10 May Working on the right contracts
Are you chasing the great white whale?
If you are a contractor or a self-employed tradesman, and your business is a one-man band or small to medium business (SME), this parallel to business is something to think about.
In Herman Melville’s fictional novel Moby Dick, Captain Ahab, the monomaniacal captain, was obsessed with catching Moby Dick, the white whale that he blamed for the loss of his leg. This obsession resulted in the time he used to hunt the white whale, while not hunting other whales, and his obsessive actions caused the death of his entire crew and his own life.
The parallel to this tale is that while you or your business is spending so much time on that one big contract, you can become too involved working in the business and completing time frames (to not incur penalties). When that one big contract dries up, then what? Are your other clients still there? You may have to start looking for other work, especially if you have employees.
If you are in this space, then take heed because it’s a trap that many fall into and can result in the loss of a business that also impacts on your health and private life.
Setting the contract requirements
Last month I met with a civil contractor who has 15 employees, offers a range of services and has a wide range of equipment and machinery. We discussed business, health and safety and personnel systems, contractor assessment and customer relations, and I asked him if he was busy.
Client – “Hell yes, I’m snowed under with work. I’m working weekends and don’t know if I have enough time to complete all the jobs I have promised my customers within the verbally agreed time frames”.
Hasmate – “Do you ever get the customers contract or service specifications in writing or by email?”
Client – “No, I don’t, should I?”
Hasmate – “Yes, as a part of your site visit to ascertain the conditions, constraints or any special requirements. This is also your basis for your quoting/tendering, your proof of what the client wants and your proof if ever there is a cost overrun, a deviation of contract or a civil claim against your business. It also acts as evidence if you have to chase your money through a debt collector”.
Client – “I never looked at it from that point of view!”
Hasmate – “If that’s the case, do you establish a formal agreement for services prior to the contract starting?”
Client – “If I was to do that, I would be spending all my time doing paperwork and not getting on the job. Why should I?”
Hasmate – “For the very same reasons as above”.
Hasmate – “What’s your time worth and have you had any contracts in the past 2-3 years that haven’t ended well because you have not done your checks or due diligence on the contract, prior to agreeing to undertake it?”
Client – “There have been a few – in fact, I’m playing catch up to try to recover the loss.”
Hasmate – “Have you ever told a prospective client that you can’t do the job at that point in time but will be available in XYZ time frame?”
Client – “Never! If they want the job done, I commit to it. What’s the downside or benefit to do this approach?”
Hasmate – “If you are straight up with them, they will often accept your answer and honesty ,and agree to wait. Even if you can’t do the job, recommend another trusted contractor to them.”
Hasmate – “Have you ever completed a capability assessment on any contract enquiry, prior to committing to the work?”
Client – Hell no! I grab every job I can get ,because if I don’t, I could lose the business, or my opposition will get the work.”
If this sounds familiar, regardless of what type of business you are in, then I suggest that you re-evaluate your position on this.
Why? Take time to think back about past contracts or work and ask yourself this question. Because of this approach to getting work, how much has it cost my business in lost time, penalty payments, lost or disgruntled customers, employee frustration, health and safety issues, and/or damage or loss of machinery and equipment?
Capability versus ability
So, what’s a capability and ability check? It simply means that you take 5 steps back and take 30 minutes to complete a checklist to see that you have the:
- Time, scheduled and otherwise;
- Administration systems;
- Financial capability with your bank;
- Systems (health and safety, and other);
- Contractor assessment certification;
- Insurance covers;
- Manpower with the ability qualifications, training, skills and expertise;
- Equipment and mechanical services backup;
- Materials; and
- Associations, etc
in place, prior to committing to the contract.
This can be simply done by developing a simple checklist that may just save your business from losing hundreds of thousands of hard earned income. This valuable document travels with the contract documentation and acts as proof of your due diligence if you are ever held to account for a contract that went wrong.
Never overpromise and underdeliver, or as someone once said, never offer the world and deliver a barrow load of dirt!
This may sound a light-hearted introduction to the topic of plant maintenance, but how important is this to your business and what are or could be the consequences if this is not done?
Please contact us with any enquiries today.