Page 94 - Built Expressions - Online Construction Magazine - November 2014 Issue

wordpress.com MASTER Stroke auction sites, this practice has not been endorsed by major contractors. This is because owners have yet to see substantial savings and the open-bid approach presents a host of problems. Construction is different from many other products and services sold as commodities. Most contractors – and even most buyers of construction services – would agree that construction services are not commodities, even Responding to a recent FMI survey on construction delivery though they are at times treated as such. methods, one contractor commented on why contractors Through market surveys and interaction with clients, FMI regularly price at extremely low levels: “To keep their men working and hears contractors and owners caution maintain cash fow.” against blindly focusing on low price for construction projects, yet some persist. Responding to a recent FMI survey on construction delivery Complex Structures, Less plant project, the cost in lost event methods, one contractor commented Competitive Bidding revenue or production from missed on why contractors price at extremely Buildings that are less likely to be schedules and poor workmanship can low levels: “To keep their men working treated as commodities include those be tremendous. and maintain cash fow.” that have unique designs, include The real risk in the low-bid squeeze innovative technology, present diffcult play is that contractors will attempt to Standard Structures, More building conditions, are mission- make up for negative proft projections Competitive Bidding critical, or are signifcantly large in by cutting corners, increasing the The pressure from project owners to scope. These buildings include: cost and number of change orders, treat construction procurement as a • Chemical/industrial process plants and billing for extras. Competing commodity continues, especially with • Stadiums contractors that don’t understand the highly competitive structures that are • Medical buildings low-bid landscape run the risk of going characteristically less complicated • Research facilities out of business. to build, have standard designs and • Power plants and other utilities Some markets will continue to place prototypes, and can be fulflled by a • Bridges value on quality services provided by large number of builders. • Oil platforms competent contractors. Increasingly, Examples of these projects include: • Museums however, market conditions are • Housing (residential and multi- • Concert halls pushing contractors to reduce fees, and family) For the more complex building it will be diffcult to reorient project • Warehouses projects, owners tend to be looking owners who have become conditioned • Chain stores/retail more for best value, thereby avoiding to view construction services as • Offce buildings (excluding high- the risk of poor quality and missed discounted. These two factors continue rises and skyscrapers) schedules for these large, unique to drive the market to the lowest • Lodging projects. For example, if a contractor common denominator – a vicious cycle • Schools fails to deliver on a stadium or power that will be slow to reverse. Mega Trend #2: Impact of wired.com gizmag.com Technology While the engineering and construction felds unquestionably boast some of the most industrious, innovative, and creative professionals in the U.S., there is a lack of technological innovation in construction methods. After all, the basic inputs to the construction process – wood, stone, steel, and craftsmanship PG 94 Built Expressions Vol: 3 Issue: 11 November 2014