Managing the Contractor-Customer Relationship

Managing the Contractor-Customer Relationship

Introduction

Notably, for any project success, a close working relationship between client and contractor is significant since the success of any project revolves around the quality of the relationship between a client and the service provider. Also, trust and understanding between all parties is the basis of a good working relationship, and if managed correctly, it can result in a more permanent contract between all parties. Besides, proper relationship management will be beneficial to both parties for the long term, and the contractors will also be able to acquire a significant number of long-standing clients.

Ethical Issues That Can Arise in Contracting

Business contracts are only valid within an ethical framework that assumes contractual obligations are observed and fulfilled by most parties. Besides, the basis for an efficiently functioning economy is competing for, obtaining, and satisfying contracts ethically. Therefore, a company will lose contracts, particularly those with governments, and also waste valuable resources in legal entanglements with contractual partners seeking damages if it engages in unethical behavior (Erlandsson & Fjeld, 2017). For instance, ethical determination of prices is one of the ethical issues that can arise in contracting. Thus, it is essential to have some basis for determining your rates, for instance, cost-plus profit or moral market levels, instead of basing your prices on manipulation or hidden factors that are not ethical. Besides, after the calculation of the contract price, it is also crucial to ensure that a transparent fashion is used in presenting it, without hidden costs. As a result, when a contract is negotiated ethically, it will bring about a balance between the benefits to the supplier and the purchaser, hence being advantageous to both parties.

On the other hand, some conflicts of interest, for instance, bidding on work for which you decide who is awarded the contract, are not ethically acceptable, and therefore, it is best when you avoid them. However, other types of conflict with interest can be avoided with transparency when they arise because of factors beyond your control. Therefore, to make those conflicts ethical, you have to address the issue publicly (Gellings & Parmenter, 2016). Additionally, fair competition is another moral issue whereby, through the competitive market, you can know of the value you are offering to customers as compared with your competitors. Besides, you know that you have been presenting exceptional benefits when you obtain a contract through fair competition. However, a contractor has to work on reducing prices or increasing their quality if a competitor receives the contract (Erlandsson & Fjeld, 2017). Also, observing laws and regulations which protect the consumer, employees, and other market participants whereby you have to keep legal and regulatory constraints in mind when you develop an offer and sign a contract (Gellings & Parmenter, 2016). Moreover, it is good ethical practice to make a mistake on the safe side thus avoid legal problems  brought about by coming too close to questionable practices and also trying to define the exact legal limits when you are in doubt about the legality of contract provisions.

Benefits That Can Arise with Contracting

Becoming a contractor is such an attractive option compared to being employed since contracting delivers skilled knowledge workers a vast range of benefits. Recruiting results in increased earnings whereby a contractor is paid more than an equivalent employee and also takes home more net pay than the other employee, considering their tax status. On the other hand, contractors have a great variety and interests where they have a chance to choose their assignments and clients (Erlandsson & Fjeld, 2017). Hence, they can choose to work only on projects that interest them. Also, contractors are more flexible and can want when to work and when not to, since they have greater control over working hours and locations, unlike employees. Employees must report to work between set hours in a week with limited time off, hence making contracting more beneficial. Besides, contractors are more advantaged when it comes to holidays since they can choose to take as much or as little time off as they like. Moreover, they can work less to make the same amount of money as when they were employed because they earn more. Furthermore, in training, contractors choose which skills to develop and what exercise to take, and they also gain much higher satisfaction. When they are in control of their skills development, they return on financial investment.

Moreover, contractors are their boss and, therefore, no more office politics where they are under pressure to put in excessive hours, work on weekends, or strive for promotions to secure wage increases. Also, contractors are independent of their clients and do not become line managers unless in an interim management role. Additionally, another benefit with contracting is improved work and life balance whereby contractors have control over their destiny (Gellings & Parmenter, 2016). Contractors can choose to take the school holidays off with their kids or learn to sail with their increased earnings, which is their choice. Moreover, contractors can continue to perform a role that they love, train, and develop skills at their own pace, and also have an opportunity to choose when and where to work (Erlandsson & Fjeld, 2017). Furthermore, contractors have a chance to test out a new field of expertise without fully committing themselves to time job. If it does not work out, they can quickly and easily cut their losses.

Importance of the Communication Process in the Contractor-Customer Relationship

Success and failures of commercial construction projects ate often defined by relationships and communication. Therefore, if you have a team in place that can effectively communicate and navigate the construction process successfully, the chances of meeting the completion date and staying on a budget of your project increases. Additionally, not only is it essential to establish a good relationship with your contractor, but it is also crucial for your contractor to have a good working relationship with municipalities, subcontractors, and architects since they determine the flow of your project. On the other hand, a contractor having a good understanding of your needs and expectations, it becomes easy for them to lead the construction team effectively. Hence, reducing confusion and also preventing the slowdown of the construction process (Erlandsson & Fjeld, 2017). Besides, it is vital to provide the necessary information and how to reach each other in every way possible. Provide the company you have selected with the required information, for instance, a list of your contact numbers and email addresses, to make it easy to contact you when they have questions or in case of emergencies (Gellings & Parmenter, 2016).

Additionally, it is essential to discuss the details of the contract thoroughly and also, and it is not advisable to start with the job if you have any problem with the deal. Thus, discussing with your contractor each detail included in the document will help in preventing disputes. Besides, it will also bring a level of comfort to both the customers and the contractors. Also, inform your contractor about your response routine since having an active communication will help in speeding up your project’s progress (Erlandsson & Fjeld, 2017). Therefore, it is essential to let your contractor know your preferred response routine and at what time. Besides, if it is not possible to monitor your progress regularly, communicate to your contractor so that you can set a realistic completion date, and this is necessary for every project. Furthermore, establish and clarify payment terms and conditions early on to avoid anyone getting caught unaware when invoices are sent out or concerning economic fluctuations, change orders, or other unexpected factors where the budget needs to be adjusted. Also, select a primary mode of communication whereby, if phone calls are the primary source, significant decisions or changes should be followed up with an email always to ensure there is a written record of the conversation or decision (Erlandsson & Fjeld, 2017).

Also, choose on the point of contact to avoid things getting misinterpreted since the more aspects of connections there are, it also gets more comfortable for jobs to get lost in translation. Therefore, when there is a breakdown or mistake made, it will be easier to track the source when you have a primary decision-maker on both sides hence avoiding blame games (Gellings & Parmenter, 2016). Moreover, it is also important to communicate via visuals than verbal communication when talking about a project’s scope and design. Therefore, you can provide a client with a better representation of what you are talking about by taking advantage of 3-D construction technology.

Risks and Responsibilities in the Contractor-Customer Relationship

Notably, the lack of time is one of the problems faced by a project manager when hiring a contractor. After signing the contract, many times, the constructing process needs to start urgently, obliging the hiring company only to select the contractors that can begin immediately (Eriksson et al., 2015). Hence, lack of time in the initial preparation causes failure in the contracting since it is necessary to reserve enough time to prepare the contracting process. Besides, hiring the contractors available to begin the project immediately makes it hard to meet the real needs of the customer. Also, there is no guarantee that your project will be delivered on time. Therefore, for a successful partnership, contract planning is essential during the contracting process, and thus, the project manager must stick to the established selection criteria during preparation (Eriksson et al., 2015). Additionally, hiring a contractor without their documentation in order can fail the project. Therefore, it is necessary to verify the contractor’s documentation, take care of them, and also keep an updated registry throughout the whole project.

Moreover, a lack of effective control will lead to a lack of active management. The project controls, and the project management team must update the calculation of the actual performance index and compare it to the project plan. Usually, a weekly update is enough for the frequency of these updates, although they depend on the length and type of the project. Therefore, to reduce the problems that can be led by the contractor’s lack of management expertise, the project team should help with problem identification and also propose problem solutions to guarantee that the project will meet the contractual requirements (Gellings & Parmenter, 2016).

References

Eriksson, M., LeBel, L., & Lindroos, O. (2015). Management of outsourced forest harvesting operations for better customer-contractor alignment. Forest Policy and Economics, 53, 45-55.

Erlandsson, E., & Fjeld, D. (2017). Impacts of service buyer management on contractor profitability and satisfaction–a Swedish case study. International journal of forest engineering, 28(3), 148-156.

Gellings, C. W., & Parmenter, K. E. (2016). Demand-side management. In Energy Efficiency and Renewable Energy Handbook (Vol. 289, No. 310, pp. 289-310). ROUTLEDGE in association with GSE Research.