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Hidden Contracts You Didn’t Know About

February 15th, 2009 No comments

We were in the process of buying the electrical equipment for a new plant when the electrical engineer came in with the bad news. They had been told by the electric utility the project would have to buy the transformer from the utility company. We could understand hooking up the transformer, but to actually have to buy the transformer was crazy, which we told him in no
uncertain terms! The transformer we needed cost $750,000 from our referred supplier, while the utility wanted $1,250,000 for basically the same thing. They put a few bells and whistles on it but the cheaper version would work just as well. Was there any way around this? Apparently not. It was the law in this jurisdiction. So just like that, POW, we were, $500,000 behind in the budget. Unfortunately this senario is all too familiar and is just one example of what I call hidden contracts. These are contracts your company has with out side suppliers / agencies / government bodies that you are not usually aware of until the bill comes in.
Utilities are just one of those hidden contracts.

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