There is a very blunt message on the home page of successful and long term Sydney builder, Kell and Rigby
Kell & Rigby has suspended trading on all our sites while we review our financial situation. …….We are working hard to resolve this situation.
Of the many successful projects completed by this hundred year old building company was the Apple store at Bondi, the fitout of the Federal Parliament and the refurbishment of the Sydney Town Hall.
So how does it go so wrong after 100 years of Building and how do you go broke when Apple has you as a preferred builder?
To work for Apple proves you have serious building chops. Their meticulous attention to detail is well documented. Steve Jobs is named in the patents for the glass staircase that features in many of Apples flagship stores. The engineers and designers said a stair could not be made entirely from glass so the Apple team designed their own. and patented the result.
The first Australian Apple store, that Kell and Rigby built, was described by Ron Johnson, Apple’s senior vice president of Retail, as the “breathtaking (and the) ultimate place for the people of Sydney to shop, learn and be inspired.”
Kell and Rigby worked with Apple on a few projects but even being (apparently) ear marked to build the new Brisbane Apple store was insufficient to keep this long standing builder afloat. The root cause may have been far simpler than tangling with a technology company whose single focus is to make awesome things.
On the ABC director James Kell blamed a single large apartment project for the companies demise.
In essence he said
This is a particularly large project, the biggest we have ever undertaken and it went seriously wrong.
So how does an experienced fourth generation builder that had been through two world wars and a Depression get brought unstuck by a single project? Simple, we all make the same mistake all the time, including me, we over reach.
We all do it, all the time, we over reach.
The process of tendering for projects is relatively simple. After calculating the costs on a project we add a margin for our profit. This is where we make our living, its where our kids go to private schools or we get to holiday abroad. It is the return for the substantial risk that is involved in contracting. It is the return for late nights and early mornings. Smaller tenders have room only for small margins but bigger projects bring with them the promise of big returns.
The deadly two card trick is that we look for bigger and bigger jobs in the hope of attracting bigger profit margins. We all over reach our capabilities. We grab projects that we simply do not have the capacity to build correctly. The under resourcing may be in funding, or supervisory staff and often it is a simple case of too little man power.
This is not greed either. You would have to earn every cent of the profit on a flagship Apple store and I have never heard a contractor say that any building work was simple. It is the desire of all businessmen to make money and the big projects have a siren song that is irresistible at times. All this upside of course must be balanced with the extra risk involved. If you get the risk factors wrong you will come unstuck quickly.
One of the first projects I built, as a green 23 year old builder , was a block of eight apartments for a Hong Kong based investor. Property was booming and people were very scarce. I was horrified when a carpet supply contractor wanted to add a little fat to his price that he and I would share, on the side. Man I had a lot to learn. I got through that project okay, but the spectre of catastrophe was always present.
Sadly we all have a distinct blind spot when a large carrot is dangled.
