“Bankability” is strictly defined as a project or proposal that has sufficient collateral, future cashflow, and high probability of success. In reality, it’s a practice that we should exercise in the decision making process in many aspects of our life. Decisions are often based on emotion , money , or haste . Bankable decisions are decisions that are well thought out whilst considering other pertinent factors. Oftentimes a decision based solely on emotion or money can be a very poor decision.
The construction industry in California is a multibillion dollar industry. As a group, contractors suffer from a lack of credibility as a result of poor communication and business management skills and poor business practices. Since our economic downturn, the industry has been especially subject to the negative economic forces in action. According to the California Contractor’s State License Board, many contractors still in business have tried to survive by “further alteration of their business methods,” otherwise known as “cheat to compete.” In each issue of the Licensed Contractor’s News-letter, which we receive quarterly, there is a list of hundreds of contractors whose licenses have been revoked in the past three months for a variety of illegal activities. The offenses that subject a contractor to license revocation are too numerous to mention. I’ll bet that at least 20% of people who read this article have contractor horror stories of their own. Illegal change orders, project price increase, greater than $1,000 maximum down payment are all license revocable offenses. When considering competing contractors for your project, re-read the definition of bankability, then consider how bankability may relate to the contractor you ultimately select. Do a thorough background check via the “instant license check” link at the California Contractors State License Board website at www.cslb.ca.gov. Here you’ll find the license and insurance status of contractors. You’ll also find if there is any litigation in progress against the contractor, the contractors employee declaration and requiredworkman’s compensation status. Did you know that if your contractor has employees and does not pay for workman’s compensation insurance you can be subject to suit from an injured employee of this contractor if they are injured at your home or business?
After gathering this information, make a determination if your contractors profile fits the definition of bankability, and if your investment of time and money in that contractor will result in long-term advantage for you. Statistically it is safe to say that in many cases the lowest initial bid cost will actually result in greater long-term costs because the means by which the low bid cost was reached, oftentimes by cutting corners. Illegal change orders are an unscrupulous tactic used by low bidders to increase the project cost. The “underground economy” operating in the construction sector is rampant, and consumers suffer every day as a result of it. Next month I’ll further touch on how to further vet contractors competing for your project. There are many good contractors; “trust but verify” is the best approach.
Energy Milestone : Germany is not a nation known for it’s sunny climate. On the 21st
of July,30% of all power needs for Germany were supplied by solar energy. On Saturday, 50% of the nations power needs were supplied by solar energy. Germany has almost as much solar power generation capacity as the rest of the world combined. It is a nation that is 20 years ahead of us in deployment of renewable energy. It’s slowly being generally accepted in the USA that renewable energy is safer than nuclear energy, cleaner than coal and natural gas, and better for the long-term health of our nation’s people. In locations where the price of electricity is high, such as in California, it is also a better long-term economic choice.
During the product selection phase of any construction project, balancing quality and price is an ideal goal to achieve. Specifically for solar projects,find and utilize products that will have the lowest long-term cost of ownership. Achieve this by balancing price, compatibility, warranty, manufacturer viability, and technology. Quality made solar products are very reliable, but in the next 30 years you may need someone to answer the tech support line.
Pricing is very important these days. Very few contractors can succeed on “value add” higher cost projects alone. Conversely, it’s common for the consumer to confuse low bids as best value. Construction projects are investment decisions like any other investment decision. They require the careful thought and planning so that long-term cost of ownership is kept to a minimum.
By Mark Becker,GoSimpleSolar
Mark Becker is the President of GoSimpleSolar , by Semper Fidelis Construction, a Danville based Solar Installation Firm. Mark can be reached at 925.915.9252. Come visit GoSimpleSolar’s new show-room at 114 West Prospect Ave. in Danville to see, touch, and discuss solar and energy efficiency products. For more details, see www.GoSimpleSolar.com or email Mark@GoSimpleSolar.com.