The Website
OMBA Property Group now has an official website. Check it out at www.OMBAPropertyGroup.com.
Building In-House… (Again)
We arrived at this conclusion only after I had written the opposite to you in print. Deanne and I would rather change our minds in public than be consistent at a cost of ₱2.7 million per building.
In February I told you we would bring in an outside contractor to speed up our building program. We have since reversed that decision, and I owe you the reasoning.
The idea certainly had some merit. An experienced contractor should build faster than a young company. It felt right.
Then we did what we should have done first (a lesson in itself). We took the contractor's quote for our next project and rebuilt it line by line. The same building (OMBA Three) came out roughly a third cheaper, with the single biggest line being the contractor's margin at about 35 percent of the saving. The rest came from supplier relationships built over time.
What a Contractor Actually Sells
So, it is worth asking what a contractor actually sells. Those are two things: (1) the knowledge of how to build a particular building, and (2) the labor and expertise to build it.
On a one-off project, the first is worth every peso. For example, if you're building a house in Manila and have never done it, then somebody has to figure the puzzle out.
But we build the same building every time, and we have standardized our processes. By the third copy, the figuring out is basically done, and paying a contractor's margin is paying rent on knowledge (and relationships) we already own.
Plus, a contractor moves on their schedule. In May that would’ve meant sitting on capital.
Our rule is now simple. A real estate company should not be in the construction business, unless it can standardize its build. Once it can, it should keep the contractor's margin for itself.
We can, and we will.
One-Way Doors and Two-Way Doors
Jeff Bezos sorts decisions into two kinds. One-way doors cannot be walked back, so they deserve slow and careful thought. Two-way doors can, so they deserve a quick decision and a quick reversal if facts turn out differently.
A haircut is a two-way door. A tattoo is a one-way door.
Telling your family over dinner that you are moving to Manila for a job is a two-way door, however it feels at the table. Selling the house to do it is the one-way door. Trouble starts when we mistake the announcement for the sale.
The contractor decision looked like a one-way door. I had announced it in print, and walking it back meant telling you I had been wrong. But the decision still lived only on paper. The only thing holding the door shut would have been pride.
Had we proceeded anyway, it would have become a one-way door for real. A signed contract and a started build cannot be unwound, and we would have paid the margin on every floor to avoid writing to you.
And we will be wrong again. What we are building is a company that finds out sooner. Two-way doors are for walking through, and we intend to keep walking.
The SEC has released our amended Articles of Incorporation. If this is relevant to you, please reach out to me or JJ.
Dan Dima-ala
Founder & President
OMBA Property Group, Inc.
DDG Properties, Inc.
📧 [email protected]
📞 +63 939 913 9996
🌐 www.OMBAPropertyGroup.com
