Over the years, I’ve observed a recurring issue in the scaffolding industry: inadequate planning for multiple scopes of work in a project space, leading to significant rework. I surveyed major EPC buyers responsible for scaffolding in multibillion-dollar projects. Occasionally these buyers only managed scaffolding, but more often they managed a range of services, including insulation, coatings, and fireproofing. Universally, they reported budget overruns in scaffolding, ranging from 6% to 50% of the initial budget. Larger budgets had smaller percentage overruns, but the impact was still substantial.
The main cause of these overruns was rework. That being said in cases with higher percentage overruns, poor initial budgeting was to blame. Often, budgets were based on a flat percentage of estimated hours for other trades, which is ineffective. For instance, scaffolding for a welder varies significantly based on the location and complexity of the platform, even though the weld is the same.
Even with thorough planning, congested sites or multiple trades in the same area can cause blind spots. I proposed that EPCs could save millions by hiring a scaffolding company to plan the work and coordinate the subsequent work, incentivized by sharing in the savings. However, this suggestion was typically dismissed. The strategy remained to use outdated budgeting methods and hire the lowest bidder, leading to predictable overruns or at the very least a poor experience.
My argument was that contractor provide what they are being paid to provide. A Time and Material contract will net more time and more material. The only way for the scaffold company to increase profit dollars is to increase the billable hours, parts, etc. Collaborative scope building with contractors, allowing them to share in savings, would reduce costs and risks, benefiting all parties. Now there is a base level of profit for the scaffold company, and more cost reduction equals more profit! Similarly when I was involved in very time sensitive projects where the contract called for Liquidated Damages in the event of a schedule missed by even one hour, I would ask for an Early Completion Bonus.
While there was agreement in the idea with both buyers and operations personnel, we never reached the decision-makers to implement this change. Those with the power to adjust the paradigm had little desire to do so. They were suspicious because so many of my competitors at the time took projects on too low margins and then killed them with change orders or other fantastical feats of accounting.
Over the years I offered risk-reward bid alternatives across the United States and across industries, but these were never considered during negotiations. My challenge to the industry is to leverage strong relationships to attempt to adjust this dynamic for the benefit of all.
- EPCs and Owners benefit from lower overall costs, lower risk, and a collaborative sub relationship.
- Workers benefit because now elite performance is identified and recognized, and their mental health is better because they know they are a key part of a winning plan.
- Scaffold companies benefit because they can generate more dollars in gross profit per hour worked or per ton of material on the ground.
About Me:
I am a seasoned professional with 24 years of experience in the scaffolding and soft craft industries. My career spans various senior-level sales and operations management roles, including National Account Manager, VP of Business Development, and Senior Vice President of Operations. This extensive background gives me a unique, comprehensive perspective on the industry, enabling me to drive innovation and efficiency in every project.
About Scaffold.Work:
At Scaffold.Work, we specialize in providing expert scaffolding and financial consultation services for all industries. Our goal is to help businesses overcome challenges, period.
