Guy's project, a residential complex in the Bucharest area, ran into a delay of the kind that happens in almost every project: a building contractor who progressed more slowly than planned, and an infrastructure approval postponed by several months at the local authority. Nothing dramatic in itself. But the kind that accumulates.
Some of the buyers had already asked questions. They weren't angry yet, but they asked. And Guy, who has been managing projects in Romania for several years, knew exactly what happens when those questions go unanswered. He knew that his preliminary agreements included a penalty clause for late delivery, as there should be in any such agreement - a clause meant to protect the buyer if the date passes without an extension agreed in writing. And he knew that at some point, if he didn't act, the buyers would begin formally demanding that penalty. And then it would no longer be a conversation. It would be a lawsuit.
He called me on his own initiative, before I asked and before he had to. “I want to return money to a number of buyers,” he said. “Before anyone asks me.”
We sat on it together and calculated two scenarios. In the first scenario, Guy waits. If and when a buyer formally demands the contractual penalty, he will pay it, but at that point the buyer will already be on edge, will consult a lawyer, and may demand more than he is truly owed in order to “cover the risk.” In the second scenario, he approaches first, before anyone demands, and offers voluntary partial compensation - lower than the full penalty, but paid immediately, without lawyers, and without the buyer having to fight for it at all.
Guy chose the second scenario, and not because he is generous. He explained it in simple words: “I'm not returning the money because I feel bad. I'm returning it because it costs me less, and because it buys me something money doesn't always buy - a buyer who keeps telling his friends about the project, instead of telling them he had to sue me.”
He approached the three buyers who were closest to the boiling point, before they approached him. He offered each a fixed, immediate sum, along with a detailed, binding written update on the new schedule, with an additional commitment if he failed to meet that date as well. Two buyers accepted the offer immediately. The third hesitated, asked to consult, and in the end also agreed, after seeing that the other two had already received a fair answer.
The project ended up a few more months late beyond the original forecast. But when the apartments were handed over, Guy did not face lawsuits, or negative reviews that could have hurt him on the next project, or lawyers from the other side. He faced a cost known in advance, paid on terms he himself set.
I come back to this story often, because it is the opposite of what people think about “giving up money.” Guy didn't give up. He recognized that he had a window - the moment between “the buyers are still only asking” and “the buyers are already suing,” and he acted within it, before the window closed and the delay cost him far more.
It isn't generosity. It is the recognition that in managing projects, and abroad in particular, sometimes the most profitable action is the one that looks least profitable at the moment you take it.
The question I would ask in your place
- Do I have an early sign of a problem in a project today - a delay, a complaint, a question that keeps coming back - that I am still treating as “not really a problem yet”?
- What costs me more: acting now from a position of strength, or waiting for the other side to come to me from a position of anger?
- Do I calculate the cost of an early solution, or only the cost of a solution forced on me late?
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית