Unless large contractors learn from what happened to Cavalier Construction and change their business models, “we’re going to see more giants fall”.
Former Bahamian Contractors Association (BCA) President Leonard Sands said he had been warning the industry for at least six years now that there was a change in how projects were being developed.
“Six years ago… we sat around the table and noticed that all of the major contractors that we talked to were seeing diminished numbers. Activity in the sector was still high, but the year-over-year numbers were diminishing for companies. And so, we looked at why that was. What we learned was that, especially in the areas of Lyford cay, Old Fort Bay, large out-island developments and Nassau-driven developments, there was a new model,” he said.
“We saw a lot more properties being built but not by single general contractors. We started to hear, ‘oh, this project management group is building this development’, ‘oh, this team of project managers is building this thing’.”
Sands said since then he has been advising industry stakeholders to break down their scope of work from being a general contractor to a specialty contractor.
“So now today as Cavalier has had much better times and much better days and other large contractors are in that same risk category, I can tell you again the clarion call I would make is that contractors that are large and not seeing volumes of work need to pick a scope of work and bustle that service. One single scope,” he said.
“For example, the project that’s happening almost across from the Office of the Prime Minister, that’s a condo development. The window supply contract, just the installation of windows, is an over $20 million scope of work. The installation of all the interior doors, every door in every bedroom, every bathroom for this whole condo development, you’re talking about thousands of dollars. That’s another very sizeable contract. So I’m saying that unless other large contractors learn from this, we’re going to see more giants fall.”
Earlier this week, current BCA President Michael Pratt said the loss of Cavalier was a major blow to the sector, that he feared would result in lost confidence in the sector.
Sands said the local construction sector remains robust.
“But a challenge I’ve always had with it is that I think the local builders probably get about 49 percent of the market. I think the more profitable work is still dominated by persons who are expats, who come to The Bahamas and set up a financially funded entity and, through a project management approach, take the fat off of all the projects. That doesn’t bode well for us, not for the sector.”