In Tough Economic Times; "EXAMINE" Your Bids Carefully:
By: Steven Brahney

Informative Article: In Tough Economic Times; "EXAMINE" Your Bids Carefully

Cost of Raw Materials: July 1987
Coal Tar Emulsion Sealer:	$0.80 Gallon
Asphalt:	$25.00 Ton
Gas:	$0.90 Gallon
Average Installation Costs:
Asphalt Seal Coating (2 Coat Applications With Rubber And Sand)	$0.25 sq ft
Asphalt Resurfacing (2” Compacted Thickness)	$1.00 sq ft

Cost of Raw Materials: July 2008
Coal Tar Emulsion Sealer:	$2.25 Gallon
Asphalt:	$59.00 Ton
Gas:	$4.00 Gallon
Average Installation Costs:
Asphalt Seal Coating (2 Coat Applications With Rubber And Sand)	$0.10 sq ft
Asphalt Resurfacing (2” Compacted Thickness)	$1.00 sq ft

** We have seen proposals from contractors for prices as low as $0.05 sq ft for seal coating and $0.80 sq ft for an asphalt overlay.

Do the Math:
Pavement Sealer Coverage Rate: 50 sq ft per gallon for a 2 coat application Cost Per Square Foot For Pavement Sealer: $0.045 per sq ft.

The price above doesn't include sales tax on the materials, sand, latex, labor, overhead or markup. If contractors raw cost just on raw materials without the incidentals mentioned above is $0.045 sq ft, how do you think the contractor is able to complete your project at a cost of $0.05 sq ft. I will explain how later in this information bulletin.

Hot Mix Asphalt Coverage Rate: 80 sq ft per ton for a 2" compacted thickness Cost Per Square Foot For Hot Asphalt: $0.74 per sq ft.

The price above doesn't include sales tax on the materials, trucking, fuel, labor, overhead or markup. If contractors raw cost just on raw materials without the incidentals mentioned above is $0.74 sq ft, how do you think the contractor is able to complete your project at a cost of $0.75 sq ft. I will explain how later in this information bulletin.

Recession, Depression, Adjustment Period, Slump, Downturn, Housing Crisis or whatever you would like to classify it as; we are in it! Economists are predicting that we are going to be in it for the next 18 - 36 months. Like most everyone, I am hoping that it is going to be short lived and conditions will improve after this Novembers elections.

Some of you may find your budgets for parking lot maintenance being reduced due to shrinking sales in some facets of industry to include: retail, hospitality, convenience stores and big box. It is more important now than ever to ensure that you align yourself with a quality pavement maintenance contractor who not only understands your industry and tenants schedules but also who is backed by integrity and adequately financed to weather the storm.

In tough times when money is tight, some facility managers may be inclined to view pavement maintenance as a "commodity" with all services being of equal value and searching for the lowest possible price in hopes that it will be adequate enough to cover their budget. This is a mistake that can be very costly. (Please refer to our article: The True Cost Of The Low Bid)

Analyze this scenario: You receive two prices for parking lot seal coating. Contractor A comes in with a price that is 5% over your budget. Contractor B comes in with a price that is 20% below your budget. If contractor "A" is a sound company backed with solid references and a solid work history and contractor "B" is a company that is new to the industry and doesn't have any references or verifiable track record, which deal seems better? In tough economic times, a facility manager may be inclined to go with contractor B.

What if I told you that contractor "A" guarantees all of their work and they are willing to give you references of jobs that they actually had punch list items on and returned to fix and exceeded the customers' expectations? In addition, they are adequately staffed with highly trained field personnel, office / operations support staff, state of the art equipment, financially stable, Dun & Bradstreet Rated and the owner of the company has a verifiable address where he lives and owns his house.

What if I told you that contractor "B" has no guarantee on his work, he has been in business less than 2 years, he has no support staff (He does everything from measuring the jobs to completing the work- typical owner / operator), picks up his different work crew everyday from a pool of ready to use labor at out front of Home Depot for cash, he only owns one truck which he uses for personal / business use, keeps his one seal coating machine parked at a self storage facility where his rent is consistently late, he doesn't have a checking account- he cashes all his business checks at a business check cashing establishment and he lives in an apartment with a month - month lease.

When your job that you just saved 20% on the year before falls apart and you call contractor "B" and find out his telephone is disconnected, how much of a deal did you get?

CAVEAT EMPTOR- "Buyer Beware"

With the current economy where it is at the moment, you are going to see the following trend in our industry:

• Contractors low balling projects to keep their crews busy
• Little to no quality control- making sure the project looks good enough to get paid
• Contractors blatantly and knowingly "cutting corners" to make up for eroded profits
• Larger heavy / civil highway contractors attempting to gain market share in the private sector to make up for the deficit in the TEA-21 spending. Although these contractors may be adequately staffed with people and equipment, working in the private and public sector is "night & day". These contractors are use to pulling onto projects and paving miles and miles in a single shift. They are going to have difficulty working in certain segments of the industry when it comes to coordinating with tenants, working around your schedule / deliveries and keeping the job site clean and orderly. When they don't find a "Porta John" close by, it would not be uncommon to see them "taking care of business" behind a dumpster or even on a tree in clear view of patrons or customers
• Contractors performing sub-standard workmanship and then experiencing total business failure and closing shop. What is going to happen when your 2" overlay comes apart like a jig saw puzzle and the contractor had been paid and their telephone number is disconnected?

Don't Fall Victim:
In the current economic conditions that we are in, one thing can be assured:

• More Fly-By-Night and unethical contractors will start to surface, looking to take advantage of property / facility managers decreased budgets, attempting to make them believe they are getting the "deal of a lifetime"
• Current contractors who are not in business for the "long haul" are going to start to look to ways to "cut costs / corners" to make up for a decrease in business and reduced profit margins
• Due to the exorbitant "mark-ups" National Service Providers put on their projects, they will find it harder to locate "sub-contractors" who can "afford" to work at the below cost prices they expect their sub-contractors to work for. This will leave sub-contractors with a dilemma: Take the work or decline the work. Most of them that take the work will most likely perform sub-standard workmanship to make up for the eroded profit margin

Rest Assured: Turn To Your True "Value Engineering Contractor"

Brahney Pavement Solutions was founded on the principles of Quality Workmanship, Maximum Efficiency and "Unshakable Character" through the highest level of Integrity in our industry.

Our workmanship, operations, process flow, office / field support, service and project procedures far exceed the industry standards. Don't lose sleep if the rising costs of construction materials and your shrinking budget make your project seem as if it will never be completed. Brahney Pavement Solutions is committed to helping you stretch your budget dollars as far as they can go. We can achieve this by doing the following:

• Negotiating better pricing on raw materials through "Net Payment" to our vendors versus 30 day credit terms
• Constantly improving efficiency in the field to ensure faster completion of projects while ensuring the integrity of the project is not compromised
• "Stacking Projects" in both our Regional and National market places. We can schedule several different projects for several different customers in one geographic area for efficient completion. If you have a deficit in your budget, we may be able to save you money and ensure the project is completed to exceed industry standards due to our cost savings on mobilization (Even for National Projects) because our own in house work crews will already be working in the immediate area.
• Our "True" Self Performing (NO SUBCONTRACTORS) National Business Model allows us to have better control over our schedule because we are not reliant on subcontractors who typically only seek work from NSP's when their own work load is light and they are looking to fill their schedule to keep their people busy.

Contact Brahney Pavement Solutions today to receive a free copy of our "Recession Proof Pavement Management Plan." This comprehensive guide will show you the most cost effective process to budget in an economic adjustment period when you are faced with a shrinking budget and high vacancy rates and / or decreased sales.



Resources:

Proposal Check List: Don't Sign A Contract With Another Pavement Maintenance Contractor, General Contractor, Broker Or National Service Provider Until View Our "Contractor Prequalification Check List"


Steven Brahney is the CEO / Managing Director of Brahney Pavement Solutions. Brahney Pavement Solutions is a National Pavement Maintenance And Management Firm located in Hillsborough NJ. If you have any questions, he can be reached by telephone (732) 489-1857 or via email: steve@fixasphalt.com