Well, clients do want to get into partnering. Their hearts are in the right place. Trouble is, says Greg Verhoef, their hearts don’t always know what other parts of their body are up to
Partnering. What a wonderful concept. One online dictionary defines a partner as: “One that is united or associated with another in an activity or a sphere of common interest, especially members of a business partnership.” The Oxford English dictionary site says it’s “a person who takes part in an undertaking with another or others, especially in a business with shared risks and profits”. Great – I’ll have some of that! This partnering lark is the holy grail for bottom-of-the-food-chain subcontractors like us.
Over the past five to 10 years, the concept of partnering has really taken off in our industry. I say “the concept” because in our experience those definitions of partnering are radically different to the reality. This is, when it comes to winning the contract, the lowest price wins, regardless of whether the lowest price subcontractor fulfils the main contractor’s supply-chain standards or not.
As a sizeable subcontractor working for the cream of the UK’s main contractors, project managers and developers, we’ve been asked to attend seminars that we’ve had to pay for, join accreditation schemes that attract considerable annual subscription fees and complete time-consuming applications – all in the name of partnering with one company
or another. Initially we regarded it as an honour; we would enthusiastically tell our suppliers and subcontractors about our partnering credentials. These days, unfortunately, that enthusiasm has been replaced with scepticism.
“What went wrong?” I hear you ask. In a word: corporate duplicity (yes I know it’s two words but please, give me a little leeway here). Or to use two words more appropriate on the subject of partners: “corporate infidelity”. Usually with a brazen hussy that will never be more than a one night stand.
Let me explain. On more than one occasion we have found that our main contractor “partner” has placed its order with a subcontractor that doesn’t tick the boxes required to be a partner but ticks just enough for it to be entrusted with a major order. So if the price is low enough and they claim they can meet the programme, the order is placed. Their lack of successful projects? Overlooked. Their tenuous financial standing? Overlooked. Their lack of membership of prequalification schemes? Overlooked. If the price is low enough, even screwing up a job for the same main contractor can be overlooked. Health and safety record? Equal opportunities policy? Corporate responsibility practices? I could go on, but I’m sure you get the picture.
What went wrong with partnering? Corporate duplicity. Or to use words more appropriate to the subject of partners,
corporate infidelity. Usually with a hussy that will never be more than a one night stand
In our experience, all too often there’s a disparity between the admirable but unenforced ideals of the head office-based senior management and the site-based package managers, commercial managers and quantity surveyors that control the subcontract packages. It’s ironic that often the initial low price steadily increases as the job progresses and can end up higher than the comprehensive price given by the partner in the first place. To go back to the previous analogy, superficial attractiveness often fades in daylight.
Could the problem be that while the senior managers are selling their partnering scheme to their “preferred” subcontractors, they are also offering significant financial incentives to their project teams to deliver the project below the guaranteed maximum price they negotiated with the client? Not that offering financial incentives is a bad thing – far from it. We all operate in a competitive environment and understand that main contractors often take their profit from the savings they make during construction. But surely it’s naive to think that the commercial interests of the project team won’t affect the decision making process …
To add insult to injury, our elevated status as a partner doesn’t even preclude us from having to complete reams of prequalification questions, let alone give us the opportunity to negotiate work. Nor are we any more likely to be paid on time. Perhaps we should drop our expenditure on satisfying main contractors’ partnering criteria and re-direct the funds to shave that extra half a percent off our prices. Defeatist? Maybe. But what would you do?
While the “concept” of partnering works for all parties, in the current environment, the reality is unlikely to work for the more substantial subcontractors that focus on quality. Ironically, these are the very companies that most main contractors say they want as partners.
But it’s not all doom and gloom. We’re fortunate enough to regularly work with a small number of enlightened developers and project managers (two to be precise) in which partnering is valued by the project team as well as the directors. It’s beneficial for them and it’s beneficial for us. Guess which customers get our best prices?
Greg Verhoef is director of Szerelmey