Construction and Renovation Pain in India - Can it be Fixed ?
Nov 28 2019
- Does construction and renovation space interests you ?
- Have you constructed or renovated something or planning to do in future ?
- Have you gone through pain while constructing and renovating?
If any of the above answer is Yes, Then this article is for YOU.
Construction industry is an unorganised sector in India and it is the second largest employer and contributor to economic activity, after agriculture sector. Needless to say, we all become a part of this economic activity multiple times in our life time. This industry can be divided into three mega segments:
- Real Estate — residential and commercial construction
- Infrastructure — includes roads, railways, airport, power, etc.
- Industrial – which comprises refineries, textiles, etc.
Lets dive into real estate sector where majority of us are interested in and gets involved. This sector can be divided into :
- Construction Initiated By Expert (big builders - big residential and commercial projects)
- Construction Initiated By Non Expert (house construction by home owners, office renovation for corporates, school construction by some govt agency, shop or home renovation by any individual). Basically, people like you and me.
Lets get into Non-Expert Initiated Real Estate Sector.
Short Story - Problem Statement
Ram wants to construct a house and Priya wants to renovate her flat. They met lots of contractors, trusted them with their gut feeling (thats how it works :) - right ). Ram thought its all going good until contractor said, that this job was not covered in the budget - BOUNCER - and at the end Ram ends up paying more. And as expected, the project also got delayed by months. Priya ends up having more grey hairs than she has before project because project management sucks and she came to know that same stuff could have been done at better rates.
Question - Can this space be fixed by being an aggregator of trusted professionals where company does due diligence and provide customers with best and trusted contractor ? Can this fix the system ?
Ok lets understand why and why not.
What is the difference between typical mobile purchase or booking a bus from an e-commerce website VS booking a home renovation or construction job ? For the former, the customer engagement time is small. May be max an hour or in a bus may be 12 hours. What happens if the product was not good or you didn't like the bus you travelled in; you return the product or you gave a bad review and you are done. I am NOT saying there is no pain, there will be; but for a very short span of time. In case of construction and renovation if there is a pain then this pain can be for months, may be years in case of jumbo house construction or a commercial building. Also here money losses can be significant. Thats why just providing the best contractor will not help. Agreed ?
Other issues: What if contractor takes the money and does not work properly ? What happens if he delayed the project by months ? What happen if he say in the end that this job was never discussed and will be charged extra ? What about project management at site ? etc.
In North India there is an adage saying- "Shaadi Kar ke dekho ya ghar banaa kar ke dekho" which means " If you want to understand pain, try to organise a marriage or try to build a house".
With our research and understanding we found that just providing trusted construction & renovation professionals (acting as an aggregator), will be half baked solution and miss a real intent to fix this space. I will say it is not half-baked but one-third baked. What is rest two-third ?
1) Can we make all the work specifications, materials, timelines, penalties for delay etc. online and black & white so that customers clearly understand what they are getting at a certain cost. They will know exactly what is going to be done and everything crystal clear. They can compare different contracts (read specification) like they compare mobile phones on any e-commerce website and can make informed and educated decision.
2) Money safety- Most of contractors takes milestone money in advance to start the work. What happen if contractor/architect/renovator runs with your money or does not complete your work or delays your work.
We have tried solving both the above issues with the following proposition :
1) Online Contract- which consist of the extensive forms/questionnaire that take all material and process specifications to do a job. Online contract forces contractors to enter all the work related details, work schedule, quality standard, legal clauses etc. This makes sure that there is no grey areas left, the project becomes trackable by our systems, makes it transparent, makes it comparable. Though we have ZERO tolerance to delays but penalties section make sure that for any project delay, customer is compensated with the money refund.
2) Escrow Type Facility - We act as an escrow account- your safety net of money. You transfer the money to us and we transfer it to contractor only when the milestone is completed as per specification. It means customer is safe all the time and he pays only for what is done.
Does customer have anything to loose here?
Do you think, anything else can be added to ensure absolute trust to this space? Suggestions are welcome !
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