A material price fluctuation, undercutting competitors, lack of labor and subcontractors leaving a busy site work … These are just examples of some of the hardest problems that contractors encounter with. It seems to be all related to money. All of slow withdrawal period, short of money, and lack of working fund are a massive debt. If the contractor is not strong minded enough, this problem may easily lead to abandoning work.
So basically for every crisis which is related to money, Mr. Pick the executive from construction business have gradually overcome such problem by himself by working on construction buildings including lower Northern Thailand and expanding into crane business and real estate.
A lesson from working for a high value government project
“Before I graduated, I’ve updated my own house and knew many technicians already. I thought I would work for construction in the future. We have learned about this along the way as well. I have registered partnership with my high school friends and started from the multiples of small job. I still remember that we’ve received five thousand baht and a little profit for the first work.
Over 3 years, we have worked on projects in a range of about 1-3 million and then we got a chance to work on government project in a range of 20-30 million baht. We also wanted to work on it because it is a high value work and we wanted to try working on such a big project. Also, anyone would believe that government project is a good opportunity as the money is ensured. However, when we do, we started to encounter with things that are different from private sector. We normally talk directly to the customers about adding or reducing work. Everything is changed and scheduled and the work must be punctual and be delivered immediately.
We have encountered invisible cost which everyone knows what it is. And the interim payment from the government project is not happening the next day. It has rather a system of it and there are many factors which delay our pay. If the budget is circulating, it is disadvantageous for us as liquidity wouldn’t be enough and it would take few months for money to be claimed. We had no budget to work and there wasn’t any progress. In the end, our contract was fined and we couldn’t try to negotiate at all. If it was a private work, we can still talk to our customers nicely and we may not be fined. However, the government project doesn’t work like this.
This was a life experience. We know that we were not ready to work on such a big scale of government project. There are many different factors and we have forgot to think many including the rise in material price due to Olympic held in China before. The BOQ price of steel is 23 baht per km but the actual price of steel is 38 baht per km.
That project was losing millions.”
Arthitwong during liquidity crisis
“At that time, no one wanted to know me. If I met someone, he/she was afraid that I may ask for help to borrow money. At that time we were so stressed. We didn’t have budget like others. Families have never worked on construction or ran a business before. Parents are public servants and they get regular salaries. We have lost of a lot, it was more than what we’ve borrowed from others. At that time, we didn’t have money at all.
We are cool now and have fixed the problems from the point where it should be fixed by ourselves.
First, we have combined all the debts into a chunk, assuming there is a million baht debt. This chunk is negotiated with people who can lend us and we specify where we can pay by installment, how many years we can pay all back, where we can adjust the debt structure. I have consulted with bank on dealing with this chunk of debt.
Many of suppliers who we weren’t repaid the debt have given us a chance because they know that Arthitwong can work and assure a quality. This debt was held first and so we could restart and work on a new projects. Our credit was still available and the new work wasn’t affected and carried on. When I had enough money, I gradually paid off the old debt and it took a bit of time to overcome it.
Whatever happens, we never abandon work. Loss of budget and money is turning point of all business. I want to tell every customers that we do not abandon your work indeed. Even if I lose budget, I still don’t abandon work. We have lost our budget on the government project but we still finished till the end with policy and prestige. Another thing is that we do not break promise with suppliers. This principle is a very important. It may take little more time to pay but it must be certainly paid. No matter how many months it takes or how much the interest is, we don’t forget to pay them so they can help us in crisis like this.
Finally, we have a reputation that we never leave anyone’s work who help us and customers trust us. We may be a small company. Executives are still young but we have a history that we never leave work and the work must be done with fair quality. Customers know that Arthitwong doesn’t abandon work and they rather give a chance to us. The material store is also reliable.”
A work worth tens of millions but without expected profit must be adjusted
“For few years, we managed to start again only at private sector. We had a chance to work on a large private project which costs about more than ten millions for serviced apartment in Lumphun, Northern Thailand. There was a turn-key which we’ve worked for the highest cost of 50-60 million on pharmaceutical manufacturing plant.
During the port work, the work was worth 40-50 million per year. In the end, we have seen a profit figure of each project but we felt that it is not as we have expected, why don’t we have a profit of 10 or 15 %? Something must have happened with our construction work. One of my friends have joked whether we work for charity or not. We worked to earn money worth of millions but nothing remained in the end.
It is because I didn’t want to lose budget and remain as the same old me. In 2012, I have thought about cost management, planning and determination of the cost details first, which means all the payment in each process need to be identified clearly. We also had a Cost Control of the company which shows how many materials we have used. This helped us a lot. We made a turnover three years after and we have improved and grew up every year until last year when we found Builk on the website by chance.
What we were using is very similar to BUILK Cost Control: controlling payment. Last February, we started to try using Builk and it took a bit of time to get used to the system. With cooperation of the team and partnership, we’ve entered information in Builk at the end of every project in six months and use it skillfully until we become BUILK PRO Network.
I felt that using this showed the results very clearly. When I have to talk to the bank, I don’t have to do much. I just had to print the results on a single paper to show the details to the bank. The numbers are easy to see and the bank was impressed with it as well. Everything has changed and now there’s a backup system.We use Builk with business for 3 main reason; pile crane business and expanding real estate, and construction service.”
Interviewed on January 27th, 2016
About Builk team
Builk team is a team which everyone in our Builk wants to create a quality community for contractors in Southeast Asia. We help construction business to reduce cost, save time by creatingcost control program which contractors can use for free. Other than program, we also make others what we can think of for contractors to have better life.