By Clive Thurston
Contractors, trades, and suppliers are all familiar with the concept of being prequalified for a project, the use of prequalification is a valuable tool for owners and one that is recommended as a best practice in the industry
Owners want to be assured that the contractors and their partners who are bidding their projects can deliver what it is the owner wants. Not only on time but on budget, to that end they use prequalification to ensure that those who bid their project have the abilities, qualifications, and interest in the project to deliver what it is they need.
That requires a collaborative effort by all parties the owner, the consultant, the contractor, and their partners in the project. Without good communication and collaboration, the best prequalification can fail. But there is something else to be considered about prequalifying, and that is, shouldn’t those bidding the work be looking at whether the client qualifies as someone they would like to work for?
All too often contractors fail to consider this point, they failed to ask themselves whether the client who is asking them to bid the project is a good fit for their firm? Are you going to be able to work with that client, what is their record of payment, what is their dispute record? These are questions among many, that generals are used to having to answer to an owner but should not you, the general, be asking the very same questions about your new potential client?
I am a firm believer in what is become known as the ‘Collaborative Process” something a friend of mine, Gianluca Pascale, has written about in his book The Collaborative Construction Process. Together, we are discussing many of the issues that have challenged our industry for many years and how we might take this very antiquated industry and turn it around so that all stakeholders can benefit.
I have talked in the past at many industry forms about the need for such collaboration and communication so that the parties can work together to achieve their goals. Owners have extremely strict prequalification systems as they are keen to avoid any possible problem on their project. That is fair enough, and not surprising but sometimes that goes way beyond the norm and not a matter of prequalification. Frankly, a lot of information that is requested is just not relevant, thus complicating the process and in many cases discouraging some people from wanting to bid. Thereby, depriving the owner of good competition.
Just as owners are intent on ensuring that those who bid their projects are capable and the right fit so to general contractors need to ensure that who they are bidding to are a good fit and that the client in fact ‘qualifies” as someone that you want to work for.
I am aware that contractors feel they have no choice but to bid after all,that is why they are in business to build, so that they can provide jobs for their employees, so that they can feed their families and pay their bills. I have never met a contractor who openly admits that he got into the construction industry simply to make money. They are in this industry because they love to build, they love to produce, to create, to take the concept that the architects and engineers have come up with and make it a reality for the client. To me, that is the overwhelming driving force of contractors and why they do what they do.
Sometimes they feel that they have no choice but to bid, and they will bid owners that they know are going to be a problem. I have seen this too often in the industry, and I have seen how contractors deal with it, in some cases they will not bid that owner. Contractors will include what I term the “aggravation factor” to their bid’s because they know they are going to have a problem. This is not in anybody’s best interests and certainly is not in the best interests of the industry.
I believe that our current system is antiquated and needs to change. It needs to be about the things that we value the most in this industry. Whether a general contractor, subtrade, supplier, consultant, or an owner; we all have the same goal. A successful project. We need to move away from the old practices of poor planning, poor communication, and most importantly a lack of transparency which has become too often an adversarial approach to the procurement of construction services.
There are many things that can be done to improve our industry, but I want to focus on prequalification which in my opinion must be a two-way street. I strongly believe that just as trades are cautious about which generals they will bid, generals need to be cautious about what entities they will bid. It is important that general contractors look to see whether the entity is a good fit. In essence, do they qualify to work with you?
What should you be looking for? How can you be sure when you are assessing a client as to whether they are somebody you wish to work for? My friend Gianluca suggests three clear qualifications that you should consider.
- What is the mindset of the client contractor relationship? Is it ‘business only” or is there more to that relationship regarding how each side expects to be treated and will be treated?
- Does the client show a willingness to be fully transparent about their business and the way they do things?
- Do they value collaboration, transparency, and accountability? And will they involve all [required] team members, including themselves in the project?
I would add the following items that we need to look at to ensure a successful project,
- Does the owner follow industry practices?
- What type of contracts are they using, CCDC or something else?
- What are the terms contained in the contract, are they fair and balanced for all sides or are they one-sided and transfer risk entirely to the contractor?
- Does the client have a reputation for late payment, or litigation?
Just as owners want to ensure that the contractors who are bidding them care not only about the project, but about them and their business, or their taxpayers. Therefore, it is equally important that contractors look to ensure that those clients will treat them in the same manner that they expect to be treated.
I believe that a far more proactive effort needs to be made by contractors in deciding who they intend to work for and assessing their potential clients to ensure the success of delivering a project. If collaboration, communication, transparency, and payment are going to be an issue, then my advice is stay away. I am aware that is something general contractors are always afraid to do, but nonetheless, it is done by companies of all sizes. Fear of doing the right thing is what has led us to where we are today. Many of the problems in our industry could have been avoided had we all just been willing to take a stand.
We should expect to be treated honourably and fairly the same way that owners wish to be treated by those that bid and execute their projects. It is time that we as an industry make sure that we take a good look at who we work for and whether we should be working for them.
Clive Thurston is the OGCA‘s former president. He can be reached at (416) 399-2250 or email clive@thurstoncs.com.