Survival of the pickiest

Published:  08 January, 2016

Being selective about bidding is a positive step for the industry, says John Daly of LJJ

Recent reports suggest that contractors are turning down 50% of London bid opportunities due to a less robust London residential market. While it may sound a far-fetched figure to some, the increasing trend to be more selective about which work to bid for stretches much further than the residential sector — and far beyond London.

While some may have seen the original story as a dose of gloom and doom about the residential market, to me it’s a very positive — and long overdue — development in the way contractors approach their new business pipeline.

During the downturn, lots of building-services contractors of all sizes were bidding for work that they couldn’t afford to deliver at the price agreed just to keep themselves afloat. Many of those that won business at any cost are no longer trading.

It’s a strategy that LJJ never adopted. We took the conscious decision during the downturn to limit growth but maintain our quality standards and future viability by only bidding for work from main contractors that we could trust, prioritising repeat business and focusing on profitability as well as turnover.

Things are looking up for the building-services sector (thank goodness), but the commercial value of that approach remains the same. It’s not a case of turning down work. No-one wants to turn down good jobs! But companies are protecting themselves from financial risk — and rightly so.

Estimating is a big cost to building-services contractors so, quite rightly, there has to be a commercial decision about where to invest that resource by choosing jobs that are deliverable and profitable, rather than going after any work that’s available.

Hopefully, as we start 2016 with a more robust construction market, we’ll start to see a return to the principles of partnering that were abandoned by so many during leaner times.

For a while, everything was about cost; developers squeezed contractors on budgets and programmes and contractors passed those pressures down to M&E specialists. We need to see an end to that culture of ‘lowest price wins’ and a renewed emphasis on quality and trust.

The whole sector needs to think more collaboratively if BIM is ever going to work and if developers want to add value to their schemes, and principal contractors want reliable delivery from their building-services partners we all have to prioritise value over cost.

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