Business Finance - Management QSO 349 Homework ( week 8)

THE ETHICS OF CONTRACTING. British architect, 1874-1919; Apr 13, 1877; 7, 15; British Periodicals pg. 227  

THE  ETHICS  OF  CONTRACTING     CONTRACTORS  of  experience  know  that  in    cases  where    there    are    but    few   competitors,  if    the  works  are    at    all    complicated,  mistakes    made  by  bidders   frequently  occur,  either  in  omission  of  portions  of    the  labour  or  material,  or  both,  or   in  the  computation.  Through  inexperience,  the  mistake  is  often  in  undervaluing  the   cost  of  labour  and  quantity  of  material.  It  follows  that  the  chances  of  such  mistakes   increase  in  the  same  ratio  to  the  number  of  bidders.    But  the  mistake  having  been   made  and  the  bids  becoming  public,  a  false  pride  prevents  the    bidder  from  “backing   out  ,”  even  on  discovering  the  mistake.  

In  the  competition  for  public  works,  there  are  two  other  classes  of  bidders-­‐ one  that  bids  with  dishonest  intentions,  calculating  in  making  up  the  bid  the  item  of   "  scamping  the    job,"    and  one  that    bids  in  ignorance  of  the  nature  of  the  work    for   which  the  bids  are    offered.    A  bidder  of  this  last  class  may  be  seen  hanging  around   the  office  of  the    architect,  or  wherever  the      contractors  may  be  engaged  in    figuring     the    job,  picking    up  such    information  as  he  can    to  make  his    bid    upon.      Thus  it  will   be  seen  how  it  often  happens  that  contracts  are  set  below  cost-­‐that  is,  if  the    cost  of     actually  fulfilling  the  demands  of  the  specifications  is  computed.        Now  comes  the   rub.  The  successful  bidder  has  become  the  contractor  either  through  a  mistake  or   dishonest  intentions.    The  effect  is  much  the  same  upon  the  building  in  either  case.       Satisfied      that  the  work  has  been  undertaken  too  low,  it  is  slighted  at  every  point     possible.      The  owner,  in  case  of  private  work,  is  often  his  own  superintendent.    He  is   satisfied,  through  ignorance  with  the  work  as  it  proceeds,  but  awakes  to  unpleasant       discoveries  during;  a  storm  when  the  rain  comes  through  the  ceiling,  the  winds   undulate  the  carpets,  and  the  perfume  of  drains    permeate    the      parlours.  Then  we   hear  the  outcry  against  dishonest  contractors;  and  unfortunately  for  the  class  the   charge  has  good  foundation.  

It  sometimes  occurs  that  a  contractor  will  perform  his  contract  honestly,   even  with    the  knowledge  that    he    is    losing    money;    this    is    the  case  much  oftener   than  the  public  will    give  him    credit  for.      It  will  not  require  a  professor  of  political   economy  to  understand  that  this  course  cannot  long  be  continued.      To  pay  out  more   than  is  received  would  soon  result  in  the  man  being  no  longer  a  contractor.  

On  the  other  hand,  an  owner  of  a  building  cannot,  as  a  rule,  get  more  than  he   pays  for.        To  educate  the  public  conscience  to  a  higher  standard  of  value  received   than  it  at  present  knows,  would  soon  do  away  with  the  charge  of  "dishonest   contractors."      We  get-­‐and  can  only  get-­‐what  we  pay  for.  Within  the  past  few  years   contracts  have  been  frequently  let–  perhaps  its  will  not  be  saying  too  much  that  they   have  been  usually  let-­‐at  less  than  cost;  that  is,  if  the  specifications  were  strictly   fulfilled.  This  applies  to  both  public  and  private  work,  and  necessarily  implies  the   general  bankruptcy  of  contractors,  or  a  general  slighting  of  the  work.  Contractors  of   over  twenty-­‐five  years’  practice  in  their  business  and  still  actively  engaged  in  it,  in   this  city,  who  have  the  reputation  of  uniformly  performing  contracts  with  the   utmost  fidelity,  have  been  in  these  last  few  years  almost  unable  to  obtain  a  contract  

wither  public  or  private.  Private  work  alone  was  possible  for  the  faithful  contractor,   and  that  only  when  the  owner  or  the  agent  took  proper  means  to  bar  out  the   dishonest  and  incapable  bidders.  The  consequences  of  this  method  of   undervaluation  are  plain  enough  to  be  seen.    The  work  is  improperly  done,  to  enable   the  contractor  to  get  through  with  as  little  loss  as  possible.    One  of  the  worst   features  of  this  method  is  the  nonchalance  with  which    contractors  generally  come   to  treat  it.      "He  got  what  he  paid  for,”  is  the  usual  remark  among  them;  and  this  is   true,  but    none    the    less    unfortunate.    Their  curt,  rough,  outspoken  remarks  contain   the  germ  of  the  whole  truth.    Every  cheap  and  flimsy  house  bears  witness  to  it.        The   manifold  imperfections  in  both  the  plans  and  specifications  multiply  in  the   construction  of  the  building.      Cheap  plans  are  first  sought,  then  cheap  contractors;   the  result  is  a  cheap  house.    The  cheapening  system  prepares  the  way  for  slighted   work.    The  one  follows  the  other  as  night  follows  day.    Those  making  the  demand,   however,  are,  strangely  enough,  disappointed.  They  expected  to  get  more  than    they   paid    for.      They  have  only  been  buying  a  house  of  Peter  Funk,  that  is  all;  but  again   comes  the  outcry  against  ''  dishonest  contractors."  

A  conversation  heard  while  riding  in  the  street  cars  not  long  since  would   seem  to  answer  this  question:-­‐  

"  How  much  did  your  house  cost?"   The  sum  was  named.   "That's  very  cheap,  is  it  not?"   “Oh,  yes  (smiling),  that  fellow  lost  money  by  my  house.  It  is  a  cheap  house-­‐

very  cheap,  sir."   The  possessor  of  that  cheap  house-­‐and  it  is  a  cheap  house-­‐chuckles,  and  

wraps    his  warm    overcoat    around    him    with    a  sense    of    supreme  satisfaction,   while  "that  fellow"  who  "lost    money    by  my  [his]  house  11  wears  a  coat  too  thin  for     this  zero  weather.    The  man  so  pleased  with  himself  for  over-­‐reaching  is  living  in  a   house,  and  calls  it  "my  house”  that  was  built  by  subscription-­‐the  workman   subscribing    muscle,  the    merchant    material.  "That  fellow”  is  digging  away  at   another  cheap  house,  slighting  it  all  he  can,  trying  to  scrimp  enough  out  of    it    to    pay     for    material  that  went  into  the  “very  cheap  house,  sir  ."  

The  too  common  practice  of  bringing  into  competition  with  this  class  of   contractors  those  who  are  known  to  habitually  slight  their  work,  although  capable   of  doing  good  work,  and  those  who  have  neither  experience  nor  ability,  incapable   under  any  circumstances  of  performing  good  work,  has  a  tendency  to  lower  the   character  of  contractor  generally,  and  deteriorate  the  standard  of  good  work.  Every   man  in  the  building  business  who  has  been  a  resident  of  this  city  twenty  years  and   upward  well  knows  the  inferior  manner  in  which  work  on    buildings    assumed    to     be    first-­‐class    is  to-­‐day  performed    compared    to    that    which    they    saw    done    in       years    past.  No  other  men  lament  the  decline  in  good,  substantial  work  so  much  as   they,  for  no  other  class  of  men  so  well  understand  the  general  deteriorating   influences.      And  yet  these  very  men  must      perforce  adopt  the  methods  in  vogue,  or   get  out  of  the  way.      In  Rome  one  must  do  as  the  Romans  do,  is  true  in  this  case.    A   contractor  who  relies  entirely  upon  making  a  living  by  doing  good  honest  work  will   starve  in  less  than  a  year.      The  men  who  are  willing  to  pay  for  such  work  are  few   and    far    between,  and    these    few  are  not  always    building.      Therefore  all  must  fall  

into    line    unless    some  other  occupation  offers  by  which      a    living    be    made;    and   but  few  contractors  know  any  other  way  than    the  one  which    has    been  a  life-­‐work   with  them.  They  must  make  the  best      of  their  own  business,  whatever  be  the   consequences.  One  of  the  strongest  influences  at  work  in  extending  the  worst   features  of  the  present  system  of  contracting  in  the  building  business  is  the  natural   aptitude  of    people  to  compare    the    cost    of    two  buildings    by  their    relative    size.       The  average  man  who  pays  for  a  house  measures  its  value  by  the  number  of  stories   and  the  superficial  feet  of  ground  it  covers.  To  him  a  house  is  a  house.    There  are  big   houses  and  little  houses.    John  Smith's  is  as  large  as  mine,  and  it  only  cost  so  much.       An  architect  and  builder  knows  what  this  talk  means,  and  down  goes  the  character   of  the  house  in  accord  with  John  Smith's  house.    After  that,  no  house  in  the  city  of  the   same  size  must  cost  any  more,  all  the  better  if  a  little  less.        The  character  of  the   work  is  thus  fixed  by  the  cost.    Houses  are  like  men:    it  is  easier  to  lower  the   character  of  either  than  to  raise  it.      It  is  not  certain  but  that  the  elevation  or   depression  of  the  one  will  be  correspondingly  accompanied      by  the    other.    The   general  notion  held  as  to  the  character  of  the  average  contractor  would      seem    to     sustain    this    idea;      for    that  a  general      depression    in    the    character    of      the  work     on    buildings  has  taken  place,    is  true,  whatever    may  be  assigned  as  the    cause.-­‐ Milwaukee  Sentinel.