Digging A Grave for Your Company

graveyard burial companySome company activities may look innocuous and many seem like a good idea. But there is one thing you can do to kill your company and bury it in a very deep hole. One action that is as good as buying a burial plot and signing the deeds.

 

 

When a Client establishes a Project it will have been approved against a Budget. A budget for Engineering, Procurement, Construction or a Total Budget for a Main Contractor.

Knowledge of that budget for anyone other than a select group of Client personnel is a very dangerous thing indeed.

But to many Contractors it might seem like something they could put to good use.

You may be able to obtain such a budget through various means but a better idea would be to buy an elephant gun and shoot your bid in the back of the neck with it.

Because

Clients. They prepare a budget with the information they have available using their best cost practices. The relationship of that budget to reality may be tenuous.

The relationship of that budget to how much it will cost a Contractor to execute the job could not even be described as tenuous. It’s a guesstimate.

Because? They’re not the Contractor. They have no insight into how much it will cost a Contractor to do the work. No idea of how comfortable or desperate a Contractor is to get the work.

Plus. The project may have been priced to ensure a thumbs-up by the Client’s review committee.

Main Contractors. Knowledge of a Client’s Budget will deep-six their company in a variety of ways.

They can shave $10 off the budget price and ensure their bid is ‘under budget’. Or they can take all of the money out of their bank account and distribute it on the street to passers-by to achieve the same end result.

Because 1. The budget minus $10 bears no relation to what it will actually cost that particular company to do the job + overheads + profit + taxes +++

Because 2. What is the budget you’re looking at? Does it contain contingency? Was it produced at FEL 1 stage or FEL 3? The content and context of a budget is as important as the price. It is unlikely that you know the details.

Because 3. The provenance of the information is uncertain. Who exactly stole that information? I could have used a different description there but theft is the right terminology. Did a clerk find it on the wrong photocopier? Who knows?

Because 4. If the Client finds out? You’re off their bid-list, maybe forever.

Because 5. If the law finds out you could end up in a situation where all your statements end with the words ‘your honour’.

 

The Solution?

Bid the contract the best you can.

Know your costs, your overheads, your risk.

Understand the scope of work.

Price in location, the job market, the contract details.

Ignore what your competitors are doing.

 

Or buy a shovel.

 

 

Ends

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