Planning Management in Construction Business

Uncategorized Jul 01, 2022

Negotiating a subcontract is a project that typically takes 6-8 weeks to secure each step (approach, qualification, preparation, site visit, negotiation, contract signing). It is important to commit to a reliable and realistic schedule and to understand the dynamics of the negotiation time to increase the chances of success.

Here are some problems regularly observed in the field:

  1.  Subcontractor sourcing is managed in a "stop & go" mode

The efforts invested in the search for subcontractors must be maintained over time to deliver all its promises. Indeed, the more subcontractors you have available, the more you will be able to accelerate your delivery schedule, increase your customers' satisfaction and thus increase your market share. Word of mouth works very well, and subcontractors realize that they are not alone in the market: this increases your attractiveness and your bargaining power.

  1.  The subcontractor threatens to leave if the job is delayed

In a tight or fast-growing market, the subcontractor has a favorable balance of power. His ambition leads him to saturate his production capacity by adopting the motto ("first come, first served"), sometimes at the risk of damaging the commercial relationship with the principal. However, the financial damage of a delay in a project can be very real. Taking as an example a contract of 12 weeks of work where the margin would be 15%, a delay of 2 weeks would cancel any possibility of return on investment.

  1.  No forward-looking schedule was discussed with the subcontractor before the end of the work

For the same reasons mentioned above, the absence of medium-term prospects for his activity may lead to the subcontractor's departure, who will prefer to settle in another geographical area by working for a competing company. The waiting time to get in touch with new subcontractors will only be lengthened.

An important part of your reputation and attractiveness to subcontractors is linked to the dynamics of the negotiations, the reliability of the planning and the anticipation of future needs.

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