Nickel And Dime? In Tough Economic Time?

poole_3

Please give your thoughts on the below article from the constructonomics blog. Thanks.



Have you noticed all the advertisements on television now start with, "In these difficult economic times..", and then go on to explain how you need to give your money to them despite the horrible and catastrophic economy. I've yet to be convinced by any of these ads, but they do get me thinking about what construction companies should do in, "these difficult economic times".

So Mr. or Mrs. Company Owner looks at his or her backlog of work and after some very elementary arithmetic realizes that there will not be enough money to pay the workforce, cover overhead, pay for the corporate jet and vacations to Tahiti, and still leave a sizable profit/bonus. Whatever should they do? I've got it! Start hacking employees.

Like a machete blazing a path through the Amazon, company owners have dropped staff like Terrell Owens drops passes across the middle. The question however, is if this is the best strategy. Perhaps it is, and when they start hiring again, they will have a fresh new group that may be better than the one previously in place.

Perhaps surprisingly however, this is not intended to be a sarcastic rant about the greediness of organizational convention or tendency of Terrell Owens to drop passes(I just saw an opportunity and took it). Rather, I'd like to look a bit more seriously about how a particular project may tackle (no pun intended) some very tight margins.

An ex-coworker of mine who survived a ruthless round of lay-offs at the company for whom I used to work, was talking about how his general contracting company is now having to hard bid jobs that would, under normal conditions, be negotiated. Evidently this hard bid, lump sum, contract presents more risk than a negotiated contract (I'm actually a bit skeptical of this, but let's assume it does). He is faced with the necessity to submit every nickel and dime of extra work to the owner as a request for change order.

To say the least, owner's do not like being nickel and dimed. In fact, getting a reputation for being a nickel and dime contractor can leave you literally picking up nickels and dimes from the sidewalk to stay alive. However, on small projects with a razor thin profit margin, nickels and dimes can turn into dollars that could erase some errors that were not covered by the non-existent contingency line. Is this worth sacrificing your reputation to maintain profitability in a time when survival is the main objective?

My opinion is yes. The owner may be upset in the short term with the small annoying change orders, but I believe this will be soon forgotten and the end result of cost, time, quality, and customer service will be the deciding factor in how your reputation is determined. So go ahead, throw out those nickel and dimes like you're a kid at the mall fountain. You won't even need to make a wish.

dirt diggler

um ...

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ChrWright

I know you mean well... But you start with advertising, then talk about job cuts...and then end up on change orders???

Your article is all fluff and no meat. I have no idea what on earth you're trying to say here.

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poole_3

>Perhaps surprisingly however, this is not intended to be a sarcastic rant about the greediness of organizational convention or tendency of >Terrell Owens to drop passes(I just saw an opportunity and took it). Rather, I'd like to look a bit more seriously about how a particular project >may tackle (no pun intended) some very tight margins.

This is what I'm trying to say. And what leads you to believe that I mean well?

neolitic

One thing that distinguishes
all good writers, is good writing.

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ChrWright

So your bottom line point is: bid your projects tight and then pound your client with change orders to beef up your margins?

Yes, it seems I was wrong... I assumed you were trying to say something productive.

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Thewoodman

I am confused. It starts out accusing contractors of letting people go in order to make a bigger profit. Hell I had to let my guys go so I could personally survive. It was not a "greed thing". It was a " man it would be really nice if I could pay my mortgage this month thing".

Then in changes direction and is in favor of the contractor. I don't get it.

Mark

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silvertree

Like a drunken merchant sailor weaving on the docks and looking for love while busy cats feast on the oily remains of Lake Superior whitefish that have fed generations of their surly and feral ancestors we are brought to the simple and inevitable conclusion that communication is better served by simple language not encumbered with analogies.

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ChrWright

Now THAT'S good writing...

Sounds like Hemingway... right after a bender.

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neolitic

"It was a dark and stormy night...."

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dirt diggler

now I'm even more confused


Okay, so you're wanting to tackle the subject of "how to succeed by working on very tight margins"


well ... here's my answer --- "you don't"






something else that I don't think you have a grasp on - is what the purpose of an "employee" is. I say this because you incorporated the word "greed" into the same paragraph that talks about lay-offs --- and this sends me a flag that maybe you might not understand what an employee is.



Employees are a commodity. They are human machines that are "designed" more or less to carry out a task that generates money for a business.


That is all. Employees aren't hired because they need a job - or because they have a family. Or because they have a master's degree and they "deserve it." It's because they are needed; there is a demand for that business to have employees. When that demand is no longer there, a business does not have a need for employees. In fact, they become a liability


It's as simple as that. So don't insinuate that "greed" causes people to get laid off.


Afterall, greed was what caused those people to get hired in the first place ...




and ... try sitting on the other side of the desk telling someone with a 4 year old that they're not coming back to work on Monday. That's not fun.

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Tinstaafl

Now, THAT, I can go with.

No offense (well, probably, but I can't help it) poole_3, but Silvertree's post actually makes more sense than the tripe you've been trying to feed us.

silvertree

Poole is looking for conversation, he's a highly educated guy and he's throwing his thoughts out there. What is tough is trying to understand the theory he proposes as opposed to how things work.

Now I mixed myself up, I'm going back to drunk my Hemmingway thing.

He was just a man born in the birthplace of cool, cloaked behind the shadow of a giant that made all things seem easy, seem important. All the time left would now be wasted to try and secure the unattainable, the untrue, not even his dog would raise his head when he entered the room.

I'm stopping for good now, I promise. LOL!

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stonelayer

I sure am glad I'm not alone here, if I were I would probably miss work tomorrow so I would have work for the rest of week.

silvertree

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RayGoerdt

No comment

JumboJack

He knew he had come to the end.The end of a long and storied career.
A career that had seen him write with prose not seen since the Bard himself.
And like that....He was gone....Long gone....Far far away....

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Mike(VA)

I have to say I read the OP's post in a different way. I could be wrong, but where in the post does it say that he wrote the article? He may very well be the one who posted in the blog, but I don't know that.

Please give your thoughts on the below article from the constructonomics blog. Thanks.

The OP's 2nd post seems to have picked out a point in the article.

Perhaps surprisingly however, this is not intended to be a sarcastic rant about the greediness of organizational convention or tendency of Terrell Owens to drop passes(I just saw an opportunity and took it). Rather, I'd like to look a bit more seriously about how a particular project may tackle (no pun intended) some very tight margins.

Again, I could be way off base here, but it seems the intent was to seek possible solutions to a tight margin project. We all know to not bid such a project in the first place, but if it happened, how would one increase the margins? My opinion, BTW, is you don't nickel and dime customers, you eat the job and bid better the next time.

I think that the OP saw this article, has had this happen to him, and wanted to see others' opinions. If I am wrong, get out the wet noodles and let the flogging begin.

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PA woodbutcher

If someones idea of a tight budget and my idea of a tight budget are totally different..it usually doesn't make for a good fit. I have been talking budgets and how it fits into a business relationship with most of my customers. If their budget for a project is unrealistic, I have no problem proposing something that is within their budget, with opportunities for expansion at a later date. Does that make sense? I'm not taking a project to be nickel and dimed to death, it only makes the end result look like it was nickel and dimed and done half assed.

My customers are either previous clients or direct referrals from previous clients. I am looking for long term customers, not someone who is looking for the best price.

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outlaw

I try to warn customers against low-balling, tight-margined contractors that only jack up the price latter with a bunch of change-orders.

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