So we should make all non-USA first corporations take a loyalty oath now?
By “shallow roots”, I mean how invested they are in the US, materially. E.g. employees hired, infrastructure built, benefits paid etc. If that amount is near zero, does it matter if they leave the US? Presumably, they will still buy and sell in the US, if the profit is there, even if their roots lie elsewhere. I don’t know of any large companies that have embargo’d the US due to politics. If they’re that big of shitheads, good riddance!
That’s a bold strategy, Cotton.
If you tax organisations based on their headcount, they will find ways of lowering their headcount. If you want lower end jobs to disappear, a head tax is an excellent way to do it.
In fact, every custom software development / implementation company I ever worked for worked exactly this way. We submitted bids for projects we knew were unlikely, then got awarded the contract, then over the course of the project tried to find the sweet spot between delivering less than we promised / getting paid more than we bid / preventing the customer from being so angry we got sued. I imagine pretty much any bespoke manufacturer works this way. Try building a custom home sometime, this is exactly the experience you’ll have.
I am a general contractor who actually bids work that requires you come in within your price or you are going to lose money. We don’t do customs, we do commercial work. The problem with doing as you assert is that you never work for that customer again. Try remodeling a hospital and then half way thru the project you tell them your price was just a guideline and the actual cost will be 50% higher.
Yet we did do work again for the same customers. The measure of success was whether we could make a customer happy with the outcome despite the gap between expectation and reality. All custom software companies, and all ERP implementation companies, have to do this. It’s the business model. Hell, just google and you’ll find plenty of horror stories about how wildly ERP implementations vary from plan. Similarly, virtually all custom home builders do this. So it isn’t the case that only government contractors do this, that it is a phenomenon unknown in the private marketplace.
So, your point is clients are stupid? It is still an insane way to run government.
I also wonder about your custom home statement. Remodeling of a home perhaps, as with any remodel there can be the unforeseen, but when you are building new short of the client changing the scope of the project there is no excuse for exceeding the contract price.
I am not going to argue that some industries don’t do this, I think the new tech systems for California’s courts has ran way past any quoted prices, but it really is a shitty way for government to do business. I am not sure what my original post references (high speed rail?), but basically building something as it is being designed is a poor way to do things.
Are clients stupid, or realistic? The literature on project success rates is quite extensive, and no one could be familiar with it and not understand that almost all projects go wrong - if, that is, the standard used to measure them is initial expectations.
In any event, my point is this is not something cured by the magic of markets. It is an expression of the difficulty of predicting outcomes for complex efforts, and the inexact nature of managing large undertakings involving lots of people. Every single successful company quite often fails miserably at this, and it is not the fault of government bureaucracy.
Here’s an example: The various great investment banks of the world basically destroyed themselves when they undertook the project of profiting on the sale of shitty mortgage derivatives.
It is when government, aka the taxpayer, pays the bill. Is there any wonder contractors fight to get contracts for large government projects when they know in the end that their quote is just a guideline that will be adjusted thru the magic of the change order. I bet change orders in the high speed rail project, assuming it is completed, amount to a considerable cost of the total project. I say this as bridges that have already been built are being torn down, while the builder claims they were built to specs as they existed at the time and while he change orders the price of demo and a new bridge.
I don’t know where @scottagibson is getting the custom home example. If your contractors go over budget that should be on them, unless you signed some really bad scope of work proposals or something went south on the land itself such as shifting bedrock or failed groundwater tests after the planning. Contractors are supposed to build a cushion into their price to absorb misc overages.
I appreciate the sentiment, truly, but what you’re saying is that government employee project managers should be better and more effective than private sector project managers. Is that a reasonable expectation, given the difference in market incentives for public vs private employment? I don’t think so.
I keep bringing up the high speed rail here, because I think that is where I started in this thread and as a Californian I am aware of it. But you do realize that started out as an $8b project and at last estimate was over $80b.
The tunnel built in Boston a decade ago (maybe) was like that.
You can argue that large government projects often delve into the unknown and are therefore ripe for this kind of thing, and you would be right. It is also abused.
But, could you imagine Amazon or Apple building a new campus and it coming in 10x the original price?
Or there are undiscovered requirements, or poorly understood ones, or changes in the prices for materials, and so on. Anyone who’s ever built a custom home has had this experience, where at some point the contractor will say ‘we cannot do X for you as planned, because of Y, unless you can pay additional Z’. There may be some negotiation at that point, but the contractor will not consistently eat that cost.
A lot of government projects are absolutely worse managed than private sector projects, largely because they are spending other people’s money.
The entire system is largely setup to avoid accountability. Accountability just means that some government beancounter had decided to make more work for himself, which never happens. The only time real accountability happens, is when the failure actually bubbles up so far that it somehow becomes public and media coverage makes it politically uncomfortable, which is exceptionally rare.
Yes, I agree that it is abused. I just don’t agree that it is only abused in the public contract world.
If it was in the scope of work proposal, then the contractor has to eat it. If it wasn’t, then you negotiate. Source: my custom home and my wife works for a construction contractor. Material price changes are not the customer’s issue.
Managers of large corporations are spending other people ‘s money, too. If you can find some data which shows that private projects are demonstrably more successful than public ones, I am happy to look at it. What I think you’re likely to find is that it is size and scope which drive the success rates more than private / public.
As a contractor I can tell you having the price of materials rise during a 6 month project is normal, and no, you can’t turn around and tell the client he needs to cough up more money because the price of sheet rock or concrete went up. I have a friend who runs a flooring company and he will often for large projects have to buy and warehouse flooring for up to a year in advance to make sure he keeps the price he bid with.
Exactly correct. You stock as much material as you can while building a buffer into your margin. If the customer of a custom home got screwed with material cost rises, then they signed a bad contract.