Client/Contractor Business Model Ultimately Flawed?

Ever since I got into contracting I have come to believe the 'client/contracting' model to be flawed. I believe this is especially true for quoted project work.

On the surface, the client/contractor relationship is mutually benefical, win-win for both parties. But scratch a bit deeper and you will find that there is ultimately a conflict of interest that govern the dynamics of this relationship.

What is this conflict of interest you ask?

From the contractors points of view:

The client wants a full automated production line built, tested and commissioned in 2 days and only wants to pay a couple of peanuts for it.

From the clients point of view:

The contractor wants to charge me $100/hr to drink coffee, think a bit and type some code into a PC. Not to mention the ridiculous mark-ups they put on components - surely an illuminated push button doesn't cost that much?!

The truth is.

Illuminated push buttons do cost a lot.

The other truth is - the client and contractor have different views on how long & how much a job would/should cost.

The other other truth is - both the client and contractor are wrong. The project is going to take much longer and cost much more than either of them expected.

Therefore.

Programmers spend more time coding then was allowed for to get the job done (essentially doing work for free if it was a quoted job).
Likewise, the client almost always end up paying more then what was orginially budgeted for.

Result.

Everyone ends up dissappointed and feeling slightly bitter.


And that is why - the client/contractor business model is ultimately flawed.

The Hidden Costs

WHEN QUOTING A JOB YOU MUST EVEN FIGURE IN THE COST OF SOME ONE TO OPEN THE BOXES THE NEW STUFF COMES IN. UNPACK IT, CHECK THE PICK TICKET FOR ERRORS, PUT IT ON A SHELF, FURTHER THE MANUALS TO ENGINEERING. HOW ABOUT MAKING THE LABELS TO IDENTIFY THE PARTS IN THE ELECTRICAL CABINETS. THEN APPLY THE LABELS ! AS AN X LOW VOLTAGE CONTRACTOR I CAN ASSURE THESE SMALL DETAILS ADD UP TO LOTS OF $$$$$$$$$$$$$$$$. and there are hundreds more of small details that as a contractor can break you. THE CLIENT SIMPLY DOES NOT UNDERSTAND THE DYNAMICS OF BUSINESS. THE COST OF WARRANTY CAN RUIN YOU.

I been on both side of the fence now, am back in the client side of things.

Most of the problem are due to a lack of trust and understanding. This is the same for any type of contracting, whether an automation system or replacing your kitchen sink.

Sounds like you are a contractor right now. so my advice is to be brutally honest with your clients on cost and time.

In a perfect world it is quite simple.

Customer: Specify exactly what you require.

Contractor: Specify exactly what you will deliver and what it will cost.


The more details that can be agreed presales makes life easier.

I wish we lived in a perfect world...............

harryting said:

I been on both side of the fence now, am back in the client side of things.

Most of the problem are due to a lack of trust and understanding. This is the same for any type of contracting, whether an automation system or replacing your kitchen sink.

Sounds like you are a contractor right now. so my advice is to be brutally honest with your clients on cost and time.

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The advice would be good if the client was brutally reasonable in terms and value expectations.

MrQ said:

In a perfect world it is quite simple.

Customer: Specify exactly what you require.

Contractor: Specify exactly what you will deliver and what it will cost.


The more details that can be agreed presales makes life easier.

I wish we lived in a perfect world...............

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Problems with money and payment usually start when you supply the customer with what they asked for , not what they wanted.

curlyandshemp said:

Problems with money and payment usually start when you supply the customer with what they asked for , not what they wanted.

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This is a really good point!

Dead on

harryting said:

Most of the problem are due to a lack of trust and understanding. This is the same for any type of contracting, whether an automation system or replacing your kitchen sink

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Because of a great many social issues the client/contractor relationship in the US has become adversarial and not collaborative.

We can blame the lawyers, but we pay those bloodsucking impediments to progress and let them dictate to us. We have to live with the results.

The sad part is that its getting worse, not better.

Being a client for 18 years and then a contractor for 9 years and still being able to stay afloat, I have found that at the end of the day, the quote or contract is what prevails.

If you are a client and you want to get what you want, you have to provide a detailed specification. Otherwise, expect anything for what you don't specify, and don't be surprised to expect to pay extra for something you missed.

If you are a contractor, then you have to provide a detailed quote on what will be provided and when. You also have to recognize your company's technical limitations, no matter how big the payoff is. From what I have seen, the machine builders and contractors that get in the biggest trouble are those that take on jobs that are out of thier area of expertise, beyond the capability of thier resources or they don't recognize the difference between a sure thing and a development job. Also good quotes start from good record keeping.

Vague, open ended or incomplete agreements only end up in someone loosing money and ill feelings all around. Building trust is hard work.

ATU said:

From what I have seen, the machine builders and contractors that get in the biggest trouble are those that take on jobs that are out of thier area of expertise, beyond the capability of thier resources ....

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I couldn't agree more. The outfit I currently work for is this way, and it ends up costing me several weeks away from the family.

Tom Jenkins said:

Because of a great many social issues the client/contractor relationship in the US has become adversarial and not collaborative.

We can blame the lawyers, but we pay those bloodsucking impediments to progress and let them dictate to us. We have to live with the results.

The sad part is that its getting worse, not better.

Click to expand...

Well, Tom, once again you have hit the nail on the head. I predict that with the U$ economy in its present downturn, there will be more-and-more bottom fishing and also, what I call 'keep-the-vendor-interested' quote activity.

ATU said:

Being a client for 18 years and then a contractor for 9 years and still being able to stay afloat, I have found that at the end of the day, the quote or contract is what prevails.

<snip>

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Dude, you need to get out more.
I've seen people holding signed contracts in their hands, and denying that they ever understood what they signed, and faulted the supplier for not making sure the papers indicated what they wanted.

At the end of the REAL day, lawyers prevail.

Sure, I've been in the same situation. Did they take it to court?

The thing is, as a contractor you don't know the true cost of a project until you get into the detail design stage.

When asked to quote a project by a client, the contractor rarely goes into level of detail required to cost the job accurately.

When you got half a dozen projects to quote (of which you might secure 1 or 2), you just don't have the time/resources to accurately cost every project that comes your way.

Also, some clients have ridiculous deadlines on their tenders, forcing contractors to provide a rushed quote to meet the cut-off date.

The result of this flawed process is that projects go over-budget and over-time.

As many other posters have already stated - mutual trust is what is lacking in the client/contractor relationship.

As a contractor, I find I am always trying to cover my a$$ because the client tends to automatically blame me if something goes wrong.

I have a lot of goodwill towards my clients, I tend to bend over backwards to satisfied their requirements.
However, I find that a lot of clients tend to default to using threats when dealing with contractors.

Once the client starts playing the blame game, the contractor gets defensive and will refuses to admit any fault. Then the lawyers come in.

I read an interesting definition of 'scope creep'.

Scope creep -

The process by which the client decides what he/she really wants.