Company Classifications are Important!
What’s in a name? This isn’t a game, not a tune, but a serious question! What a company calls itself can be helpful, misleading, or downright confusing! Often the confusion is purely coincidental, sometimes purposefully misleading! Who is responsible for proper definitions, the consumer, of course! Simply follow the old cliche, “let the buyer beware”.
In the commercial construction industry, any company can identify their organization in any manner they choose, but, does that mean that the identification is accurate, maybe, maybe not! Let’s take a moment to outline the commonly accepted characteristics of various types of organizations, in our industry.
Manufacturer: A manufacturer is generally expected to actually manufacture products, not just a part here and a part there. One would expect to find;
- A factory or factories that manufacture the majority of the components, parts and pieces of the company’s products.
- Design, engineering, marketing, sales, packaging, shipping and receiving, and accounting departments, to take the product from initial design to delivery to the customer.
- A product line or group of products, produced on a regular basis, and regularly offered for sale in the market place. Products that have standard brochures and advertising to support the marketing and sales of the product line.
Distributor: A distributor is a company that actually carries an inventory of many synergistic products and offers them for sale to the industry. One would expect to find;
- A large warehouse at each location, with an inventory of regularly used products and accessories.
- An inside sales staff, knowledgeable in the products and systems available for sale by the company.
- Company delivery vehicles and staff to service the customer base.
Contractor: A contractor is a company the generally bids on projects, secures contracts, and builds the finished product. One would expect to find;
- An estimating department.
- A shop drawing department.
- A construction department, consisting of project managers, project superintendents, and field mechanics.
- Warehouse, trucking, and material handling department.
Independent Manufacturers’ Representative: An Independent Rep represents a group of manufacturers on regular basis in an exclusive territory. One would expect;
- Exclusive representation, of specific manufacturers, in a specific territory.
- A company knowledgeable in their products, with the ability to assist the owner and architect in design, detail and specification preparation.
- The ability to offer quotations and technical assistance to contractors, pre and post bid.
- A company that is not a “broker”, but contractually linked to a given group of manufacturers.
Most of what has just been outlined seems ridiculously simple and one might ask, what is the point of stating the obvious? The reason for stating the obvious is to address a problem becoming more and more common in our industry.
Companies offering a misleading description of their business, leading to confusion on the part of owners, architects and general contractors. Clients who simply accept whatever they are told by a company, without considering the potential problems facing them as the project proceeds.
When it comes right down to it, it is the responsibility of the owner and architect to conduct “due diligence” concerning those they choose to partner with on a project. It’s really incredible, how many, seemingly sophisticated firms, simply believe what they are told, and do not take the time to carefully investigate the claims presented to them.
It’s not that complicated. If an owner or architect is considering working with a new company, ask a few questions and confirm the claims made. The following are some of the myriad questions that should be answered before entering into a critical relationship;
- List of company personnel and responsibilities. Brief resume of the key members of the management team, and length of time with the company.
- List of owners of the company, including percentage of ownership.
- List of all company locations. Size of each facility, number of company employed staff members at each location. Indication if locations are company owned and operated, or if they are simply sub contractors.
- List of significant company owned or leased equipment, including description and age of machinery, computers, trucks and other key components of the business.
- Complete credit information.
- References, both credit and client, including full names, addresses, and other pertinent contact information.
- For important projects, visit the key locations of the firm. This is never a waste of time, and will guaranty accurate representation of the company.
Architects and owners, assuming your project is important to you, isn’t it sensible to be certain with whom you are doing business. Often times, misunderstandings are simply a matter of miscommunication; other times they are a result of misleading comments or presentations.
It’s the responsibility of the owner and architect to be certain that they are dealing with qualified, well financed, companies. It is further their responsibility, to be certain that those they are dealing with are actually performing the service anticipated.
William L. Shannon CSI, CISCA
President of Shannon Corporation
Recipient of the 2004 De Gelleke Award