There are grim times ahead for specialist contractors and savings will have to made. Greg Verhoef explains why value engineering alone will not be enough
So it seems we can forget about the roof extension, the wife’s new car or sending our children to private schools. The magic carpet ride is over and the credit crunch has brought us all back to earth.
Every week projects are being shelved. Schemes that once stacked up have been unceremoniously mothballed. It seems that the movement of a few basis points in funding and a slight decrease in loan-to-value ratios has completely wrecked the financial balance of our lives.
Szerelmey, as a specialist, is several links down the food chain; we are reliant on our big brothers, the main contractors, to secure work. There are huge implications for us in how they handle the value engineering process. If we take a snapshot of how it is today, we are reaping the harvest of work secured six months ago. But what about the future? It is obvious we will have to put our heads down and seriously get to work.
Main contractors, and subcontractors, like ourselves, have to do everything they can to value engineer projects in order to improve their viability, especially when it comes to certain elements of design. Developers need our help and we need them. In the current climate, we have no alternative but to squeeze the blood out of every stone.
But where do we draw the line?
Value engineering can only go so far. At some point, by reducing specification and spending for the sake of cost reductions, developers are merely going to diminish the value and quality of their schemes. In addition, consultants, contractors and subcontractors will then have to incur greater risks.
Aside from value engineering, there are a number of simple ways that savings can be made if all involved pay attention to detail.
As a specialist stone contractor, one of the big problems for us is double handling; a major frustration, especially in central London. This can result in serious cost implications that snowball and affect other subcontractors involved in the same project.
Given the current market, we need to secure work with main contractors that we deem to be efficient. After all, repeatedly moving stone is a time-consuming and expensive operation
The use of specialist heavy lifting equipment to move the stone, the additional use of cranes and the subsequent risk of damage are all related to additional costs. Strict delivery schedules, careful planning, proper access, lifting equipment and careful storage all play a part in making things more efficient.
We need to keep to basic principles. Efficient site management, good preplanning and site logistics can reduce these costs significantly. Given the current market, we as specialist subcontractors need to secure work with main contractors that we deem to be efficient. After all, it stands to reason that repeatedly moving stone is a time-consuming and expensive operation. Efficiency is the name of the game, now more than ever.
A few years ago we had the good fortune to secure a contract to build a stone facade for a prestigious London building. Fortunately for all involved, the client took the brave decision to spend money to provide a specialised access and lifting system for the facade. This initially appeared expensive; however, the access system allowed us to complete the project several weeks ahead of schedule. The efficiency of the system helped to save the client time and money.
Let’s not forget that architects also play a significant role in all this. They too can help to reduce costs by consulting us in the early stages of the contract design. By working together from the start, we can co-ordinate cost savings well ahead of schedule.
While these are just a few basic matters that need to be considered, there are many more things from a stone contractor’s point of view that can be done to save money on a development and maximise efficiency. In my opinion, efficiency is the key to profitability in the construction industry.
But for now, after riding on the magic carpet for so long, we are just going to have to face the fact that it is going to be tough working on Planet Earth!
Greg Verhoef is director of Szerelmey