A Chance to Revise and Extend My Remarks on Risk and the Role of Subcontractors
On September 20 at the McGraw-Hill building in New York City, we will spend a day together analyzing risk and reward in the construction industry. We probably need a few semesters at this effort but we will try and synthesize it in one day. Kudos to McGraw-Hill Construction for doing this: we need to keep our focus on the realities as well as the fantasies in our beloved industry.
As a specialty subcontractor, I'd just like to say, HELLO, we are here!
We are ready to be counted and to be required to submit more "actual" information for the benefit of the project.
Only first, lower our monthly retainage to 2% from 10% or 5%, and pay us along the way for proposal and ticket work for which we can now validate our labor costs on.
Otherwise the risk-reward ratios for the industry will not change. The current dispute in the VA Colorado project is an example.
Since we have so little good historical data from subs (the "actuals"), A-E's are having difficulty "designing" to a "target" price. While Design Assist will help, it's really the Owner that has the funds (or doesn't).
Since we have so little good historical data from subs (the "actuals"), A-E's are having difficulty "designing" to a "target" price. While Design Assist will help, it's really the Owner that has the funds (or doesn't).
This entity and it's agents should be getting better at what actually happened on the job to understand the effects of design on cost, means and methods, sequencing and the like. This is doable if the labor code data is shared by Subs to create historical databases of Actuals in Assemblies ("AIA").
Owners like to say: "Hey we passed all the risk onto the CM at risk/GC then on to the subs and then just "fuggedaboutit" (NY slang). Uh, hello, have we heard of litigation risk? Have we heard of misinformation and lack of clarity? Owners can bury their heads in the sand if they want as we've heard in the industry on all levels, "Call us when it's over".
Many of the Owners like to call themselves "Builders."
Owners like to say: "Hey we passed all the risk onto the CM at risk/GC then on to the subs and then just "fuggedaboutit" (NY slang). Uh, hello, have we heard of litigation risk? Have we heard of misinformation and lack of clarity? Owners can bury their heads in the sand if they want as we've heard in the industry on all levels, "Call us when it's over".
Many of the Owners like to call themselves "Builders."
Are they aware of the latest means and methods, office and field? Do they know how many hours went into framing or sheetrocking the building?
The answer is no, they don't know but they should.
As so called "Builders," they do conceptual estimating in the public and private sectors. They have no data from the field from Subs to Owners to learn what really happened on their big investment.
Construction is a "One-Off industry" really. Every job is on it's own with very little historical data submitted from the Subs to get better at being true "Builders".
Want a sense of what we're up against? How do you separate contract hours worked in various tasks from change order hours in those and other tasks? It's not done now.
Want a sense of what we're up against? How do you separate contract hours worked in various tasks from change order hours in those and other tasks? It's not done now.
That's the biggest risk the industry faces, changing the information requirements garnered from Subs to free up the money and reduce the risks to everyone. Until then we are in a static, protective environment, and nothing really changes, especially after a one-day conference like theENR Risk Summit.
However, if we can shine a light on the issues and ignite a discussion to open us up to a new way of doing business that benefits all and grows the industry, then it will be a memorable day and a beginning to the "next things" that we've all been waiting for.
Amen to that.
