Modular factories that work in the commercial side of construction
face many challenges even though modular is predicted to be the most sought-after
way to build hotels, dormitories, affordable housing and apartments Post COVID-19.
PFS Corporation
Viking Carrier
Mariotti Building ProductsNo production, no income.
One situation almost all of commercial factories face is keeping their production
lines operating without long breaks between projects. For example, if a project
were scheduled to begin within a day or so of the last module of the previous project
rolling off the assembly line but the next project got delayed due to a
financing or zoning problem that takes a month to resolve, the line goes down
for a month.
Even a week’s delay in putting a project on the line
could mean hundreds of thousands of dollars in lost revenue.
A less talked about problem
There is another situation many modular factories
face that is not as obvious as an empty production line. It is when the project is
completed but payments are held back and the factory has to take the developer
to court.
Not only is this a long process, it also costs the
modular factory time and money. In the meantime, getting materials and paying
labor becomes an almost start-up experience. The factory may have to extend their
A/P or take out loans to meet their fixed and payroll costs.
From an article by John Beague in Pennsylvania Real-Time News
“On May 7th a modular construction company in
Columbia County claims a university in Connecticut owes it $705,039 for change
orders on a housing project.
Modular Steel Systems Inc. of Bloomsburg accuses
Fairfield University in a suit filed Thursday in U.S. Middle District Court
with breach of contract and unjust enrichment.
Modular Steel says it was contracted to provide 92
modular units for a project known as Fairfield University Townhouse Style
Junior Housing in Fairfield, Connecticut.
Despite being a subcontractor, Modular Steel says it
dealt with representatives of the university including its architect, who
directed changes to windows, doors and cabinets.
The company agreed to make the changes but, according to
the complaint, it has not been paid $542,684 for the work.
It also accuses Fairfield of not releasing $192,335 in
retainage. The suit seeks payment of the $705,039.”
From an
article by John Beague in Pennsylvania
Real-Time News
3 Responses
Commercial change orders – handle with care.
Change orders need to be approved in writing by authorized agent, and not by email or verbal.
MMC: nice bling but see here. Beware.