Established Relationships a Double-Edged Sword

Posted on August 19, 2011

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Some hospital administrators work decades to find a reliable design and construction team. No wonder when a team performs well more than once, that team can quickly find themselves a ‘preferred provider’ at the hospital. For the designer or builder, this is heaven. And for the Director of Facilities or VP of Strategic Planning, relief. The team trades off its institutional knowledge at your hospital, provides good service, and you in turn, have a reliable team with talent you trust.

But these are not necessary the Halcyon Days for capital projects. Established relationships can be a danger as much as a safety.

Negotiators are taught to be skeptical of clients with which they do frequent business because, over time, long-term relationships lead to loss of power for the buyer. The service provider tends to drift away from very competitive pricing strategies used early on to win business, and others stop calling on the buyer (‘I’m not wasting my time—Jones and Associates owns that hospital’), so competitive offers can be more difficult to achieve. Teams can get a little lazy and lose their edge, take things for granted, and play off their familiarity with the client to their benefit.

In many cases, a hospital can benefit greatly by seeing another way of doing things and a fresh perspective. New value can be gained as well. Think about the most common method for a significant pay raise. The recommended route is almost never to approach your current employer. Why? Because of your history, your familiarity, your established relationship. They know you well, maybe too well, and tend to undervalue you in relation to the rest of prospective employers. It always makes sense to test your value in the open market from time to time, just to keep everyone honest, and then go back to your favored partner with a counter offer.

The same is true with design and construction. I don’t mean to say established relationships are bad; they aren’t. Something to consider, though, is to engage in repeat business with someone you like, but not as an absolute sole source situation. It is amazing how much things can change in the market over five, seven, twelve years while you were operating in the safety of your relationship cocoon with your current designer and general contractor.

If you are a design-bid-build disciple, why not see what design-build can offer? A simple change of delivery method may be enough to shake up your current team, and provide a new perspective on what can be purchased for a dollar these days outside your current bidding arena. You may find you can get services not currently offered by your favorite firm. You may find more protection from risk. You may receive a significant amount of new, helpful technology and software at your disposal. You may even enjoy the process better.

And if the guilt is too great, you can always go back to the way things were—just go back armed with an education.

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