Friday, April 24, 2009

Quality and Value

One of the topics I have been pondering lately is how you quantify quality. At the commercial scene shop I work at we are aware that we tend to not be the low bid. We try to provide a level of service and quality that makes our price, through higher, still a good value. But how do you qualify that one of our clients will have an experience with us that is 10% (an arbitrary number) better in terms of service or quality that what they would have experienced with another vender?

On some of the proposals we work on, the client will ask for a price for the pieces as drawn / described, and then allow us to put in additional prices to be added (value added) or subtracted (value engineered). I think this can be tricky.

How do you quantify value added? I think we have value added in our core pricing, which cannot easily be taken out and itemized, because it isn’t optional – it is the way we function. We don’t use inferior parts or materials. If I am buying rigging equipment, I am going to buy the right stuff even though it costs more. I suppose I can buy the cheap stuff, and then change order to the right part, but at the same time, not every client would accept that change order. If those parts are to fail, who has the liability? Did they fail at install, or 10 years later – is it warranty work or a client request? I don’t want to put myself or my company in a possible negative situation by using something that is inferior. Other things that we provide – trial assembly / full unit assembly/ test fitting / testing, are items that we need to do for quality purposes, but are also advantages to the client. We know what it will take to install, because it has already been tested. It’s cheaper to test it in the shop that it is onsite – both for us, and for our clients. We can / and have occasionally, cut out some of the assembly time – and in those instances, at the end of the project, the install labor always more than what it could have been. Since hours are building according to actual hours worked (and in accordance to union rules) this can end up costing our clients more – though when we bid the project we will try to anticipate the increase in onsite time due to the minimal testing or assembly.

I won’t talk about value engineering as much, because I feel that it’s a lot easier to do this. The trick is to make it cheaper without affecting the quality. I can make something out of steel more economically than I can from aluminum, but it won’t be as light. I can use 15 oz velour instead or 21 oz. But if a light is immediately behind the drape, then the 15 oz velour should have a black out liner – in which case the 21 oz velour is more economical. Then there is an option regarding what to price – the 21 oz velour which is ultimately cheaper and the best value – the cheapest option which is 15 oz alone, which doesn’t provide full functionality, or the 15 oz with the addition of the blackout cloth. Proposals with a lot of al a carte options can be tricky to put together – and sometimes end up being more expensive as a package because of the way the time break down works out – Building a bench might cost $500- but building 4 won’t necessarily cost $2,000. There is a line that shouldn’t be crossed when value engineering. First, there is a minimal level of what we as a company can / or wants to provide. For instance, locally, there is a shop that in non-union and are basically a couple of guys in a shop cranking out cheap scenery. And if that’s what the client wants – we can’t compete. Something quick and cheap may be exactly what the client wants – but say a potential client sees it and thinks that we can’t build a quality piece – they won’t necessary understand that the set was done “poorly” because that’s what the client wanted. Its better for us to refer the client to another shop that may meet there needs better, and maintain our reputation through jobs that are more in alignment with what we can provide. Secondly, even if we chose to compete against a company that can produce something like that, we can’t really win- the overhead and shop organization that insures a quality product, makes it very hard to push a small job through the shop profitably. In theatre, a shop can produce quality scenery up to a certain scale, but below that is doable down to the smallest piece – profitability isn’t a concern. On the commercial side, the project tends to be a certain scale before it fits into the way we work, and there is a maximum. Point being, now that I have lied about that fact that I wouldn’t talk much about value engineering, is that you can go too far.

I know shops who bid a value engineered version upfront, without description, and then essentially try to change order the client to get back to what the client originally wanted in the first place. So while their bid beats ours in the first round – the final price the client paid may have been higher in the long run that what we offered. I like that we provide a cost that will allow us to meet our client’s expectations without relying on trying to get extra money every time something comes up. We have all been around long enough to know that things do some up. We allow some flexibility – major changes to scope of course require a revised price. This is one way that I think that we positively affect the service that we offer clients.

When you go to an event / or see items that have been built by us or one of our competitors – what is the quality scale? This would be true for seeing theatre as well, perhaps even more so since you are a distance away, and only see one side from an audience perspective. What is quality – automation? Well, that may be indicative of a certain level of money and skill. A believable paint treatment? The use of light affects the end result as well. In most circumstances I think there are two levels – it looks good or it doesn’t. You see every seam – or they disappear. There is a 3rd level, but I think the scenery that is built will not make that level alone – it must be done in coordination with all of the other elements of the production.

In terms of seeing productions – its stating the obvious that seeing a show on Broadway is a different experience than seeing it in storefront theatre or a church basement theatre, or even a regional lort theatre. We have expectations as to the level of quality for each type, and we wouldn’t expect a small theatre to have all of the qualities of a Broadway house. The flip side of this is that there is a cost associated to this. A Broadway show might cost 150 bucks, while a small theater production might cost 20. My expectations are a lot higher when I lay out 300 bucks to go to see a show with my partner. Here in Chicago, I think this question becomes even trickier – there are tons of theatres to choose from. One show may be 20 and another similar 30. Who is to say that going to one is worth 10 bucks more per person (other than the choice of which title you would prefer to see). What would happen in the movie theatre if shows like Lord of the Rings, Harry Potter and other huge films were $20 and the shows that weren’t rated as well were $10?

A good example I can mention refers to a production that I was thinking of taking my friends to. I had seen the production at a regional theatre in another city and had enjoyed it. Though I am in a different city now, I saw that it was playing at a local theatre when my friends would be visiting and checked on tickets. Tickets were available for 70 each. Having seen the show in a theatre where the tickets were going for 35, I couldn’t honestly answer how this current production could possibly add that much more value. I doubt the directing would be 100% better – or the scenery or the evening would be that much better. The size of the two theatres was slightly different, but not significantly in terms of quality. I ended up buying tickets for my friends at a small little house, and in terms of enjoyment – probably had as good as of experience for a lot less cost.

Plus, frankly, there is a cost versus experience association that affects the value perceived. If I spend 10 for a ticket, I have fewer expectations than if I spend 100. If I spend only a little and the show is good – I get a great value. If the show is so-so and I spent a lot- I didn’t get as much value. For my clients, value is also different – it may be worth spending extra money to get more service. To take that back to seeing a show- perhaps if the 70 ticket provided free parking so that I didn’t have to pay as much to park downtown, then I would see additional value.

But of course there’s a catch – what provides value to me, doesn’t always provide value to others as well.

What do you think? What creates value? How do you quantify Quality? How do you define what something is worth? How does this information affect the way scenery is built?

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