Tag: Australia

Building Boom and Builders going Bust

Here we go again. The head hunters have emerged, companies cannot retain and hire good staff, material prices are through the roof and subbies are ordering jet skis (well maybe a few).

The Australian construction sector is going gang busters and the inevitable will happen – good, established builders and subcontractors will and are going broke. Some blame ridiculous low profit margins, some blame “greedy” subcontractors, some blame Covid. The truth is we need to look at ourselves. We determine the submitted tender, we put pressure on shaky subcontractors, we convince ourselves we can deliver on time and on budget.

Bottom line is many builders simply cannot manage risk, we accept draconian contract terms, procure inefficiently and blame everyone else for out predetermined fate.

Just say no and go fishing

Hand in your badge and gun

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A project manager mate of mine arrived at his site office last Friday. He was greeted with the normal scene: union delegates arguing about subcontractors having the audacity to employ people who are not 100% unionised; subcontractors with not enough resources; and emails from the client’s representative refusing perfectly valid variations. He had made a decision which would upset head office and may make him a pariah as far as future promotion was concerned. He was taking Saturday off to have a full weekend with his wife.

Although his annual salary far exceeds the “average Australian” if it is divided by the number of hours he works, his hourly rate is less than a site labourer. But he has a passion for construction. That passion cost him his first marriage, drove him to the occasional drink, and evolved him into a dad his children did not know or particularly like. But his passion was a major factor in driving him to deliver project after project for his employer.

As Friday wore on, and the normal dramas of the day were crossed off the to do list, he decided it was time for his daily “walk about. However, as he reached for his hard hat, he received a text from his operations manager. Not a personal visit or a phone call, just a text which read verbatim: “Company ceased trading, get everyone off site, lock the gates, take only personal belongings report to head office immediately”. Yes the company had gone broke.

This has happened to many of us in the construction industry, we end up with broken relationships, heart attacks through stress, and the stigma that goes with having been the PM on “that job, for “that mob” who screwed their subcontractors. Sometimes the bloke delivering the project gets screwed as well.

Now he has to wait and see if he will get his entitlements, find a job, and still keep his passion for his next employer. His comment to me “Well at least I have finished paying child support, I think it is time for a spot of fishing”

So if you are reading this mate, go easy on the Johnny Walker, enjoy the fishing and it may be a good idea to take your wife with you or you might get made redundant there as well, then you will be looking for wife number 3.

by Gerry Keating

https://gkeating.com/

Back Home to Brisbane

Brisbane
Home is Brisbane

Having spent so much time working in different parts of the world sometimes you forget where home really is. Moreover, I have met many ex-pats who may have many assets but have no base – no real home. It is taken me a long time to come to the conclusion that not only is my home in Brisbane but so is my heart.

I have lived in Brisbane since 1989 but have spent more than half of that time either working overseas or in various far flung construction sites in every state of Australia. Coal mines, iron ore processing, commercial building, water treatment plants, meat works, high rise etc etc. Now I just want to live here, no more FIFO, no more cheap motels, airport lounges nor hire 4WDs. OK the construction industry here is on the slide, the boom years are over and over the next twelve months there will be even more builders going to the wall or sacking staff.

Recently I have been asked to head back to Perth, I have been approached to return to Qatar to build football stadia for the World Cup. But I declined, they can keep their money I simply want to sleep in my own bed each night.

Who would want to live anywhere else?

by Gerry Keating

http://gkeating.com

Busy Going Broke

redundancy250It is symptomatic of our industry that often companies assume being busy equates to making money. All too often it just means acceleration towards bankruptcy. Increased activity does not necessarily mean making greater profit. Nobody hold a gun to our heads to force us into signing a contract, yet we still sign up for projects with unrealistic programmes, inadequate budgets, and risks which we believe can be overcome. It is plain and simple delusion.

The warning signs begin with the tender process. In order to save development costs, clients do not put the required resources into preparing tender documentation. They work under the false illusion that “the market” will determine the best price and the contract will save them from a “switched on” builder. The reality is that “the market” consists of builders who know their game and as long as they understand activity versus profit, the tenders will reflect the completeness of the tender documentation.

Some years ago I delivered a large coal infrastructure project in Kalimantan for an Indonesian client. To keep costs down the client believed he could set the tenders up with minimal documentation, unproven consultants and a catch-all contract. What it would have cost for proper tender documentation was less than 5% of what it cost in contractual claims, delayed production, legal fees and lost profit.

The next twelve months here in Australia will be difficult fr the construction industry, especially for employees who have never experienced really bad times. Yes I am old enough to have gone through Arab oil embargos and three day weeks. It won’t be as bad as that but large contractors will shed staff, salaries will continue their decline and there will be lack of confidence generally. The difference will be contractors will not win work at any price and make cuts in overheads earlier.

Seek.com will be in most people’s favourite bar, LinkedIn will continue its exponential growth, as we all brace ourselves for a bumpy ride.