3 lessons from latest WT Insider Report

As we embarked on our research for our series of reports on the relationship between prime contractors and subcontractors, we had a couple of assumptions.

Our first report looked at the relationship from the perspective of the subcontractor, and for the report released this week, we examined the relationship from the perspective of the prime.

What we found were two views with more similarities than differences; each side sees the relationship as critical to their success, but each side also sees fault in the other for when the relationship falters.

When we started our research, we knew that the partnership between primes and subs was important to how the market functions, and we knew that the relationship between primes and subs could be contentious.

Our assumptions were right, but we were off on the degree. The relationship isn’t just important, but critical as more than 80 percent of prime contractors rely on partnerships as they pursue business. There are requirements from customers that demand the bringing in subcontractors, but there is also the reality that subs bring expertise, domain knowledge and customer relationships that can make or break a project.

But as important as the relationship is to success, it is also troubled, and today’s current market environment will challenge the best of partnerships.

I’ll stop short of calling it dysfunctional, but our verbatim comments point to problems around transparency and honesty that make the relationship between primes and subs contentious.

We call it a “can’t live with them, can’t live without them” scenario.

Over the coming days, I’ll be diving in and analyzing different aspects of our second report. If you are already an Insider member, I encourage you to download the report and study it. If you aren’t a member, now is the time to join.

That’s all the sales pitch you’ll get from me because I think the reports sell themselves.

Here are some critical takeaways:

• 43 percent of prime contractors worked with five or more partners in the last two years. Eighty-one percent said they partnered with one or more.
• The “Gap.” Subcontractors as a group consistently underperform in critical areas of teamwork, customer knowledge, industry perception and process when compared to the value primes place on those attributes.
• The “Stars.” When rating their single best subcontractor, the primes said they out performed in those areas when compared to the value primes place on the attributes.

The lesson for me is that the relationship, as troubled as it can be at times, is critical, and there are opportunities for subcontractors to rise above other companies and gain a competitive advantage by focusing on teamwork, customer knowledge, domain expertise and technical skills.

I’ll be exploring these issues and more over the coming week. In the meantime, read the report and let me know what you think, particularly if my conclusions are off base.