A general contractor will not build a house at a loss. And it wouldn’t just be one, but estimated at least 10 with a general contractor. If it’s not profitable for them, they establish a second GmbH in advance, close the first one (sale or insolvency), and continue with the second; if necessary, another managing director is installed as a front man. Nowadays there are GmbH "funeral" companies that advertise online and broker corresponding buyers. All personally experienced.
I wouldn’t agree with that. For example, in our hospital network, there is a rehabilitation clinic (yes, a different industry, etc.) that has been making losses for years, if not decades. It is kept alive because: a) fixed costs can be covered with it. These costs remain even if we close it. b) it belongs to the portfolio and one wants to offer the complete package. From ventilation -> rehab.
If the builder now makes losses or no margins, he will not immediately shut down. Because with that he can at least cover the fixed costs and part of his variable costs. Better than looking for a new customer now. Planning phase, etc. takes time.
Now let’s think the other way around. The client loses their job, gets a new one but it pays 10% less. Does the builder say: "We will now reduce the price by 10%"? Just as the client carries a financing risk, the contractor should bear the entrepreneurial risk. And I also assume that if a fixed-price contract is signed, the general contractor secures prices and materials at the latest the next day.