November 11, 2009

EllisDon CEO proposes a subcontractor bill of rights

Subcontractors are key to our future. We recognize without their loyalty, EllisDon cannot compete or ultimately, survive.

We all know if EllisDon is the preferred general contractor (GC) throughout the subcontractor market, we will have a substantial advantage over every one of our competitors.

And yet, I acknowledge, we are still not 100 per cent consistent across the board in our treatment of these partners.

We are almost there, I think, but not completely there. Sometimes, games get played. Sometimes, relationships get cashed in on. Sometimes we don’t execute and sometimes —hopefully rarely — it is tempting to trade ethics and reputation for a few dollars of profit in the short term.

This is not what anyone at EllisDon wants to see, anywhere or at any level.

Therefore, here are some steps to ensure we always treat our subcontractors professionally and ethically.

Let’s call it a subcontractors’ bill of rights, or code of ethics, which we would commit to, every day, in writing, or pay the price.

There are five principles I am suggesting:

1. Price shopping will be an employment termination event: Price shopping is when, during a bid close, one subcontractor’s lower price is quietly given to another subcontractor in order to make that sub low. It is one of the most unethical practices in the industry and cannot be tolerated at EllisDon.

We have a Verbal, Written and Gone policy on our sites regarding safety. We will institute the same policy with respect to this price shopping. Caught once, it’s a verbal warning, twice and it’s written, three times and you’re gone, regardless of seniority. If any subcontractor has concrete evidence or proof of bid shopping, they are welcome to contact me directly.

2. The low qualified sub at closing gets the job: A pretty simple concept, really. We need to make sure that we get all the info on every price at closing, so we know which price to carry. If you’re the low qualified sub at closing, you get the award on those terms, period. (Let’s acknowledge that construction management (CM) subcontractor bids to clients often have more complexity and are often beyond our control, but our ‘recommendations to award’ should follow this standard.)

3. No backcharges: We define a backcharge as a charge on an EllisDon project without both clear advance notice and appropriate justification/documentation. This idea we can just send out backcharges at the end of projects, without an adequate prior warning (enabling the sub to fix the problem) and appropriate justification, has got to die. If the sub can show an inappropriate backcharge, according to the above definition, it gets cancelled. Regardless of the amount, we eat the loss.

4. Timely payment: If we don’t include a sub’s legitimate billing on our invoice, or if we don’t bill the owner when we should (and as a result the sub doesn’t get paid on time), we will pay the sub interest at prime plus two per cent on the payment delay.

5. Returned phone calls: We will return your phone call within 24 hours, or you can to call me to complain. EllisDon must commit to this standard. If our people are on holiday, they will leave instructions as to whom to talk to in their absence.

Now, these issues are often more complicated than contemplated by these strict standards. On CM projects, clients often control bid closings and awards (we will let subcontractors know the process so they can decide what they want to do).

But, day to day, the bottom line is: what is fair and ethical in both directions?

Appropriate judgement, openness and fairness are required from everyone.

EllisDon is determined to be the best in the industry and that demands high standards of execution, professionalism and ethics at every level, every day.

That’s our promise.

I am happy to hear from anyone on these issues at any time. It is my intention — after some helpful advice — to finalize this code of ethics, and issue it to every EllisDon subcontractor.

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