Avoiding contractor pitfalls takes right steps

Bart Boatright is vice president of Flintco Inc.'s Springfield office.

The national economy finally seems to be taking a turn for the better, and the Springfield area continues to thrive.

Healthy markets such as ours drive real estate development as businesses require new buildings and growing businesses require expanded facilities. Additional public works projects are also required to accommodate increasing populations. As a result, the need for qualified and reliable commercial contractors is increasingly critical to support growth and help assure economic viability.

Selecting the right commercial contractor can be a daunting task. Next to operational costs, construction is often the largest expense a business incurs. Selecting the wrong contractor can result in excessive cost or a nonperforming facility. With so much at stake, there are several issues that buyers of commercial construction services should consider.

Buying a service not a product. While few people would select a doctor or a lawyer based exclusively on price, many will use this as the sole criteria to select a contractor. While price should be a consideration, of equal relevance is the contractor's ability to interact well with an organization, their experience and stability, commitment to understand the business, and ability to solve issues.

Too often owners have found that the lowest-priced bid ends up being the highest-priced final bill due to change orders, delays in scheduling and in operational costs due to a project that does not meet quality standards.

Determine the delivery method in advance. There are several methods of delivering and contracting commercial construction services. Construction management agency, aka "at risk," design/build and general contracting are just a few. The best delivery method for a given project is contingent upon how a business operates, internal resources, funding and the schedule for delivery.

For example, construction management at risk enables the owner to specify a guaranteed maximum price. The contractor assumes any budget overruns on the approved scope in excess of the GMP. If the project is delivered below the GMP, these savings are typically shared between the owner and construction manager. Design/build is another method that is primarily focused on speed of delivery, and it is different because it has one contract for design and construction. With design/build, design and construction occur concurrently, thus reducing the overall time from project inception to completion.

Experience counts. Only contractors that understand the specialized needs of a business will have insight regarding correct installation of equipment and will know the questions to ask to provide a client with the best product alternatives at the best price.

Check references. Ask for, and check, the references for the company and the key individuals assigned to the project. Ask the potential contractors that they provide owner, architect and subcontractor references. Check with the Better Business Bureau to see if there have been any complaints lodged against the company. Insist on meeting the project manager or superintendent who will be assigned to the project.

Be sure the company is stable. It is important to verify the contractor has sufficient bonding capacity, is financially stable and has been in business for some time. Bonding will help alleviate the financial risk if a company fails to complete construction of the project.

Be sure the company has a quality-control program.

Ask to see a documented quality-control program. It should describe the process for monitoring the drawings and budget during the design phase, and how they monitor the work during construction.

Find out how a company deals with changes.

There has never been a set of perfect documents and the environment can't be controlled. Changes during the course of construction are, therefore, inevitable. Know how the contractor deals with changes to the scope. For example, what is their typical documentation and approval process? What is their performance history in relationship to contractor initiated change orders as a percentage of overall construction costs?

Find out about a company's safety record. Ask to see the contractor's documented safety manual and processes. Also, ask for verification from a third party that the program works. Construction can be hazardous, even deadly, if safety precautions are not taken and in this litigious environment no business can afford unsafe practices.

These are just a few of the many issues that should be considered when selecting a commercial contractor.

A good source of information regarding delivery methods and other issues for selection of commercial contractors are contractor associations. The Springfield Contractors Association is an excellent resource. They are knowledgeable about contractors in the local construction industry.