Persimmon targets subcontractors in cost-cutting drive

Persimmon is looking to retender subcontractor packages more regularly as it looks to “share the cost pressures in this new challenging environment.”

The house building giant highlighted cost control measures in its latest results as sales continued to slump.

Group Chief Executive Dean Finch said said: “We are reviewing our subcontractor pricing on a more frequent basis to identify opportunities to secure increased savings. We are actively retendering sites to identify savings.

“Just as we absorbed many price increases from subcontractors in recent years, so we need to share the cost pressures in this new challenging environment.

“While there are of course variations across trades, groundworker, bricklayer and dry liner costs are in general coming down, for example.

“National infrastructure projects like HS2 continue to create pressures in the broader sector, however the overall inflationary pressure is reducing and we are working proactively and in a detailed manner to capture it.”

Persimmon is also focusing on value-engineering with a “plot-by-plot, site-by-site review to identify areas for cost savings or value enhancement that do not compromise quality.”

This includes reviewing construction methods and using Persimmon’s own brick and tile products more widely.

Finch added: “This enhanced review and oversight of site costs is being complemented where possible by the expanded use of procurement framework agreements and frequent supplier negotiations to reduce the impact from build cost inflation and capture any pricing opportunities as soon as possible.”

He said: “Regular interrogation of build processes, product specifications and subcontractors will drive opportunities for savings, as will on-going overhead reviews.”

A recruitment freeze has also seen staff numbers drop by 300 since the start of the year and Persimmon is targeting another £25m in annual savings.

Work in progress is also being carefully managed to match sales rates with build rates now 26% lower than last year.

Latest results for the six months to June 30 2023 show pre-tax profit fell to £151m from £440m last time.

Turnover was down to £1.19bn from £1.69bn as new home completions dropped to 4,249 from 6,652.

Persimmon returned £192m in dividend payments to shareholders during the period..



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