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Who wants to be a rotten egg?

The Race to the bottom – The start line

As an electrician who runs a business that employs electricians and apprentices and believes in CPD for all who work for me, I find it hard to maintain a work flow fit for the size of company we have built, through choice and selective project acceptance. Unless I compromise the values we started this venture with, I wonder can we hold on while the race to the bottom is underway.

It is very apparent to me that a lot of customers all be it private, main contractors, developers etc will judge a tender cost on the bottom line. They will assume that a cheap quote will provide Value to the project and that by some miracle a good job can come from a cheap price. Or maybe feel safe knowing the murky T&C in the projects specification will ensure a top notch job at the subcontractor’s expense either way.

I can predict some of the responses, and please don’t take this as an attack at all professions mentioned other than us!! This is all simply my view on subcontracting and the tender stage.

Now firstly those clients that bottom line skim, I do not want to work with. I would like to educate some of them and share with them true stories of the cheaper quote ending up 10-30% higher than my ‘expensive quote’ in the long run.

Now in fairness I am sure the main contractor can recover a majority of those costs at the end users expense, but I bet not all of them thus injecting bad feeling in the project. The developer generally has nowhere to go and will swallow the additional cost, the private client well…. they will either get a half hearted job or get hit with all sorts of unsightly variations or ransoms, or the sub-contractor will get wrapped up in red tape depending on the contract type or client strength etc. and be made to do the work of which there will be a shortfall of cash and will:

  • fold the sub contractor
  • Encourage sub standard workmanship and or equipment with potentially catastrophic results
  • Both A and B

All outcomes in my opinion are undesirable and avoidable.

All of that takes me to my first point below about honesty and also highlights the blog title, the race to the bottom.

But it does lead me to the point I made above, how long can a sub contractor last trying to do the right thing?

I would like to make the point that we have a fantastic client base, that I am proud to say are almost all 100% retained customers and we appreciate you all, some are main contractors some are private developers some private clients, the one common factor of our clients is.. They appreciate the value we offer them.

In my opinion the value we offer is extensive, but to summarise:

  • Honesty and integrity
  • Extensive depth of knowledge across a broad range of systems
  • Reliability
  • Communication is key, always stay in touch whether it good or bad news.
  • Confidence to all our clients
  • Standards above high, if we think its high we believe we can go higher

The start line of the race to the bottom in my opinion is the Client. The end user. How can they help improve standards? This is what the bottom line of my rant is trying to achieve.

The client comes in multiple forms in my experience, but our main two clients that can help are.

Domestic, we have the private client who we work with directly, for us it is easy to work with the right domestic clients, they accept our quotation we deliver and we build a relationship and we can do repeat work for said client, most of the time with no need to price the works as the trust is there and we don’t waste hours pricing against competitors that should in theory be pricing the same stuff any way.

Commercial, this is the tricky one; the client is a lot of the time hidden behind layers of people and generally never seen until hand over day.

Commercial end users we rarely work with directly due to the layers of people in front of them who are in place supposedly to look after the client’s best interest.

The client believes they are doing the right thing going out to consultants be it architects project managers MEP etc, and I believe they are doing the right thing too, however the client needs to understand what they are getting for their money, and also really importantly know there budget. A good MEP consultant can give you a ball park figure depending on building type/use/size/spec level etc. And discuss budgets before a specification/scope of works (SOW) is written…. yes written not copy and pasted.

Decide what you want from your MEP consultant; decide if you are going to retain their services for the project duration.  That last decision is very important.  If you chose to let them go and they know they are only in it for a design brief and set of tender drawings then there won’t be much accountability (not the case with all, but some), if however you retain their services all the way through for all the design and rely on the services of an electrical subcontractor to simply price and install what they have designed and ensured works for you and your building what could go wrong?  

Do you want a SOW, specification, drawings? Do you want the project fully designed to stage 5… The differences in services that are on offer from MEP consultants is vast, some MEP tender packages we receive are great to work with, they are fully detailed with the specific project information, ambiguity was left at the MEP head office, and the conversations that the client/end user and consultant have had are clearly understood through the specification and drawings, what I would class as stage 3

Then we get the opposite stage 1 maybe 2 , the bum covering specification that alleviates the MEP consultant of any responsibility or duty to actually do any design and fill a document with sub-contractor shall, and will include for, no additional claims will be considered etc. etc. unbeknown to the client who thinks it’s all in hand.

The best note I have read in a specification was along the lines of, “The subcontractor will ensure he has allowed for all monies relating to breaks in continuity and as such no claims for lack of continuity will be considered!” Basically the jobs tricky and you will take all the preliminary risk even if the projects run past the indicated time scale. Seems fair to me right. NO its broad brush to say the least.

So to sum up, the first port of call in the commercial instance in my opinion is to make sure the package being tendered is informative enough to guarantee all three tenders come back like for like and has enough information and no ambiguity in it, if this was to happen in the real world all you would find out is the difference between subcontractors mark ups overheads and profit margins, which then would lead me on to another blog altogether. Collaborative working, the possibilities of being able to work open book where all parties can make money and the client is truly happy at the end seems like a good idea to me.

But what will happen with us is more often than not, as the above tenders are few and far between. Let’s say for this instance we received a middle ground package, not mind blowingly informative nor was it worthless.

We will price all elements noted qtys detailed on drawings etc, to the specification as written. Then we will allow for all the other items you will need to complete the standard we want to deliver that maybe have not been specifically mentioned or quantified, we will note any value engineering items we feel would be applicable without having a detrimental effect on the MEP consultants preliminary design.  We aim to offer a tender that avoids the need for variations on the day following a pre start.

Now with the above tender package there is no guarantee that your three tenders received are like for like and what makes it worse is that they are not reviewed by the same person who created the documents but are being reviewed (a vast majority of the time, not all) by somebody who hasn’t got the experience to evaluate all the clarifications and adds and omits it will include, and it will include loads. It needs to be clear what has and hasn’t been allowed for, unless it’s not clear, then well guess who wins the job, Mr wins the most, misses the most, and so on rolls the cycle of the race to the bottom.

What we send as a tender is our interpretation of a complete offer, all ambiguity stripped out of it and not the cheapest at a guess, for a number of reasons.

Our intentions are to keep standards to the highest level, using directly employed fully qualified electricians to manage and run your project, while also employing  apprentices directly to ensure the skills gap is filled for generations to come and ensuring continued professional development is a regular occurrence. We also ensure the engineers running your project arrive to your sites in a timely presentable fashion using up to date fully serviced and economical vehicles, while ensuring all members of staff have all the relevant health and safety qualifications to work safely on your sites. Not to mention our continued commitment to the self certification schemes that we subscribe to and various other governing trade bodies that the above named MEP consultants insist we be a part of, (again a completely stand alone subject that could be discussed).

I think if the client will accept that all parties need to make money. Once the decision is made to build a project out let’s get together sooner rather than later and do it working together not against each other, there are enough projects to make this work and I am sure the quality of the builds will get back to what it was 50 years ago, minus the asbestos though!

 

Paul Hooker,

Director

Eco Electrical Contractors