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NECA calls on electrical contractors to charge reasonable rates

The National Electrical and Communications Association (NECA) has found in its 2008 Market Monitor survey of electrical contractors that many are charging rates that are too low to sustain their businesses, potentially harming their long term viability and the industry.

The national survey of more than 2,400 contracting businesses showed that in each state and territory, average charge-out rates were consistently lower than the recommended rates published by NECA, with many contractors charging significantly less.

For example, in Victoria the average hourly charge-out rate was found to be $67 while the NECA recommended charge-out rate for that state is upward of $101. Less than three per cent of Victorian respondents charged more than $90 an hour for their services and almost 30 percent charged less than $60.

Similarly in New South Wales, the average hourly charge-out rate is $65 while the recommended charge-out rate is between $82 and $88. More than 40 per cent of New South Wales respondents charged less than $60.

The average charge-out rates and NECA recommended charge-out rates for the major states are presented in the following table.

State Average charge-out rate $ per hour NECA recommended charge-out rate $ per hour

New South Wales 65.00 81.88 — 88.26

Queensland 70.00 78.31 — 80.55

South Australia 65.00 59.77 — 67.05

Victoria 67.00 101.47 — 119.64

Western Australia 80.00 81.88 — 88.26

As an industry peak body, this finding is of serious concern to NECA with its focus on the industry’s long term future and ensuring members run safe and profitable businesses.

NECA National chief executive officer, James Tinslay said, “NECA has developed recommended charge-out rates for most states that reflect what we consider to be a fair return on the investment, risk and effort involved in running a contracting business, rather than a basic recovery of costs. Our survey shows that these recommended rates are higher than what the average contractor is currently charging.”

“We are very concerned about contractors within the industry who undercut their competitors to win work, to the extent that they often make a loss and even jeopardise the future security of their business. This not only reflects poorly on their own business management but is likely to discredit our members and the broader industry in the long term.”

The Market Monitor also found that many electrical contractors feared the damage that businesses undercharging and delivering poor standards of workmanship were having on the industry. A common theme was evident in respondents’ comments that included:

“Fly by night cowboys give us all a bad name and way undercharge before going out of business. By then the damage is done to everyone.”

“Huge variation in charge out rates of tradesmen — needs to standardise.”

NECA has drawn attention to its recommended charge-out rates to assist contractors in addressing this issue.

Tinslay explained, “Our recommended charge-out rates are based on a variety of measures including EBA wage rates, insurance charges, superannuation, realistic overheads and a fair profit for the contractor. They are available to NECA members, the wider industry and the public through our website and local NECA offices.”

“We encourage all electrical contractors to seek out these recommended rates and use them as a benchmark for setting their own rates, which will ultimately enable them to run a profitable business and secure the reputation of our industry,” he said.

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