Even though low price appears to be the deciding factor in selecting construction service providers, it is not the only factor. During the selection process, every member of the project team must focus on providing what their owners clearly want — service, quality or price. By asking probing questions, contractors can determine how to solve their customer’s problems and concentrate on making the owner’s project a success. When contractors give their owners exactly what they want, they will then get paid what they want. This is the only true “win-win”.
At a Construction Owners Association of America (COAA) Leadership Conference I asked attendees at my presentation to tell me how much quality and service matters when selecting contractors, subcontractors and suppliers. The results amazed me and gave me hope as a contractor who emphasizes quality and value over the lowest price.
Quality and service matters
Ninety-five percent of the owners surveyed stated quality and service matters when selecting contractors, subcontractors and suppliers. Many owners use pre-qualification and selection procedures that weed out the troublesome or problem contractors early on in their selection process.
Eighty-nine percent stated construction owners and developers will pay more for quality and service. I found this astonishing. When I bid or propose on most projects, it always seems the award is primarily based on low price since the quality is determined by the project plans and specifications.
How much more will they pay for quality workmanship, construction, contracting and materials?
- 36% will pay 1 to 4% more
- 36% will pay 5% more
- 18% will pay 10% or more
- and ONLY 10% will NOT pay more
How much more will construction owners and developers pay for good service from contractors, subcontractors and suppliers?
- 40% will pay 1 to 4% more
- 30% will pay 5% more
- 17% will pay 10% or more
- and ONLY 17% will NOT pay more
Quality vs. service
There is a compelling fact to consider from these results. Construction owners and developers will pay more for quality than service. This seems to contradict the ever increasing demand for perfect service and on-time completion in the customer focused business climate contractors operate in. The conclusion? Finished product is more important to owners than how they get there. In other words, poor service and lots of headaches during construction are not as painful as a completed project with poor construction quality.
Four out of five construction owners say they will pay more!
How much more depends on their needs, challenges and project goals. In order for contractors to cash in on this revelation, they must determine what their customers specifically want on each project they propose on. Focus on the important issues that make a difference to the owner and developer. Find out what matters most and is the top priority by asking before the proposal and addressing it in full detail.
George Hedley is a professional construction business coach and professional industry speaker who helps contractors grow, make more profit, and get their companies to work! He is the best-selling author of “Get Your Construction Business To Grow & Profit!” available at his online bookstore at www.HardhatPresentations.com. E-mail GH@HardhatPresentations.com to sign-up for his free e-newsletter, be part of an ongoing BIZCOACH program, or get a discount for online courses at www.HardhatBizSchool.com.