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    « Opening Doors | Main | Where is the Construction? »

    October 16, 2006

    Converging on the Best Practice

    I just returned from Europe where I visited several countries.  I am always amazed at just how different practices are in different countries.  But another thing I noticed is as time goes on practices converge.  These practices are converging between European countries and also between the U.S. and Europe.  No the European's are not acquiescing to American practices!! In many cases they are more efficient and our practices are becoming more like theirs.  For example they do not create large bid sets and distribute them to every contractor who wants one.  They print sets as they are needed.  In many countries they also require the subcontractors to pay for bid sets.  Sound familiar?

    We have all heard the term "best practices".  There is a reason they are called "best practices" because they are the most effective.  Over time all markets move to the best practice.  Furthermore, all markets eventually move towards a "cost plus" model.  As a market becomes commoditized the pricing will move towards a model where the price to the customer is the vendors fully loaded cost plus a reasonable profit.  If a company is giving something away they eventually run into trouble .  Their costs rise and their gross margins stay the same.  If a service has a cost associated with it you must find a way to charge for it (at least in a commoditized market), or you will feel the squeeze.

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