Awkward Dance 1: Low-price bidding
　　Low-price bidding has always been a tightening curse for construction companies. If you don't bid low, you won't win the bid; if you bid low, you'll lose money.
　　Although we all know that low-price bidding means “starving peers, exhausting yourself, and screwing the client”, as long as you are in this game rule of low-price bidding, there is no lowest, only lower.
　　Secondly, although labor costs and material prices have been rising in recent years, the engineering quotas have not been updated, and what's more frustrating is that the winning bid prices are actually getting lower and lower. Under such circumstances, it would be strange to be able to produce excellent projects, don't you think?
　　Awkward Dance 2: The pain of replacing business tax with VAT
　　Speaking of replacing business tax with VAT, all engineering construction units across the country, whether bosses, financial personnel, especially affiliated units (although not allowed, but actually exist in large numbers), are complaining bitterly, basically a chorus of criticism.
　　Originally, the profit margin of the engineering industry was already very low. Being able to reach a net profit of 10 points per project would be a blessing, and it also had to ensure that all project payments could be fully recovered within 2-3 years. Later, the business tax was replaced by VAT, supposedly to reduce the tax burden on enterprises, but what construction companies faced was actually a more troublesome situation.
　　Because the fierce competition in this industry has caused many projects to be won at low prices or even below cost, meaning basically no profit or even a loss from the start. Apart from improper methods like cutting corners, most companies basically adopt the method of buying materials without invoices. Go to any building materials market or manufacturer, and there is one price with an invoice and another without. Under the previous tax system, many engineering units did not issue invoices. Anyway, the tax was just over 3 points, fixed, so of course you would save costs where you could. 　　After the tax reform, although VAT can be deducted, if you want to get material invoices for deduction when buying materials, you will face material costs rising by 6 points or even more. In addition, the tax burden has not been reduced much, and it has become more troublesome (requiring the unity of the three flows).
　　Secondly, the replacement of business tax with VAT has had a great impact on the construction management and profit margins of contractors, especially subcontractors, but the pattern of project subcontracting or even full subcontracting will still be difficult to change for a long time. Since the budget cost includes 11% VAT, the pressure on contractors is not particularly great, because they can shift the burden to subcontractors, asking subcontractors to provide relevant deduction invoices. The simplified levy rate of 3% for old projects can still be easily handled. But for subcontractors, the replacement of business tax with VAT can be said to be “the last straw that breaks the camel's back”.
　　For example, if your construction site needs to buy some sand temporarily, and a farmer on the roadside sells sand from a tractor, where would the invoice come from? Moreover, invoices for catering and other expenses are not allowed to be booked beyond a certain proportion, which makes many people in the engineering industry dissatisfied. Because in the engineering industry, you might not have projects for several years, but during those years it's impossible not to have preliminary operating expenses, impossible not to have various expenditures, such as the cost of participating in bidding for a general project, which is tens of thousands. If you keep bidding and never win, just this expense would be huge. But the tax authorities say: you have no project input, why do you have so many expenses? No, not allowed to book!
　　Then we certainly have complaints: it's my company's money that I earned, how I spend it is my business, why don't you let me count it as cost? I spent the money, you don't let me include it as cost, where is the justice? And even if I didn't eat at a restaurant, just got an invoice, but the invoice was issued by the restaurant, and the restaurant has already paid tax, why don't you allow me to book it? I spent money too!
　　After the replacement of business tax with VAT, subcontractors face huge challenges, from a tax rate of basically zero before to 6% or even 8% now; from being able to operate just one company before to now needing to operate labor service companies, machinery leasing companies, material companies, etc., the daily management and operation costs required are naturally not what they used to be.
　　So the engineering industry has now fallen into a dilemma. If you follow the tax rules completely, you're basically working for nothing; if you don't follow the rules, it's illegal and criminal, and you could go to jail. Where do you want us to go to reason?
　　Awkward Dance 3: Illegal subcontracting
　　China's Construction Law, Bidding Law, and Contract Law all explicitly stipulate that the main part of a construction project cannot be subcontracted, and other parts to be subcontracted must be approved by the owner. But that is the ideal state, and in reality it is impossible to achieve.
　　Take a very realistic example. For instance, from the output value and number of employees of some enterprises, one can clearly see the clues. For example, a certain central enterprise had an output value of 1,861.2 billion yuan in 2016, with a total workforce of about 250,000, giving a per capita output value of about 7.4 million yuan. How could such a high per capita output value be achieved without subcontracting?
　　So the long-term existence of illegal subcontracting certainly has its roots. We all know that enterprises with special-grade or first-grade qualifications that can participate in bidding for large projects have advantages in technical management, but they are weak in labor and mechanical equipment resources. Enterprises with lower qualification levels often have the advantage of integrating machinery, equipment, and labor resources. Therefore, the long-term existence of subcontracting of the main project or even the entire project (commonly known as “full subcontracting”) is a very common phenomenon, just packaged in legal forms through various methods. Whenever a quality or safety accident occurs, the investigation always blames illegal subcontracting. Thus, subcontractors, who are heroes behind the scenes and have made great contributions to the country's infrastructure construction, are mocked as “mistresses”.
　　Awkward Dance 4: Excessive subcontracting commissions
　　As mentioned above, illegal subcontracting is inevitable. So as long as there is subcontracting, there will certainly be a division of subcontracting benefits (management fee commissions). And in the face of profit, people's hearts are dark. Some enterprises, in order to seek profit, transfer projects that were already won at low prices with little profit to others, taking a certain percentage as management fee commission, and the management commission is outrageously high, some even reaching a staggering 40%. As for construction costs, project quality, completion acceptance, and other issues, they ignore them completely.
　　Because the management fee extraction ratio is too high, it squeezes the subcontractor's costs, and subcontractors have to use low-priced, inferior materials or make reasonable changes during construction to ensure they don't lose money. The consequence of using inferior materials is another Aokai incident, and the construction unit will also suffer. We all know that cost is often quality. With such high management fee commissions, how can subcontractors produce qualified projects?
　　Some conscientious contractors will “show mercy” on project change payments, while some black-hearted ones do not. Seeing that subcontractors have obtained change payments through their own efforts, they also want to extract management fees. How do you expect subcontractors to survive? This is simply not letting them live!
　　Awkward Dance 5: Material prices rise, but no price adjustment
　　As we all know, material costs in construction projects usually account for a relatively large proportion of the project cost, about 60% to 70%. Therefore, changes in material unit prices during construction directly determine the “life and death” of construction companies. And we all know that during construction, the prices of materials such as steel, concrete, cement, river sand, and gravel may rise or fall at any time with external conditions. Sometimes, as the client for some projects, they simply ignore this factor and do not allow price adjustments even when material prices rise.
　　For example, in Anhui Province, construction companies jointly petitioned the government for help because material price increases exceeded what they could bear. Since 2007, government-invested projects in Anhui Province have adopted a fixed material price contract model, i.e., fixed material prices. In the construction contracts signed with the client, the “price adjustment” sub-item all stipulates “no adjustment”, which means that once building material prices rise significantly, the winning enterprise will bear huge risks.
　　Awkward Dance 6: Lifelong quality responsibility system
　　Since August 25, 2014, when the Ministry of Housing and Urban-Rural Development issued the “Interim Measures for the Investigation of Lifelong Quality Responsibility of Project Leaders of the Five Responsible Parties in Construction Projects” (hereinafter referred to as the “Measures”) and officially implemented it, many companies have begun to see construction engineers, especially young ones, unwilling to participate in project bidding or serve as project managers, and this situation has begun to affect the normal operation and management of the companies.
　　The lifelong quality responsibility system means bearing lifelong responsibility for the quality of the projects they manage. Once a quality problem occurs in a project, at best you may have your practice qualification certificate revoked and be fined millions of yuan; at worst, you may even face imprisonment.
　　The project manager's compensation in the project is just a normal salary (except for those who take bribes), but they have to bear lifelong responsibility for the entire project quality. That is to say, the compensation they receive from work is not commensurate with the responsibilities they may have to bear and the professional and life risks they may face. This is the so-called: getting paid for selling cabbage but worrying like selling white powder. Who would be willing?
　　Awkward Dance 7: Civilized construction, stricter environmental protection
　　Doing engineering now is completely different from before, regardless of whether it's useful or reasonable. With one word from the owner, the mixing station must be completely enclosed including the powder silo, the project department site must have greening, sports facilities (basketball court, football field), parking spaces, and also be beautiful and elegant, and a series of other extra requirements. These were all insignificant before; as long as the project progressed smoothly and no safety accidents occurred, it was fine.
　　Of course, we are not saying that standardized construction sites are wrong, but the high requirements for standardization now directly cause construction units' costs to increase by 20%-30%, while the winning bid price of the project has not risen accordingly, still the original price. So where does the construction unit's profit come from? Only from the main project construction, you know!
　　Awkward Dance 8: Migrant workers cooking together fined
　　Jiangsu TV's “News 360” reported that migrant workers in Nanjing were fined 150,000 yuan for cooking together, which attracted the attention of construction workers. Since these migrant workers are all from other places and from rural areas, doing physical labor and earning hard-earned money, they are reluctant to eat out in restaurants. To save money, a group of them chose to cook together in a rented house at a standard of 120 yuan/day, but this was punished by the Nanjing Jianye District Market Supervision Bureau with a fine of 155,000 yuan under the name of “operating a canteen without a license”.
　　Many netizens expressed their disagreement, jokingly saying: this kind of law enforcement is colder than winter, and in the future, a whole family won't dare to cook together; there are so many courtyard houses in Sichuan, why don't you go fine them! Although the matter is small, it reflects the difficulties of the construction industry from another perspective. Any department can pinch your neck and make it hard for you to breathe.
　　Awkward Dance 9: Collecting payments, what a painful realization
　　When it comes to collecting payments, for construction companies, whether civil engineering, decoration, pipeline, fire protection, or other construction sub-items, the difficulty in the process is self-evident. Everywhere there are armies of people demanding money shuttling through the cities. At this time, the bosses of various companies are undoubtedly the most miserable. 　　State-owned central enterprises or state-owned construction companies have an easier time than private enterprises. This is because they have sound self-controlled plans and debt clearance management systems, and they have financial support. The survival of private enterprises is in deep water, entirely dependent on the ability of the business owner.