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Extras – Legitimate cost or low-bid counter measure…?

Are unforeseen extras just that, or are they a reaction to the economic climate.

It’s strange how the demolition industry is subject to its own fashions and trends. A few trendsetters buy themselves a high reach excavator, and before you know it, they’re the industry’s must-have accessory.

The fashion trend for the past year or more has been one of low bid prices. With demolition contractors across the US and Europe struggling to keep men and machines gainfully employed, bid prices have got lower and lower to the point that, in many areas, they now need to look up to see a snake’s belly. Indeed, during the past 18 months or so, we have typed the term “low bid” so many times that our PCs have now taken to filling in the blanks as soon as we type the letters L and O in quick succession.

But, like all fashions, low bids’ place in the spotlight has been relatively fleeting. And while large swathes of the industry are still wearing last season’s cut-price colours, there are those among us who appear determined to set a new trend – Demolition Extras.

For the uninitiated, this is not some kind of designer accessory; nor is it an offshoot of the Ricky Gervais comedy TV series.

These demolition extras are those unforeseen yet oddly predictable bills that land on a client’s desk during or just after a demolition project. The reasons for these extras are numerous – almost too numerous to mention – but can range from the obvious undisclosed asbestos to the slightly more esoteric contaminated corn. But, whatever the reason, these extras seem to surprise everyone except the demolition contractor issuing the invoice.

So, in an age when clients are expected (and, in some areas, legally obliged) to disclose precisely what the unsuspecting demolition contractor is letting himself in for, are these a legitimate additional cost? Do they highlight the ignorance of clients and their project managers? Or are they a sign of something a little more sinister? Are demolition contractors attempting to offset the demand for low bids by bidding cheap to win the work and then ramping up the extras to achieve something approaching a profit?

Certainly, demolition contractors are constantly required to make changes to their plans; clients are often ignorant of the techniques and processes that will be employed which can cause confusion further down the construction chain; and asbestos (and bats, shrews, lizards and a multitude of other protected species) does have a nasty habit of hiding itself away only to leap out when it’s least expected. But when these extras can raise the cost of demolition from an agreed $7.366 million to $15.3 million, something’s not quite right.

Have Your Say: We’d love to get your take on the subject of unforeseen extras so please hop over to our Forum area and let us have your thoughts.

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Comments

Comment from Oliver James
Time August 12, 2010 at 1:33 pm

So, just to be clear, if you bag yourself a TV deal and have a good lawyer on board, you can win work by undercutting everyone knowing that you’ll make your money post-contract? The day that legal departments become a profit centre in their own right is a sad and sorry day for this industry.

Comment from admin
Time August 12, 2010 at 3:47 pm

Your point about legal departments as profit centres really does hit the nail on the head, Oliver. Sadly, this is probably what we can now expect in this litigious society of ours. Bid prices are becoming increasingly meaningless as they bare no resemblance to the final tally

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