Who do you trust? Who trusts you? The entire construction industry is built on these two simple questions. Without trust, without the belief that people will do what they say they will and can do, the whole industry collapses. We trust the subcontractor will show up on time. We trust the GC can execute the design. We trust the architect has worked through all the pesky design details. And we trust the engineer has anticipated all of the loads and done the calculations correctly.
The foundation of the construction industry is trust, but the low-price mentality undermines it
We trust all of these people and their talent, and without that trust the entire industry would collapse. The result of that reliance on trust is two-fold. First, we tend to work with the same people over and over again because we know what we’re going to get. We’re familiar with their capabilities and understand their constraints, which we can work around. The upside of that is the more trustworthy you are, the broader your reach and the greater the likelihood you can expand your business.
We often talk of trust in terms of truth-telling honesty, reliability and other personal characteristics of what we would consider a good person. But trusting someone in a business relationship also means you trust their ability to manage people and resources in a way that is efficient and predictable. The most honest person in the world who can’t manage a crew is not trustworthy in the construction world.
The second result of an industry entirely built on trust is that it is slow to change. If you are uncertain about a product, such as a new rainscreen fastening system, or a service, such as an automated final-mile distribution model, you’re going to be slow to adopt it. You’ll wait till it’s proven and has shown its trustworthiness.
In our industry, we like our well-worn paths because we’re confident in our success and we can build a business based on that success. Experimental ideas bring in too much potential for chaos, and that is the death of any company in our industry.
There is, though, a chaos agent in our midst that undermines all the trust we build with our business relationships and they with us. Price. The industry’s reliance on low-price bidding undermines the very foundation of the industry itself. It strikes at the heart of trust because we are pushed to accept the lowest (or a lower) price even when we don’t trust the outcome or the people involved.
I would like to see research on this, but I would be willing to bet that 99.9% of conflict in construction comes about because we trusted someone to do something but, because we had to get a lower price, they were actually incapable of delivering on what we trusted they would do.
There’s a lot to unpack with that idea, including improved communications helping to build trust, but the idea is that price and trust work in opposition to each other.
Think of trust as value. With trust, we build value. Our clients get more for their money because we are trustworthy. But price lies in opposition to value and, if our clients want a lower price, that means they are also asking for lower value. And what they’re really telling you is they don’t completely trust you. You have not convinced them of the value of your service or product.
The only way to do that is to work over time to build up trust so they will begin to value you and move away from undermining the process with a focus on price. Companies that can demonstrate their value earn trust and can stop competing on price.
