The airport relies upon net income, revenue bonds, FAA grants and passenger facility charges, as well as alternative financing options to meet its business obligations. In 2004, the airport's assets exceed its liabilities by $1.9 billion-a $201 million increase over the previous year.
Our bid for drywall and metal studs on this project was roughly $2 million. Although the work has been done for almost a year, I can't accurately tell you what the final drywall contract will be worth, because change orders and claims have not yet been resolved (it should end up just less than $4 million). If you're wondering how a $2 million job almost doubles, you're on your way to understanding the impact these changes had on the project.
The customerWhen we evaluate a customer, we have to consider who our customer really is contractually. Although our contract for the airport was with a general contractor, I have to evaluate the owner because the owner is in control of the money and my payment from the GC is conditioned upon the owner paying the GC.
As I evaluate the managers of this project, I also must consider how our company was treated as it relates to those things the owner is in direct control of. I believe the owner has direct control over these issues:
- Bid document accuracy and completeness
- Reasonable contract terms and conditions
- Reasonable amount of owner directed changes
- Owners timely processing of change orders
- Owner's timely payment
- Owner's willingness to resolve problems
- Owner's level of decisiveness
As we evaluate this municipality, I will score it on how well it performed each of the above categories. Scoring will be based on a score of one through 10: "One" being very poor and "10" being excellent.
It's important that you understand this story is not meant to be disparaging against the airport or its managers. I'm using them as an example based on my experience and therefore my opinion. Based on my opinion, we can now begin to evaluate this indirect client.
Bid document accuracy: Score = 2
I have to score the owner very low in this regard based on nearly a doubling of our contract amount. There were nearly $2 million dollars in changes. Obviously, the plans were not completed to the owner's satisfaction prior to starting construction. Normally, I would expect somewhere around 10 percent in changes rather than roughly 100 percent.
Reasonable contract terms: Score = 2
Again, I have to give a low score for this category. My reason for this is because of the requirement that we perform the work prior to giving them a price. Although we asked that added work be done (time and material), the managers refused and directed us to proceed without agreeing upon a price, thereby settling cost issues at a much later date.
Owner directed change orders: Score = 1
The reason I scored "very poor" was due to the horrendous amount of owner-directed change order work. You may think that you would love a job that had millions of dollars in change order work. What you may not be considering is the impact all these changes have on the original scope of the work bid. Changes to this degree will absolutely and greatly impact your ability to make your intended profit margin on the original contract price and scope. As well, you will absolutely increase your overhead with this volume of changes.
Owner change order processing: Score = 1
My opinion here is the owner did not provide the manpower needed to expedite the change order process. This resulted in us having to wait long periods of time for change orders for work we paid for and therefore financed for the owners. We could not bill for added work until we received a change order.
Owners' timely payment: Score = 2
Although the managers paid the bill timely, large change orders were left unpaid waiting for review or submission. This is a subcontractor killer but a great way to help finance a project.
Owners' willingness to resolve problems: Score = 2
The managers, as well as the local dispute resolution board, in my opinion, did not display any advocacy towards subcontractors. It appears the managers are understaffed and therefore not concerned about the financial welfare of the subcontractors working on site, based on how they dealt with change order processing and scheduling.
Owners' decisiveness: Score = 2
If I were to score the managers on its ability to change or add work, I would score them a "10." However, decisiveness, as it relates to problem solving from a subcontractors perspective, I have to score them low.
Subcontractor valueWhen we evaluate a client, we are determining the client's value to us. In other words, we are trying to determine the client's significance, worth and condition as it relates to us. To evaluate a client is to basically estimate the client's value.
As subcontractors, we are familiar with the estimating process as it relates to bidding jobs. However, there are subcontractors who don't understand their own value. Many subcontractors put their companies at risk because they don't realize how valuable they are to the industry. There are subcontractors who regularly work for clients who do not value them. How do you identify clients who don't value your company?
You evaluate the client based on your experience with the client. If you don't take the time to evaluate a client, it means you're putting more value on the client than you're putting on your own business. It doesn't matter if you're a large or very small subcontractor. You must take the time to evaluate your customers and make a decision.
In my case, I evaluated the managers based on my experience. After doing so, I decided that I would not bid work with them in the future, based on my experience. I evaluated them no differently than I evaluate any other client. I can't afford to do business with them because of the poor scores. In other words, evaluating a client forces me to make a decision based on my experience.
I can't evaluate your clients nor can you evaluate mine. I can tell you that my business is more important to me than the managers of the airport or any other clients' business. The key is to identify clients who value your company and stop working for clients who don't. It's actually very simple.
Evaluate moreOne of the biggest obstacles for people in general is taking the time to evaluate. Employers and employees really don't take the time to accurately evaluate one another. Last year, I read an article about top grading, which is simply replacing people with better people. We can top grade in the office or field. Since the majority of our profits are made in the field, it makes sense to continually top grade the field at every opportunity.
When we are presented with a good idea, we oftentimes don't take the time or allow ourselves to focus on a good idea, such as top grading. If we evaluate our employees and we determine that we could use some better people, we often wait for those better people to come to us. However, sometimes we don't evaluate because it's easier to remain the same.
As employees, we can evaluate our employers. It's OK to evaluate the people above us. The way we evaluate our superiors is important because we don't want to evaluate them based on our emotions. We want to accurately evaluate them the same way we would evaluate a client. As a suggestion, you may want to evaluate your employer based on the following criteria:
- Pay and benefit package
- Level of support
- Leads by example
- Promotes a harmonious work environment
- Brings out the best in the worker
- Lets the worker to grow
- Promotes teamwork
- Involves family
Create a list of criteria that is important to you. Maybe money is not your motivation. After creating your list, take the time to score your employer. Many employees come home complaining either about their job or supervisor. In most cases, the job is not the problem-it's the person you work for or it's you. If you come to realize that you are one of those people who come home to your family feeling angry or depressed, I strongly suggest you sit quietly in a room by yourself with pen and paper and simply evaluate your employer.
Generally, we are the most critical of those closest to us. Our spouses, children, friends and family members are closest to us, and we often spend our time being critical of them when the real problem is that we are not happy with something deeper. Is that true for you?
Being critical of another person is selfish and self-serving. To evaluate a person or a client is just the opposite of selfish. Evaluating is based on truth and should result in positive action.
Evaluate thisAs in the case of the managers of the airport project, I evaluated them to the best of my ability and decided it would be in our best interest not to bid them in the future. There are many clients, many employers and many employees to choose from. It's all about finding the right fit. Top grading is the act of replacing poor or marginal employees with better employees. You as an employer can top grade your client list and those you employ. As well, employees can also top grade.
As an employee, you have every right to evaluate the person(s) and the company you work for. It's not only your right to top grade yourself, it is your duty to work for the best employer and company you can find. Some employees don't think much of themselves for either personal reasons or because they work for people who don't bring out the best in them.
As I said, some employees don't value themselves enough to move to companies that bring out the best in them. Have you evaluated yourself and determined why you unhappily stay where you are?
Take some time to evaluate your current situation and determine if you want to top grade yourself into another position or company. Ask yourself these questions:
- Is my family or am I negatively impacted by the people/company I work for?
- Am I happy?
- Do the people I work for bring out the best in me?
- Am I proud of what I do?
- Do the people I work for appreciate me?
- Is there opportunity for me to grow in this company?
- Do I look forward to going to work each day?
- Is my employer paying me what I'm worth?
- Is there a better company for me to work for?
- Will it get better or worse?
Score yourself honestly and you will be forced to a conclusion. You will spend more time working than you will spend doing anything else. You may not feel you are in a position to make a change or you may not feel valuable enough to make a change but you have every right to evaluate your employer/company. Once you evaluate your situation, you are on your way to either being 110 percent committed to your current situation or 100 percent committed to making a change for the better.
The key is to be honest and not allow emotionally based questions cause a quick emotional reaction. Make sure your assessment of the situation is accurate before you make any decisions. Talk to your spouse or close friend. After all, you're just in the evaluation stages. It costs you nothing to evaluate. However, it could cost you everything if you don't.
Remember: Teamwork begins with a fair contract.
If you read this article, please circle number 345.