What Goes Around Comes Around

An electrical estimator has to deal with a lot of people, including general contractors, engineers and architects. Many estimators interact with vendors. How they treat those vendors can make a world of difference.

An ethics journey
Try a Google search for the word “ethics.” You will get about 187 million results. Now change the search to “ethics and construction.” There will still be more than 109 million results. There is a mountain of information and opinions and, of course, much disagreement.

One of the biggest eye-openers was how significantly ethics vary by geographical regions. Practices that are acceptable in Chicago may not be acceptable in Los Angeles. Ethics vary even more once you leave the United States. Some parts of the world actually consider bribery to be a regular part of business, whereas it usually indicates a loss of integrity here in the United States.

My first job in this industry was at a small wholesale house. After working there for seven years, I was offered a job in purchasing for a very large electrical contractor. My current employer could not match the wage offer and encouraged me to take the job. On my last day at the wholesale house, the boss took me aside and offered some advice. He said, “When you get to your new job, do not take anything.” I did not know what he meant, but he would not say more. It only took a little while for me to figure it out. So began my journey into the ethics of this business.

My first vendor-relations decisions
Soon after starting the new job, I had to answer the question, “Can I be bought?” If the answer was yes, how much would I go for? I had to make some quick decisions, as I was in charge of purchases that ran as high as $1 million per month. Keeping my previous employer’s advice in mind, I decided that the only thing I would take from vendors was lunch, with the qualification that they could not “buy me” with food. I informed them, however, that they could influence my purchasing decisions with great service and rock-bottom prices.

This approach worked very well, partially because I controlled so much money. If I held up an order to a wholesale house on Monday, someone called Tuesday morning, asking what the problem was.

I actually took this approach to the dismay of my boss, who preferred yelling at the vendors. I got the same lecture at least twice per month. Imagine a man with a heavy British accent yelling, “Steve, you’re not bloody hard enough on the wholesalers.” It was everything I could do not to grin. Let me qualify that. To this day, I am still fond of the man and have great respect for him. He taught me a lot and brought me from small contracting to large contracting without many scars. I simply disagreed with him.

As I matured and learned a little more about psychology, I came to understand that his approach may be necessary for some people, whereas my methods worked better with others.

Shopping your vendors
The next issue in dealing with vendors is shopping, which is the practice of revealing one vendor’s price to a competitor in an attempt to get a lower price (the same thing some general contractors do to you). This practice occasionally causes negative side effects, including not getting quotes until minutes before bid time, vendors holding back their best price, and vendors giving their best price to someone else. If you shop your vendors, they most certainly will use strategies to protect themselves. These problems with vendor relations gave me a novel idea.

I had just started a new job in an estimating and project management position that gave me authority over project purchases. I required my vendor’s sales staff to make their first price their best price and deliver it at least 30 minutes prior to the bid. I also told them the purchase orders would be written to the low bidder for the quoted price. It took a while for them to catch on, but the results were amazing. Once the vendors learned I could be trusted, I started getting low numbers hours before the bid. If the number got shopped (by someone else, of course), they would call me with the new low number. Better prices contributed to more winning bids with better markups. Unexpectedly, the vendors gave us better service after the sale, which, in turn, made me look good with my customers.

CARR has been in the electrical construction business 41 years. He started Carr Consulting Services—which provides electrical estimating and educational services—in 1994. Contact him at 805.523.1575 or steve@electrical-estimating.com.

About the Author

Stephen Carr

Estimating Columnist

Stephen Carr has been in the electrical construction business since 1971. He started Carr Consulting Services—which provides electrical estimating and educational services—in 1994. Contact him at 805.523.1575 or steve@electrical-estimating.com, and...

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