Renovation Costs Remain Questionable For 2022

 As seen in Golf Business July/August 2021 

By Steve Eubanks:

Rising costs are alarming everyone in the industry. With labor, materials and energy shooting upward at staggering rates, a lot of operators who are in the middle of renovation or redesign projects are panicked that price overruns might ruin their budgets.

But at least one expert in the field says those operators have nothing to fear in the short term. It’s the people who put projects off until 2022 who should be concerned.

“Right now, all the pricing is locked in (for 2021) except for the occasional add-on,” said noted architect Bill Bergin, who has eight redesign and renovation projects under construction from Wisconsin to the Florida panhandle. “What will be affected is 2022. I have a job that I’m bidding in Brentwood (Tennessee, just outside Nashville) and my general manager was asking me last week if I was ready to bid for the job. I told him, not quite, that I had a few more things to button up, but that I wouldn’t bid it now even if I was ready because I don’t know what pricing is going to be. I want to wait and let things settle out.” 

The problem is people’s natural tendency to extrapolate. It is human nature to assume that the current economic condition will continue into an infinite future. Good times or bad, people assume the current trends will always continue. That is how boom-time bubbles form. It is also how, when inflation is growing at 4.2%, people project doomsday when forecasting 2022 and beyond. 

Bergin had been around the block enough times to know that prices won’t rise forever. “I can’t believe that things are going to keep rocketing up,” he said. “It has never happened before. Historically, there is a leveling off at some point. But also, right now, contractors are very busy. If I wait a little bit (to submit my bids), some projects are going to be put on hold because of costs.” 

Contractors with work underway are the ones getting squeezed, especially as supply shortages leave them scrambling for materials. “We had to make an adjustment last week on a pipe size,” Bergin said. “We’re locked in with our contractor, but he couldn’t get a specific pipe size and the new pipe was a lot more.

“We also can’t get mix to one of our jobs, not because there isn’t any mix out there in the market, but because we can’t get trucks (and drivers) to get our mix to us. There’s definitely stuff going on and we’re all adjusting. Fortunately, everybody is very understanding because everybody in the business is going through the same thing right now.

“Also, we’re having some trouble with turnover in our crews because there is so much work.” 

But golf renovation is a little different. Someone who specializes in bunker redesign and construction is not likely to walk away tomorrow and become a painter.

“A shaper is not leaving to go work at Amazon,” Bergin said. “There is a specific skill set that’s pretty narrow in our business. We don’t lose people to go work in factories.”

Course operators are not so lucky. Once that bunker is built or that fairway is shaped, finished and seeded, somebody has to maintain it. And you might well lose that person to the local Amazon warehouse.  

“Clubs are having a lot more trouble with labor than construction people,” Bergin said. “My superintendents are having a lot of trouble getting people to work. It’s a tough labor market. So, yeah, your employees are very important to you right now.”