Price is the refuge of the dreamer. The dreamer who believes there’s such a thing as something for nothing, where no one gets hurt.
Cost on the other hand, is generally more relevant and real, also more complicated.
If the thing you’re looking to buy is in your hand and you can explore it in detail or you know from experience that all brands are equal, say gasoline, then the price may be your most relevant measuring stick by which to make a decision.
But this is rarely the case, especially in today’s ever-changing souq (you’ll have to Google it), where we’re faced with the tyranny of choices at almost every turn.
This is not a new problem. In the days of yore, when I went to the record store, I had to make my purchasing decision based on what I saw on the jacket cover – that and the price, neither of which told me much about what the music on the album would actually be like. Yeah for iTunes! Now, I simply can’t decide.
If I wanted to buy a new pickup, I would visit all the dealerships and test drive as many trucks as dealers were willing to hand over to an 18-year-old. Even then I couldn’t tell what owning that truck or brand would actually cost me down the road.
Today I can’t buy toothpaste, vacations, computers – you name it – without sifting through a vast array of choices packaged with information I don’t have time to read, much of which I can’t understand, and much of it intended to distract me from the price.
Which ironically puts me right back to where I began, having to make my decision based on price.
In the intervening years, I’ve learned that price is rarely a useful tool with which to make any decision. Sorting by price is not only slothful, shopping for price is a trap. A compelling trap, but a trap all the same.
Why is it then that almost the entire procurement process in huge industries like construction or our public-sector institutions are fixated on the purchasing price instead of the actual cost?
We have the technology and the manufacturing prowess to provide accurate costs that include design, manufacture, supply, installation and life cycle upkeep for customized and sophisticated solutions. And still, despite past experience to the contrary, the response is that those solutions are too expensive. The purchaser would simply prefer a lower price.
I can’t tell you how many times we’ve been told by a client, an architect, a designer or a general contractor that they’re going to choose the promise of a lower price over an accurate cost. I can tell you that in construction, this scenario happens daily.
The result? By the time the real cost becomes apparent, the trap has been sprung: it’s too late to escape the ensuing disaster.
Price is like the shell game – a gamble that’s presented as giving you a real chance at winning when in fact it’s often a confidence trick used to perpetrate a fraud. The swindle is called a short-con because it’s quick and easy to pull off.
Quick and easy – like giving someone a price you think they want to hear.
Construction, though, is anything but quick and easy. We are in it for the long haul. We build buildings with the expectation that they will have a minimum 40-50-year serviceable life span. Yet, almost everyone involved in the industry and procurement chain is attached to the immediate (price) over the long-term (cost).
Go figure.
Ask yourself, who does this model serve?
It doesn’t serve the client, who ends up paying the full cost and then some, no matter what price they were promised.
If you think that doesn’t cost us all, think again.
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