In the midst of the recession, price undercutting has reached a new high (or low).
Price undercutting is almost as old as the demolition business. In fact, it’s fair to say that no matter how low a tender price might be, there’s always someone willing to shave off a little more to keep their men employed and their machines moving.
But in the midst of the current recession, where workloads are lower and margins are so think they’re verging upon transparent, comes news that the practice of price undercutting in the US demolition business has reached a new high (or low).
Demolition News has received a document that purports to show the bid prices from 15 US contractors, all bidding for the contract to demolish the Texas Stadium, former home of the world-famous Dallas Cowboys American Football team.
As you can see from the attached document, there is a huge disparity in the tender prices, with the highest base price running at approximately 200% higher than the lowest bid. Even allowing for the fact that the highest bid (from Brandenburg) is the highest by a considerable margin (approximately $5 million) there is still a huge disparity of around $3 million between the second highest bid and the lowest. And this on a project that looks to be worth around $9 million.
Reports from the US also suggest that price undercutting is not the only issue impacting upon their business. Apparently, there is a growing trend for contractors from the Eastern side of the US to bid for contracts as far afield as Texas, Florida and even California, something that is almost unprecedented during non-recession times.
As far as we’re aware, the contract for the demolition of the Texas Stadium is still under negotiation and the successful bidder has not yet been named. But we will keep a close eye on this one; it will be interesting to see if Weir Bros (the lowest bidder) gets the nod.
We would love to hear your comments on this story or your own experiences of undercutting in the current economic climate. Please use the Comments tab (in blue, below).