The words “we,” “us,” “you” and “our” appear frequently in this book. To whom do they refer? They refer collectively to the primary performer of a contract obligation and to all entities that have assumed some responsibility for performance under the direction of the prime performer.
In virtually all projects, except possibly some very small ones, the prime performer will engage the services of some combination of consultants, suppliers, and subcontractors. Under a common law doctrine called privity of contract, except under special circumstances the secondary performers are invisible to the customer. The customer, when seeking a remedy for any failure of performance, will talk only to the prime performer. The prime performer generally is unable to shift blame to any secondary performer.
For this reason, it is wise for the prime performer to be very careful in the relations it creates with secondary performers. Not only should these relations be fully defined in writing, but the writing itself should be carefully reviewed to be sure it is free of ambiguities, conflicts, and omissions.
Using carefully drafted documents to create a relation between the prime performer and a secondary performer is necessary but not sufficient to guarantee that the relationship will be successful. Success depends in large measure on the desire and the ability of the secondary performer to have a successful relationship. Hence, the prime performer should seek to form relationships only with secondary performers who are 1) qualified and 2) motivated.
“Qualified” means that they have available the resources, physically and intellectually, to do what is asked of them. “Motivated” means that they strongly value and want to protect their relationship with the prime performer. In the case of consultants, qualification is usually established by reviewing some combination of academic credentials, licenses and certifications, and a verifiable record of success in similar consulting assignments. In addition, the consulting hourly rate or blanket fee must be acceptable. Further, the consultant must come equipped with all of the tools (hardware, software, memberships, relationships, knowledge, etc.) appropriate to his or her specialty, and must be available when needed.
In the case of suppliers, unless a delay is acceptable for some reason, a supplier must have in stock the item needed at the time it is ordered, and must have an acceptable price. Suppliers must also offer acceptable warranty and return policies.
The relationships between a prime and a consultant and between a prime and a supplier are generally quite simple compared to the relationship between a prime and a subcontractor. Subcontractor relationships are frequently very complex due to the many instructions necessary to define them. These may include drawings and specifications, statements of work, schedules, test procedures, quality requirements, shipping instructions, and numerous other documents, plus mechanisms for reliably and quickly accomplishing changes in design baseline. Therefore a prime has, or should have, considerable interest in the details of the capability of a subcontractor and the subcontractor’s supply chain, and in the stability and reliability of the processes the subcontractor has in place. The skills and experience of the subcontractor’s management will also be of interest.
Determining motivation of a consultant, supplier, or subcontractor is a trickier matter. Motivation, unfortunately, can be feigned. It can also change with circumstances. The only way to be reasonably sure is to test from time to time. Are commitments met? Are promises kept?
Unfortunately, the due diligence necessary to verify these characteristics is often missing. The sad result can be missed delivery dates, poor quality, design errors, and extra costs.
Chapter 3 Review Questions
- Have you ever experienced a significant failure to perform of a subcontractor, supplier, or consultant? What damage did the failure do to your project?
- Could the failure experienced in question 1 above have been prevented by reasonable and appropriate due diligence? About how much do you think the due diligence would have cost?
- A frequent problem with subcontractors entrusted to create complex, high technology devices is that their initial estimate of what the device will cost to produce is quickly forgotten as the project wears on. Ultimately, it may turn out to cost five or ten times as much. Given that this is not uncommon, what steps can you think of that would keep this from happening?