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The reason that high performance is so important is very simple: High performing contractors make higher profits! This claim is supported by a Harvard Business School-funded research project (Corporate Culture and Performance by Kotter and Heskett) that discovered that businesses that focus on meeting the needs of customers, employees and owners while developing leadership through the company, outperform the competition in four critical areas:
* Revenues increase 4 times faster.
* Job creation is 7 times faster.
* Owner equity grows 12 times faster.
* Profit performance is 750 times higher.
The question is what is high performance© Most contractors claim they provide high performance; however, general clients have a different opinion. Unfortunately for the contractor the only opinion that matters is the client's.
The problem starts with quality, which I declare consists of three essential elements. The first is the bricks and mortar and most contractors do a reasonable job in that area.
Service and relationships are the other two elements that make up quality. In these two areas there is a substantial difference between contractors. However, the contractors that master these two areas differentiate their companies from their competitors and experience extraordinary benefits.
I have heard statements that illustrate the importance of service and relationship. One common statement is, "They are the best contractor in town, yet if they improved their close-out procedures and communication they could substantially improve their performance." The highest-performing contractors listen to their clients.
A key to this concept is better understanding the concept of client. I prefer the definition of a client as "someone under the protection of." How long would you keep your attorney or financial planner if you didn't think they were protecting you© Then how long should a construction client keep a contractor if he's not protecting him© Yet, how many construction clients think their contractor is out to protect them©
Instead of protecting the client, contractors often find themselves in conflict with them. This serves no one. And yes, I understand that many clients create many of the conflicts. However, instead of protecting the client from himself the contractor retaliates in an effort to level the playing field.
The confrontational approach has a fundamental flaw. There is no such thing as a successful win-lose situatio. The reason is the loser will sabotage the process until it finally ends up in a lose-lose situation. Therefore, the only sustainable relationship is a win-win-win environment that includes, customers, employees and construction company owners.
Cooperation is the spirit of the "Best Value Procurement Approach." This approach works because it delivers the greatest value to the client, doesn't exploit the workers, and rewards the contractor for high performance. I realize that some customers will insist on hammering on price with the aim of getting something for nothing.
The alternative is for contractors to seek out clients who understand value. Contractors that do that are rewarded with higher profits and growth and have happier clients.
Dr. Kashiwagi, in his book Best Value Procurement states, "Quality contractors earn more profit because they are more efficient, are not price based, perform work properly the first time, and are requested by [clients] who want work done right."
I don't want to mislead you; this approach isn't easy. It takes hard work, but it is certainly better than the alternative of competing on price.
The choice is yours, but when you find clients that realize that you're entitled to make a fair profit for the value delivered and you treat them the way they want to be treated, your business will soar to new levels.
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