Market segments

[mshields]

This is, I know, beyond the scope of this Forum but the participants are nevertheless uniquely qualified to comment so I hope you'll indulge me.

I'm wonder what market segments in the construction market represents those for which you can sell value. And here is what I mean by that. I know that mine and my reputation are a strong consideration to our clients but I also know that in the market we are in, we are frequently beat down on price to a level where taking the job is difficult to celebrate.

I know that in the past, working in the Data Center market, the fee/"value provided" equation was much more advantageous. I'd be interested in your thoughts about other segments, particularly in this continuingly tough economic environment are still willing to pay a premium for a premium product.

Thanks,

Mike

 

[brian john]

With 26 years in a ?specialized? segment of the trade I have found through 3 recessions that competition picks up as everyone wants to be specialized offering services that in normal times (or good times) they would not consider.

I also see that hospitals and data centers that once only hired certain EC?s (those that had a reputation of doing data or hospital worK) open up the bidding process to almost any firms. We see a lot more mistakes, as the price of jobs is beat down.

 

[mshields]

Selling Value

Selling Value

Yeah - as a firm that specializes in Hospitals, I'm seeing that too. Hence the question?

 

[kingpb]

I am in the power/energy market and although there has been a downturn in the number of larger projects (US); we are still quite busy and are seeing an increase in the number retro-fit and re-hab projects. These types still have competition, and we have had to sharpen our pencils when it comes to the budgets.

However, a lot of our work comes from long-term clients where the relationships are well established, and they have come to expect a certain level of quality. In that regard, they will typically issue a request for qualifications, e.g. not a price, thus avoiding getting stuck with a low cost/bid provider. Additionally, we have projects simply given to us because we have general service agreements already in place with that client.

I think the approach best taken, from an engineering perspective, is that when the clients want to pay less, then instead of providing the same level of service for less money, you simply do less. What I mean by that is, you don't show as many details, or attend so many meetings. In essence provide the minimum neded to get it built with as little effort as possible. If the client wants to pay for less, than he doesn't get the A+ job, he only gets the B, or C+ job.

I joke with people that I can do any job for an hour - I simply have my drafter print out an electrical title sheet, and I put on it, provide electrical construction complete that meets NEC minimum requirements, and satisfies the AHJ. "Done"
The EC bid goes up, but that's the Owner's problem, not mine. As the fee goes up, then the more detail I can provide.

 

[mshields]

Great input

Great input

That's excellent input. But when you say the Power/Energy market, what specifically does that mean. Are you working for utilities? Are you implimenting alternative energy such as photovoltaics or wind turbines?

 

[kingpb]

Utilities and IPP's (Independent Power Producers)

It seems anything on the "renewable side" i.e. wind and PV especially, is having the same issue with firms doing low cost work or in many instances they are turn-key projects so they design it, provide equipment, and build it, and sometime even operate them. We have had more success on renewable projects working for the Owner as the Owner's Engineer putting together the bid documents then reviewing the project design documents. Good fee's and no risk.

 

[mshields]

Thanks

Thanks

That sounds interesting. I wonder how much opportunity there is for that up here in New England. Perhaps I'll look into it.

Thanks,

Mike