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June 26, 2005
Construction Contracting is a Tennis Match!
In the 1960's the name of the game for construction firms was to "get it done", deliver the project and then hash out the financial issues with the client. Contractors were comfortable doing this. Clients understood the ethic and appreciated the extra work this involved.
Since that time, owners have slowly changed but, change they have. They view construction firms as a resource which is to be managed. Owners understand more about the construction process than ever before. They involve themselves deeper in projects. It is their right; however, if they manage the details closer, we should expect a responsive and reliable partner. If not, we should be reasonably expected to hold them accountable.
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Matt Stevens is a management consultant who works only with construction contractors. He has performed training and business consultation for the contracting community since 1994. Matt can be reached at mstevens@stevensci.com.
Search Terms: Managing a Construction Firm, Profit Strateg, Estimating, Project Manage, Accounting, Bidding, Pricing, Labor Rates, People Develiopment, Employee Development, Management Style,industry trends
Posted by Matt Stevens at June 26, 2005 12:40 PM
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Comments
This problem is continuing to escalate, especially for the lower tier subcontractors. I'm interested in ways that we can overcome these issues.
Some suggestions might include:
1. Standardizing All Construction Contracts that provide a fair and equal playing field for all participants.
2. Establishment of "Site Logistics Planning" as part of the solicitation phase. The best planners would be evaluated on a weighted scale of price,technical knowledge, and field logistics strategies that affect schedule.
3. Standardize Specifications
4. Tie the design team into the construction planning phase with incentive to "value - design", with contractor input.
I'd like to hear what others think about these and other strategies.
Posted by: Richard F. Reznicek at July 18, 2005 10:26 AM
Matt: I enjoyed reading about the advent of CM degrees and changes from the 60's, however, I think the contractors have some blame also. A watershed was the book entitled Contractors Guide to Change Orders by Andy Civitello published about 20 years ago and still in print. In my opinion, it changed everything. Most contractors have a copy and use it. I came up thru the field starting in 1973 and now act as an owner's rep. I can "feel" a contractor that is a change order artist and call them on it early on, especially on hard bid jobs where I couldn't screen them out. A knowledgeable owner can make a GC like this feel very small very quickly. You hit the problem on the head, we have very few "knowledgeable" owners with field experience, thus GC's get away with things I would have never agreed to. Then, they just keep doing it.
Posted by: David Bentley at July 18, 2005 12:21 PM
While I tend to agree with you, as long as we have accountants (CFO's) involved in the process, low bid will not go away, even in the private sector. Yes, DB is making in roads but it will never take over completely. I prefer just bidding fee and general conditions, getting the GC on board and help select subs. But.....a lot of CFO's don't like that. Feel it is open to fraud also.
Posted by: David Bentley at July 18, 2005 02:48 PM