WWEMA Window: Great Expectations — A Supplier's Point Of View

By Nathen Myers, SUEZ Treatment Solutions North America

Your team has been diligently working for over a year on a project and its bid time. You submit your equipment supply offer and eagerly await the results. Then, the good news: the project is yours! Even before the end of the celebratory high-fives, the clock is already counting down the minutes to final negotiations and after a few weeks of back-and-forth, you have a signed contract and the execution phase of the project commences.

But what is the ultimate end game? Is it really enough to deliver equipment based on the terms of an executed contract, or is the answer broader and less tangible? Have you truly met the expectations of your stakeholders and managed your relationships to ensure that, at the end of the day, you have delivered not only equipment but also the best possible customer experience?  

Every project involves multiple stakeholders such as the equipment manufacturer (supplier), general contractor (GC), engineer (consultant), end-user (owner), etc. Every interaction with any one of them presents an opportunity for a fruitful “client experience.” In an ideal world, a supplier would perform with a combination of an unambiguous scope, a set of clear expectations, and harmonious communication. In reality, this is seldom the case. With so many stakeholders, every project has the potential for misunderstandings, misinterpretations, or unfulfilled “perceived expectations” that can undermine the quality of the project, fracture relationships between the parties, and hurt future commercial opportunities. It is therefore crucial to be watchful of signs that the relationship is in trouble and to act quickly to mitigate any damage.

Throughout the life of the contract, a number of situations can arise to undermine trust in the supplier’s ability to deliver. At its core, a good supplier can deliver a superior client experience based on three components: communication, responsiveness, and delivery. A supplier may believe they are providing these three attributes but fail to see that one or all are not meeting their client’s expectations. Managing communications with all of our relationships is crucial. An inability to create successful relationships can create a caustic environment regardless of whether the issue is real or perceived.

However, managing relationships and offering effective communication alone cannot resolve every issue.  Capital equipment projects are complex and fraught with client expectations that can quickly imperil the supplier’s ability to deliver a seamless customer experience if left unmet. Some of the following examples should sound familiar to every supplier organization and prompt a call for watchfulness. Your reputation may depend on it.

Terms and conditions (T&Cs), which lay the groundwork for the execution phase, are predicated on compromise; however, if the client (generally the GC) feels they are forced to accept the supplier’s terms due to specification position, a negative perception can be created from the onset. On the other hand, if the supplier feels they are forced to accept riskier terms than what was covered in their pricing, then they will be more reluctant to provide above-and-beyond support during the execution since the risk could potentially erode their margin. 

Most suppliers will not commence execution on a project without a signed and contractually binding agreement; however, this process can take several weeks to finalize. If a client has a schedule constraint, this can lead to an expectation that the supplier is responsible for meeting the schedule, regardless of whether or not they are contractually bound to do so, including any additional time associated with the consultant’s submittal review and approvals, especially if multiple revisions are required. This is important since most suppliers will not “release to fabricate” until the submittal approvals are received. It is therefore crucial that schedules be well defined to avoid any misunderstanding.

Another common point of confusion are the expectations set during the selling process (between the owner, consultant, and supplier’s commercial team) that are not equivalent to what is understood during execution (supplier’s execution team and generally the awarded GC). Budgets estimates can quickly become budget escalations due to additions made during the detailed design phase. At times, a client’s expectations may go beyond the agreed-upon contractual obligations. Not complying with these additional requests can create acrimony and a perception that the supplier is difficult and unresponsive.  Furthermore, determining the cause of technical issues is often the responsibility of the supplier and the burden of determining “how to make it right” often falls on the supplier, even if the root cause was beyond their control.  

Similarly, a misalignment between the prime contract (between the owner and the GC) and the subcontract (between the GC and the supplier) can lead to differing expectations. It is common for a supplier to not sign up for the same risk defined in the prime contract since a supplier’s scope is substantially smaller. Equally common is a lack of clear understanding between the involved parties.  For example, a typical project will have an owner that has a direct contract with a consultant and one with the GC. The GC will have a direct contract with a supplier. At the end of the project, both the consultant and GC will exit the project sometime after commissioning; however, the supplier will have equipment that is expected to last many years and is judged by the owner on how well the equipment performs. Since the ultimate relationship is between the owner and supplier, should communication protocols be expanded during the critical design, selection, and installation phases?

One of the more critical issues is retainage release. If a GC perceives that the supplier has caused a delay or contributed to the owner withholding payment, this could lead the GC to withhold retainage regardless of whether or not the contributing factor is contractually justified. With an understanding that legal action should always be the option of last resort, it is sometimes difficult to resolve these situations and to finalize the project without fracturing relationships and negatively impacting future projects.

At the end of the day, it is truly possible to fulfill all expectations? Perhaps not. But as the old saying goes, “It is not about the destination, but the journey.” This holds true to the premise of this article. Just because one has provided a solution does not mean that the client is satisfied. The process in which the solution was obtained could have lingering impacts related to perceived expectations not being met. It is not my intention to provide solutions for the examples provided in this article, but to offer a suggestion that we be mindful of possible situations and look for clues that perceived expectations are not being fulfilled. We may not always be able to address the needs as perceived; however, recognition of potential pitfalls is the first step, followed by prompt communication. In the end, we all want the same thing: a great installation, delivered on time, at a fair cost, and without complications.

Nathen Myers is Vice President – Municipal Sales at SUEZ Treatment Solutions North America and a WWEMA Board Member.