There seems to be a lot of conversation and information concerning new construction and remodeling both commercial and residential, that I’ve found to be somewhat misleading. In our market of high end condominiums, homes and commercial products, there is all this talk of how building costs are way down. Both labor and material. We’ve had client’s and prospects who have told us they can get their projects built at some unbelievable low rate.
The market is tough, the competition is tough and everyone is looking for more work. Contracts are being signed on projects for amounts that all of us our shaking our heads. How can that be? Well, what we’re finding out through this bidding process the last couple of years (and bidding with subcontractors we’ve worked with successfully over the years) there’s just enough money in some proposals to cover the materials let alone the labor and the cost to do business. Unfortunately, owner’s and general contractors are accepting these bids just to get the job. Then it’s doing everything legally possible to hold them to it. How long can this go on?
This has caused projects to suffer. The back chargeing of subs for numerous things like cleanup, dumpster fee, off loading or hoisting. Things that use to be part of a project. Schedules suffer because some subcontractors won’t show up until everyone is out of there way so they’re not held up or lately because they don’t have the people necessary to cover all their bases.
I believe that old saying “You get what you pay for” is real and right now it is really coming back to bite a lot of owner’s and developers. There are numerous projects around the area where subs have pulled off because they’re out of money. They low bid the project hopeing they would make some back in changes and keep their key employees busy. Well, that didn’t happen. Now they are over budget, the money is spent, and the general contractor and owner is left holding the bag. There’s a lot of frustration and stress involved in this whole process.
How did we get here? Who told these owners what to expect in costs? The realism is, building material costs aren’t cheaper. It still takes the same amount of time to perform the many tasks involved in a construction project. How about the true craftsman? Sure there is cheaper labor, and then the project suffers with poor workmanship and the true quality which it demands. Every owner expects and demands high end quality, but in this low bid arena of today, aren’t willing to or feel it’s not necessary to go the extra mile and pay for it. Right now the whole industry is suffering.
A few bright spots to all of this is, it’s helped every company to reevaluate where it’s going. How we can all be more efficient in business and where and how to cut down on waste. Let’s hope we’re turning the corner on this one and let’s look to a brighter future.