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Oh, I think I can explain this pretty easily... most construction companies aren't competitive. Construction and real-estate are two markets that are from top-t

Oh, I think I can explain this pretty easily... most construction companies aren't competitive. Construction and real-estate are two markets that are from top-to-bottom, inside-out, soaked in cronyism. I'd wager most multi-million dollar plus construction companies simply know the right people to get the contracts and as a result never effectively "bid" on a single fucking thing. Why then, if there is no real competition, would you ever increase productivity? Short answer, you wouldn't. Being more productive would require increasing the rate at which you use capital (i.e. you spend more) witout any accompanying increase in gross profits. shrug

hellbannedguy 5y ago
In most parts of the USA winning on a public project requires three bids. Why do the same companies always seem to win? In my neck of the woods (The Bay Area), one company seems to get all the jobs. The company's name rhymes with Gelato. I started to look carefully at the bids. (I got a General Contractor's license a while ago, and it an easy test, and verification of work experience is a joke.) Ok, I looked into the owner of the contractor's license, and in all three bids, they had a "Gelato" as owner of the company. It looks like the "Gelato" family sent three kids to Sacramento to take the test, and get their licenses. They all bid on the same project, and one wins. They must share the million dollar equipment, and pool of employees though? Is it legal? I don't know. Do I know for a fact this is how it works--no. (There's a bill, I believe up for vote soon, in Sacramento. It requires all bidding parties to verify their company us big enough to do the project. I don't think we need a bill like this. I don't think small companies bidding on huge project to is a problem. If I am right about "Gelato" construction company--authorities should look into the bidding process. There us a reason, besides inflation, that public projects get more expensive each year, and never seem to end.)
- systemvoltage 5y ago
  Curious - what is the name of the company? Why not disclose "Gelato"?
  - hellbannedguy 5y ago
    Look up "road work in Marin County."
    - joe_the_user 5y ago
      Or: "suicide FBI informant marin county construction"
      - snypher 5y ago
        http://www.tombutt.com/forum/2001/010601A.htm http://www.tombutt.com/forum/2001/010601A.htm
  - owyn 5y ago
    I dunno what the op intent was except just a general sense of discretion that is kind of the HN vibe. But it's obviously Ghilotti Construction. And yes, they do seem to build everything around here, freeways, bridges, big stuff like that. They don't have a wikipedia page, my uncle was a civil engineer there for decades (now retired)
    - malwarebytess 5y ago
      Kind of reminds me of the SWIM nonsense of the early internet. Not saying the name with so much detail isn't protecting you from anything. Just say the name people, or don't comment.
    - phkahler 5y ago
      If they do a good job at prices that are in the ballpark it may be fine. Sometimes what looks like cronyism is just someone picking someone they trust to do the job. It can be hard to tell the difference unless there are obvious problems constantly being overlooked - like with NASA contractors for example.
brightball 5y ago
I wouldn’t shock me to see that the construction companies just figured out how to finance their own real estate projects.
joe_the_user 5y ago
This is absolutely compatible with everything described in the article. A lower-productivity project is a large project, a larger project allows larger amounts of money to be skimmed. Plus elaborate custom specifications for projects also make it hard to keep track of costs and bureaucrats wind-up fond of these things. Etc.
Ozzie_osman 5y ago
It's not just cronyism, it's flat out corruption. I took a 2-3 year detour from tech to work in construction. The industry is rife with corruption and misaligned incentives. Kick-backs are common. Bids are often not truly competitive, and when they are, people find ways like change-order abuse [1] to subvert the system. There are so many ways to rig the bidding process (bribing someone to find out competitor bids so you can undercut them) and the execution (cutting corners that you don't expect someone to find out about, or just bribing whoever is overseeing quality who might detect the corners you cut). Even the US Army Corps of Engineers has had massive corruption cases. When I was in the industry this was an open secret, which surprising to me given the Foreign Corrupt Practices Act... eventually this would be cracked down upon [2], but as far as I've heard, still common. [1] https://guide.iacrc.org/potential-scheme-change-order-abuse/ https://guide.iacrc.org/potential-scheme-change-order-abuse/ [2] https://www.justice.gov/usao-dc/pr/former-us-army-corps-engineers-manager-sentenced-more-19-years-prison-30-million-bribery https://www.justice.gov/usao-dc/pr/former-us-army-corps-engi...
- cagmz 5y ago
  What was your role? That's an interesting detour.
  - Ozzie_osman 5y ago
    Not that interesting honestly. It was a family business and I helped out by the managing operations (this was more as a supplier of building material to contractors) and doing business development (which involved bidding for construction projects).

hellbannedguy 5y ago

In most parts of the USA winning on a public project requires three bids. Why do the same companies always seem to win? In my neck of the woods (The Bay Area), one company seems to get all the jobs. The company's name rhymes with Gelato. I started to look carefully at the bids. (I got a General Contractor's license a while ago, and it an easy test, and verification of work experience is a joke.) Ok, I looked into the owner of the contractor's license, and in all three bids, they had a "Gelato" as owner of the company. It looks like the "Gelato" family sent three kids to Sacramento to take the test, and get their licenses. They all bid on the same project, and one wins. They must share the million dollar equipment, and pool of employees though? Is it legal? I don't know. Do I know for a fact this is how it works--no. (There's a bill, I believe up for vote soon, in Sacramento. It requires all bidding parties to verify their company us big enough to do the project. I don't think we need a bill like this. I don't think small companies bidding on huge project to is a problem. If I am right about "Gelato" construction company--authorities should look into the bidding process. There us a reason, besides inflation, that public projects get more expensive each year, and never seem to end.)

systemvoltage 5y ago
Curious - what is the name of the company? Why not disclose "Gelato"?
- hellbannedguy 5y ago
  Look up "road work in Marin County."
  - joe_the_user 5y ago
    Or: "suicide FBI informant marin county construction"
    - snypher 5y ago
      http://www.tombutt.com/forum/2001/010601A.htm http://www.tombutt.com/forum/2001/010601A.htm
- owyn 5y ago
  I dunno what the op intent was except just a general sense of discretion that is kind of the HN vibe. But it's obviously Ghilotti Construction. And yes, they do seem to build everything around here, freeways, bridges, big stuff like that. They don't have a wikipedia page, my uncle was a civil engineer there for decades (now retired)
  - malwarebytess 5y ago
    Kind of reminds me of the SWIM nonsense of the early internet. Not saying the name with so much detail isn't protecting you from anything. Just say the name people, or don't comment.
  - phkahler 5y ago
    If they do a good job at prices that are in the ballpark it may be fine. Sometimes what looks like cronyism is just someone picking someone they trust to do the job. It can be hard to tell the difference unless there are obvious problems constantly being overlooked - like with NASA contractors for example.

brightball 5y ago

I wouldn’t shock me to see that the construction companies just figured out how to finance their own real estate projects.

joe_the_user 5y ago

This is absolutely compatible with everything described in the article. A lower-productivity project is a large project, a larger project allows larger amounts of money to be skimmed. Plus elaborate custom specifications for projects also make it hard to keep track of costs and bureaucrats wind-up fond of these things. Etc.

Ozzie_osman 5y ago

It's not just cronyism, it's flat out corruption. I took a 2-3 year detour from tech to work in construction. The industry is rife with corruption and misaligned incentives. Kick-backs are common. Bids are often not truly competitive, and when they are, people find ways like change-order abuse [1] to subvert the system. There are so many ways to rig the bidding process (bribing someone to find out competitor bids so you can undercut them) and the execution (cutting corners that you don't expect someone to find out about, or just bribing whoever is overseeing quality who might detect the corners you cut). Even the US Army Corps of Engineers has had massive corruption cases. When I was in the industry this was an open secret, which surprising to me given the Foreign Corrupt Practices Act... eventually this would be cracked down upon [2], but as far as I've heard, still common. [1] https://guide.iacrc.org/potential-scheme-change-order-abuse/ https://guide.iacrc.org/potential-scheme-change-order-abuse/ [2] https://www.justice.gov/usao-dc/pr/former-us-army-corps-engineers-manager-sentenced-more-19-years-prison-30-million-bribery https://www.justice.gov/usao-dc/pr/former-us-army-corps-engi...

cagmz 5y ago
What was your role? That's an interesting detour.
- Ozzie_osman 5y ago
  Not that interesting honestly. It was a family business and I helped out by the managing operations (this was more as a supplier of building material to contractors) and doing business development (which involved bidding for construction projects).