Half Full, Half Empty or Drinking Problem

Some people see the cup as half full; some see the cup as half empty. I see the cup as fully empty because I know, left unattended, someone is going to drink the remains of the cup.

Among contractors and project managers, there are several management styles. Just as there are optimistic and pessimistic people, so too, contractors and project managers (PMs from hereon) come in various degrees of the same pool. When I was young (pre-PC USA), the typical contractor I was familiar with was gruff and loud. So, I began my career the same way. Made a lot of people mad but always got the job done. I have worked around other PMs who cheerlead the job to death. By the time the project is finished, every body might feel good but the project is a disaster and the client is left holding the bag – or several years become eaten up with litigation between the client and the positive PM. He aimed for half full and ended up half empty.

Over the years, it is my experience that most everything I set out to accomplish will fail. That is an honest surmise – not half empty or full – we live in a fallen world. This is not to say my projects fail – because they seldom do. The failure is accomplished in that I set high standards for the job and we seldom arrive at the top unscathed. We may miss but we end up above average – or half full. To become a successful PM, you must understand how to deal out respect – but cut the cards, first. Knowing where the potentials for failure lie and setting safeguards is your best strategy for bringing the job to completion successfully – or half full.

In the 80s and 90s, most of my work consisted of speculative construction. That means I would design the project, purchase the land to place it on that met the goals of the project, build the project and then sell it. Sometimes the speculation consisted of a home, or a group of homes. Other times, it was apartments, commercial buildings or land developments. For a few years, I developed a relationship with subcontractors that I would no longer recommend: As I became familiar with the subs, we began to dispense with contracts, substituting it with an understanding of what the unit costs would be. Seldom did this create a problem. But, every once-in-a-while, someone would become greedy and see a non-written contract as an opportunity to gain extra dough.

While building our own home in 1990, the electrician thought he would upgrade features without consulting me. I found a few as we went along and confronted him. He assured me I would thank him for it and I won’t even notice the cost. Well, the bill was double what it was for that same floor plan (it was our sixth time building this plan). I ended up paying him rather than get into a legal entanglement – but it was his last job with us.

You can see the problem that would arise if using this method of management to PM a home for a client. Unless the PM has an exact, turnkey price contract with the client, this method of management is likely to end up in a three-way lawsuit. Even within an exact price contract, the PM is left holding the bag, so this type of a relationship is not to be recommended.

A few years ago, a new neighbor was looking to build a home a few doors down from me. I consulted with him and told him I would build the project for an eight percent fee. I assured him, I would get at least three bids for every unit. He told me to draw the contract but the next day he told me he had cut a deal with a contractor from his church. It seems this PM was high up in the local builder association, which I had dropped out of a few years before because of their persistence in pushing bills before the legislature to increase regulations. The building association had come up with a new name for cost-plus and he had infected the client with the excitement of the new program. I warned the neighbor to make sure the only person on cost-plus was the PM and to make certain at least three bids were acquired for every unit. As it turned out, the contractor and everyone down-line was on a 10% cost-plus contract. By the time the house was framed, it was two-months behind schedule and $40,000 over budget. After that disaster, the neighbor was not interested in talking to me or anyone else and finished the project himself.

You see, whenever you leave a glass unattended, someone will drink the last drop. Don’t leave yourself open to failure. Just as important as having a sound contract with your client is your contract with your subs. In a future installment, we will review the necessary elements of contracts with subcontractors. Stay tuned . . . Meanwhile, work on keeping the glass half full.

About the author: Dean Isaacson

General contractor since 1975 (currently with Idaho Contractor). Previously held Certified Safety Administrator status from the National Association of Safety Professionals. Expert witness and forensics in construction related cases. Will help you with project management and marketing. We do cold calls and trade shows.

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