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Posted: January 17, 2017 | Blog
By Rory Woolsey
For contractors, and those of us working with contractors, this discussion of trust is very relevant -- particularly in the current competitive market. For example, Job Order Contracting has a strong partnering component that thrives when founded with trust. When the trust goes away, so does the contract!
Transitions: All American businesses are in transition. They now operate in an environment of global competition, rapidly-changing technology, and more demanding consumers. In the scramble to be more competitive, businesses are re-engineering, reorganizing, downsizing, and outsourcing. The question is: How are contractors impacted by these changes and what actions can they take to be more competitive and thrive (or just survive) in the current economy?
Low Bid; Best Bid: Historically, facility managers have had their hands tied with acquisition regulations that required the award of projects to the lowest bidding contractor. This has typically been the case with publicly-funded projects. Too often, the low bid winner would prove to be the contractor that also made the most mistakes in their bid. Then there are also the stories of the low bidder capitalizing on imperfect design documents with change orders as the project unfolds.
It’s true: A selection process that ignores a contractor's past performance and awards contracts only on the basis of low bid is flawed. Experienced contractors have seen the "after the fact" failings of the low bidder and they would agree; low bid is not necessarily best bid!
Trends in Acquisition: Today, contractors are being evaluated with a greater consideration of their past performance, records of quality, safety, integrity, on-time delivery, and team resumes. These points are being critiqued and quantified for a fair evaluation. This is a good trend.
This being the case, the most valuable asset any contractor can have is its reputation of positive past performance and business practices. Building a trust relationship with customers through a proven track record is essential. The single best strategy a contractor can employ to improve business volume and profitability is to invest in the asset of trust.
Building Trust: So how do you go about building a high-trust business organization? You could just say that you are "trustworthy," and even profess it on the company letterhead....this tactic has been tried. The fact is that it’s not enough to say it and read it; you have to be it and do it. In order to earn the trust of people and companies outside the company, your company must be trustworthy internally.
In organizations that don’t operate from a position of trust, their operations bog down with bureaucratic and inefficient rules and regulations, policies and procedures. An organization that puts trust at the forefront reduces social friction and encourages creativity and the sharing of ideas and knowledge. At the core of trust is the competence and character of the company and the people it is made up of. Investing in the competence and character of the individuals that make up an organization is an investment in trust. This is a simple premise that can have a powerful impact on the bottom line.
Investing in Competence: Investing in competence[JT6] in an organization is a key component to building trust. Competence is an individual’s level of qualifications, skill, and ability to function at a task or job. A workforce lacking competence would not foster trust with peers, subordinates, or with customers. To put it another way: would you allow an inexperienced steel worker to install critical structural pieces for an elementary school project? Certainly not; trust would be limited.
There is much to be said for in-house training programs that keep the communication open on the latest technologies, methods, systems and practices. Investing in education with the rank and file is an investment in the organization's competence in the marketplace.
Likewise, investing in the human resource systems for screening and hiring construction people is also an investment in competence. Hiring practices are critical. Continuing to populate the workforce with marginally competent people will never nurture a culture of trust. The competence of the workforce is an asset of the organization that should be maintained and upgraded.
Character"istics": Character is equally important to building trust in organizations, although it is more difficult to measure and quantify. An individual’s character and the collective character of the organization are revealed with time and trials in the workplace. We have all experienced people and organizations with untrustworthy character "istics" such as impatience, duplicity, dishonesty and ingratitude. These are the opposites of the "istics" that should be nurtured and encouraged -- such as patience with customers, honesty, integrity, perseverance and contribution. It is in this fashion that trust is built, along with a competent workforce. The rank and file will follow if it is clear that these "istics" are not to be compromised at any level of the company. Eventually they will become an obvious part of the culture.
Just Trust Me: An organization's workforce is its most valuable asset for continued health and profitability. Trust strengthens the company, the workforce and its relationship with the customer. Social friction is the result of a culture lacking trust. When a company turns this around, and maintains trust in all aspects, this friction will be minimized. And you’ll notice that the overall efficiency and effectiveness of systems and processes has increased.
Contractors can see marked improvements in work volume and profitability by investing in the competence and character of the company. Trust resulting from competence and character will lead to the building of a trustworthy organization!
About the Author: Rory Woolsey, CEP, has worked in Management and Engineering for the construction industry for 33 years, starting as a construction laborer in Billings, Montana, in 1972. He has since held positions as a field engineer, project manager, MIS manager, testing laboratory manager, estimator, senior editor, designer, structural engineer, and general contractor. He was the President of The Wool-Zee Company, Inc., construction consultants for 20 years. Rory is currently an Accounts Manager for the Gordian Group, the parent company to RS Means.
Mr. Woolsey has also held positions with some of the leaders in the construction industry, such as Bechtel, H.J. Kaiser Constructors, and the R.S. Means Company, and has worked on projects ranging from heavy, military, industrial, commercial and residential. He has given over 7,000 classroom hours of instruction nationally to architects, engineers, contractors, and facility managers on topics of project management, CPM scheduling, construction estimating, facility maintenance, partnering, and leadership. Rory is a Certified Estimating Professional (CEP) through AACE International.