Aquatic Technology Pool & Spa, "Creating Water as Art."™

Aquatic Technology Pool & Spa, "Creating Water as Art."™
Pools as an art form - the way it should be!

Tuesday, April 1, 2008

Architects' & General Building Contractors' construction budgets

Volume builders will freely provide quotes to build a project, based upon a flat "square feet" or "perimeter foot" calculation. They are usually provided a "flat plan" or "architectural rendering" (pretty picture) from which to prepare a bid. Keep in mind that these builders construct to the lowest standards that the markets will tolerate.

Architects and Custom Home Builders then rely on these figures when preparing construction budgets for the client. No structural engineering has been performed. No hydraulic calculations or plumbing schematics have been designed. No equipment has been defined. The finish materials & installation practices to be employed have not been specified. Tile and material mock-ups have not been approved. The fine details have not been worked out, nor has any scope of work been defined.

Show a custom home builder a picture of a house & ask him EXACTLY how much to build it... THEY WILL LAUGH HYSTERICALLY!! Then they'll rattle off a small portion of a larger list of questions... at best they can provide a price range - say, $100 to $1,000 per square foot. Or they may graciously provide "allowances" for line items. This is great for the budget, that is, until the property owners realize that they must shop at flea markets and second-hand stores to stay within the "allowances."

Because the property owners are insisting on a budgetary figure for the pool, these false and arbitrary figures get placed into the construction budget. These fictitious figures are then quoted to the property owner. This is how they become the gospel. The property owners are relying on it & think that they can actually have the vessels built for that price. Never mind that they were envisioning hand cut imported glass tile mosaic murals inside the vessels and Bellagio Hotel style interactive water features that dance to music.

Only later, as the change orders pile up, does everyone involved realize that the figures are invalid. Sometimes the property owner NEVER comes to grip with this reality. Reality usually starts to set in once the structural engineering & geotechnical reports are completed, and the finish materials start to be defined. Suddenly the pool is "way over budget." And, it it always the pool contractor's fault.

So guess what??? The lowest bidder wins again. The Home Builder only has a limited amount budgeted for the pool (based upon those invalid budgetary figures). They award the project to the lowest bidder to maintain their profit margins. And in the end, the project gets built by the pool contractor who can degrade the project the most, to satisfy these fictitious budgetary constraints.

It is best to get an aquatic designer involved during the design phase of the home. They will know the correct questions to ask, usually working around a "predefined budget." After all doesn't the architect start & work around this premise? How much do you want to spend? What do you expect for that money & can we get there from here? Before contacting a general contractor to price the construction of the buildings, all of the engineering & preliminary specifications have been determined.

All of the general contractor's subcontractors are bidding on SPECIFICATIONS... XYZ roofing materials, ABC wall veneers, etc. So why then, is the swimming pool contractor being asked to provide construction pricing based upon a pretty picture or flat plan? Why aren't detailed structural engineering, plumbing schematics, equipment specifications, finish materials, and installation specifications defined for the bidders?

Again, it is the "alignment of reality with the clients' expectations," that is the most important in keeping these projects on budget. Quoting invalid or fictitious budgetary construction figures only serves to undermine the clients faith in the Architect or General Building Contractor. It also gives the appearance that the valid construction figures from the competent pool builders are just "gold diggers," who are padding their bids. When, in fact these are the very builders that the clients needs to hire! Honest, forthright, and not willing to partake in the degradation of swimming pool construction as an art form.

Another method to "find" additional funds, is for the property owner to remove the pool construction from the General Contractors' "scope of work." This frees up the additional profit margin that the General Contractor would charge on top of the pool construction costs, as funds for the construction of the pool. But oftentimes this is still not enough to build what the property owners were envisioning.

This is another positive argument for "cost plus % gross mark-up" construction.

Paolo Benedetti - Aquatic Artist
"Creating water as art."™

Structural Engineering & Geotechnical Reports

Now here's the dilemma... a volume pool builder provides a bid based upon a structure of MINIMUM specifications. They usually have not reviewed any geo-technical reports (aka: soils report) to ascertain just how strong the structure needs to be.

Pools are designed (usually) to hold the "forces of the earth out" & not the "weight of the water in." THERE IS ABSOLUTELY NO WAY to determine the engineering requirements of the structure without defining the soil conditions on a site.

But most swimming pools are built with generic engineering, purchased in volume from a production mill engineering firm. These plans are valid, ONLY if the engineering used from the plan meets or exceeds the soil conditions of the site. It is the structural engineer's responsibility to review the soils report to determine what plans are required. IT IS NOT the pool contractor or salesman's job to define the strength of the structure. You're lucky if the contractor is a college graduate. And I doubt that they will possess an engineering degree or have an on-staff structural engineer (though there are a few out there!).

"Standard library engineering" is a cost effective & acceptable means of designing structures. However, the use of these type of plans is only valid if their selection and use is based upon the structural engineer's review of the soil & site conditions.

Some municipal planning & building departments are starting to become educated. Many are now requiring a geo-technical review of a proposed site. They are also requiring that the geo-technical engineer review the structural engineering to determine it's adequacy. Often times an inspection of the open excavation is performed to verify that the soil conditions are no worse than anticipated by the preliminary geo-technical investigation. Some municipalities may only require a geo-technical report in predefined "geo-hazard zones."

Bear in mind that the soils report is usually based upon a boring or test trench. The report is based upon this small sample of space upon the property. Oftentimes the test trench or boring will just barely miss (and therefore fail to identify in advance) an obstruction, large rock, incompetent pocket of material, or other deficiency. Yes, sometimes a project has to be halted while the experts (geo-technical & structural engineer) regroup to redesign the engineering.

The builder & geo-technical engineer CAN NOT be held responsible for these unforeseen obstacles. After all, it is the property owner's land... If buried treasure was unearthed, the property owner would surely be out in the yard laying claim to the bounty. So why are they not also the owners of any negative finds?

The foundation for a building has to be designed to meet the soil and site conditions. So why shouldn't a pool, which is built ENTIRELY in the ground, meet those same requirements?? Alas, IT IS! It is in the building codes (Uniform & California) that structures be engineered for the site & soil conditions..... and a pool is a structure!

When the pool cracks, goes out of level, sinks, or slides down the hillside, this generic boilerplate engineering will be invalid, if it was not selected by a structural engineer with the site and soil conditions as the determining factors.

In California, geo-technical investigations begin at around $5,000. When volume pool builders are competing on who has the lowest price, the requirement for the property owner providing a geo-technical report can "over price" their bid. Therefore, few will ever ask if a soils report is even available.

That should be the first criteria when selecting a builder - Does he take the initiative to inquire if a soils report is even available? If there is one available is he going to provide it to the structural engineer to review? Will the structural engineer issue documentation (plan notes, invoice, letter) that he has ACTUALLY reviewed the soils report?

Paolo Benedetti - Aquatic Artist
"Creating water as art."™

Fixed Price is not always the "Best Price"

A commissioned salesman works on just that... a commission. They have a "book price," the price schedule that is established by their firm which is the MINIMUM that they can sell items from their "menu."

If the salesman thinks that he can gouge you for some money above the book price of your project, that gets figured into the project as "overage." The salesman gets to split the overage with the company 50/50. Problem is, you don't get to see the "book price," just the bid.

Now, if he under bids the project & the property owner has signed a contract, then they dumb down the project as much as they can to increase their margins to come out profitable.

Working on a "cost + % gross mark-up" basis is fair to both the consumer & builder. The property owner is guaranteed a quality job and the builder is guaranteed a fair profit. The builder is not forced to "pad" the job for unforeseen items or for minor cost overruns.

The builder then has no excuse for not properly supervising the project, following proper installation techniques, or allowing the sub-contractors to perform quality work. This process also allows the builder to take proactive steps to correct issues, before the property owner raises them.

Out of the builders' gross profit, they will be expected to cover insurance (general liability) and their general & administrative overhead (office staff & expenses, advertising, vehicle expenses & insurance, management salaries, travel expenses, etc.). What is left over is their "net profit." Gross profit can run from 25-40% depending on the overhead associated with a project. Net profits in construction companies are usually around 10-15%.

Expect to pay on the higher end of the scales for "boutique" or "premium" builders. They usually take on fewer projects, deliver higher levels of supervision, quality & craftsmanship. They posses a higher level of construction skills and are more readily available for their clients. This equates to a smoother project with less hassles, and a finer finished product.

Another method, is to hire a "consultant" to manage local contractors, who in turn actually builds the project. In this scenario, the property owner needs to be prepared to actually pay more than if they contracted directly for the project. The property owner needs to be prepared for a lot of conflicts and to "back the play" of the consultant.

Constant conflicts arise, because the local contractor (and their subcontractors) do not possess the skills to build the project on their own. The consultant ends up having to "teach" the local contractor how to waterproof, set tile, place concrete - basically how to build a pool properly. This is where the conflicts begin...

The local contractor (who is working on a fixed price contract) refuses to perform aspects of the project as specified, and insists on "doing things the way we have always done." This is because they are not familiar with all of the various industry trade standards - and they bid the job, based upon their own evil ways. When they are "called on the carpet" the feud begins, change orders appear, owners get upset, and the project budget gets blown out of the water.

Isn't this exactly why the local pool builder was not a "direct hire" in the first place... because the owners did not have faith in their abilities, knowledge, and skills??

Paolo Benedetti - Aquatic Artist
"Creating water as art."™

Why you're the loser with the "low bidder."

For an off-the-shelf consumer product, one might be satisfied with merely "shopping price." However, when it comes to construction, shopping on price alone is the consumer's pitfall. Here's why...

A property owner desires the best that they can afford. They thumb through the yellow pages or surf the web, and select 4 or 5 pretty ads that appeal to them. They telephone and set up appointments.

A commissioned salesman comes to their house. This person routinely has limited "design sense," and is merely motivated by "making the sale." The product offerings that they feature are limited by those that their company has on it's menu.

The property owner is provided with a "free design" from each of the companies. Some are created from pre-defined tracing templates and others using "pre-packaged swimming pool design software." The "designs" are limited by the templates or by the offerings of the software program.

The salesman touts how he'll save the client money by utilizing 1 pump to perform multiple functions. They can complete the entire construction process in a few months & have the family swimming before "school's out."

The low bidder with the fastest installation schedule is awarded the project.

Will the property owner really get what they expect? You know the answer.... they are expecting customer service, yet how can the low bidder cover the overhead of staff to provide customer service?

The property owner will expect someone to be on the job supervising the sub-contractors... but how can they have a supervisor assigned to manage their job with such little profit margins?

Left to their own devices, the construction of the pool becomes a parade of unsupervised sub-contractors, who take the path of least resistance in everything they do. They will be "back-charged" by the pool builder, if they exceed the budgeted allotment for any aspect of the job.

To that end, the expectations of the property owner & the reality of the finances of the "low bidder" pool builder quickly collide.

Remember the saying, "You get what you pay for" ??

Over the years I have been involved in many construction defect litigations. Most of these are a direct result of the a misalignment of the property owner's expectations and the reality of hiring the low bidder. While we'd all love to have a Bentley for the price of a Yugo, face it.... it isn't going to happen.

A quality project simply CAN NOT be built cheaply. There are minumum standards that must be met. Established concrete curing times must be followed. Masonry drying times are dictated by industry standards. And these are the MINIMUMS. To finish a project in a few months, means that something is being shortchanged. And you can bet that it is the quality.

"Good isn't cheap & cheap isn't good!"

Paolo Benedetti - Aquatic Artist
"Creating water as art."™