Commercial Builds Research Brief

I love this. Two different sales motions running in parallel. Residential is one-at-a-time, high-touch, SMS-first. Commercial is relationship-driven, tender-based, volume orders. They don't compete for my time in the same way.

The QLD Government Employee Housing program is the one I'd chase first. Standing procurement, ongoing demand, Class 1a dwellings in regional towns. That's literally what we build. The 3.4m series needs no pilot vehicle, which keeps delivery costs down for remote locations. And our fixed pricing model is perfect for government procurement — they hate uncertainty.

The Rural Workers' Accommodation Initiative is a sleeper. Farmers don't want to deal with council approvals. We can say "no planning approval needed for up to 20 workers" and that removes the biggest objection. Marketing angle writes itself. But this is direct B2B sales, not a tender process.

My concern: We haven't closed our first residential sale yet. Q2 rock is 10 contracts / $700K. Chasing commercial before we have residential proof points dilutes focus. I'd register on the portals now (low effort, high optionality), but not actively pursue tenders until we have at least 2-3 residential builds done as case studies.

Action: Register on all 4 portals this week. Create the Capability Statement. Set up alerts. But don't bid on anything until Q3.

Let me put some numbers around this. Our current residential model: $155K average sale, 70% markup on cost, one-at-a-time production. If we close 10 residential contracts this year, that's $1.55M revenue.

A single government housing order could be 5-20 units. Even at discounted commercial pricing (say 50% markup instead of 70% to win tenders), 10 units of the Haus 6.0 at ~$120K commercial price = $1.2M from one contract. The unit economics change completely at volume.

The real opportunity: The QBuild MMC program is a $2.8B pipeline. Even getting 1% of that is $28M over the program life. But we'd likely need to adapt to their standardised floor plans, which means product development cost.

Risk I see: Government contracts are slow to pay. 30-60 day payment terms are standard. With $0 revenue and $287K invested, cash flow matters. We can't afford to build 10 units and wait 60 days for payment.

Action: Model a commercial pricing tier at 45% markup. Calculate minimum order size that justifies setup cost. Map payment terms vs cash flow for different scenarios.

From a production standpoint, workforce accommodation is actually simpler than residential secondary dwellings. Repeat builds of the same model, standardised specifications, less customisation. Our factory would run more efficiently on 10 identical units than 10 different residential projects.

SIP construction advantage: Our SIP panels tested at ACH 2.03 (vs typical Australian homes at 15-30). That thermal performance is a genuine selling point for remote/regional accommodation where energy costs are high. BAL 29 with FC panels covers most of regional QLD bushfire-prone areas.

Concern: Government and commercial specs often require fire separation between units, specific acoustic ratings, disability access in a percentage of units, commercial-grade fixtures, and possibly cyclone ratings for North QLD. We need to understand exactly what QBuild standardised floor plans require before committing.

Action: Review QBuild standardised floor plans. Get SipForm bulk order lead times and pricing. Assess factory capacity for 5, 10, and 20 unit runs.

Registration on these portals is a process task. Low effort, high optionality. I can document the registration steps as an SOP, Jeremy or Ross executes, done in a day. That's the easy part.

The Capability Statement is the blocker. We can't register properly without it. It needs to look professional, cover our QBCC licence, product range, factory capability, delivery reach, and any completed projects. Since we don't have completed projects yet, we lean on the display site, architect credentials, and SIP technical specs.

Action: Create Capability Statement this week. Compile insurance certificates. Draft registration SOP. When first tender opportunity comes, budget $2-5K for a professional tender writer.

I'm cautiously supportive but the financial reality is clear: zero revenue, $287K invested, net loss of $286,892. The immediate priority is residential sales.

Key financial risks for commercial: Working capital — at ~$70K cost per unit, a 10-unit contract needs $700K in working capital before payment. We don't have that. Government pays 30-60 days from invoice. Insurance uplift to $20M PL will increase premiums. Tender costs (time + tender writer) at 10-20% win rates means budgeting to lose before you win.

The upside: Government contracts are bankable. A signed government contract makes working capital finance much easier to obtain. Banks and invoice factoring providers love government receivables.

Action: Check current insurance limits and cost to uplift. Model working capital requirement for 5, 10, 20 unit orders. Investigate invoice factoring/trade finance facilities that could fund production against government purchase orders.

Brand-wise, don't lose the plot. Outhaus is positioning as an architectural modular brand. "Workforce accommodation" and "government housing" sounds very different to "architect-designed modular living." We need to be careful about how we message this.

My recommendation: Don't change the consumer brand at all. Create a separate "Outhaus Commercial" or "Outhaus Projects" sub-brand for the government/workforce market. Same product, different positioning. Two audiences, two voices, one factory.

The rural workers' accommodation angle is actually brand-safe. "Architect-designed worker accommodation" is a differentiator in a market full of dongas and portable cabins. We can charge a premium because our product looks and feels like a real home, not a site hut.

Action: Design the Capability Statement in Outhaus brand but with commercial language. Consider a /commercial or /projects page on the website. Keep residential and commercial messaging separate.

Strategically, this is a market diversification play and the timing is right to plant seeds, even if harvest is 6-12 months away. Outhaus currently has a single revenue stream — inherently risky for a pre-revenue company. Adding a government/commercial channel creates revenue diversification, counter-cyclical demand, and potentially a faster path to first revenue.

Competitive moat consideration: Saltair Modular is already on the QBuild panel. Getting on panels early, even before bidding, means you're in the system when procurement rounds happen.

What NOT to do: Don't pivot to commercial. Add commercial as a second channel. The residential brand is the long-term margin play. Commercial is the volume play. You want both.

Government procurement has specific legal requirements: Queensland Procurement Policy 2026 (just released March 2026 — read it before registering). Supplier Code of Conduct compliance. Modern Slavery Act statement. $20M public liability minimum. Professional indemnity for design services. Longer defect liability periods (12-24 months vs 6 months standard). IP clauses that may require assignment or licensing of architect-designed plans — critical to review before bidding.

Action: Review QPP 2026. Check insurance coverage limits. Get legal advice on IP clauses before any tender submission.

Volume orders change procurement dynamics significantly. SipForm bulk pricing: 10+ panel sets should trigger volume discounts — negotiate now, not when there's a deadline. Standard lead times need confirming for bulk orders (8-12 week pre-order likely needed). Multi-unit delivery to one location is more efficient — one mobilisation cost, multiple units delivered.

Action: Contact SipForm about bulk order pricing tiers and lead times. Spec a standardised fixture package for commercial units.