Nemo takes a deep dive into the temple construction gravy train

[drumdude]

https://www.youtube.com/watch?v=u0LdjTZW93U

Big surprise, temple construction costs are at least 5 times more expensive than comparable construction projects. And most contractor companies are owned by the families of prominent Mormon leaders.

Tithing dollars -> Temple construction -> Mormon elite' bank accounts.

[Everybody Wang Chung]

This is just the tip of the iceberg. There is a big reason the Church will never be transparent with its finances.

[Dr Moore]

5 times? Compared to what? The Wall Street Journal had a piece recently with temple numbers. Didn’t look that far off of high end residential costs frankly.

If not done by member-owned construction companies, the money would be spent anyway and someone else would make their fair profit. So who cares who earned the money? I’ve heard church construction margins are lower than average because member owned businesses give discounts, like the business giving back price in a sort of tithing so to speak.

[Markk]

I think one needs to be careful on this subject. I am almost certain that these types of projects do not go out to competitive bidding, as most standard projects do. It would be foolish in my opinion to do so by the church, if they want to retain the quality of their projects and reduce CM and QC overhead costs. My guess is they have a pool of GC's that are pre-qualified and then bid between themselves. Having a trusted GC, that is getting rich by volume is a much better option, than just going with low bid or best value with an ever-changing group of GCs...especially given the reality these projects are global.

Nemo did not get into how the bid process works, which really needs to be discussed. Are the projects bid out as lump sum or maybe a cost-plus type of arraignment, which is my guess. With the former, you advertise the project, post the bid instructions and qualifications, then hope for the best after probably months of vetting GC's you know nothing about. And, in let's say Peru, as an example, I would much rather have someone I know and trust managing and building, instead of rolling the dice and spending the added internal management costs at long distance. My guess is that these projects are probably bid out as a Cost Plus or Guaranteed Maximum, or G-max. My guess is that the GC is making about 8 to maybe, and I say maybe 14 or 15 % profit and overhead. Which on a 10-million-dollar project is tight, but and 10, 20-million-dollar projects that is really good money.

The church knows what they want, and I know what it will cost, and I would bet the GC's are secure in what profit they will make...and while they won't get rich on any single project, they will get very rich on multiple projects. The church does not have to scrimp at all here, in regard to risk management it is smart business. In fact, it is cheap insurance.

I am a manager in a specialized niche in Construction, Historic Restoration/Preservation, and two or three thousand a square foot is not out of the question at all. I've seen projects lose money at those percentages. You get what you pay for, and risk management is everything in these types of high-end projects.

I think the bigger issue is why are they building these Temples when the membership is in decline.

[drumdude]

One YouTube comment made what I feel is a good point: if the goal is to save as many dead people as possible then that can be more effectively accomplished in the thousands of existing ward and stake buildings.

It’s unthinkable that the Jesus of the New Testament would require a million dollar chandelier in the building to make the ordinances stick. If anything he would advocate for the exact opposite.

[Moksha]

Oh yeah? Well, what if God wants the General Authorities' families to grow rich off the tithing gravy train?

We already know that God rewards the most valiant from the Heaven War, so any analogies of fleecing pigeons in a barrel are not well taken.

[Dr. Shades]

If not done by member-owned construction companies, the money would be spent anyway and someone else would make their fair profit. So who cares who earned the money?

I think the point is that temples are built specifically so that member-owned construction companies can rake in excessive profits. If not done by member-owned companies, as you say, then the church wouldn't bother building so many temples in the first place.

[Dwight]

It's a shame French Toast probably isn't lurking to see that we aren't blind Nemo fans. I think that there could be something here to look at and evaluate, but you need someone with some knowledge to really dig in and some of this is private and/or just not going to be revealed to the likes of Nemo. I think salaries to employees the church may more see a direct "and 10% will come back to us" than on work done by companies.

I know the some subcontractors definitely get pressured with taking low margins, but it's for the church and the promise of more work that is steady. I was talking with someone about how the Draper temple got shut down not too long into use cause the windows were leaking. They had left the church, but were family with one of the subcontractors fixing the windows. The subcontractors were getting paid peanuts and pressure that it was for the temple. Who knows that the GC was charging the church to fix it, or if it fell under some sort of warranty as the problem was with the original installation of the windows.

The church also does pride itself in unique/expensive materials. Sure the chandeliers may be gaudy, and it may be excessive to get marble or granite from some far off place but that is probably not going into someone connected's pocket directly. I'm guessing there may be some sort of standard margin to sourcing materials and such, so yes 10% of $1000 is more than 10% of $100, but it may be fairly standard.

[Fence Sitter]

I think the bigger issue is why are they building these Temples when the membership is in decline.

I think the church believes temples are the key to keeping active members paying tithing.

[Markk]

I know the some subcontractors definitely get pressured with taking low margins, but it's for the church and the promise of more work that is steady. I was talking with someone about how the Draper temple got shut down not too long into use cause the windows were leaking. They had left the church, but were family with one of the subcontractors fixing the windows. The subcontractors were getting paid peanuts and pressure that it was for the temple. Who knows that the GC was charging the church to fix it, or if it fell under some sort of warranty as the problem was with the original installation of the windows.

My guess is the church is not going to allow a GC to just bid out the subs, I would bet on it. So, my guess is that GC prequalifies X number of subs for each trade, then by committee the church CM team choses each sub via best value and not necessarily low bid. The GC, in turn will receive a direct fee, say 10-15% to manage the sub, on top of their fee as the GC, which would include general conditions and site services. I have done several projects this way and it is a very safe way of making money, but not a huge profit but a very fair profit.

The advantage the owner has is that they know what the GC is going to make, everything is transparent, and it almost reduces the chance for change order overruns and claims by the GC and their subs.

I didn't research the GC's Nemo mentioned, maybe I will tonight, but I would be curious to know whether they self-perform say the concrete and masonry, and sub everything else out, or sub everything out. My guess is they do not self-perform too much if anything, especially in foreign countries, but I could be wrong.

Also, some, if not most countries mandate you use local labor, or you won't get permits. I have a friend that helps manage projects in Cuba, and they have to use almost exclusively Cuban labor.