Terry Pegula named Sabres President; PSE separating Bills and Sabres

[Porous Five Hole]

2 hours ago, Eleven said:

I think I need to know what this means....

 

[Eleven]

10 minutes ago, Porous Five Hole said:

 

It's just too noisy.  I did give it 30 seconds.  I'm not going to know the reference, I guess, or whoever "Kelis" is.  I'll be ok.  Carry on.

[sabremike]

In the past quarter century only one team has relocated (Atlanta) and that was after they were literally kicked out of their arena and there was no other choice.

 

[Sidc3000]

Businessmen make business decisions irrespective of emotions. Terry dissolved PSE because Kim is incapable of continuing to run the business and, I’m assuming, it made no financial sense. For all we know he’s wanted to ***** can it for years but Kim fought it. He now has absolute control and is making the best decisions to continue to make money. Don’t forget that the new stadium construction is 300 million dollars over budget and counting. He has to fund that somehow. 

Edited September 3, 2023 by Sidc3000

[\GoBillsInDallas/]

4 hours ago, Sidc3000 said:

Don’t forget that the new stadium construction is 300 million dollars over budget and counting. He has to fund that somehow. 

 

[PerreaultForever]

5 hours ago, Sidc3000 said:

Don’t forget that the new stadium construction is 300 million dollars over budget and counting. He has to fund that somehow. 

When has a new stadium in the U.S. ever not been over budget? Pretty sure these guys all know that going in (they should) and they just give lower numbers up front for politicians and other BS stuff like that. Unless he starts losing those fracking lawsuits he will be just fine. 

[Pimlach]

6 hours ago, PerreaultForever said:

When has a new stadium in the U.S. ever not been over budget? Pretty sure these guys all know that going in (they should) and they just give lower numbers up front for politicians and other BS stuff like that. Unless he starts losing those fracking lawsuits he will be just fine. 

What gets me is they are still getting bids from suppliers and contractors.   All of that should have been done BEFORE they asked for and got approval for taxpayer money.  The estimates should have been completed and reviewed.   They need fixed price estimates that are good for several years.  

[Doohicksie]

1 hour ago, Pimlach said:

They need fixed price estimates that are good for several years.  

Go out and ask for those.  You'll get laughed out of the place.

[JohnC]

9 hours ago, Pimlach said:

What gets me is they are still getting bids from suppliers and contractors.   All of that should have been done BEFORE they asked for and got approval for taxpayer money.  The estimates should have been completed and reviewed.   They need fixed price estimates that are good for several years.  

Why would the supplier lock in his prices for an extended period of time when his costs are going up? That would make no sense for the supplier. The same dynamic applies to labor. If you are a plumbing company and your labor costs are steadily rising, why would you lock in your estimate at the present time when you know it will be an outdated (underestimated) job? In most simple small construction jobs that will be done right away you can get a locked in estimate. But in a major long term and complicated project where you are dealing with a job that will take years it is a different situation. The bottom-line is that you can't run away from basic economic and market forces i.e. the concept of supply and demand. 

[That Aud Smell]

10 hours ago, Pimlach said:

What gets me is they are still getting bids from suppliers and contractors.   All of that should have been done BEFORE they asked for and got approval for taxpayer money.  The estimates should have been completed and reviewed.   They need fixed price estimates that are good for several years.  

This is how the process works, though. Get your financing, then put the thing out to bid. Then the generals bid. Then a bid’s accepted. *Then* starts the process of getting the subs and suppliers. SOP.

The question of how overruns get dealt with is more variable. Seems to me a certain former c-level Bills exec found this out the hard way.

[Pimlach]

12 hours ago, Doohickie said:

Go out and ask for those.  You'll get laughed out of the place.

That is the only way.  You need pricing to be good for at least one year, in commercial work it is not rocket science - there should be no new inventions here.  

[Pimlach]

3 hours ago, That Aud Smell said:

This is how the process works, though. Get your financing, then put the thing out to bid. Then the generals bid. Then a bid’s accepted. *Then* starts the process of getting the subs and suppliers. SOP.

The question of how overruns get dealt with is more variable. Seems to me a certain former c-level Bills exec found this out the hard way.

True to a point but the bids have to worth something.  The contract should be "fixed price" and the General Contractors should have already gotten bids from their subs.  When the major contractors are selected the proposals should be reviewed for truth in pricing - the pricing should have some sort of test for reasonableness and their should be a cash reserve for risk and to cover changes.  

 

 

[Pimlach]

3 hours ago, JohnC said:

Why would the supplier lock in his prices for an extended period of time when his costs are going up? That would make no sense for the supplier. The same dynamic applies to labor. If you are a plumbing company and your labor costs are steadily rising, why would you lock in your estimate at the present time when you know it will be an outdated (underestimated) job? In most simple small construction jobs that will be done right away you can get a locked in estimate. But in a major long term and complicated project where you are dealing with a job that will take years it is a different situation. The bottom-line is that you can't run away from basic economic and market forces i.e. the concept of supply and demand. 

Really?  Then we would never build anything major or complicated to cost  - ever.   We will never building a new skyscraper, a bridge, a highway, a fighter jet, etc. 

There are ways to protect the suppliers and the Buyers from price in escalation and risk.  There are ways to incentivize a contractor to keep costs down.  

What labor increases?  The Bills are looking at almost 20% cost growth before a shovel hits the dirt and you think that is ok?   At this early stage it is much more likely that they forgot key requirements that they have to meet, which is why they are still getting bids in.  

 

Edited September 4, 2023 by Pimlach

[JohnC]

55 minutes ago, Pimlach said:

Really?  Then we would never build anything major or complicated to cost  - ever.   We will never building a new skyscraper, a bridge, a highway, a fighter jet, etc. 

There are ways to protect the suppliers and the Buyers from price in escalation and risk.  There are ways to incentivize a contractor to keep costs down.  

What labor increases?  The Bills are looking at almost 20% cost growth before a shovel hits the dirt and you think that is ok?   At this early stage it is much more likely that they forgot key requirements that they have to meet, which is why they are still getting bids in.  

 

https://buffalonews.com/business/local/bills-stadium-ralph-wilson-park-amazon-impact-construction/article_4a2b4fa4-4287-11ee-9e09-cbd2f0fc549e.html

Due to the post covid and associated supply change challenges and the delays in other projects there is now a pent-up demand for supplies and workers. That's a reality. If there was a mistake that was made by the Pegulas it is that they should have had their plans ready sooner, even before the negotiations were done with the government entities. As I said in the prior post, rising costs can directly be attributable to issues related to the supply and demand of raw products and labor. (The Buffalo News article highlights that point.)

[PerreaultForever]

14 hours ago, Pimlach said:

What gets me is they are still getting bids from suppliers and contractors.   All of that should have been done BEFORE they asked for and got approval for taxpayer money.  The estimates should have been completed and reviewed.   They need fixed price estimates that are good for several years.  

If the U.S. is anything like Canada (and I think it is) that's really hard to do these days. There are huge labour shortages and all the power is in the hands of contractors. They all have more work than they can handle and quotes they give have short time limits. It's not how it used to be. There just isn't enough competition in the workplace right now. You're kind of at the mercy of the contractors and suppliers. 

[Pimlach]

22 minutes ago, PerreaultForever said:

If the U.S. is anything like Canada (and I think it is) that's really hard to do these days. There are huge labour shortages and all the power is in the hands of contractors. They all have more work than they can handle and quotes they give have short time limits. It's not how it used to be. There just isn't enough competition in the workplace right now. You're kind of at the mercy of the contractors and suppliers. 

That may be true and yet another "sign of the times".  

I am well versed in government contracts - which includes how funding is obtained and budgeted, how proposals are prepared, how proposals are evaluated, what contractors must disclose about their cost estimates, and how risk is evaluated.  In fact, I am an expert at it.  

The commercial world is different is some significant ways.  Two big differences are that contractors can ask for any fee they want and the disclosure of cost estimating details are not as stringent.  Still, this level of cost overrun this early in the process is concerning.   

[JohnC]

35 minutes ago, Pimlach said:

That may be true and yet another "sign of the times".  

I am well versed in government contracts - which includes how funding is obtained and budgeted, how proposals are prepared, how proposals are evaluated, what contractors must disclose about their cost estimates, and how risk is evaluated.  In fact, I am an expert at it.  

The commercial world is different is some significant ways.  Two big differences are that contractors can ask for any fee they want and the disclosure of cost estimating details are not as stringent.  Still, this level of cost overrun this early in the process is concerning.   

On large bidded defense contracts and computer updating in agencies usually go over budget. It is the norm and not the exception. The stunning surprise is not when they go over budget but when they stick to it. (I'm referring to large contracts and not small contracts.)

[Pimlach]

42 minutes ago, JohnC said:

https://buffalonews.com/business/local/bills-stadium-ralph-wilson-park-amazon-impact-construction/article_4a2b4fa4-4287-11ee-9e09-cbd2f0fc549e.html

Due to the post covid and associated supply change challenges and the delays in other projects there is now a pent-up demand for supplies and workers. That's a reality. If there was a mistake that was made by the Pegulas it is that they should have had their plans ready sooner, even before the negotiations were done with the government entities. As I said in the prior post, rising costs can directly be attributable to issues related to the supply and demand of raw products and labor. (The Buffalo News article highlights that point.)

Labor and material should be one of the first things that you verify and secure when entering into a contract like this, one with a critical schedule.  Covid is getting to be an overused excuse but ok, no surprise there - just say the magic words "supply chain".  

The people managing this for Pegula are off to a terrible start, could it be why there was a change at the top?  

 

 

 

[PerreaultForever]

1 hour ago, Pimlach said:

That may be true and yet another "sign of the times".  

I am well versed in government contracts - which includes how funding is obtained and budgeted, how proposals are prepared, how proposals are evaluated, what contractors must disclose about their cost estimates, and how risk is evaluated.  In fact, I am an expert at it.  

The commercial world is different is some significant ways.  Two big differences are that contractors can ask for any fee they want and the disclosure of cost estimating details are not as stringent.  Still, this level of cost overrun this early in the process is concerning.   

It is, and although it is definitely a "sign of the times" there could of course be incompetence in there as well. Hard to say. 

It's kind of just the way it is now though. I used to work for Hydro and 20 plus years ago contractors would make bids on the construction of new sub stations (that sort of thing) and there was a ton of competition and these guys all cut to the core and were desperately trying to land the contract. Last few years I worked there (4 years ago plus) we had less bids and many of them didn't seem to care if they won or not. They all had busy schedules. There's definitely a shortage, and the power dynamics have shifted in their favour so I think if they come in and say "sorry, price of the lumber/concrete/steel/whatever went up so it's now x dollars" there's not much that can be done. 

[Pimlach]

46 minutes ago, JohnC said:

On large bidded defense contracts and computer updating in agencies usually go over budget. It is the norm and not the exception. The stunning surprise is not when they go over budget but when they stick to it. (I'm referring to large contracts and not small contracts.)

The bold I can agree with as being mostly is true.  Which is why the contracts are set up to penalize and/or incentivize the contractors - the cost overruns typically will first come out of the defense contractors fee (profits).  Once all the contractor fee is expired, and the governments funding reserve is expired, the contract goes to congress for evaluation - it either gets killed or they find more money by taking funds from another contract  or even a future contract - the government has to evaluate their needs and  the risk of proceeding or not.

Sometimes these defense programs overrun because they are developing a new capability, utilizing advanced technology, and they run into unknown and unforeseen problems, sometimes the requirements are just too hard to achieve in the given schedule.  That is a lot different than this situation.  The stadium build is extremely complex to manage but they are not doing anything that hasn't been done many times before.  

Edited September 4, 2023 by Pimlach

[That Aud Smell]

4 hours ago, Pimlach said:

True to a point but the bids have to worth something.  The contract should be "fixed price" and the General Contractors should have already gotten bids from their subs.  When the major contractors are selected the proposals should be reviewed for truth in pricing - the pricing should have some sort of test for reasonableness and their should be a cash reserve for risk and to cover changes.  

All of that is possible in theory. Sounds like the Pegulas could have used you during negotiations.

[SwampD]

On 9/1/2023 at 9:40 PM, Porous Five Hole said:

 

Hope she invested wisely.

[Taro T]

20 hours ago, Pimlach said:

What gets me is they are still getting bids from suppliers and contractors.   All of that should have been done BEFORE they asked for and got approval for taxpayer money.  The estimates should have been completed and reviewed.   They need fixed price estimates that are good for several years.  

What's surprising is that they don't seem to have taken out any futures contracts to hedge against inflation.  Yes, that adds some up front costs, but it also insures that if prices do shoot up that you can exercise your options on those particular commodities / proxy for the commodities and still have the overall project come in on budget.

[nfreeman]

4 hours ago, Taro T said:

What's surprising is that they don't seem to have taken out any futures contracts to hedge against inflation.  Yes, that adds some up front costs, but it also insures that if prices do shoot up that you can exercise your options on those particular commodities / proxy for the commodities and still have the overall project come in on budget.

These cost overruns aren't due to hedge-able causes.

[Pimlach]

13 hours ago, Taro T said:

What's surprising is that they don't seem to have taken out any futures contracts to hedge against inflation.  Yes, that adds some up front costs, but it also insures that if prices do shoot up that you can exercise your options on those particular commodities / proxy for the commodities and still have the overall project come in on budget.

I am not sure how that works in the  commercial world but in government contracts, when they ask contractors to bid a project that takes several years to perform, you include escalation (inflation) and cost of money, over that period.  When things like labor rates go up the Contractor's must manage to that, the labor rate changes from year to year are not an opener for the contract.  If the contractors labor rates increase he pays it out of his own reserve or from his fee (profit).  He flows similar contracts to his major sub-tier suppliers to protect his estimates.  Unless the scope of the contract changes (i.e. new requirements), the price established at contract award is the price.  

From the BN article, it appears they did not have all the bids in and all the suppliers selected and locked into a contract, so the numbers they started with for the project were incomplete and based on projections that are inaccurate.   We could see more significant cost growth apparently.  

An example of good project management in this century:   In St Louis, the current Busch stadium was being built literally right next door to the old one.  The last season in the old stadium you could literally see the two stadiums sitting side by side.   But they had to hold off on finishing the last sections of the new stadium until the old one was torn down.  Why?  Because the new structure was to share a small amount of the same ground that the old one was on.  So, they had to wait until their last season ended (including playoffs) and then finish the last part in the late fall and winter to meet the opening day schedule.  They put finishing touches on inside of those last sections at the start of the first season.  The new stadium opened on time and then they spent the next few years taking down the old one and building a beautiful Ballpark Village complex on the site of the old stadium, it is literally across just one street from the new stadium.  Talk about good schedule management and project management skills!  

https://www.sportsbusinessjournal.com/en/Journal/Issues/2005/10/03/Facilities/Stadiums-Overlap-Builds-Time-Pressure-Into-Schedule

Today we are quick to point to inflation, labor issues, supply chain issues, but all those things had be to accounted for in past decades too.