Have you noticed all the advertisements on television now start with, "In these difficult economic times..", and then go on to explain how you need to give your money to them despite the horrible and catastrophic economy. I've yet to be convinced by any of these ads, but they do get me thinking about what construction companies should do in, "these difficult economic times".
So Mr. or Mrs. Company Owner looks at his or her backlog of work and after some very elementary arithmetic realizes that there will not be enough money to pay the workforce, cover overhead, pay for the corporate jet and vacations to Tahiti, and still leave a sizable profit/bonus. Whatever should they do? I've got it! Start hacking employees.
Like a machete blazing a path through the Amazon, company owners have dropped staff like Terrell Owens drops passes across the middle. The question however, is if this is the best strategy. Perhaps it is, and when they start hiring again, they will have a fresh new group that may be better than the one previously in place.
Perhaps surprisingly however, this is not intended to be a sarcastic rant about the greediness of organizational convention or tendency of Terrell Owens to drop passes(I just saw an opportunity and took it). Rather, I'd like to look a bit more seriously about how a particular project may tackle (no pun intended) some very tight margins.
An ex-coworker of mine who survived a ruthless round of lay-offs at the company for whom I used to work, was talking about how his general contracting company is now having to hard bid jobs that would, under normal conditions, be negotiated. Evidently this hard bid, lump sum, contract presents more risk than a negotiated contract (I'm actually a bit skeptical of this, but let's assume it does). He is faced with the necessity to submit every nickel and dime of extra work to the owner as a request for change order.
To say the least, owner's do not like being nickel and dimed. In fact, getting a reputation for being a nickel and dime contractor can leave you literally picking up nickels and dimes from the sidewalk to stay alive. However, on small projects with a razor thin profit margin, nickels and dimes can turn into dollars that could erase some errors that were not covered by the non-existent contingency line. Is this worth sacrificing your reputation to maintain profitability in a time when survival is the main objective?
My opinion is yes. The owner may be upset in the short term with the small annoying change orders, but I believe this will be soon forgotten and the end result of cost, time, quality, and customer service will be the deciding factor in how your reputation is determined. So go ahead, throw out those nickel and dimes like you're a kid at the mall fountain. You won't even need to make a wish.
Posts
No comments:
Post a Comment