How to choose the right commercial GC

Phil Englett

According to a recent report from Cushman & Wakefield, vacancies continue to increase in Orlando’s office, industrial and retail market. Office space has reached a vacancy rate of 20%. Meanwhile, retail listings in Gainesville increased nearly 10% during the last quarter. Statistics such as these are common throughout the state - which partially explains why the commercial construction market remains sluggish.

That said, some new projects are moving forward. For developers and architects searching for general contractors, the scarcity of new commercial construction projects means it’s a buyer’s market. Small and large general contractors are vying for the same work, which can make the bid evaluation process even more complicated.

When assessing contractors, developers and architects should ask themselves the following four questions.

What’s in a name?

Name recognition may help larger, higher-profile contractors land on more RFQ/RFP distribution lists, but does that mean they’re the most qualified for the job? Not always.

Before making the final decision, be sure to check the references of each short-listed contractor. Inquire about the quality of their work, as well as their responsiveness, flexibility and overall customer service. Will they give each project the necessary attention and priority - even if the economy starts to bounce back and larger projects become available?

Meanwhile, don’t make assumptions about financial stability. The truth is, in this economy, it’s hard to tell from the outside which general contractors are financially healthy … and which ones aren’t. Take these extra steps to avoid considering general contractors who may not be around long enough to complete the project:

- Request balance sheets and financial information.

- Make sure contractors are in good standing with the Better Business Bureau.

- Consider asking for a letter from the contractor’s bank.

- Ask what kind of insurance the contractor carries and ask permission to verify it.

- Ask how many employees the contractor has and if they’re all insured.

- Verify that the contractor provides worker’s compensation insurance.

- Remember, bigger doesn’t necessarily equate to better fiscal stability.

Is bigger always better?

The shortage of work means contractors are bidding on projects they may have passed up in a better economy. But, commercial construction isn’t a one-size-fits-all industry. Experience with one type of project doesn’t necessarily translate to other kinds of work.

For example, a developer searching for a general contractor to build a hospital should be wary of bids from companies that specialize in quick-service restaurant construction. Likewise, if you’re building a small community bank, hiring a contractor whose experience is limited to high-dollar, large-scale projects may not be the best decision.

Size and scope of a project should determine the type of contractor ultimately chosen. During the interview process, ask candidates if they’ve recently completed a project similar to the one being bid. Are they able to complete the work within your timeframe and budget? Can they share examples of work that mirror the parameters of the upcoming project?

With so many contractors available, now is not the time to be a “guinea pig” for a contractor hoping to break into a new market segment.

What’s included in the bid?

Sometimes the lowest bidder turns out to be anything but that. It seems some companies will do just about anything to win a job - even if it means low-balling the bid with the intention of adding additional fees during the project. Not only is this unethical, it has the potential to send a project’s budget into a tailspin.

To avoid this, resist the temptation to automatically award the contract to the lowest bidder. Instead, closely examine every submission. Which ones include a high level of detail? If a bid lacks specifics, ask the contractor for an explanation - and then require a detailed breakdown of costs to be provided in writing.

Who’s on your team?

Developers and architects must have a strong relationship with a project’s general contractor - specifically, the people assigned to the project. To avoid the “bait and switch,” ask contractors to provide the names and qualifications of each member of the project team. Who will be the primary contact? What level of involvement will the contractor’s owner or partners have?

At smaller general contracting companies, management is more likely to have direct, day-to-day involvement - and not just on the larger jobs. Owner participation on all sizes of projects ensures an enhanced level of quality control and accessibility. At the same time, this hands-on approach can speed up the decision-making process, ensure stricter adherence to the budget and expedite problem solving.

Find your fit

With so many general contractors competing for such a limited amount of work, developers, architects and owners must do their due diligence to choose the company best equipped to meet the project’s demands. The affordability of scheduling software and other technologies means smaller firms are just as efficient - if not more so in some cases - than the larger contractors. That’s why it’s important to compare the size, scope and type of job with the general contractors’ corresponding experience and expertise to find the best fit for your next project.

Phil Englett is the president of KEL Constructors, a family-owned and operated, full-service firm providing general contracting, construction management and design/build services for business industries including medical, hospitality, banking and retail.