SR259 Value of time savings in new housing (2018)

Quicker construction can be of significant advantage to builders because it improves their cash flow and profit. This study was conducted to identify the theoretical cost savings arising from shorter construction times for new housing.

The report does not discuss how time can be saved. Instead, it considers the effect on profit and cash flow of reducing time between the various sequential steps rather than looking at possible savings from, for example, more efficient use of labour. Hence, the report is primarily concerned with the overall duration of the project rather than resource use efficiencies.

The savings estimated were shown to a number of builders, and their feedback indicated the main advantage of quicker construction was greater profit and reduced overhead per house. There are also cash flow advantages dependent on the contractual arrangements.

For spec-built housing, reduced construction time unambiguously provides a cash flow advantage to the builder. However, in fixed-price contracts, progress payments are usually staged to provide positive cash flow and so a reduced construction time will not automatically result in cash flow savings to the builder.