The New Jersey construction community received a New Year’s gift at the end of December: an announcement from the Murphy administration adding over $400 million in new projects currently under design, as well as accelerating its first quarter 2019 construction program, giving much promise to 2019! Now that these plans have been announced, and projects are being released for bids, what does it all mean to contractors?
Here are some key points to be cognizant of when proposing on these opportunities:
- Keep track of your current project load, where projects currently stand and assess whether you are truly ready and prepared to take on additional contracts
- Ensure there is proper personnel available to take on the project as the increased volume may create shortages
- It is also imperative to assess how the increased volume may be affecting subcontractors (if applicable)
- Will the labor pool be able to handle the increase? (i.e. union halls are somewhat empty in NY Metropolitan area due to current activity. You may not get the best employees out of the halls. Non-union employers may not have as many skilled workers available.)
- Assessing office personnel, inclusive of estimators, is also imperative prior to agreeing to take on new projects. Not being properly staffed can lead to logjams in added paperwork, errors affecting financial reporting.
- What new technology will you need in order to take on additional job
- Is the internal infrastructure currently in place to handle the increased volume of work?
- Review capex budgets and additional equipment needs
- Planning discussions with your CPA, bank and surety should be happening routinely
- Update your 2019 budget to account for added overhead costs, upfront and startup contract costs, additional estimating and bidding expenses.
- Have appropriate cash flow available for potential increase in activity, ensure lines of credit are available and sufficient