The Yin & Yang
If blue was the only color, there would be no blue.
Without sound there is no silence.
“In ancient Chinese philosophy, yin and yang is a concept of dualism describing how seemingly opposite or contrary forces may actually be complementary, interconnected, and interdependent in the natural world, and how they may give rise to each other as they interrelate to one another.”
Yin and Yang in Construction
To a large measure, some of the success enjoyed by contracting companies over the years is due to the forces of yin and yang that reside within their walls. The traditional design/bid/build business model that dominated the construction industry since the turn of the 20th century created a “natural tension” between the marketers (sales people) and the estimators (numbers people).
- Marketers are tasked with bringing opportunities in the door, prospecting for leads and selling the firm’s services. In the traditional design/bid/build model (gradually being replaced by a more modern procurement process that factors in quality, experience, and risk management) marketers researched the competition in an attempt to figure out what their pricing might be. Marketers might pressure estimators to find efficiencies and to consider best case scenarios in order to “tighten up” pricing. They might advocate for cheaper suppliers, non-union subcontractors, reliance on “extras” and other tricks of the trade.
- Estimators, on the other hand, seek to ensure a fully-costed bid that includes a reasonable profit and a cushion against the unforeseen. At the same time estimators work to be sure that they have accounted for all contingencies. Because construction projects are highly complex endeavors involving multiple, variously efficient sub-contractors, ever-increasing material costs, and persistent overhead cost inflation over time, the estimator’s task is formidable, indeed. For example:
Inflation can have a dramatic impact on the accuracy of future construction costs. Usually, budgets are prepared from known current costs. If an estimate is being developed for a project whose midpoint of construction is two years in the future, estimators must carry an inflation factor to represent the expected cost of the project at that time. Some factor in the CPI, the Consumer Price Index. However, the CPI tracks changes in the prices paid by urban consumers for a representative basket of goods and services, including food, transportation, medical care, apparel, recreation, housing. This index is not related at all to construction and is ineffective in adjusting construction pricing. Historically, Construction Inflation is about double the CPI, but for the last 5 years construction inflation averages three times the CPI. (Construction Analytics, 2-11-19)
Imagine how the marketers will react when they hear that news!
“Seemingly opposite or contrary forces may actually be complementary, interconnected, and interdependent…”
Perhaps the most important job of the construction company CEO is to make that happen. The savvy boss knows better than to encourage cooperation between these “get the work” professionals. Cooperation leads to compromise, and that is the last thing CEOs want either group to do. Some seem to understand that conflict and opposing views between professional passionate about their perspective usually leads to healthy outcomes. Then the CEO can step in and make the final decision if necessary, never forgetting that: Conflict Breeds Creativity.
Read More: Strategies To Win DBB Construction Proposals