Pingback from Price Undercutting Hits Epic Proportions – Demolitionforum.com Forums
Time August 24, 2009 at 12:47 pm

[...] of price undercutting in the US demolition business has reached a new high (or low). Click here for the full [...]

Comment from Oliver James
Time August 24, 2009 at 3:25 pm

This is total madness!! My first thought hen I read this was that Brandenberg either identified a lot more potetial problems than their competitors, or just didn’t really want the job, hence their exceptionally high (comparative) cost. What is more worrying, however, is some of the low bids shown here. Contractors need to understand that short-term cost cutting to maintain a steady flow of work rarely ends up being short-term. Clients and main contractors all-too-quickly become accustomed to these unusually low prices and these soon become the norm, meaning that we all earn less, even when the economic situation improves.
I sincerely hope that the client in this instance thinks twice about opting for the lowest tender price purely because it IS the lowest price. I would hope that a price that is two-thirds that of the highest offer will set alarm bells ringing.

Comment from Big Jake
Time August 24, 2009 at 3:26 pm

Don’t take much stock in the fact that East Coast contractors tendered for the project. That was the result of a really lame attempt by a subcontractor to pad the bidder’s list with “friendly” contractors. Of course, it screws the local contractors.

Comment from admin
Time August 24, 2009 at 4:05 pm

Thanks for that Big Jake; always great to get a different perspective on these things.
That said, even that lame attempt can be damaging, both to local contractors and to anticipated pricing moving forward.
This entire contract sounds like one serious can of worms to me.

Comment from J. Milton
Time August 24, 2009 at 9:52 pm

All over the Midwest, our company is running into the same issues. Here is an excerpt from my Blog posted last month in part, addressing Stimulus Money:

“From the perspective of demolition and environmental remediation companies, here are the current observations. Most of the money is being allocated to local municipalities that are employing the funds to address the blight of foreclosed or abandoned homes. Given the public nature of such bids and the need for townships to get the best return on money invested, the jobs are going cheap and attracting large groups of contractors to bid the work.

Excessive low bidding is not a healthy reflection of what prices a robust economy would normally command; disproportionate low bidding has become the norm. Exasperating the problem is the types of companies that are submitting proposals.

As we monitor the situation, public bids are attracting many companies who express little credibility as a demolition contractor. Everything from landscape companies to remodeling firms and local residents who may possess a piece or two of equipment are bidding demolition work. The diversity of those who tender proposals reflects that business owners are attempting to diversify and/or make use of available equipment/personnel in order to keep business going. The downside is that local entities who fail to scrutinize the capabilities of contractors are placing unqualified workers in dangerous situations.”

My number one concern ins the qualifications and safety records of some of these firms.. Thankfully, we have a secure group of private entities that has allowed us to avoid these insane low bid prices.

Comment from admin
Time August 25, 2009 at 9:56 am

J. Milton makes some superb points here, including one that I omitted entirely – The threat of non-demolition companies bidding for (and even winning) demolition work. In these days of training and industry regulation, it would be nice to think that letting demolition work to builders and landscape contractors is a thing of the past; but I fear that the current recession may have moved us back to precisely that situation.
I know that here in the UK, the National Federation of Demolition Contractors comprises around 160 of the country’s leading demolition companies, and that there are a further 30+ that would be considered of sufficient quality, professionalism and stature to become NFDC members. But check any professional database, and it says there are 800+ “demolition companies” here. What this means is that there are 600 or so companies that maybe own an excavator and who wouldn’t mind “having a go” at demolition of the need arose. Sadly, with many clients and contractors looking first and foremost at the bottom line, some of these guys might just get a job or two. Not only will this take much-needed work and income from qualified demolition companies, the accidents and incidents that are almost bound to follow will set the industry’s safety record back 20 years in a matter of weeks.

Comment from john woodward
Time August 25, 2009 at 2:33 pm

Mark, There are a couple of issues here. Did the client during prequal of contractors ensure that they were competent to do the job in the first place, CDM2007 sets out clear measures for judging competency but possibly there are not such measures in the US and are tenderers chasing work to keep the wolf from the door and hoping to ride out the recession on low, or nil, margins until better times come along.
With regard to NFDC contractors you would expect a level field to apply but there will still be variation on price depending on where the job is, who else is tendering and how buy they all are.

Comment from Oliver James
Time August 25, 2009 at 8:36 pm

The current recession has simply brought out the worst in everone. Clients are lowering their standards and expectations to cut costs; unqualified demolition companies are attempting to maintain workloads by stealing contracts from legitimate demolition professionals; and those demolition professionals are cutting corners reducing their spend on training and equipment. The fact that some companies will go out of business is the tip of the iceberg; the problems caused by the recession run much deeper.

Pingback from Low pricing story set to run…and run | Everyone Read It!
Time August 28, 2009 at 2:11 am

[...] do we publish our article on the incredibly wide spread of pricing on the contract to take down the Texas Stadium than another high profile US demolition contract becomes the latest to show what appears to be [...]

Comment from Bdolgin
Time August 29, 2009 at 11:59 am

I bid this project as a prime (I was not low) and I understand why the low bid was about a million under where they should have been. The project required about a million dollars worht of fil to be imported. The successful bidder was digging a hole on a project near the stadium and had the fill. Sometimes it is better to be lucky than smart

Pingback from Exclusive audio podcast – The US Bidding war… | Everyone Read It!
Time September 3, 2009 at 2:17 am

[...] unreported bidding war that is taking place in the US demolition community. Contracts like the Texas Stadium have shown a huge variation in price, reports suggest that traditionally local demolition companies [...]

Comment from Mike
Time October 5, 2009 at 10:50 am

If you think its only happening in the Demolition sector, think again as it is even worse in workwear!!!

Comment from eddie
Time October 30, 2010 at 4:06 pm

Savings on the million dollars worth of fill nearby along with doing the research such as advance scrap pricing and recycled concrete and lower general conditions that are required for larger contractors one can see that a lot of low bids are very dooable.