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Edition 402 – Playing Off

The building and construction industry really is messed up! You have a bunch of medium and larger players who control proceedings in terms of projects. They’re the ones that are negotiating the contracts with whomever the client is – Governments, Large Corporates, Developers.

In the background, making it all happen, are the small and family businesses that provide a huge bulk of the trades that turn up on site. Plumbers, electricians, carpenters, concreters, you name it. They’re mostly Mum & Dad (or Mate & Mate) businesses that have less than 20 staff, modest turnover and an aspiration to build a better life for themselves and their families through pursuing the path of their own business journey. Without these businesses, with the smarts of the owners and the sweat and toil of all involved, nothing would be built in this country.

So, why is the industry messed up? Simply because the larger operators essentially “play-off” the industry participants against each other, all in the name of driving a few extra dollars out of the equation. I can’t tell you the number of times that I’ve had clients in the building and construction industry tell me how much they’ve invested in building relationships with developers or builders (or both) in order to get a foot in the door.

Like the client who spent the most part of three months preparing, and revising on multiple occasions, a quote for a multi storey development. All along, the developer kept changing the specifications, then coming back to my client, asking them to revisit the proposal and the price. Whilst I get that this is the way that things happen, it doesn’t mean it’s right! All the while, the small business operator is told they’re a “shoe-in” for the deal, only to receive the message, once they’ve over invested in the proposal, that someone has come in and undercut them by 10%. It’s nothing but duplicitous behaviour on the part of the developer or builder to harness the expertise and the time of a talented business owner, only to spin a different line when the hard work of solving a problem has been done.

Or another client, who was approached by a large telco to assist with the integration of their systems as a result of the merger of two “tuck-in” smaller telco purchases. A job that has to happen “yesterday”, instead stalls, when some brainiac at the client decides that they’re not prepared to spend that sort of money right now, even after negotiations have taken place for 6 months, with often a lot of time and intellectual property investment on the part of the small business contractor.

What’s the point in building a relationship, and listening to the “promises” of these individuals, when they break those promises, consistently? At some point, it leads to:

  1. A breakdown in trust.
  2. A desire to do whatever it takes to get the job done, which involves cutting corners.
  3. A churning of contractors on site, who simply are fed up with being spun a lie, and eventually go elsewhere for work.

I don’t have any answers, other than to suggest that at some point, these small and family businesses are going to start walking away from these projects. Why take on more staff, invest more money and take on greater risk, when people are trying to screw you down? In the end, some of these small businesses will actually be more profitable, with less heartache in the lives of their owners, if they contracted in size, rather than grew.

That’s great for them, but what does that mean in terms of building the infrastructure that a growing country needs?

What does that mean in terms of solving the country’s housing problem, if people start walking away from the industry?

This Week’s Tip

“You’d think that trust and respect are worth more than a few dollars, wouldn’t you?”