I was Manager of Contracts for a construction company once, when we were losing tens of millions of dollars on a major project. The original estimate was much too low, and management agreed to an even lower price, and we were experiencing overruns. It was a nightmare.
Top management hired a Consultant whose business was assisting government contractors in filing claims against the Federal Government. He was retired military, and he actually had a good track record.
Well, after reviewing all of our records and spending an hour or so with me, he made a presentation to management, recommending that we file what is referred to as a “Total Cost” claim. This is an extremely risky strategy where you demand more money because certain unquantifiable factors had caused a great overrun, and you are entitled to more money…just BECAUSE.
Since I was the Contract Manager, I was asked what I thought of this recommendation - with the entire management team looking on.
I very calmly told the assembled group that while such a claim might be successful against the Federal Government, it would do nothing but enrage this private sector company, with totally unpredictable results. It could backfire and make things worse.
Two days later, I was terminated for “not being a team player.”
Well…
A couple months later, the claim was filed (three large binders with many pictures, graphs, and charts) by the President of the company (to ensure that it was taken seriously). As was related to me by my successor, the client left the room, and came back a half hour or so later. He said that this claim was considered to be a repudiation of the contract and a breach. He said that unless the claim was immediately withdrawn, the contract would be terminated immediately for default. Furthermore, he demanded a full and unconditional release from ANY claims from the beginning of the contract to date, and without this additional waiver they would stop all payments immediately.
At the time, we had about 400 craft and labor workers on site, all working 12-hour days to keep the project on schedule, and all requiring WEEKLY payments by union contract. The company did not have the resources to carry the project for even a week at that burn rate, so we had to withdraw the claim in writing and give the customer the waiver that he demanded, thus giving up a couple million in LEGITIMATE claims that could now not be pursued.
The company went bankrupt within another six months, due to the losses on that contract.
Revenge? Maybe not. But I certainly felt vindicated. I’ve always wondered if anyone on the management team ever reflected back on what I said and acknowledged that I was absolutely correct.