The journey begins - purchased a truck.

Education is always expensive. In money, time or blood: it always costs.
As long as the juice is worth the squeeze, education is worthwhile.

 

That’s not how big time business works. Professionals don’t do such things and if one ####s up they take it on the chin like a professional would. Like has been mentioned, big lessons sometimes cost big money. He’ll be alright and ultimately the experience will pay dividends.

 

I think @blairandgretchen is sandbagging on us. He is a crafty dude and he isn’t going to lose a dime on this deal.

 

But why not ? If something goes over budget in any other business the contractor isn't taking it on the chin? Is this one of those things that only happen in trucking ? "Because that's the way it is and how it will be " ?

For example, house remodel over budget . Who pays? Not the contractor.

Mechanic bill over estimated quote. Who pays ? Not the shop.

And those are after the job has already been done.

Every other business transaction you come back to the table and work it out... I would think any 2 honest business people if something is going to cost you more then estimated , then the problem should be raised with the other parties and you should work things out to find a solution. Why is that such a foreign concept in transportation business? Why is the carrier always expected to shovel the #### down the road? Because they underestimated a routing cost? That's not even a #### up. There's a lot of variables involved and one couldn't be expected to be completely accurate with an initial bid like that.

There has to be some understanding for all parties involved... I don't think I would just go on with it if it was me. I would be having conversations with the others making sure they know what everything costs and how much it's going to take me to move this.

Maybe that's just me though. I'm here to learn, but also don't agree with everything I see in this business. And most of the things I disagree with have no other reasons for it being that way other than" it's been done this way for x amount of years and that's just the way it is kid" BS.

I Would go about this completely different than most would apparently. and if my thinking ostracized me from the industry then so be it. I just don't see this happening in any other industry, but if I'm wrong please give me an example that can be debated. And a better argument then "that's just not how it works" and "that's the way it is".

 

When we bid a job, and our bid is accepted, we do the job for the agreed upon amount unless there are design changes constituting a change order.

Blair bid the job, so unless the load is other than described I expect he will do what he said he would do.

One thing that surprises me though; if I were to bid his project my price would be a lot higher if I needed to give a price prior to researching all the costs, due to covering costs that I did not have defined prior to placing the bid. From the shipper's perspective, I would think that they would get the best deal with a competent carrier after having allowed a few days to research what all will be involved. I suppose that many carriers specializing in super loads already know pretty much what the costs and permit conditions will be, and that is where the risk lies to Blair. He must compete with entities who have a database of these costs without having the personal experience himself. This leads us back to the learning curve cost. In order to break into a different scope of work there are unknowns that you have to make your most educated guess, and hope you are pretty close.

Also, Blair has the good fortune to know folks like @Old Man , who can probably help him in being aware of what all is involved, and give him a feeling for what the probable ballpark cost will be.

 

I 100% agree . But those unknowns of costs could be bid in a way where the costs always falls on the customers shoulders rather then the carriers shoulders, correct? In no world should any business ever eat a cost" because that's not how big business works" or "that's the way it's been done for 40 years" or whatever other b.s. line anybody with more experience than me likes to say because they think I'm not capable of doing things successfully different then them. That cost will always fall on my customer in any business transaction, we as a business, are simply hired problem solvers.

The part I don't agree with is that anybody should just roll over and shovel the #### down the road... if the only 2 solutions to this problem at this point, is to say we can't do the load for the agreed upon price because the expenses are higher than we anticipated and It needs to be renegotiated, OR continue forward and lose money and shovel the #### down the road.. anybody that advocates for losing money is not making a smart decision, whether it was agreed upon or not.

It's a simple mistake that would be done by lots of carriers, including myself probably more than most. There is a ton of variables involved in making that original bid and whoever we agreed upon with that number, is most likely going to get a higher bid from anybody else that bids that load and has the experience to bid it accurately, as you mentioned....

So it would be in everybody's best interest, to go back to the table and have a conversation about it, and come to a better deal...just because we agreed upon an amount in a legal binding contract, doesn't mean contracts can't be amended, and you cant have that conversation with all parties involved..

This is just purely my opinion and that's what I wouldve done to handled this.. If that is the wrong way to go about it, then that is ok.. i run business to make money. If I couldn't come to an agreement with them on a new deal, i would gladly not take the original deal and make 0 dollars vs lose x amount of dollars... if you want to make the argument that they could take us to court for not fulfilling terms of a contract that is fine as well. We could tie it up in the court system for many years fairly easily. the reality is the load still needs to be moved, and I would think it wouldn't be smart to take legal action at this point, vs amending the original bid or finding a different company who is most likely going to be experienced and bid a higher rate than me.

I want to add, my argument is not directed at Blair or anybody else , this is just a hypothetical situation that I disagree with how some would handle it. It's good we have these conversations. And it's good that people post this type of stuff, so we can talk about it. it is important in helping us all understand how to handle it. This is the nitty gritty of business that you can't read in a book. We can all have informed discussions from different sides of it and think about how we can handle it, if we ever come across this situation.

Thank you Blair for posting this and I wish you success with the job. I know you are very smart business man and going to come out on top of it. No doubt in my mind.

 

In our business, which is not trucking, The arrangement that you propose would be a Time & Material (T&M) or Cost Plus contract. If you are dealing with an honest and successful contractor that is really the least expensive way to get quality work done. The problem is that the client cannot apply a hard number to the project until after it is complete. When we bid something the price is always higher than what our price would likely be on a T&M basis, because we are assuming the risk and worst case scenario on a firm fixed bid.

Two possibilities that come to mind that would be more equitable to all parties are:
1) A bid to do the project with all permit/escort/route surveys etc. in addition to the bid, with an agreed upon markup, say 10%. The still does not give the client a hard number prior to starting the job though.

2) Provide a not-to-exceed price that is high enough to cover all contingencies, but invoice on an actual cost plus profit basis. The problem with that is that the contractor assumes risk if the not-to-exceed price isn't high enough, yet the client reaps the reward if the project goes really well.

I think the firm-fixed approach is desired because even though risk is higher to the contractor, profit potential is as well.

 

$80K once. Worked my balls off for six months in the worst winter in like 80 years.