Don’t try and sing if you really can’t
Certain types of behaviour create significant problems. Examples are dishonesty, bullying or entering television talent shows.
Unfortunately not all contractors behave well when it comes to the commercial management of major construction projects. So what are the commercial equivalents of an impassioned karaoke rendition of, “flying without wings”?
The 5 worst commercial behaviours
1. Failing to resource the job adequately
Some of the worst commercial problems we have seen came from incompetent commercial management.
Contractors work on wafer thin margins. Their biggest concern is cashflow. As long as they are being paid, some contractors ignore their margins until they recognise a problem. (Normally this happens towards the end of a project.) This can lead to aggressive commercial behaviour to try and recover the position.
3. Ignoring the contract
Often, contractors put the contract in the bottom drawer and never refer to it. (Employers are guilty of this too!) When we carry out audits and refer back to the agreement we often hear contractors say, “that was never the intention of the contract” or, “the employer agreed we could do this”.
The contract is the basis of the relationship between employer and contractor and where it is only read when there is a problem or at the end of the job it can lead to significant commercial problems.
Some contractors adopt a highly aggressive approach to any commercial challenge. In the worst cases this is a strategy to create additional margin.
Unfortunately, in our experience, some contractors go beyond being commercially aggressive to wrongdoing. Some of our biggest findings (£10m+) have come from this area.
Complacency: The biggest risk to major construction projects
We have audited the vast majority of the large contracting organisations and not all contractors are the same. We have seen some excellent examples of commercial management. Unfortunately we have also seen examples of all the worst commercial behaviours described above.
Without being paranoid, you should consider the potential for commercial issues arising from these issues. The biggest risk of all is complacency.
The importance of independent and expert review
To make sure that as a client you are receiving value for your spend and that you are not facing unnecessary commercial risks you should consider some form of regular and targeted independent review of your project. An independent and expert view will provide you with a reliable understanding of what is going on in the commercial management of your project.
The transparency an independent and expert review will provide you with will allow you to take action on problems before they get out of hand and help avoid unwelcome surprises.
Any programme of independent and expert reviews can be targeted to those areas of greatest risk and in our experience, will pay for itself many times over.
(And if you use us, we promise never to sing outside of the shower.)