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TR U M P STR A TEGI ES FO R R E A L ESTA TE

was too low, the GC’s profit disintegrates. If it virtually disappears,
the GC may either run into financial trouble or elect not to finish
the job. This will undoubtedly result in considerable aggravation, if
not litigation, for you. The GC may come back to you and say some-
thing like: “Look, I projected my steel to cost $20,000, but steel
prices went up and it came in at $31,000.” Ordinarily, you might
want to reply, “Well, that’s your problem, not mine.” But if you have
a GC in financial trouble, you’re not going to get the job finished on
time or with the same level of craftsmanship you expect. He’s going
to figure out some way to control his losses.
To avoid major pitfalls, Trump considers a CM as the better way
to go. The CM usually has good contacts with all the trades and usu-
ally knows the best ones to do most of the work. Therefore, he might
say to Trump, “I have three electrical contractors that I’ve worked
with before and are qualified to bid on the electrical work for the
building.” If Trump gives the CM the go ahead, the acceptable con-
tractors submit their bids. The CM may recommend which bid to ac-
cept, and it doesn’t necessarily have to be the lowest one. The CM
does this with all the trades, so he creates a trade breakdown (i.e., a
spreadsheet listing all of the trades that will perform each aspect of
work on the building). Then Trump will go through all these trades
and will either, “approve, or disapprove” often saying, “Yes, I’ve used
this guy before, he’s good.” Or, Trump may personally get involved,
as he usually does, and speak to the contractors directly and negoti-
ate the pricing. Once the trades are in place, the CM is responsible
for seeing that everything goes according to schedule. The role of
the CM is the same regardless of the size of the building or the cost
of construction or renovation.
It should be noted that a GC may be hired on a “cost plus” basis.
That means that the GC will solicit bids from contractors, negotiate
them for you, and supervise the construction. You will sign all of the
contacts with the various trades and will be responsible for all pay-

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