Good clients, who pay construction companies fairly and on time, who have recurring work, and are well organised, are like gold to construction companies and should be nurtured and looked after. I’ve done many multi-million dollar projects for the same customers, and in some cases projects have gone from a first phase to a second one and even onto a fifth phase. Many of these projects have been negotiated with the client avoiding the uncertainty of having to tender on the open market. When they were tendered we were sometimes awarded the project even though we didn’t have the lowest price.
So how do you keep a good client?
Of course you cannot keep competitors away from a client by price alone. There will always be someone who is prepared to undercut prices to get an opportunity to work for a good client. The only way to keep competitors out is by:
1. developing a relationship with the client
2. delivering a quality product, on time and without incident
3. being fair and honest with the client
4. acknowledging mistakes and rectifying the problems as soon as possible
5. managing the client’s expectations
6. not over-promising and under-delivering – if anything under-promise and over-deliver
7. senior management from the construction company being seen by the client on the project
8. project staff (in particular the contractor’s project manager) understanding the importance of building the relationship
This shouldn’t stop you from submitting construction claims and variations when you are entitled to do so. But, do ensure these are fair and that they are discussed with the client and that, where possible, you have assisted and forewarned the client to try and prevent the variation from occurring. In many cases, despite submitting and being paid large variation claims I have maintained good relationships with these client and have gone on to do further projects with them.
If a competitor’s price is cheaper than yours, explain to the client why your bid is more expensive. Remind your client of your past successes and achievements on their projects. Negotiate with the client, but don’t undertake a project at a price that will lose money.
Naturally, when a construction company does repeated work for a client there’s a danger they’ll become complacent and arrogant, and start to charge inflated prices for work. When a client discovers they’ve been taken advantage of they can be quite unforgiving.
Don't depend on only one client
Don’t become overly dependent on one client. Unfortunately clients also go through phases of spending and other times when they cut back on expenditure. Contractors who are largely dependent on work from one client can quickly run out of work when that client stops spending.
Stay in contact
When work finally runs out with a particular client due to another contractor winning the work, or the client not having further construction projects, stay in contact with them. This may entail a phone call every six months and as a minimum a greeting card at the end of the year. No matter how good the relationship was with the client you cannot depend on them remembering your company in a year’s time and inviting the company to tender for their next project. Regrettably clients have fairly short memories (except when it comes to remembering poor performance), so it’s essential to keep reminding them of the past relationship.
(Paul Netscher is the author of the acclaimed books ‘Successful Construction Project Management: The Practical Guide’ and ‘Building a Successful Construction Company: The Practical Guide’. Get your copies from Amazon or other retail outlets, in your choice of paperback or eBook. This article is an extract from ‘Building a Successful Construction Company’)
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The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein.
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