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This is not good for public projects which is what Skillman does. Since they work off a fee and fees initiate profits, will they be able to keep their clients best interests in mind all while trying to increase profitability?
Don’t all companies try to increase profitability – not just ESOP’s? This just spreads the profits to their employees as owners – which is a good thing.
Not when their clients ( public project/ tax payer money) is involved. They are responsible to be careful with their clients money, but now they are considered owners who are also trying to boost their OWN profitability
They still have to operate in a competitive environment and win bids just like any other company.
Cliff P. – Is your assumption that other contractors working on public projects and schools are not earning a fee or trying to make profits? All contractors need to make a profit or they will not stay in business. This is true whether they are building a project for a local school or a private owner like Lilly. Whether the contractor is owned by a single person, a couple of key people or all the employees it still needs to make a profit. Hopefully the ESOP ownership structure just incentivizes more people to provide additional effort to make sure the project is successful.
Public projects are still awarded to the lowest bidder. So, if their fee structure got outside of normal parameters they wouldn’t win public projects.
Everyone operates to make money. However, when you are simply a construction management company that passes costs onto the owner WHILE marking them up, what incentives do they now have to keep costs down? The more expensive the project is, the more fees they make. I get competitive bids to get the job, but once you HAVE the job, who controls change orders? If they operate on a 7% fee to simply pass paperwork through , what causes them to keep costs lower for their clients? They perform 0 work. Only a management company. Basically an extra layer of FAT that schools corporations pay to get projects built.