Will Owners Pay More?
Can you imagine living in a world where construction project owners and developers pay more for quality work & excellent service? As a commercial general contractor for over 35 years, I never dreamed this might come true…or has it?
My vast experience bidding and negotiating on 1,000’s of projects contradicts the survey I took at a Construction Owners Association of America (COAA) Leadership Conference. COAA is comprised of organizations, institutions and companies that regularly engage in building construction projects as the owner or developer. The members include public entities, universities, federal and state agencies as well as private companies and major developers.
As part of my presentation entitled: “Leading the Future in the Construction Industry”, I asked the attendees to tell me how much quality and service matters when selecting contractors, subcontractors and suppliers. The results amazed me and gave me hope as a contractor who emphasizes quality and value over the lowest price.
Quality and Service Matters!
95% of the owners surveyed stated quality and service matters when selecting contractors, subcontractors and suppliers. Many owners use pre-qualification and selection procedures that weed out the troublesome or problem contractors early on in their selection process.
89% stated construction owners and developers will pay more for quality and service! I found this astonishing. When I bid or propose on most projects, it always seems the award is primarily based on low price since the quality is determined by the project plans and specifications.
How much more will they pay for quality workmanship, construction, contracting and materials?
36% will pay 1 to 4% more
36% will pay 5% more
18% will pay 10% or more
and ONLY 10% will NOT pay more!
How much more will construction owners and developers pay for good service from contractors, subcontractors and suppliers?
40% will pay 1 to 4% more
30% will pay 5% more
17% will pay 10% or more
and ONLY 17% will NOT pay more!
Quality Vs. Service?
There is a compelling fact to consider from these results. Construction owners and developers will pay more for quality than service. This seems to contradict the ever increasing demand for perfect service and on-time completion in the customer focused business climate contractors operate in. The conclusion? Finished product is more important to owners than how they get there. In other words, poor service and lots of headaches during construction are not as painful as a completed project with poor construction quality.
Four out of five construction owners say they will pay more!
How much more depends on their needs, challenges and project goals. In order for contractors to cash in on this revelation, they must determine what their customers specifically want on each project they propose on. Focus on the important issues that make a difference to the owner and developer. Find out what matters most and is the top priority by asking before the proposal and addressing it in full detail.
Even though low price appears to be the deciding factor in selecting construction service providers, it is not the only factor. During the selection process, every member of the project team must focus on providing what their owners clearly want service, quality or price. By asking probing questions, contractors can determine how to solve their customer’s problems and concentrate on making the owner’s project a success. When contractors give their owners exactly what they want, they will then get paid what they want. This is the only true “win-win”.