Know When to Hold Them, Fold Them and Especially When to Walk Away

The afternoon of March 15th I walked out of an appointment to the receptionist telling me the new FIU bridge had collapsed. My heart sank as I prayed there were no fatalities which of course I knew was most likely inevitable.

Throughout the days that followed I took many calls from professionals in our industry, as disheartened by the event as I am to this day, with most providing insight into probable prevention. The call that has been resonating the most with me was the call from someone informing me that the closest competitor on the bridge project walked away from the project as their price was two million higher and they could not cut their price further and be assured coverage for safety and the unknowns of building a project of this design. They stuck with their go-no-go and are thankful today they did, despite how exciting the project seemed at the time of bidding.

Construction is wired for new challenges and losing the opportunity for a new one can hurt. It is only when those that feel the pain of taking the wrong project typically tend to pick and choose projects future carefully.

Insurance companies are who typically write and publish go-no-go articles. They know first-hand the cost when a contractor takes on a project they need to pay out on. Insurance is focusing on the business costs while the human capital costs can be beyond calculation.

A contractor, no matter what size company, takes a project they are not staffed, financed, and ready to handle can go out of business with one bad project.  Even if the project doesn’t put them out of business many times they lose key personnel, financing capabilities and business structure they may never fully recover from.

Example: A company typically does high-end retail and restaurant work in the 1 to 5 million dollar range takes on an industrial warehouse project contract value 5 million. All the projects are lump sum contract, so what’s the big deal. They are no longer the experts. Unless they have a leader that has industrial warehouse project experience and can make sure the preconstruction, project management, field supervision and accounting are adequately covered on this project. It is most likely a new set of sub-contractors, different code compliance, safety issues etc.. will come into play.

You can take the example above and change it out to a company specializing in public work takes on a private project.  A company that has done tenant build-out work takes a ground-up project they are not equipped to handle.  Often, a General Contractor will take the subcontractor they know who have done smaller projects for them and give them the opportunity to do a much larger, more significant project only for both sides to have the project and relationship fall apart because the subcontractor did not have the bandwidth to take the project.

Staffing is the majority of the equation for a successful project.  Yes, the old saying “One bad apple can spoil the bunch” holds true. Most companies think that staffing a successful project is strictly the project specific management team, but that is so untrue.  The field team without the right support in leadership, accounting, safety, and preconstruction are often set up for failure no matter how qualified they are for their roles.

We have provided for you downloadable Go-No-Go checklists.  There is one for General or Prime Contractor and one for Sub-contractor working for a General Contractor. Ours is a bit different than the standard risk management Go-No-Go’s because we have included questions to ask yourselves that dig a little deeper into what can and often does go wrong.

We love to celebrate your success with you, and we mourn over the losses like the FIU bridge project.

We hope you will take the time to evaluate your projects and know when to hold them, know when to fold them even if you have put time and cost in them and know when to walk away.




1 Comment
  • Gordon Drury

    I use this same matrix when evaluating potential employers. The low bidders are always suspect. To bad as the margins keep rising for the builders and developers, our wages stagnate. That bridge was built by the low bidder using cheap labor just grinding their 8 hrs. They could have cared less about the consiquences of their shoddy work. Florida Construction industry Ethics and Standards are those of a third world Banana Republic.

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