Transparency in fixed price construction – Do we need more of it?
Congrats! You have been awarded the largest lump sum contract in your construction company’s history.
The owner makes one request that you weren’t expecting, they want to see all your craft names, trade classifications, and man hours on a daily basis. Oh yeah, please include all your equipment and tools while you’re at it.
For most owners, the more information the better, so they are probably very happy if you oblige. But what are some of the reasons this info important to owners?
- Performance: Is your contractor making or losing money on this project?
- Safety: Detailed daily data of manpower and assets on site.
- Quality: If you’re struggling to make money on the project or burning far too many man hours relative to progress, they may look for quality issues/shortcuts.
- Cost: What would the cost have been if the owner went with a reimbursable contract? How much money did the contractor make?
The industry appears to be headed towards a far more transparent model and there is opportunity & rewards for vendors and owners that embrace the change.
How do you feel about this level of transparency? Are owners interested in this info? How will contractors respond?