The Contractor's Job Is to Protect the Client!

By Ted Garrison

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? How long would you keep your CPA if he or she 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 generally 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 reality, this is the customer's fault.

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. The 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' resistance to change and their misunderstanding about what best value means.

For example, ABC of Pennsylvania is happy that it killed the Commonwealth of Pennsylvania's best value program. Unfortunately, they threw 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 and all contractors need 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 of best value, 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.

Ted Garrison, author of Strategic Planning for Contractors, works with businesses in the construction industry. He can be reached at Growing@TedGarrison.com. For further information see his web page at www.TedGarrison.com.