Construction market in the USA. Personal experience

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

Blogger Nikolai Grigoriev made a very interesting post based on his own experience and giving an exhaustive idea not only about the US construction industry, but also about the American principles of doing business.

Salaries

Wages in a construction site in the United States range from USD 12 / hour for auxiliary workers to USD 93 / hour. There are many projects for the government, for the army, where the minimum wage for, say, an electrician is 62 dollars an hour. All workers, naturally, want to get to such a construction site. But there are also many private projects, for example Tesla Gigafactory, where, due to the frantic pace of work, a standard operating mode is set 6 days a week, 10 hours a day. On such a project, qualified personnel receive the first 40 hours per week about $ 40 per hour, and the next 20 hours at a rate of 1.5, that is, $ 60 per hour. In total, a month before taxes comes out about 11, 700 dollars, after taxes - about ten per month. But this is at a private construction site, where the schedule is very tight and people are in short supply. On a typical construction site, skilled workers earn USD 40 x 40 hours per week, which is about $ 6,700 before taxes and about $ 5,650 after taxes. I am deducted 16% of taxes, because I have a large family, from single people - about 25%.

To get to such a pay, you need to be a good worker, skillful. Appreciated by colleagues and superiors.

There are also construction sites such as Prevailing Wage and Davis-Bacon Act. The history of the creation of these laws is very interesting, who wants to feel the atmosphere in which they were created, I recommend reading one of the great books of the United States - "The Grapes of Wrath" by Steinbeck. About how, during the Great Depression, almost everyone lost their jobs and land, and rushed to California (where the cult of the 66th highway and pickup trucks originated), where, due to the influx of workers, they were paid less per hour than a person needs to eat every day. Quite closely resembles the situation today with the minimum wage (minimum wage) in Russia and the salaries of teachers, doctors and military personnel.

At Prevailing Wage and Davis-Bacon Act construction sites, all wages per hour for each occupation are set by the US government, and are updated once a year. An electrician, let's say, is about $ 62 an hour. Accordingly, all hours over 40 hours a week are another half times more. These workers are paid more than the top managers of many companies.

All Public Works (roads, bridges, utilities for cities, schools, government buildings, power plants, pumping water and sewers, military infrastructure, etc.) are pay-controlled projects. Therefore, they tend to be much more expensive than private projects. One example is the reconstruction of the UN building in New York, this project cost more than $ 2.5 billion. And the lion's share of these costs fell on labor costs.

The demand for labor is now very high in the US construction market. Companies cannot find people for projects, people simply run out, there is a construction boom. Therefore, the mechanisms of motivation, attitudes towards employees, their training to increase their efficiency - all this is given special attention.

Opening hours

Almost all construction companies in the United States have the same working hours: at the construction site everyone works from 6 am to 2:30 pm, and in the office from 7 am to 5 pm. There is a lot of extracurricular work here and there, but at a construction site it is paid at a rate of 1, 5, but not at the office.

I think that when a man finishes his working day at 2:30 in the afternoon, it greatly affects the entire socio-economic situation in the country. He can build a house in the afternoon, ride a motorcycle, spend time with his family. Can do a lot. I think economists grossly underestimate the impact of this factor.

Project

Not a single project in the USA has a Civil Defense and Emergencies section. And POS too. And Out-and-Out Activities for People with Disabilities. And energy efficiency. And Environmental Protection. And Estimates. And Other Documentation.

As I have suspected for a long time, all this is rubbish. And the design standards are spelled out in the Building Code. And there is also no POS, Civil Defense and Emergencies and all this rubbish. Because the judicial system normally works to resolve insurance claims between the parties to the conflict.

And estimates are made only by general contractors and their subscribers, and they never show them to clients, because the price of the contract is firm.

A Explanatory Note (called Specifications in the USA) - 1,500 pages thick, with detailed instructions on which sockets to buy and which manufacturers. It is mainly aimed not at the norms, but at the correct determination of the client's wishes and the level of the budget of his project. So that the contractor can calculate the price as accurately as possible.

Licenses

Building licenses in the USA are issued only to people, and only then they are tied to the company. Therefore, if such a person left the company, you need to get a new license for another person.

Such a person must pass a 6-hour exam, which has 240 questions, half for knowledge of laws, half for knowledge of the industry, for example, calculating the voltage drop in a 360 feet long feeder at 480V, 260A and 300MCM feeder thickness.

To become a licensed Professional Engineer, you need to pass two exams (one at the beginning of your career, immediately after university, the second after 4 years of engineering practice), ten times more difficult than for a construction license. With integrals, differential equations, and calculations of stress diagrams.

Only such people sign each drawing and put their personal seal on it, not the company. The company just puts its logo on. If something is designed incorrectly and there is an accident, this very engineer will be responsible. For this he has professional liability insurance.

In the US construction market, contractors are very deeply specialized in their areas of work. If you look at the official license classifier, you will see 46 different licenses. Each has its own exam, its own separate procedure.

Estimates

There are no salespeople in the construction business in the US. Each estimator is a seller. It depends 70% on him whether the company will work tomorrow or not. It is he who is responsible for ensuring that the company wins the construction tender, so that not only the estimate, but also all the accompanying documents for the tender are prepared. Huge responsibility and subtle skill.

The remaining 30% depends on the decisions of the owner of the company during the competition, as well as on the decisive meeting with the client with an intensive coordination of his final requirements.

The estimate is a hundred times simpler and clearer than in Russia, any foreman in it will figure out what's what. It is arranged according to a very simple principle: for example, the line "Socket 125V, 20A": the socket costs three dollars, and it takes half an hour to install it in the wall. Everything. No insanity with coefficients and indices, widespread in my homeland.

The estimate is intended to win the project, and since at the stage of the competition and the struggle for the contract there is very little time for drawing up the estimate, then all operations for its drawing up should be as efficient as possible. The estimate for a project worth $ 20-30 million is made in 5-10 working days, for a project 1-2 million - in one or two days.

Small companies make estimates, which, after winning the contract, can be safely sent to the supplier for assembly and delivery. In large companies, this is a two-step process: first, they make an estimate in general terms to take a contract, and then, if they won, they make a second estimate, already for daily work on the project, deliveries, and accounting for working time and materials.

As the company's portfolio of projects and experience grows, daily adjustments are made to the database. Both material prices and labor costs change in the database. This does not happen for pleasure, but is the result of painstaking work and disputes between estimates and production workers, because estimates have to win the project, production workers always come to complain that there is not enough money for construction. The eternal dichotomy of the construction business.

Relations with employees

In the United States, it is not customary to be rude to colleagues, almost never. In general, swearing is not accepted, since many conflicts end in lawsuits, in which, as a rule, not an employee, but a company must prove that it behaved appropriately. A lawsuit against an employee can easily cost a company about $ 400,000. Therefore, they do not swear, everyone smiles at each other, and behaves extremely correctly. At the same time, the smiles are sometimes clearly strained, but the culture of upbringing compels.

I don’t know about other states, but California and Nevada have the “At Will” law, that is, “of good will”. It means that an employee can leave the company with a 10-minute notice, and the company can dismiss an employee at any time with the same notice.

This law quite disciplines everyone, both employees and the company. The owners of the companies understand that it is possible to lure a valuable personnel away from them in no time, and the fool understands that he can be fired right at lunchtime today. Perfect market competition.

If a company hires too few minority people, it could be sued for discrimination. Therefore, the composition of the companies is very diverse, people from all over the world work.

The more you work in such a very DIVERSE environment, the more you are amazed at how many smart people from all countries have come to the USA. The more you understand how inferior and arrogant your perception of other races and cultures was. We have very cool guys from Colombia, the Philippines, Korea, Mexico, Dubai, there are guys from Russia, Belarus. They teach me everything they know, for which I am very grateful to them. And they know a huge number of things. Many owned their own companies in their countries, with 100-150 employees. Ten percent of employees are aimed at starting their own business, especially young people.

Before being hired, each employee is run through four main tests: a written test for comprehension, logic, knowledge of English and the subject of work, then an interview with three or four Senior employees of the company, then a mandatory medical test for drugs for all, and the last one - a Criminal Background check. and DUI (driving under the influence of alcohol or drugs). This procedure more or less guarantees that the company will hire a good person.

Builder's pledge

There is an amazing law in the USA, which does not exist (and will not be? …) in Russia, called Mechanics' Lien (Builder's Pledge). This is almost the only law that very strongly protects the contractor's rights to receive money. Under this law, ANY of the contractors, subcontractors, any of the suppliers of equipment and materials, any of the WORKERS, architects, GARDENERS, fixers of plugs or taps, mixers, etc. can impose a SECURITY on real estate in the event that he completed his work under the contract (design, construction, supply of materials, and other improvements), but he was not paid (and it does not matter, WHO did not pay him).

It is a very powerful tool for getting paid for your work. If you worked and you were not paid on the project, you register with Registrar (an analogue of Rosreestr) a pledge on the building along with the land plot, and you have the right to submit documents for the forced sale of this asset in 30 days and receive your money. This bond can be imposed on the property at any time, even if the contractor has not received the INTERMEDIATE contractual payment on time. The deposit is unconditional, the consent of the property owner is not required.

Therefore, contractors and workers with payment by contract or salary are NEVER sent to the USA (naturally, for this they must submit the documents required by this law on time, for example, Preliminary Notice, adhere to the deadline for submission, etc.).

This law also has a downside: if you are a home owner and a contractor works for you, it is YOUR responsibility to make sure that all of his subcontractors and workers receive their money, otherwise your house could be FORCEDLY sold under the hammer for a debt the size of for example, $ 700 to repair a fence. For this, homeowners also have a whole set of tools that they usually do not even know about.

About honesty

Business honesty in the United States is not a spiritual and theoretical concept as it is in Russia. It directly stems from the daily practices of marketing, production and project closure, is armed to the teeth and has advanced tools for mutual verification of counterparties.

For example, at the stage of competition for a project, when you are competing with two or three contractors of your specialization, at the stage of opening envelopes and announcing prices, it turns out that prices differ by 3-5%. The requirements for insurance and guarantees are general and the same for everyone. The estimated databases are very similar for everyone, and they are updated precisely based on the results of competitions and the struggle for contracts. The winner of the tender, "Low Bidder" does not just win the competition, its documentation is checked by the second-place contractor, and has the right to appeal the results of the tender and cancel its results if it finds something to complain about. If not, he puts a signature on it in the tender protocol (for expensive Public Works tenders, there are also closed tenders).

If a supplier appreciates the delivery of a package of materials to a contractor according to the specification, and has forgotten something, he will have to swallow this loss in order to maintain a relationship with the contractor. If the contractor forgot to calculate something in his estimate and won the tender, he will carry out these works at his own expense.

Material Submittals and numerous inspections by local authorities cannot be bypassed at the stage of work production. That is, the materials and quality of work are fully controlled. Any serious violation results in huge fines and in the worst cases, Revoking the License. The entire history of serious violations is tied to the license and available online for everyone, with names and surnames of people, insurance coverage, etc.

Wages to workers are paid once a week, if you try to cheat with them, then your company will end its existence in four months. Not an option.

During the closing phase of a project, it is very important for a company to come out without any courts and with a good relationship with the client, because otherwise you can lose four to five years of your life talking to lawyers instead of clients and lose several million dollars. An acquaintance of mine bankrupted his general contracting company because of a case worth $ 2 million (it was much cheaper to do than to continue working, since the project's court case was growing like a snowball, he had to mortgage his house in the bank to pay the workers), and this a massive phenomenon in the construction site.

Do not forget that the average American has more than 5-7 units of various small arms in his house, from pistols to sniper rifles and large-caliber machine guns. So with a gross deception, it becomes simply dangerous to live in the world.

Thus, if everyone in the company honestly fulfills their duties and does not lie to the client and the authorities, then the company will prosper and develop. A direct consequence, without the need to convince someone of the theories of psychoanalysis. Honesty is one of the main, massive financial variables in the equations of business optimization functions. For all.

Profit

A direct consequence of the superior section, talent, intelligence, quickness, connections, in a good sense, the cunning of the leader and the state of the market, for any successful company is the achievement of the indicator of its main optimization function: the planned profit on the project.

Small companies ("Mommy & Daddy Shops", as they are called in the US in local slang), earn 30-70% of pre-tax profits on projects, that is, according to the formula (price of all materials + labor remuneration + cost of all subcontractors + cost of use equipment) * (from 1, 3 to 1, 7). On average, about 1, 5. After taxes and office maintenance, about 25-30% remains. But the projects of such companies are small, up to 0.5 million dollars, and 90% of the projects do not even reach 50 thousand dollars. This type of construction company is classified as a Service Company.

Huge companies with a turnover of several billion dollars (like Skanska, Emcor, Jacobs) earn about 5% to 25% before tax, depending on the project (using the same formula as above). I think the exact estimate of the market average profit figure is around 15%. After paying taxes and maintaining the central office, about half remains, but if the company has a not too bloated staff, and a smart accountant, and he is well versed in taxes, then more.

In bad times, when the market falls (as happened in 2007-2009), and many companies go broke, the survivors work for 5% or less, while collecting the best pieces of the broken ones. It comes to 0-1%, which makes a lot of sense, because it is incredibly difficult to reassemble the team after you have fired everyone, you will hire anyone back. But in good times, when there are a lot of projects everywhere and people cannot be found in the daytime, everyone (suppliers, subcontractors, general contractors) raise the bar for clients to 20-25% (large companies) and 50-70% (small companies) before tax, to accumulate fat until the next market drop. And the market pleases with its constancy, and falls exactly once every 10 years.

Many companies in the construction market are 100-150 years old or more (for example, McCarthy, since 1864), so the evolution of “how much does it cost to put brick on brick” has come a long way, and the rules of the game for companies are exactly the same.

Children

Here it is in the order of things to bring a child with you to work and show him what you are doing, what you are doing at work. I see children in our office about once a month, sometimes they come in a big, cheerful crowd. It's very funny to watch such processions at a construction site - there is such a chain of penguins, helmets twice as many heads, orange vests almost to the ground, and everyone adjusts their protective glasses on their nose that they fall down and slide out. And the eyes look at the foreman in such a way that it is beyond words, they suck the world around into the brain, like a tornado. My colleague has five children, he once spent six or three hours explaining how the work is done, what the company does.

Lots of interns. They are paid half as much (about $ 17-20 an hour), they work for three months during their university holidays, and during these three months the company watches them, and they - the company. They still have to study for two or three years, but they are already working.