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| NEW CONSTRUCTION STRATEGIES ARTICLES |
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| Southeast Construction Magazine:
August 2006 Issue |
The Contractor's Job Is
To Protect The Client
By Ted Garrison |
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The primary purpose of any
business is to protect its clients. Think about it. How long would you keep
your attorney if she weren’t protecting you? How long would you keep your
financial planner if he weren’t protecting you? So how long should a client
keep its contractor if the contractor isn’t protecting him?
Unfortunately, the low-bid environment does just the opposite. It places the
contractor and client in an adversarial position. This has resulted in increased
litigation, lower quality, excessive change orders and general unhappy customers.
The worst result is the impact on construction labor. When contractors focus
on just lowering their price, they often think they must keep wages down.
This is a mistake. This results in lower quality people for two reasons. The
low wages don’t attract the best people and when companies don’t invest in
their employees’ education they fail to perform at peak performance.
In the low-bid environment, the contractor is required to follow the plans
and specifications. This encourages contractors to place lower-qualified people
on the project, because highly skilled workers would want to do things the
best way instead of merely following directions. Also, in this environment,
when things don’t work, it’s the customer’s problem. When the customer issues
revised directions the contractor has a basis for a change order. Therefore,
the contractor doesn’t want its workers simply taking the initiative to fix
the problem because it would eliminate the change order and/or place the contractor
at risk for not following the plans and specifications.
The low-bid process focuses totally on price. In the best-value approach,
both price and performance are considered. In this approach, the customer
pays the right price to do it right. The right number is provided up front,
eliminating the need for change orders. The high-performing contractor is
then in a position to protect the client. The contractor and workers can look
ahead and determine potential problems and do what is necessary to eliminate
them.
A proper best-valued program makes its selection in a way that is fair to
all contractors as well as the customer. They only organization that suffers
under the best value approach is the low-performing contractor. However, isn’t
that the purpose? When the construction industry promotes best value, it’s
protecting its customers from low-performing contractors.
The challenge is to overcome peoples’ resistant to change and their misunderstanding
about what best value means.
For example, ABC of Pennsylvania is happy that they killed the Commonwealth
of Pennsylvania’s best value program. Unfortunately, they through out the
baby with the bath water. I’m not suggesting that the Commonwealth’s plan
didn’t have flaws or provisions that should have been removed. However to
throw out the concept is the wrong approach.
The industry needs to use all the tools available to deliver greater value
to the customer. After all, isn’t that our job? When we fight concepts that
work in the owner’s behalf, we say we don’t care about them—and that we only
care about ourselves.
In a speech at the Construction Management Association of America’s leadership
conference in Philadelphia before the court’s decision, James Creedon, Secretary
of the Commonwealth of Pennsylvania Department of General Services, reported
that the use of best value had reduced change orders from 36 percent to 6
percent.
Obviously, the process must be doing something right. Instead of fighting
the concept, contractors must find ways to create a fair and value-driven
system for the owner, the contractor and employees.
If contractors want to be considered as professionals, then they must protect
their clients like true professionals. Giving the customer the greatest value
for his money is the right answer.
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