I’m working on a project now where the client hired the cheapest builder to do the job.
Basically the tender went out and a bunch of construction companies bid for the job with the award going to the one who gave the lowest cost.
That tends to happen a lot in the construction industry.
Now though, there’s a problem. This contractor is slowly losing money because the client is always late to pay them (more on that later) and as a result they’re starting to drag their feet in terms of moving the construction process along.
This wouldn’t really be a problem if it was an ordinary small project but it’s not. In fact it’s actually a government project. It isn’t surprising that the government always goes for the cheapest tender but what’s surprising is that they’re lousy payers.
Now the poor contractor has to pay for a lot of the things that are getting built on site. The elevator shaft, car and motor room cost a hefty amount of money and the contractor has to put down a 50% deposit to the company before they can get the parts. That means that they need money coming in in order to have cash to indent the supplies that they need in order to get the whole ball rolling.
When your client takes forever to pay you this leads to difficulties in cash flow, hence the stalling of work on site.
The builder we’ve got for the project isn’t the biggest one around. They’re slowly trying to take on larger projects to increase the credibility and as a result take on even bigger projects.
The one they’re doing for us is a medium sized on and possible a bite just too large for them to comfortably chew. So now they’re sitting around moaning about how they’re getting screwed and it’s hardly a surprise because they lowered their tender price with the aim of winning the bid, knowing that they’d end up in this situation in the first place but always hoping for the best.
Sadly as the architect there’s very little we can do to help them as they really put themselves in this situation in the first place.
Annoyingly the client is also frustrated and has threatened to terminate their contract and find another builder (a tedious and expensive legal affair).
I’d like to argue that all of this could have been avoided in the first place if the client had just decided that instead of hiring the cheapest builder in order to save a bit of money, maybe they should have hired a slightly more expensive builder and saved on headaches and time instead?
Just speaking my thoughts out loud, that’s all.