For the past few weeks, Demolition News has dedicated page after page of coverage to the near-suicidal bidding war that is raging throughout the US demolition industry (and which will almost certainly be mirrored this side of the pond).

But while the damage of this “work at any price” approach is entirely self-inflicted, a new danger now looms large on the horizon from clients and developers eager to squeeze every last ounce of profit from the demolition profession’s coffers.

That threat comes in the shape of reverse auction bidding (or a race to the bottom as it should more properly be known). In a reverse online auction, invited contractors and/or subcontractors are given a password to a dedicated Web site created to handle the scheduled auction. At the appointed time, competing contractors log on and list their prices. If a competitor has already placed a lower bid, participants can either back out of the auction altogether or place an even lower bid.

The auctions generally allow competing companies time – often just minutes — after each bid to counter with a lower price. After a period of no bidding activity, the auction is closed and the lowest bid becomes binding.

At a time when US contractors have seemingly switched tried and tested pricing methods and common sense for short-termism, the reverse auction is a matter that should be fought against by all concerned.

And I sincerely hope that this is one industry development that never makes it across the pond!

Click here for further details.

Our thanks to Robert Kullinski for bringing this to our attention.

I am becoming almost as tired writing about this as I am sure you are reading about it. But another day has brought another suicidally low winning bid for a contract to demolish the Riverfront Prison in Camden, New Jersey.

However, this one is even more worthy of reporting, partly for the sheer magnitude of the difference between local officials’ estimates and the winning bid price, but also because the winning bid came not from a fly-by-night landscaping contractor with a sideline in demolition but from one of the world’s biggest demolition companies; Brandenburg Industrial Service Co.

Philly.com reports that local client Delaware River Port Authority had set aside some $6 million for the demolition works. Brandenburg was the lowest of the 23 bids (yes 23) received at just $1.25 million. Even the highest bid, from local contractor W. Hargrove Demolition of Camden came inside the original estimate by $1.1 million.

This is just the latest example of the US demolition industry’s “race to the bottom” which has seen similarly low bid-to-estimate prices on contracts including the Executive Inn in Kentucky, the Texas Stadium in Dallas and yesterday’s wastewater treatment plant in Florida.

Sadly, I am not privvy to the inner machinations of the National Demolition Association. But surely the time has come for the NDA to take a stand and to advise its members of the perils of this seemingly suicidal course of action.

We are beginning to suspect that someone has circulated a memo to US demolition contractors that advises them to abandon all common sense and business acumen during the current recession, and merely submit bid prices that verge on lunacy.

What other explanation can there be when a contract to demolish a wastewater plant (and is it only me that’s intrigued by the fact that the spokesman is a Mr J. Christ?) in Palm City, Florida with an estimated value of $200,000 has been won with a bid of just $60,000.

It’s true that President Obama’s much-vaunted stimulus package has yet to bear fruit among the demolition fraternity.   Buch such suicidal pricing is surely the worst kind of short-termism.   And it is likely that the low prices set to win much-needed work today will be expected by clients long after the cloud of recession has lifted.

Mike Taylor (left) and Ray Passeno

So when we bumped into NDA chief executive Mike Taylor and president Ray Passeno at the 2009 Convention of the National Federation of Demolition Contractors (which took place this past weekend in Killarney, Ireland) we took the opportunity to record this exclusive audio podcast interview with them.