Build It

Building for the future: San Francisco

A story in the San Francisco Business Journal today reported on the finding of the Association of Bay Area Governments (ABAG). 

The ABAG says that San Francisco will add 156,000 new workers over the next 25 years and that those workers will require 34 million new square feet of office space.  That's an average of 1,360,000 square feet of office built new each year until 2034.

Moody's did a similar prediction, although their numbers were lower.  They predict adding 61,000 new workers which would require about 13 million new square feet of office.

Regardless of which number you believe, the implication is that building will never die in the Bay Area and especially San Francisco.  It may take a breather (as in what's happening now) but there will always be need and demand for new structures.  Smart developers know that they are not building products for their customers today, but rather for those customers 10 years from now.

I wrote about this topic back in Novemberafter listening to Chris Meany from WMS Partners talk about the need for housing for the future populations of the Bay Area.  Even though it's a tough construction climate right now, he understood that he has to get underway in order to time the market so that his units come online when the housing market has fully rebounded. 

I guess the moral of this post is to have heart.  That this is not the first (or last) recession and that demand and economic feasibility for development will return in time.

Jared Willis

How Saturn lost my business: A reprographic parable

My 2003 Saturn Vue is in need of repair. 

Calling my semi-local Saturn dealership recently, I told them what my problems were and their answer back was that this seemingly quick fix was going to cost me $800.00.   Now I had my own mechanic look at my car ahead of time and he could tell me what was wrong, but also that this problem had to fixed by the dealer.  He said the whole operation should take the dealer roughly 2 hours.

This frustrated me because I felt that for such a quick task, with relatively little work on the part of the service tech, that $800 amounted to highway robbery.  However, I then remembered that just that week, a client of ours became upset with us after hearing what we were charging for CDs of drawings.  The client felt that since it mostly a computer operation, and that it took almost no time, that our charge was outrageous. 

Aye, There's the Rub

Now if you're a good reprographer, you're probably saying  "Well, the client doesn't understand all the work and costs that go into that CD" or something like that.  In both of these situations, the price of the service caused both clients to say "No thanks".

This little predicament got me thinking about two things mainly:

1. My lack of desire to pay $800 to fix my car just means I won't get it done at that dealership.  It doesn't mean that I don't still have the problem.  However, now I'm going to look for alternative methods for solving my problem.  These may include finding another dealership, using my own mechanic to fix a problem he's not trained for and trying to do the work myself.  At least 2 of those options could potentially put me and my car in danger, especially if the problem was more serious.

2. Not that I have any real experience valuing car services, but I feel that I would have been happy to pay somewhere in the neighborhood of $250.00 to get my car repaired.  Would the dealership have been better off with my $250 instead of not having my $800?  Could they pay their employees at $250?  Would they risk the monetary value of their other services by discounting this one to me?

I think my experience with Saturn and reprographers in the digital age have some similarities, especially when we look at the issue of CD burns.

Reprographers HAVE to get paid for furnishing digital information, whether on CD, over the internet or wherever.  It's a simple fact.  The value of your services HAS to be in the information providing, regardless of the format.  However, clients have been trained to believe that paper is more valuable and they therefore feel more comfortable paying for a physical product that looks voluminous.  The problem here lies in the value gap of our clients.  They simply don't assign the same value to a CD as they do a full set of plans.  

Where do you go from here?

So now you have the reprographer who has to charge basically the same as a full set, contrasted with a client who doesn't see them as equal and feels that you can't charge him the cost of a full set for 15 minutes work.  Where's the middle ground?

Maybe the answer lies in still charging the client a fair amount of money, but reducing your fees to make it seem more palatable.  If you are able to reduce the cost of digital information you will receive a few benefits:

• You'll get the money from the CD burn or download.
• The client will view you as the one place to go for information, in any format.
• You still prop up the value of that digital information; that it has to be paid for.
• You prevent the client from going elsewhere to have his problem fixed.  Because the place that client goes is almost certainly more dangerous for him than just paying you to do it right.

I am definitely not the authority on how to charge for digital services, but I see this "value gap" between clients and reprographers all the time and there has to be someway to meet in the middle.

The one thing I will say with certainty is that you must get paid for your digital information fulfillment because eventually, that will be all there is.  Create value for your services now so you'll be around to provide that value to your clients in the long run.

Jared Willis

The Spearin Doctrine. What is it and why is it important?

In doing some research on Building Information Modeling (BIM) recently, I came across a legal decision referred to as the Spearin Doctrine.  For those in reprographic sales (or any type of construction for that matter) this is a decision you should become very familiar with.

It was a Supreme Court case (United States v. Spearin) heard in 1918 that essentially lays the legal groundwork for assigning liability for accurate and correct plans.  It pitted a General Contractor against the US Government which had asked Spearin to build a dry-dock in New York.

You can read a great summary here, but basically Spearin completed the work according to the plans as approved by the Owner (the US Government).  A year later, when a neighboring sewer line that was not included on the approved plans broke and flooded the dry-dock, the blame (and cost to fix the problem) was laid squarely on the shoulders of the Owner. To paraphrase the linked article above:

"This doctrine...maintains that a contractor will not be liable to the owner for loss or damage which results solely from insufficiencies or defects in such information, plans and specifications."

When talking to your Owner/Developer clients, the importance of accurate and complete document management can not be stressed enough.  This particular case may deal with the accuracy of the drawings themselves, but stressing your QC processes that help catch incomplete drawings and other mistakes.  Get down to the real issues facing the Owner including that's he's responsible for the drawings that make it out to the team, then show them how you help mitigate that risk with your services. 

Jared Willis

Of construction delays and Pepto Bismol

I've been watching a lot of Construction shows recently.  Stuff like Build It Bigger and Colossal Construction.  These shows offer a great inside look at some of the world's biggest construction projects.  In fact, they even profiled the Grand Canyon Overpass project I blogged about a few weeks back.

One thing that has really stood out to me about these shows is the drama they create around project delays.  At a particularly critical junction, the announcer comes on and says something like, "If they can't get this concrete up on the structure before the thunderstorm hits, the project will be delayed and will cost another million dollars to re-attempt."  First of all, I think, 'A million dollar concrete pour?', but when you add in all the labor, materials, schedule delays and other costs, that number is not exaggerated.  In fact, on the Grand Canyon project, they had a concrete event called the "Million Dollar Pour".

And stuff like that is always happening, all the time and with all the trades (although concrete seems to be involved a lot for some reason).  Every time the announcer tells me how much that one screwup costs, I literally get a knot in my stomach and a little heartburn; and it's not even my money on the line.

We know this happens in real life too.  We were just talking to a GC about a new project of theirs that's slated for a $700 million construction budget, and he said that he fully expects the project to go a year longer than projected and another $100 million over budget.  That blew me away.  This guy, who is very knowledgable in construction costs, expects that they'll spend 1/7th of the job cost in overage.

I started this post to talk about communication, but I think the message that has developed here for Reprographic salespeople is that if you're not helping your clients find a way to prevent wasting an entire 1/7th of their job cost overage and loss, you shouldn't even be talking to them.  If I was that developer, I imagine that the only thing I would want to hear about would be how you're going to help me cut down on overage, risk and schedule delay.  I would imagine that minor savings on materials cost that I could get by hammering subs would be pennies compared to savings in workflow, efficiency and delay.

Bring that message to your clients, help them undo those stomach knots and I bet you'll have their ear and their project.