John L. Ginger Masonry, Inc. - Page 6

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          preliminary cost estimate.  The developer would use the                     
          preliminary estimate to develop a budget on a project.  In                  
          essence, Ginger served as consultant to the residential                     
          developer, providing information such as the type of products the           
          developer should use or a cost-saving approach to a problem.                
               When the preliminary work was finished and the job was set             
          to go forward, the residential developer would want petitioner to           
          get the job because Ginger already was familiar with it.  As a              
          result, the residential developer would be more lenient with                
          petitioner in the bidding process than might otherwise be the               
          case.  This proved crucial to petitioner's success because it               
          gave Ginger the opportunity to negotiate a final bid with the               
          developer.  This was not standard practice in the industry.                 
          Typically, the subcontractor submitting the lowest bid would get            
          the job, but petitioner generally was not the lowest bidder.  In            
          fact, Ginger did not want petitioner to be the lowest bidder.               
          Because of Ginger's good working relationship with the                      
          developers, they were willing to pay petitioner a premium since             
          they trusted that Ginger would deliver superior quality and                 
          service.  Ginger considered this a key to petitioner's success.             
               Once petitioner began working with the large developers,               
          Ginger took advantage of economies of scale and negotiated                  
          excellent terms on the purchase of materials.  Petitioner grew              
          and developed a backlog of pending projects equal to 3-5 months             
          of work.  The backlog helped petitioner retain quality workers              




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Last modified: May 25, 2011