CREJ - Building Dialogue - March 2015
Although most of us seek out the best deal when shopping for a car, house and toothpaste, our team often receives feedback of frustration from colleagues when clients make their final selections based on the lowest fee or lowest bid. The challenge in front of us is to demonstrate why a client should pay more for our services. This is very difficult when you are selling a service to those who have limited industry experience. Is being selected by low fee always bad? Should we embrace that we have to provide the lowest fee to win the final selection? Here are some things to consider on why owners’ hiring based on lowest fee isn’t all bad. New markets. We have seen design and construction firms have an iron grip on certain project types, be it libraries, police or recreation centers. We have worked with great firms with great people who never seem to have an opportunity to demonstrate their abilities on these types of projects. In fact, many won’t submit because their qualifications can’t compare. What if you had an opportunity to overcome a qualifications based selection process and break into a whole new market without teaming or changing your processes? You might reconsider submitting given the more level playing field. New subcontractors. In the Construction Manager at Risk process, we see favoritism to certain subcontractors by certain general contractors. As these subcontractors become complacent and understand how to bid against the usual two go-to firms, prices creep up and, as a general contractor, you lose a competitive edge. Consider blaming the owner and the competitive process as a way to venture out to a new subcontractor you may want to work with. Performance. Sometimes we have something to prove when we are given a chance. We have often seen higher levels of service from teams that are given a chance. Typically, a subcontractor or consultant will not take his new opportunity lightly. Represent the owner. Owners want their design team and general contractors to represent them and their project goals. We rarely see design teams present how they procured their consultant team in a way that demonstrates a consideration for fee. Demonstrate your effort to get the client the best value and they will remember it, even if you are not the lowest fee. Recession ready. Working with the same consultants and subcontractors time and time again is not a true depiction of the market and may not prepare you when the next recession comes. There are many smaller, younger, more nimble firms that you might be missing out on. Be ready to win work when price is a significant driver. Bid ready. When interviewing general contractors, we often hear “100 percent of our work is negotiated.” This statement rarely passes the “so what” test. Clients respond to firms that know how to bid work; it indicates that they have a pulse on the market and are willing to find the right subcontractor for their project. Most of us believe that we have the “right price,” but sometimes we get edged out by a firm that is simply hungrier. Keep focused, strategically position yourself to increase your value on a proposed project and respect the simple fact that this is a competitive market.