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Building Paradise: Construction in the Caribbean

Posted by: investoradmin
Category: Building Supply

Adam Cooper, Ascent Consulting

It sounds like a dream job for many construction professionals: get paid to live and work in the Caribbean! Sandy beaches, palm trees and great weather.  Low taxes, fun projects and a high quality of life.

But construction in the Caribbean has its own set of complicated challenges.  We interviewed several construction professionals living and working in the Caribbean islands. What we found was surprising.

The number one complaint was of the quality of workers and the suitability of the workforce available to actually build things. There are few vocational programs available to island residents and most training comes directly from their employers. Bad habits get passed down from generation to generation. Even the basics, such as the ability to read plans and specifications and follow basic safety procedures, must be taught to employees to ensure that they have the skills necessary to work safety and productively.

Trade organizations, such as the BCA (Bahama Contractor Association), are largely networking organizations with no official training offerings. They have no political clout or lobbying efforts that might positively impact the construction industry.

While the permanent residents of the islands are largely honest and hard-working, they lack the advanced skills required for complicated construction projects. Ex-pats are imported from the United States and Canada to manage more complicated projects, such as resorts, casinos and entertainment facilities. Locals typically find work in the realm of custom home building and residential repair services.

There is still very much a colonial hierarchy in existence across the Caribbean society. African-Caribbeans make up approximately 70% of the population throughout the islands, including Jamaica, Haiti and Barbados.  However most of the construction management and ownership positions are held by Anglos, either residents or immigrants.

The second biggest challenge lies in construction materials and acquisitions. Nothing is manufactured locally; everything must be imported. This impacts everything from Basic construction schedules and manpower projections, to the ability to keep the company cash flow positive and make the weekly payroll.

Weather can play a significant role in the ability to keep materials flowing to the job site and maintain construction schedules.  The islands consistently lack adequate drainage systems to handle massive downfalls that come with Hurricane season. Job sites often have to be closed down and readied for torrential downpours with little notice. Flood waters can take days or weeks to subside after a hurricane passes through, rendering job sites incapacitated, damaged, flooded or ruined. Materials maybe so damaged by storms that they must be removed and replaced with fresh materials, thus significantly impacting project costs and schedules.

Additionally, there are duties (taxes) that must be paid on imports. Owners typically bear the burden of the duties, and pay duty-based fees to general contractors for the procurement of materials for the projects. Having to re-buy materials to replace those damaged by storms, and pay the duties on the replacement materials, can drive pricing well outside of original projections, even with contingency funds built into the original estimates.

On the positive side, there are tremendous opportunities for construction professionals in the Caribbean. Seasoned professionals can be very successful working for or starting their own construction companies. True design-build professionals are in high demand, and DBIA-certification is often rewarded with higher salaries and more glamorous project opportunities.

General contractors are typically making 10/10 (10% mark-ups for Overhead and Profit) on cost-plus contracts. Since the GC’s manage much of the materials procurement, they receive mark-up on those materials, and the duties on those materials. With a solid subcontractor base, and smart estimating, they can often clear 25%+ gross profit on projects.

Subcontractors have the same opportunities for profitability, assuming they can find skilled workers who are able to perform and can keep materials flowing to the job sites. Skilled MEP contractors and professionals are in high demand, and are often the only trades that general contractors solicit bids from when chasing projects. Lower skilled trades, such as drywall and paint, are typically estimated by general contractors and bought out for fixed fees without soliciting bids.

Construction in the Caribbean, much like construction in other areas of the world, has its own set of challenges that are shaped by geography, weather, government and population. The frustration factor maybe higher than with construction in the States, but if Island Life keeps calling you, it’s one of the best places to live, both inside and outside of work. The people we interviewed for this article wouldn’t want to be anywhere else, or have it any other way.

Author: investoradmin