In the business world and especially the construction industry the business model of “good, fast and cheap” is consistent with the south Florida construction market. The theory is to pick any two of the three qualities and you won’t get the third. The typical south Florida model of most home owners is they want it “fast” and they want it “cheap”, with an emphasis on “cheap”. Unfortunately they think “quality” is automatic in the trilogy.
Over the last eighteen years our company has seen the fluctuation of construction cost’s due to the outbreak of war, natural disasters both home and abroad, shortage of natural resources for material fabrication purposes and corporate greed. An example of the latter is the proposed increase of 35% for drywall cost in January of 2012. One may ask how this can be since construction in south Florida is at its lowest production since December of 2007. The drywall manufacturers must think that someone has found a new use for drywall. The manufacturers forget the period from 2003 to 2006 when drywall cost rose exponentially and they had to import Chinese drywall to help fill the building demand. Many south Florida home owners and of course the attorneys will attest to the ramifications of that choice. When we received notice of this increase everyone in the office had a good laugh. We thought the drywall executives were snorting their own gypsum. What we found out was that since they are selling so little product and their inventory is at an all-time low, the top brass decided to raise the cost of drywall just to be able to meet their overhead cost. Because of the rise in the cost of oil, fabrication and transportation cost have both contributed to significant cost increases in lumber, steel, copper, aluminum and any other petroleum based products. This takes me back to the end user, the home owner.
Since this is a down market, most home owners believe they are doing us a favor by having us bid on their potential job. They believe that labor and material cost are at an all-time low and that they are getting more bang for their buck. We are finding that most home owners are not realistic with their budgets because their cousins, uncles, unlicensed and uninsured handyman can do it for cost. I recently did a site visit to see an example of such a scenario. When the home owner asked me for my opinion of the construction, I explained “you might as well tear it down because not one element of it meets the building code”. As expected I got the tight lip frown and the rolling eyes.
What home owners forget is that in order to run our business (like theirs), one has to pay rent, insurance, electric, gas and numerous overhead costs. We constantly hear how it should cost less than half of what it did less than five years ago. So I digress, do you want it good, fast or cheap? You get to pick which two.