By Graham Crawford
Published June 23, 2008
I would like to offer my comments on the amount of the completion bond mentioned in Andrew Dreschel's Friday column ("Lister hairball ready to be coughed up?", Hamilton Spectator, June 20, 2008) as a retired businessperson who, along with a business partner, built up a management consulting company specializing in strategic planning and leadership development, and with a staff of over 60 people working directly with CEOs in 18 countries, which we sold in 2001 to a company nearly 20 times times our size.
Mr. Joe Mancinelli is quoted saying, "They don't think the $250,000 is enough; we think it's too much," referring to the completion bond related to the development of the site behind the Lister Block.
A few lines later, Mr. Mancinelli says, "It's not a matter of if; we're going ahead for sure." Then, "But the only concern is how big the project will be, not if the project will go forward."
May I offer the following observations and advice to each City Councillor?
A completion bond that is less than 1 percent of the total cost of the contract value of the deal with the City is woefully low. There isn't a businessperson I know who would not take a $250,000 hit in order to close a $25,000,000 to $35,000,000 deal. Not one. Period!
You can get a 1 percent discount from your bank on service fees or credit rates if you know how to ask. In other words, they GIVE it away! I suggest, therefore, that we try something on the order of 10 to 20 percent - Namely, $2,500,000 to $5,000,000.
People tend to think twice about walking away from percentages and dollar amounts such as these.
Finally, given that Mr. Mancinelli is so confident that the building will be built, I would have concluded that he would have been comfortable agreeing to a much higher amount for the bond.
To me, it seems you can't say both things (bond too high / constructing for sure) - at least not convincingly. It's Mr. Mancinelli's business as to what he thinks is fair. It's my personal experience, however, that the amount suggested is absurd.
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