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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