A contract is a voluntary relationship that establishes formal, legal obligations between two or more parties, with the intent that all parties benefit from the relationship. Therefore, one might expect everyone affected by a contract to work cooperatively towards reaching each other’s goals. However, confrontational client / vendor relationships have become an increasing problem in the toll industry.

The costs of this are significant; and, impact everyone, including our customers.

The direct costs of confrontational relationships are obvious and easy to identify. From the client’s perspective, these costs reduce funds available to pay off bonds, and build, operate and maintain the facilities for which the tolls are being collected. From the vendor’s perspective, they reduce net revenue; and, in some cases, can impact their viability as an ongoing operation.

There are also a number of indirect costs from this situation. The more significant of these include:

• unnecessary delays in procurements (clients avoiding the challenges others have encountered)

• false starts in the procurement process (several procurements have been recently cancelled)

• increased systems and operations costs (vendors anticipate the costs of conflict and consider it in their pricing)

• losses in staff productivity, and

• increased physical and emotional stress on everyone in the industry.

These indirect costs can also be significant. Some are also incurred by those not involved in the confrontational relationships.

With financial constraints becoming an ever increasing concern, the toll industry can’t afford the losses that confrontational relationships impose. We also have a fiduciary responsibility to our customers to keep these costs to a minimum.

Our next post will identify some of the major reasons why this has become a problem in the toll industry; and, the following post will offer suggestions on how to avoid conflict, as well as successfully manage controversy when it occurs.
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Original photo courtesy of HAAP Media.

© 2013 The eTrans Group, Inc.