Posts Tagged ‘nevada’

Flat Fee Construction: An Opportunity for Innovation

March 3, 2010

When you hear construction and The Great Recession in the same sentence, you wouldn’t expect it to be good news. But I read an article today in the Wall Street Journal that has me brimming with excitement over what the future holds for our industry.

Given a choice between going out of business or keeping their construction businesses alive, contractors are striking flat fee deals with banks to build/finish the houses of failed development projects.  Sure, the contractors quoted in the article mention that such contracts “help stop the bleeding” but how long would you expect any business to continue to work just for the sake of keeping the lights on? The strongest contractors will innovate in order to improve (create) their profits.

Where will the innovation come from? Well, I hope jobsite technology gets a good, hard look (OK, I’m biased). But you can’t predict these things. Maybe it’s more efficient use of materials or labor, new contract structures or creative insurance policies. Who knows? Every penny gained through innovation goes directly to the bottom line. Now’s the time to try things!

Given the large inventory of unfinished work in the now infamous markets of Florida, Arizona, California and Nevada, flat fee contracts with banks offer contractors a solid alternative to the bare-knuckled bidding wars that are taking place for government projects. Contractors in these markets can work in familiar territory to improve themselves.

What about you? What are your recession-inspired innovations?

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