James Heuer Heuer & Company (201) 493-0220 This e-mail address is being protected from spambots. You need JavaScript enabled to view it More Info

Buying commercial construction services is not like buying undershirts. Whether you’re a business owner, high level corporate officer, developer or property manager, if you’re shopping the commercial construction market with the mindset that price will be the deciding factor, I suggest you reconsider. The potential pitfalls associated with the low cost provider can be plentiful and the reason, simply put, is that multi-trade commercial construction is not a commodity, it’s a process.

It seems a fundamental law of the marketplace that standardization of products and services leads to commoditization (all the economics majors are free to jump in here with the correct technical terms, as a civil engineer, Econ 101 was as far as I was required to go). The idea that this economic law applies to commercial construction is widely held to be true yet, in many cases, wildly misguided. Nearly every client I’ve worked with, on projects from the mundane to the complex, entered the bidding process thinking that all they needed to do was to get a few firms, reputable or not, to provide proposals and then, like shopping for a flat screen TV on the internet, compare and choose. Invariably, the client finds that each contractor’s proposal reflects his own approach to the process which is different from the next. Accurate bid comparison becomes a daunting and oftentimes impossible task for the inexperienced client.

I’m not suggesting that price shouldn’t be an important factor in the selection process of a commercial general contractor, but simply that it should not be the deciding factor. In fact, I would argue that the only time it’s appropriate for a decision to be made wholly on price is when the scope of work is easily understood and compared. A car owner searching for the best price for an oil change can easily comprehend and compare the services of several providers because there aren’t many variables. The job requires a specific oil filter, a known quantity of oil and a predictable labor component. The same car owner will have greater difficulty comparing offers for diagnosis and repair of a transmission problem without intimate knowledge of the processes and systems at issue. In the case of the transmission repair, the client’s decision process is likely to take into consideration a myriad of other factors aside from price like trust, reputation and familiarity with the mechanic. Likewise, when selecting a general contractor for a commercial construction project there are several factors to consider that can have a greater impact on the success of a project than bid price.

The bid documents

There is a direct correlation between the effort invested in planning and design of a project and the quality of the pricing information obtained at the bidding stage. If a consumer is particularly interested in accurately comparing bids and selecting the lowest price among them, there must be greater precision, thoroughness and detail in the design phase. If the bid documents are not tight, expect greater variance in the bid prices in addition to the increased likelihood of change orders.

Leadership ability

Leadership is the primary role of the general contractor on any commercial construction project and an individual project’s success largely hinges on the contractor’s ability in this regard. The task of organizing and directing the myriad parties involved (design professionals, subcontractors, consultants, client representatives, etc.) is no simple task and requires excellent communication, interpersonal and organizational skills in addition to a mastery of the technical aspects of the job. In evaluating potential contractors, the consumer should determine if the contractor’s leadership style and ability are appropriate for the project.

Alignment

When the client and contractor share a common vision and agree from the outset what constitutes success there exists the greatest likelihood for a good outcome. Without clearly expressed and understood expectations however, there is little chance that the project will work for both parties. In fact, managing a client’s expectations and ensuring that they are reasonable, is one of the most critical tasks of the general contractor. I am fully convinced that the vast majority of disputes that arise from construction projects are the result of a breakdown in communication. Before accepting the lowest bid, the prospective client should consider whether the contractor is committed to a successful outcome for all parties involved and whether he has the skill set to pull it off.

Whether the project is an expansion, renovation or new facility, the investment of resources (money, time and energy) will likely be significant. Resisting the temptation to engage a commercial general contractor based solely on bid price will go a long way toward ensuring the return on that investment is maximized.

Have a different or similar point of view? Email me about it or leave a comment.  This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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