manual?
1.4 %
0.6%
No No
63.3 %
63.9%
YES YES
35.3% 35.5%

TEAM
Do you have written job descriptions with clear

Key Performance Indicators (KPIs) for every
team member?
I don’t know
Yes
1.0%
29.9%
No
69.1%
NEW HOMES
Yes 26.8% 32.7% 11.1% 46.2%
No 72.0% 67.3% 88.9% 53.8%
I don’t know 1.2% 0.0% 0.0% 0.0%
Yes 39.3% 21.8% 25.0% 34.8%
No 59.0% 75.9% 75.0% 65.2%
I don’t know 1.6% 2.3% 0.0% 0.0%

Do you hold daily huddles/ Do you hold weekly huddles/
meetings? meetings?
1.2 %
1.0%
No No
79.8 %
35.9%
YES YES
19.0% 63.1%
Do you conduct 6-monthly or annual

performance appraisals?
I don’t know
0.6%
No
56.1%
YES
43.3%

TRAINING
Training
A common complaint made by building company declined slightly with 36.3% of respondents
owners during 2022 was the lack of time they had spending more in 2022 which was down from
available to them. This was most likely the reason 37% in the 2021 data.
only 36.9% of builders were able to read three or
more books during the year compared to 56.7% in Over a third (34.6%) of builders that took part
2021. There was also a big increase in the number in the survey currently pay to be mentored by a
of builders that didn’t manage to read a single professional coach.
book during the year which went up to 21.4% of
A concerning figure for 2022 was that over a
respondents compared to 12.1% in 2021.
quarter (26.2%) of respondents reported a
While it can be difficult to find time to read deterioration in their mental health during the
physical books, there remains an abundance of year. With the current pressures and stressors
opportunity to consume audio books due to the that owners of residential building companies are
amount of time spent driving or exercising. under, it’s important the industry finds ways for
builders to share their problems as opposed to
It was a similar story in terms of the amount remaining silent.
of time allocated to training with the average
number of hours per builder down from 2021. This is the driving force behind APB launching its
local chapters initiative which are local groups
However, the goals for builders over the next 12 run by builders for builders. APB’s local chapters
months remain the same with systemizing the welcome all builders, not just APB members.
business being the number one priority for most
building company owners, followed by increasing It’s becoming crucial in the current climate to
margins which remains a priority for 25.8% provide men and women in the industry with a
of builders. supportive environment where they can connect
and know that others share their struggles and
And while builders struggled to find time for care about their well-being.
their own education, the trend understandably

Investment in training is key
to growth and success for
construction companies
By Dave Young and Duane Johns, Regional Partners with Alair Homes
and Hosts of the Builder Nuggets Podcast.
After a year of turbulence, one SORCI category Truly great leaders make constant investments in
stood out as offering the greatest opportunity for themselves. One in 14 listed self-growth as their
investment and growth. (Luckily, it’s one you can primary focus. Want to build a better team? Seek
directly influence.) to improve your leadership skills and find ways to
get your people access to the same.
Training.
When your people feel invested in, they invest
As business coaches we’ve witnessed back. In today’s employment climate, retention
construction companies make incredible strides is more important than ever. If your people
through strategic investments in their people. are burnt out, under-valued, or commoditized,
Systems, learning, training and coaching all they’ll leave (or worse, stay and underperform).
contribute to building a culture of elevation Intentionally creating learning opportunities—
that turns small businesses into valuable and then giving staff space to share and lead—creates
rewarding self-led companies. a winning culture that attracts more winners.
The SORCI survey revealed that 37.3% of If you are one of the 81.4% that don’t have a
respondents want to enhance systemization. succession plan, look inside your current team
In order for implementation to be successful, for future owners. Your new investments increase
systems and processes need to be supported productivity, reduce risk, create predictability
by policy, manuals and training. Of the builders and value, and can internally produce your
surveyed, 79.8% indicated they dedicated six ideal buyer(s).
hours or less to training each month and 68.3%
said they spent under $417 per month on Pro tip: Worried about the time this will take, or
training. Lack of team adoption is often cited as not sure where to start? You don’t need to figure
the reason new tools or programs fail. When you it all out yourself. Find a Mastermind. (Bonus if it’s
commit to a new system, consider optimizing one your whole team can experience.)
your return on investment (ROI) by ramping up
time spent with your team (and be clear about
the ‘why’ behind the shift).

TRAINING
How many books do you read

in a year?
40.8%
28.2%
21.4%
6.2%
2.5%
1.0%
I don’t
0 1-2 3-6 7 - 12 13+
know
How much time do you allocate

to training each month?
0
hours 20.6%
1-2
hours 33.0%
3-6
hours 26.2%
7 - 12
hours 9.9%
13+
hours 6.0%
I don’t
know 4.3%

TRAINING
What is the #1 thing you would like to improve

in your business in the next 12 months?
Systemize
the business 37.3%
Increase
margins 25.8%
Sign more
contracts 18.4%
Myself
7.4%
Get more
leads 6.0%
Other 3.7%
I don’t
know 1.4%
Systemize the business 39.1% 39.2% 38.2% 24.2%
Increase margins 20.9% 31.4% 8.8% 35.5%
Sign more contracts 22.2% 11.3% 26.5% 22.6%
Myself 8.0% 6.7% 2.9% 9.7%
Get more leads 5.8% 5.2% 11.8% 6.5%
Other 2.7% 4.6% 8.8% 1.6%
I don’t know 1.3% 1.5% 2.9% 0.0%

How much did your company
invest in training in 2022?
27.2%
22.7%
18.4%
12.0%
9.5%
5.6%
3.1%
1.4%
$1 - $2,000 - $5,000 - $12,000 - $25,000 - I don’t

$0 $60,000+
$1,999 $4,999 $11,999 $24,999 $59,999 know
$0 23.6% 17.0% 2.9% 12.9%
$1 - $1,999 28.0% 25.3% 26.5% 30.6%
$2,000 - $4,999 19.6% 23.2% 20.6% 33.9%
$5,000 - $11,999 11.6% 11.3% 23.5% 9.7%
$12,000 - $24,999 9.3% 9.8% 11.8% 8.1%
$25,000 - $59,999 3.1% 9.3% 5.9% 3.2%
$60,000+ 1.3% 1.0% 5.9% 0.0%
I don’t know 3.6% 3.1% 2.9% 1.6%

TRAINING
Did you invest more in training

in 2022 than you did in 2021?
36.3% More
7.6% Less
51.3% Same
4.9% I don’t know
How much do you plan to invest

in training in 2023?
More
40.6% than 2022
Less
5.0% than 2022
Same
41.4% as 2022
13.0% I don’t know

Do you have a coach Do you pay for coaching
or mentor? or mentoring?

1.0 %
0.8%
No No
60.2 % 64.7%
YES YES
38.8 % 34.6 %
Do you have a
succession plan?
I don’t know
3.1%
No
78.3%
YES
18.6%

TRAINING
How has your mental health been in 2022

compared to last year?
25.6%
Stayed
the same 48.2%
It improved Deteriorated
26.2%

CHAPTERS
Scan for chapters

near you
GLOSSARY
Glossary
Cost Per Lead The cost per lead (CPL) is a metric that measures the cost or dollar value
(CPL) of how much it costs to acquire a lead from your marketing campaign
(refer to the definition of a lead). The CPL can help in further calculations
to establish the return on investment (ROI) for a marketing campaign.
CPL = [CAMPAIGN SPEND/LEADS GENERATED]
By comparing CPL to the value of your product or service you can

determine whether the CPL on your campaign is too high in which case
you may decide to end the campaign. However, if the CPL is low, then the
organization may wish to scale the campaign up to generate more leads.
Customer Customer Relationship Management (CRM) is a technology that is used to

Relationship manage dealings with contacts, customers, prospective clients and clients.
Management It’s a system that enables organizations to build, maintain and manage
(CRM) System relationships and streamlines processes and interactions in an effort to
increase sales, improve customer service and inevitably boost profitability.
Drawings Drawings are the amount of remuneration paid to the company owners.
Fixed Expenses Fixed expenses (also known as fixed costs, indirect costs or overhead
costs) are the expenses that cannot be directly attributed to a particular
project (eg cost of sales).
Handover A handover is when a home has reached practical completion and there
are no major defects. It is possible at the handover stage that some items
remain outstanding but they must not be considered major defects and
the home is considered suitable to move into or in the instance of a
remodel/renovation, be suitable for living.
This is also the point in the project where the client must make the
final payment.

Huddles Daily Huddle
A daily huddle is a short daily meeting, generally no longer than 15
minutes conducted by a team leader to discuss tasks or plans for the
day. The meetings maintain a consistent format with the purpose of
maintaining alignment and keeping the team focused on the bigger
picture and to help remove any stuck items that may be preventing
someone from progressing with their assignment or task.
Weekly Huddle
A weekly huddle is typically longer than a daily huddle, generally 30
minutes and not longer than one hour to evaluate progress and discuss
the strategy for the week ahead and to ask for help if needed. Typically
the weekly huddles address one or two main topics.
Key Performance A key performance indicator (KPI) is a value that illustrates if a company
Indicator (KPI) is achieving its business objectives or not. KPIs must be measurable
values so that organizations can assess and calculate how effective their
performance has been in achieving their targets.
Many organizations measure high-level KPIs and low-level KPIs. High-level

KPIs often focus on overall performance of the business for a definite
period of time, whilst low-level KPIs often tend to focus on processes in
business units, service lines or departments.
Lead A lead is a person that has expressed interest in your building company’s
products or services.
A lead is typically a contact at the first stage in the buyer’s journey that has
entered your sales process but has not been qualified.
Lead Generation As an extension of the definition provided above for a ‘lead’, lead
(aka Lead Gen) generation is the process of creating interest and attracting consumers
who express an interest in your organization’s products or services. It is a
marketing process or strategy that is utilized in an effort to generate sales
by drawing in a consumer, converting them into a lead and eventually
converting the lead into a customer or client.
It’s a strategy that is used to create awareness in your target market in an

effort to raise your organization’s profile making it more likely that you’re
top of mind so that your leads will eventually make a purchase from
your company.

GLOSSARY
Marketing A marketing qualified lead (MQL) is a lead who is considered to be most

Qualified Lead likely to ascend into a sales qualified lead (see definition of sales qualified
(MQL) lead) compared with other leads. This is typically assessed on certain
criteria, such as having a phone number, which enables them to be
passed over to the sales team for further qualification.
Sales Qualified A sales qualified lead (SQL) is an MQL that has been qualified by the sales
Lead (SQL) team, typically after a phone conversation or an in-person meeting.
Margin Gross Margin

Gross margin is your gross profit as a percentage of revenue.
Net Margin
Net margin is your net profit as a percentage of revenue.
Markup Markup is the percentage added to the cost of sale (eg labor and materials).
Net Promoter A net promoter score (NPS) is a metric that measures your customer’s
Score (NPS) experience as a percentage of ratings. The NPS also provides an
indication of the organization’s growth potential by rating the likelihood of
your customer recommending your business to a friend or colleague via
their response to a key question.
How likely is it that you would recommend [your company] to a friend

or colleague? The responses will then fall into one of the following three
categories:
Promoters – score range 9 – 10 – these are the raving fans who are the
most likely to continue business with you and also refer others to your
business which increases growth.
Passives – score range 7 – 8 – these are satisfied or neutral customers

who are susceptible to defecting to your competitors.
Detractors – score range 0 – 6 – these are unsatisfied customers who

may be potentially detrimental to your brand and reputation and
hinder growth.
To calculate your NPS score, subtract the percentage of detractors from

the percentage of promoters.

Objections An objections manual is a document that captures the common
Manual reasons why prospects either can’t or won’t sign a building contract. The
objections manual would typically outline the objections and then provide
a method or strategy for the sales person to overcome those objections
in an effort to close the sale.
Objections form a roadblock for sales teams and therefore an objections

manual helps to guide the sales person through the recommended steps
to take when a prospect raises an objection/concern. Usually this is in the
form of asking the prospect a series of questions in an effort to uncover
the real problem that is preventing the prospect from moving ahead with
the purchase. Typically the objections manual will then outline the best
possible response or action the sales person can take that provides a
solution to the prospect’s concern in an attempt to progress the sale.
Onboarding Onboarding is the process of introducing employees to the processes,

Process culture and expectations of the business. The onboarding process
familiarizes employees with the organization with the purpose of
providing them with the necessary tools and information required so that
they’re able to adjust to their new job as quickly and smoothly as possible.
Onboarding helps new employees become comfortable and confident
enabling them to perform at an optimal level as early as possible.
Organizational An organizational chart is a diagram that visually illustrates the company’s

Chart structure by outlining the reporting relationships of departments/
business units/service lines and ranks of positions/jobs.
It’s a visual tool that explains the chain of command within the
organization.
Performance A performance appraisal is a process that helps to manage employee

Appraisals performance by identifying, assessing and developing a pathway
to progression for employees to help them achieve the goals and
objectives of the organization. It is a meeting to review an employee’s
job performance and contribution to the organization by evaluating their
skills, achievements and growth. On the contrary, performance appraisals
may uncover gaps in knowledge, a lack of skills and growth that may have
affected job performance.
A performance appraisal is a forum to provide employees with

recognition, feedback, career guidance and a development plan.

GLOSSARY
Post Project Post project completion audits evaluate the budgeting and efficiency after
Completion the building project has been completed. It is a process that assesses
Audits the financial outcomes of the project by comparing the planned or
budgeted outcome versus the actual outcome. These audits typically
take into consideration costs, use of resources and results. In most cases
it assesses whether the project was completed on time and on budget.
If not, then the process works to identify where the problems occurred
that steered the project off course. It is a process that promotes ongoing
and continuous learning to foster improvement for delivering future
construction projects effectively and efficiently.
Preliminary A preliminary building agreement (PBA) is a contract that comes before

Building Agreement the actual building contract. PBAs enable the builder to undertake an
(PBA) / Prelims information gathering process to be able to provide the client with a fixed
price for the construction project.
Construction projects are complex and in most cases there are many
steps involved prior to commencement. Such steps include obtaining
mandatory information, for example, soil tests, development approvals,
efficiency reports, certificates and engineering reports.
A PBA enables the builder to obtain this necessary information to be able

to provide an accurate price and offers benefits to both parties in that it
protects both the builder and the client from unexpected or hidden costs
throughout the building process.
Remuneration Remuneration is payment or compensation for work performed or

services provided. Typically remuneration includes wages, salaries or
commissions but can also include non-monetary allowances including, but
not limited to, company cars, medical plans or meal allowances.
Search Engine Search engine optimization (SEO) is the process of improving your
Optimization (SEO) website/site to increase your visibility in search engine results. The
ultimate goal of SEO is to achieve a high enough ranking in the search
results in an effort to direct traffic to your website or page. Good visibility
in search results means you’re more likely to increase awareness and
therefore the attention of prospects. For example, when a user searches
for particular words or a phrase in a search engine such as Google,
Bing or Yahoo, the results that appear are the best matches for those
particular words in order of ranking.
Many organizations may focus their SEO efforts on ranking highly for only
specific words or phrases that they deem crucial in attracting the right
prospects to their site.

Succession Plan A succession plan is a document or process that identifies the critical
positions or leaders within the organization and aims to develop and
prepare staff in order to qualify for those identified positions.
It is a strategy or process that endeavors to groom staff in an effort to

replace leaders or fill the organization’s critical positions.
It’s a workforce planning process that is designed to increase the

availability, capability and experience of employees to undertake these
key roles as and when they become available.
Workflow Workflow is the balance of contracts that have not been invoiced. Not to
be confused with work in progress, or the sales opportunities currently
in the pipeline. It is the un-invoiced contract value for the existing signed
contracts. To put simply, it can be thought of as guaranteed sales. For
example, consider you have $1,000,000 worth of total contracts, and to
date you’ve claimed/invoiced $400,000. The workflow figure is $600,000;
it’s the un-invoiced contract value.
Work In Progress Work in progress is the difference between the forecast cost to complete,
Accounting as a percentage of completion, and the amount actually invoiced. It
Adjustment is applied to a construction company’s accounts at month-end as a
(WIPAA) journal entry.

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associationofprofessionalbuilders.com

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State of Residential

1 Association of Professional Builders

A combination of record low unemployment and

Even those who have not found themselves

State of Residential Construction Industry Annual Report 2023 2

Despite the The #1 sales Builders’ financial

Cost escalation clauses exposed

3 Association of Professional Builders

State of Residential Construction Industry Annual Report 2023 4

Even more encouraging is that 70.5% of builders

Almost three quarters of builders (74.8%) know

5 Association of Professional Builders

State of Residential Construction Industry Annual Report 2023 6

Very closely matched to 2021’s figure was the

Once again the data revealed that

This further promotes the notion that margins

7 Association of Professional Builders

Which country do you What is your age?

What is your role in the business?

OWNER/DIRECTOR/PRESIDENT SENIOR MANAGEMENT

CHOICES UNITED STATES AUSTRALIA CANADA NEW ZEALAND

New homes 71.6% 54.5% 51.6% 61.0%

Remodeling / renovations 28.4% 45.5% 48.4% 39.0%

CHOICES UNITED STATES AUSTRALIA CANADA NEW ZEALAND

New homes 83.3% 61.1% 66.7% 100.0%

Remodeling / renovations 16.7% 38.9% 33.3% 0.0%

State of Residential Construction Industry Annual Report 2023 8

CHOICES UNITED STATES AUSTRALIA CANADA NEW ZEALAND

New homes 72.9% 55.2% 52.9% 62.9%

Remodeling / renovations 27.1% 44.8% 47.1% 37.1%

9 Association of Professional Builders

What is your business model?

CHOICES UNITED STATES AUSTRALIA CANADA NEW ZEALAND

Design & build 79.3% 70.1% 83.3% 48.7%

Quoting plans 9.8% 27.1% 11.1% 43.6%

Spec homes 10.4% 1.9% 5.6% 7.7%

I don’t know 0.6% 0.9% 0.0% 0.0%

CHOICES UNITED STATES AUSTRALIA CANADA NEW ZEALAND

Design & build 78.7% 37.9% 87.5% 21.7%

Quoting plans 18.0% 62.1% 6.3% 73.9%

Spec homes 0.0% 0.0% 6.3% 0.0%

I don’t know 3.3% 0.0% 0.0% 4.3%

State of Residential Construction Industry Annual Report 2023 10

CHOICES UNITED STATES AUSTRALIA CANADA NEW ZEALAND

Fixed price 62.8% 87.9% 61.1% 59.0%

Cost plus / open book 37.2% 10.3% 38.9% 41.0%

I don’t know 0.0% 1.9% 0.0% 0.0%

CHOICES UNITED STATES AUSTRALIA CANADA NEW ZEALAND

Fixed price 60.7% 75.9% 62.5% 26.1%

Cost plus / open book 39.3% 24.1% 37.5% 73.9%

Do you belong to a franchise?

11 Association of Professional Builders

How many projects do you What is the contract value

26 - 49 8.0% $1M+ 23.3%

State of Residential Construction Industry Annual Report 2023 12

CHOICES UNITED STATES AUSTRALIA CANADA NEW ZEALAND

National Association of Home Builders (NAHB) 61.8% 0.0% 5.9% 0.0%

Association of Professional Builders (APB) 20.4% 36.6% 41.2% 16.1%

Master Builders Australia (MBA) 0.0% 68.6% 0.0% 1.6%