Never underestimate good construction industry relationships

Industry Viewpoint

People like dealing with people they like and at a time when the construction industry (like most other sectors) is coming under pressure from multiple directions, the importance of a good relationship should never be underestimated.

The contractors challenge

I was recently part of a conversation where a contractor, a consultant and a client were all talking about the challenges they are currently facing. The big challenge for the contractor is they are presently delivering projects that were tendered before Covid. They were tendered at a price that was appropriate at the time. Due to Covid these projects have faced delays and now they are being delivered, but the cost of materials and labour has skyrocketed.

The main contractor is being put under pressure from every subcontractor who are stating that despite starting the job, they can’t complete it based on the quotes they originally submitted. As a result, they want to renegotiate or they may have to walk away from a part delivered job, despite being in breach of contract. This has resulted in a very difficult situation for all concerned.

A common occurrence

This is not an isolated incident. This is happening throughout construction. The long and the short of it is that the main contractor can deliver the project at the cost they originally quoted, but they would be taking a big financial loss which could put the stability of the company at risk. Furthermore, the subcontractors are not in a position to complete the work and are asking for more money, which is putting the main contractor under even more pressure.

The only real solution is for the main contractor to have an open and honest conversation with the client in the hope that costs can be renegotiated. The client will not want the main contractor walking away and the main contractor will not want sub-contractors walking away. The cost and impact of re-tendering and picking up work that has already started will just add more delays, complexity and could impact quality.

Relationships are critical to success

This is where relationships come in. It is so critical that everyone up and down the supply chain has a good, solid working relationship with their customer.

Personally, I can’t think of another industry that is founded on relationships in quite the way the construction industry is. I have always said that once you become part of the construction industry you are in it for life. You may move around from one company to another but you won’t leave the industry.

As such, maintaining good relationships are critical – you never know when you will bump into a former colleague or client. The ability to hold open and frank discussions will hopefully see us through these challenging times as I have a feeling we will have many difficult conversations to have over the coming months as we deliver a legacy or tendered projects.

If your construction or property business would like some support with communicating your projects or positive relationships, please contact our MD, David Ing by using the contact button below. You can view our experience by clicking here.