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<Sam Millar>
posted
As an owner of a small tree service in Canada I am becoming aware of changing contractual conditions on various municipal and utility contracts that are limiting the field of bidders to a few large tree companies. Where is the ethic of free enterprise in these conditions or am I simply imagining that changes are occurring? Looking forward to your responses.
 
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<James Causton>
posted
Reply to post by Sam Millar, on December 27, 2001 at 21:46:49:

I, don't know what criteria the agencies you make reference to are using. Is it possible that your apparent exclusion from invitations to bid is related to your business "image"? I have come across many very highly qualified tree services who work very conscientiously and to high standards, however, they often get overlooked by people seeking a " big company" image. There is no reason for a small operation not to present itself as well as the larger companies.
I do not know if what you see happening is real or if it is your imagination. One thing I do know from my experience, is that very frequently, large municipal contracts are prepared to accept a lower standard of work than would normally be provided to the private home-owner,

James.
 
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<Sam Millar>
posted
Reply to post by James Causton, on December 27, 2001 at 21:46:49:

James; Image is an important factor. What we were refering to was elements within the contract document that increased the probability of the larger firms being awarded the work. In essence an exclusion policy that limits the field of bidders to one or two companies. This trend has been noticed by us in western provinces and in Ontario.
 
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<Bob Underwood>
posted
Reply to post by Sam Millar, on December 27, 2001 at 22:05:44:

Sam,

Can you list some of the specific elements you are talking about? Perhaps we can give you some advice on getting a foot in the door.

Bob
 
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<James Causton>
posted
Reply to post by Sam Millar, on December 27, 2001 at 22:05:44:

What kind of wording was used in the contract documents which seem exclusionary??

James
 
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<Sam Millar>
posted
Reply to post by Sam Millar, on December 27, 2001 at 22:05:44:

Bob and James: We are referring to performance bonds that range in price from $100,000 Cdn to $300,000 Cdn. on contracts with values of $400,000 Cdn. and less.
Naturally these bonds are left to the discretion of the inspectors or whoever within the municipality or utility enforces the performance. Needless to say it is up to our own firm to keep up with our own performance standards that meet or exceed that of our clients.
Previous experience has shown larger firms have the ability to not perform large removals, trim or slash and still get a completion certificate while various smaller firms are sent back to trim single branches. If performance bonds are enforced under these conditions you are then left with a debt, damaged credit, damaged reputation or a lenghthy arguement to seek resolution or payment. Either way time is lost and you cannot absorb these conditions as well as the larger tree companies.
I'd appreciate your comments.

Sam
 
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<Scott Cullen>
posted
Reply to post by Sam Millar, on December 28, 2001 at 10:43:09:

Lets slow down and start to separate some issue here guys.

The initial question, fitting for this topic, was about the ethics of contract specs which favor larger companies. This thread is quickly leaning towards business advice.

I think the intended use of this forum was about the ethics of arborists. This question turns it a little towards the ethics of a society in general or one or more municipaities particularly in how they contract for work. I guess that's ok since it impacts arboriculture and it makes sense to understand it. But understand the difference.

IMO if it is legal to require certain levels of capitalization or certain performance histories or certain bonding ability when putting work out to bid, then it is legal for a municipality to do it. If any particular firm can't make that cut, that's just business.

Now if performance provisons are applied differently to companies that actually get the work that may not be legal and is probably unethical... for the agency or maybe the individual doing the enforcement. There could also be criminal activity if money is changing hands in connection with performance irregularities.

If a company bids this kind of work, then "punch list" follow up work and the connected admin time should be built into the bid or allowed for in overhead. If a company performs up to contract standards there should not be much additional work. Where does the penalty arise is you in fact perform?

Now, if the small company's margin is lower becasue they are made to perform while the big company is not that could be a competitive disadvantage... but you won't be getting that work if you have to overbid, so then you won't lose money on the jobs and go into debt.

The only issue that seems to me connected with the ethics of the arborist is whether work is done according to industry and contract specs. (Taking or requesting bribes is a whole nother thing which of course also be unethical).
 
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<Scott>
posted
Reply to post by Scott Cullen, on December 29, 2001 at 01:36:23:

Scott;

It is nice to see that you are aware that this forum is for ehtical standards in arboriculture. You mention that if standards are put in place and that some can make and others cannot "Well that is just business" and the client, be it a municipality or utility, is well within their right in implementing conditions of exclusion.
The safe operation of your firm while enhancing the quality of life for the ratepayers, the general public, your clients or your workers through sound arboricultural practices and an ethical approach to business is the ethic that I speak of in this forum.
When the net result of contractual restraints does not allow a firm(s) that possess the ethical standard for work performance to bid where does the onus lie in the industry to see that the contractual restraints are justified and not just a continually changing measuring stick by which larger firms utilize their capital advantage to exclude others and in the process monopolize the work?
The change I refer to in the measuring stick is the implementation of new trade associations to qualify the contractors to bid or the necessity for a large quantity of men and equipment to bid the contract when clearly there is no need for such numbers.
I look forward to your responses.

Sam
 
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<James Causton>
posted
Reply to post by Scott Cullen, on December 29, 2001 at 01:36:23:

Scott, I could be wrong here, but part of what I am reading in Sam's post is related to smaller businesses possibly being held to a higher level of scrutiny on performance than bigger outfits are. I believe I have seen similar situations occur myself.
While I agree this might not represent an issue of the ethics of arborists, it does, none the less raise an ethical issue regarding and involving arborists. Personally I have no problem discussing the issue in here, at the point an arborist and ethics are both critical parts of the same issue, in my mind it becomes an "arboricultural ethical" issue.
It can only benefit all of us by bringing the issue out for open discussion and learning/ understanding ways to address this problem when, and if we are faced with it.
Maybe we do cross a few lines into other areas, e.g. "business advice", what is the problem with that? Do we need open another topic page called "Bus Advice" just to deal with it?
I hope the discussion can just proceed with people like yourself and others with similar vast experience, contributing to the thread,

James.
 
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<Sam Millar>
posted
Reply to post by James Causton, on December 29, 2001 at 07:02:25:

James; As noted I believe that this message board is ethics in arboriculture. If one cannot cite an example of ethical business practices in arboriculture, in an attempt to resolve or at least seek some form of debate, that can lead to resolution, in which there is a forum to be held, we are then left in the dark. Is this ethical?

Sam
 
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<Scott>
posted
Reply to post by Sam Millar, on December 29, 2001 at 23:56:59:

I think you may have misunderstood my response. I said "I guess that's ok since it impacts arboriculture and it makes sense to understand it. But understand the difference."

Understanding requires us to be reasonably clear about or questions and about context. In this case I see three different areas: the ethics of the arborist, the ethics of the public agencies and business management (not including ethical consideration... one or more of the earlier responses had to do with a smaller company effectively presenting or marketing itself).

I think I also said that discriminatory application of given specs does not seem ethical for the public agency. And structuring specs which require certain capitalization or bonding ability does not seem improper even though it effectively may exclude smaller companies. And nether of these seem to me to involve the ethics of the arborist.

So if anyone took my response to be intended to exclude this discussion I'm sorry. Clarifying the issues, separating them brings light. To the extent separation (or even selective exclusion) removes the shadows that's ethical too. (Not the same as pulling the plug and leaving nothing but darkness).
 
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<Guy>
posted
Reply to post by Scott, on December 30, 2001 at 11:47:34:

I've had the exact same experience as Sam, having to gain Improvement by raising my coverage from $100k to $300k US to get a contract Assignment. This change helped gain favor in my Role with smaller customers too, who could feel $200k safer about my working on their property. Premium bump was not that much.

re inspection standards that were far more persnickety than the big boys get and possible unethically influenced, again I've felt the same pain as Sam and James. I once had to trim 80 more small street trees than contracted, because the inspector changed the contract in midstream to satisfy a local politician. I showed Impartial documentation that I'd been on course all along, and had a change order executed to get paid in full for half of the extra work.
I was happy to setle because it saved the inspector face with his bosses, and I got followup contracts on which I got a better deal. The local politician was a help there, but nothing unethical transpired I know of. Nothing wrong with making friends and influencing people. Bottom line was, more trees got better care.
Also, as Scott suggested, I built in the admin time to take Due Care to hold the guy's hand and walk him through my work. Now they know small guys can have more Competence in their Practice Area, and outcompete the big guys by maintaining their Independence, showing all people affected the quality of their work via neighborhood activists and the media.

I expect Sam can work through the bs and succeed by doing the same. Competence, Improvement, Practice Areas, Roles, Assignments, Impartiality, Independence.
See, Scott, these principles apply in contracting practice, just like in the ASCA Code of Ethics.

PS see Insects and Disease--does anyone else treat Armillaria etc. with anything besides a chainsaw?
 
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<Scott>
posted
Reply to post by Guy, on December 31, 2001 at 09:04:47:

Those insurance limits are not really high, certainly not exclusionary. I've been out of contracting alost 17 years. Sometime before then I recall needing $1million coverage for large commercial contracts.
 
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<JPS>
posted
Reply to post by Scott, on December 31, 2001 at 12:30:21:

In this day and age of litgousness $1M is not realy enough. If a "God Forbid" happens and you only have $300K you may be going to bankruptcy court. I have $1M on $32k projected annual gross for under $900 as a subcontractor doing "trimming, removal, cleanup....".
 
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<Scott>
posted
Reply to post by JPS, on December 31, 2001 at 18:23:37:

So there's an ethical twist. If your working environment calls for $1million or more coverage, not compulsory but sensible, and you choose to only carry $300k in coverage what are the ethics relative to your responsibilities... to your clients, your employees, your family, yourself?

Those higher limts BTW are often provided by "umbrellas" which only kick in if underlying coverage is exceeded. The premiums are lower for the umbrella than for the underlying.
 
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<JPS>
posted
Reply to post by Scott, on December 31, 2001 at 20:52:22:

Another "stratigy" for reducing your premiums is to self insure to a certain level, and keep that amount in escrow.

I have a $500 deductible on property liability and maintain that amount in a separate account. This also helps keep the premium down because they are computed on your past claims as well as other actuarial data. Not that I have had any claims... yet.
 
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<Scott>
posted
Reply to post by JPS, on January 01, 2002 at 07:47:11:

It really is sobering when you think about the $ amount of damage that can be done SOOOOOO easily. A little section of branch skips off the the flagstone patio. OK the piece of stone is $50 plus the value of your time to pick it up and put it in, but then the branch hits the triple glazed window breaking just the outside glazing but the whole thing has to be repaired... $350, and on its way back to the ground that darned branch knocks over a piece of pottery... oh that was 18th century from Europe, sorry, $175. And this was a $250 job!

Or when was the last time you had any body work done? That little nick on the BMW hood... oh it's a special glaze coat, can't be touched up, gotta do the whole part edge to edge, gotta be stripped down to primer first. $1200.

So there is a real ethical responsibility to be prepared for that. By reserves, self insuring, regual insuring, whatever.
 
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<Sam Millar>
posted
Reply to post by Scott, on January 01, 2002 at 12:16:16:

Gentleman;

The topic has been deftly switched. I am referring to the inclusion of bonding requirements that are tailor-made for larger company's thereby excluding smaller firms and henceforth limiting the field we call free enterprise and are soon on the road to monopoly.
When the playing field is levelled the ethics of business and arboriculture are met. Past performance and millions of dollars worth of insurance coverage are conditions not easily met but they do show that performance/safety are up to "snuff". Is this not the ethical approach to arboricultural contracts publically tendered by municipalities and utilities. Exclusions that result in only one company qualifying to bid and receive work is arrogance of the highest order on the part of the company that bids/gets the work and then fields broken down equipment and sends unqualified workers onto the contract as qualified workers. How many times have you bid a contract, complied with the specifications, lost the bid only to see the larger firm transfer new equipment/qualified workers from the contract to another contract once they are "on the job". I would really love to hear your comments on the ethics of arboricultural business practices while dealing with these contractual retraints/business practices.

Sam Millar
 
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<Guy Meilleur>
posted
Reply to post by Sam Millar, on January 02, 2002 at 17:49:48:

Sam,
I've read theother posts that suggested ways to affordably get higher insurance coverage. I've had to go from $100k to $1 mil and not liked it one bit, but it's the cost of doing business. You can't call it exclusionary if a town's lawyers tells them to cover their butt well.

Re performance, a small guy should be able to quantify his record enough to get big jobs. Even if you haven't done big jobs, showing them you've done many small jobs well should show you're able. Testimonials, certification should help. If you have to do medium contracts to prove you are ready to perform a big one, that's just proving yourself to them.

re shoddy work, a video or digital camera can document same in a form you can use to show inspectors, councilmen, planners, neighbors, newspapers, etc. Walk them through it and convince them the contract's quality stipulations have not been met.
You haven't offered any clear evidence of their alleged exclusionary practices, so it's hard to comment on their ethics.
Reread the posts, and shop around for solutions to the insurance problem.
Guy
 
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<Sam Millar>
posted
Reply to post by Guy Meilleur, on January 20, 2002 at 19:43:23:

Guy; Insurance is not the problem. We have over 5M in place. The bonding requirements and equipment requests within the contract are arranged so that the larger firms are at an advantage yet they are performing the work with unqualified workers/equipment. Where is the etical line drawn in making these conditions public without seeming to be self serving.

Sam
 
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<James Causton>
posted
Reply to post by Sam Millar, on January 20, 2002 at 20:33:19:

Sam, as far as equipment requirements are concerned, the playing field is level. Whatever amount of equipment you could ever need to undertake any contract is waiting for you, it is in a rental yard of a national company. You don't need to own it, you just need it available,

James Causton.
 
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<Scott>
posted
Reply to post by James Causton, on January 26, 2002 at 13:44:38:

It seems there are two separate issues here.

One is the requirements imposed to get the work. Equipment. Bonding. Insurance. Crew training. Whatever. If there is a valid public policy reason for this it is ethical. As others suggest the equipment, bonding, etc. are avialable to any contractor in the market who can pay for it.

The other is whether those winning the bids are actually held to the original performance standards. If not, there could be ethical and legal issues there. Your remedies, either as a potential bidder or a concerned citizen, are probably set forth in the law in your province.

As an aside, those large equipment requirements may have as much to do with speed of work - how fast you are in and out of the ROW - as with the overall quality. Things that look questionale from the outside may often make sense if you really understand what's going on. I've observed that companies that sucessfully got that kind of work really knew the players and the ins and outs. (I cannot comment on whether there was under the table stuff in any such situations.) Maybe once a certain time threshold is met secondary equipment and crews can finish up and still perform.

Another consideration is whether you really want that work. It may not just be additional volume. It may require different capitalization, different company structure and have different profitability and return on investment. One company may do well on that kind of work and another not. And another company may do well on smaller jobs where the bigger company does a poor job and loses money to boot.
 
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