The perils of transparency

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Michael Stone in a recent newsletter describes a contractor with what appears to be a partner from hell, describing the problems with “transparency” — that is, letting your customers probe under the hood and dig into the estimates and cost structure of your business.

The challenge, he asserts, is that often clients and “helpers” think they know more about how much construction services should cost than someone actually doing the work. And we know the results: Cherry picking data to find cost points (or possible mark-up opportunities) that might be “high” — while overlooking the real contingencies and risks involved in any construction project, expecting that the contractor will absorb these risks if things go south.

Tied with this issue are the messy consequences of partnership arrangements.

There’s an old saying that the worst ship to sail the seas is a partnership. My guess is that this partnership doesn’t have a managing partner. Establishing one partner as the managing partner is an absolute must if a partnership wants to survive. You also need a written agreement in place before the first day of business.

I agree with these points — and have seen the painful consequences of partnership failures, where unfortunately the weakest partner (and there always is one) brings down the rest of the team.

How do you control/manage these issues?

First I think all contractors/business owners should obtain enough expertise in marketing and business development that they can be in the position of choosing their customers, rather than taking whatever business comes in the door (or racing like lemmings to bid low to win open-tendered work.)

Secondly, it is important to know when to hold some cards close to our chest, and when to broadcast our presence.  Clearly we need to let the right people know we are ready for work. But we don’t need to deliver an open book about our business to anyone.

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