Pulp It

Thoughts from Bernard Lax

Make Money at Work….for Doing Nothing

When was the last time that an estimator included the costs associated with employees doing nothing? It is odd that nobody has thought to add this as a line item when budgeting a job, but clearly it should be included in the cost analysis of a construction project. By now you must be wondering, what am I talking about?

Think about it. A subcontractor takes a job building a tenant space in a high rise. You would think the landlord of that building would be thrilled to accommodate the tenant in their improvements. In fact they are so thrilled they allocate just ONE elevator in the building for all the trades to use to get both manpower and materials up and down to the jobsite.

Have you ever been on one of these sites? If not, what you will see are tradesman standing around at an average rate of $100 an hour waiting and waiting for sometimes up to a half hour at a time for an elevator to get them and their materials where they need to go. You can almost say they are just standing around for a living. Multiply this occurrence by a few times a day times for every guy on the job and you will start to see the dollars add up day after day for workers doing nothing.

This became even more apparent as I have visited a couple construction sites recently that have imposed such high security and restrictive access to their sites that their construction costs have risen as a result. Imagine a 10% to 20% to their overall labor costs on a project while employees of subs wasting time complying with over bearing site regulations. The result is that the client is paying these additional costs and getting nothing in return for it.

The lesson to the sub contractor is that bidding a project without putting in the “doing nothing” factor is a sure result in diminishing your profits.

Is it Furniture or are They Walls?

Recently I have been hearing from glazing contractors how they are losing work to companies selling demountable glass partition systems. There are a number of these companies and generally they provide a good product. I want to add to this that I do not have a dog in this fight as we sell glass to these companies as well as glaziers, except that it concerns me how easy it is for a product to spread misinformation and leave a client at risk. Companies that make these systems prey on the idea that because the demountables are “furniture” they are depreciated on a faster schedule than a construction related capital improvement. That part of the tax code is correct, but can someone please explain why these new systems could by any stretch of the imagination be considered furniture.

Demountables were once systems that were compression based and basically fit between the floor and a ceiling with minimum pressure. Yeah I can buy that that can be considered furniture, but these days are anything but that. Today’s systems are designed with a variety of extrusion patterns that are assembled and mechanically connected to the ceiling and the floor, in almost exactly the same way that a glazier might install the system left to his own design. In essence they are the same thing. It seems that it is only a matter of time before the IRS catches up with this scheme leaving client’s left to battle the confusion. Granted they may not be any worse off if caught, but in my mind it doesn’t make the designer look good when they offer up this info because some salesperson told them that this was legal. My advice, check with your accountant and make sure your accountant checks with the IRS.

Click on the link and see an article written about just this subject.