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May 5, 2017
The Puget Sound region’s commercial real estate market is booming right now, with new buildings seemingly going up on every block. We are incredibly fortunate to have so many experienced and talented general contractors in this market. However, developers would be wise to pay close attention to the ever-changing landscape in construction.
During my 40-year career, I’ve had an opportunity to work on more than $5 billion worth of development projects totaling more than 15 million square feet. Based on my experience, below are 10 criteria I think developers should look at when hiring a GC.
1. Experience: While having the right experience may seem obvious, it’s without question the most important thing to consider. You want to make sure your GC has the necessary skills for your project type. They need that previous experience to help assure they can properly estimate, manage and build your project. Don’t hire a GC to build a hospital or biotech facility if they haven’t before. Always, always, check references to be sure of this.
I’ll also look for someone that has some self-performing skillsets, such as concreting, steel or carpentry. If a GC self-performs portions of the project, then they typically end up with better results. Firms with a great track record and applicable experience provide a resume of more surety, credibility and confidence to lenders and investors which are real assets to developers.
2. Organization:This one is a bit more subtle in the process of finding a GC since many people don’t think about it right away. Office and job site organization can be good indicators on whether the firm will run an organized and effective project. Actions speak louder than words, and observations related to organization are often an omen of things to come.
3. Safety and bonding history: It takes experience, organization and focus to maintain a safe work environment, so it is important to review the GC’s safety record. Additionally, those that have top tier bonding capacity are generally financially sound, which can be a very good indicator about the quality of their business.
4. Commitment: Successful GCs need to deliver a commitment to the job and to the people they build their team around. The commitment to keep on the people that you hired is critical, and you need to have that trust in them. During major growth cycles like we’re currently experiencing there’s a lot of lost talent, particularly in project engineers, project managers and construction superintendents. We’re now also losing experienced, high-quality baby boomers to retirement. As with many of these criteria, examine the firm’s track record and check their references for good indicators of their commitment to a project.
5. Timing: The timing needs to be just right when hiring a GC. You don’t want to hire too soon, or scramble at the end because it’s important that the right team will be available. Waiting for a traditional design-bid-build approach in a busy building market can create timing issues. Another impact to timing is securing key subcontractors and procuring long lead equipment. In today’s building boom, you need to secure tower cranes and elevator providers in advance along with key concrete, curtain wall and mechanical, electrical and plumbing subcontractors or you may fall short of your goals.
6. Communication: When you are hiring a GC, it’s important to see if they have the right chemistry and relationship-building skills that work for both you and their team. The way they communicate is important as well too many people rely solely on email instead of face to face these days. I’m a firm believer in the adage that 90 percent of communication is body language. In addition, the job will fall apart if people are at each other’s throats, so they must be effective communicators and know how to handle and effectively resolve conflict.
7. Leadership: You can only be an effective communicator if you are also a strong leader. Try to get a feel for the GC’s leadership abilities. Grab coffee with the team to see how they interact. Can they create an environment of teamwork and collaboration? Are they effective relationship builders? And, everyone makes mistakes. How they respond when there’s a mistake is important. These are crucial attributes necessary to creating a win-win project.
8. Subcontractors are equally important: If the GC is detail and quality oriented, then they will also likely work with subcontractors that share the same mission. You’re only as good as your team, so a good team of subcontractors means everything for the project. Additionally, many projects have incredibly complex infrastructure and it is critical that the GC and their subcontractors are highly proficient and adept with the latest building-information modeling software packages.
9. Have ties with the market: Most likely, you will be looking at candidates that are already a part of the market in which they are proposing to build. If not, however, make sure their company has built strong working relationships with established leaders in the local subcontracting market. For those GCs looking to enter a new market, they should consider making significant investments in the local organizations and communities they are joining.
10. Cost is key (but not everything): A GC that can deliver on time and on budget is worth their weight in gold. However, do not go for the lowest bid, go for high-quality and experience. Bring the firm in at the beginning and negotiate general conditions up front. During pre-construction they will watch your back. A good GC will help ensure what you are developing makes sense and stays on budget. Typically, the best contractors will meet all of the other criteria to be the type of company that meets this requirement.
Greg Krape is president of Seco Development, which has been recognized as one of the most successful mixed-use development companies in the Puget Sound region. Seco has been a landowner for over 35 years in Seattle, Bellevue, Kirkland and Renton.