Developing any type of project can be challenging. All construction projects, by their very nature, require certain skill sets and a deep understanding of a client’s expectations. But when that project is a large-scale multifamily development, the challenges are multiplied even further. Multifamily developments tend to come with more variables that require nimble and experienced teams (i.e. design, engineering, owner, GC, etc.) to successfully navigate these circumstances.
This environment presents opportunities for miscommunication that often leads to missing the mark on the client’s expectations. Furthermore, given that many multifamily projects are built as income-producing properties, this creates some additional challenges during the design and pre-construction phases. As McGuire PM, a property management company in Denver, explains, “any omissions in the construction process can be a burden to the project owner in time, money, quality, and eventual business profits. Thus, the general contractor partner you choose for your project is fundamental to its eventual success.”
General contractors are essential to the success or failure of the project because they are responsible and liable for most aspects of the project. They are embedded in every part of the construction process; project design, pre-construction, constructability reviews, cost modeling and GMP (Guaranteed Maximum Price) management, live cycle analysis, material & equipment procurement, supplier and subcontractor management, jobsite safety, value engineering, project close-out, and warranty. Lastly, collaboration with the various municipal entities involved is absolutely critical. Therefore, the general contractor you choose must align with your values and view your project as a long-term relationship and not as a mere transaction.
Considering all these variables, let’s discuss the parameters for choosing the best general contractor for your multifamily construction project.
The Basic Criteria for Choosing a General Contractor
There are a few basic criteria your GC partner should meet before considering them.
The contractor should have an established presence in your area. This is necessary so that the contractor is in touch with the conditions in the local construction industry.
The contractor must be licensed by your state and recognized by the local chapter of their professional organization.
The contractor should have a history of successfully completing projects similar in scope and complexity. You can generally find these on a general contractor’s website. For example, at Symmetry Builders Inc., we list what we’ve built, what we are building, and our partners in these projects on our website.
The contractor should be able to provide you with a list of references that include owners, architects, owners’ representatives, subcontractors, and suppliers. Talking to these individuals provides you a good overall picture of the GC’s capacities.
The contractor should be adequately insured for your project. General liability limits and associated umbrella coverages with the required professional liabilities etc. are imperative for the protection of any project.
Review the Contractor’s Reputation
You should be able to establish the contractor’s trustworthiness. This is not difficult if they have been operating in the area for some time. Established companies will leave a trail of happy or dissatisfied customers. You can look to places like your state’s Secretary of State, Facebook, Google Places, Yahoo Local, Manta, and Mortarr, or by consulting with other industry professionals with shortlists for contractors.
The Company’s Culture
If your values are not aligned with those of the company, working with them will prove to be difficult. How can you discover what a contractor actually values beyond what they say about themselves? How well do they communicate, and do they pay proper attention to your concerns? When you visited their office, did the staff look happy and motivated? Another way to gain insight into a company’s culture is to tour one of its ongoing projects.
The Project Estimates
One important quality to look for in a general contractor is transparency, especially with costs and decision-making. When looking at the estimates provided by a contractor, most project owners focus on the bottom line; but more importantly, how much clarity does the contractor provide in the estimate? Does the contractor provide full details like materials and their quality, number of workers on each task, task durations, and other important information? Does the payment schedule put you at risk? Is the estimate transparent and easy to understand?
The true test for a general contractor comes with the early task of providing a comprehensive project budget based on nothing more than a vision of a new development. No client has the funds or time to completely develop a set of documents just to see if a project is feasible or not. Most GC’s are quick to throw around some great and global cost per square foot that was based on some old project. Usually, these guesses miss the mark as every project. Every owner has a specific set of expectations that need to be considered, which aren’t typically reflected in historic unitary costs.
At Symmetry Builders Inc., we provide comprehensive, detailed, and transparent budgets from day one which allow every developer to make good business decisions early on without having to invest in expensive plans and documents. Of course, this also requires a GC with the knowledge and expertise to “build” these projects from scratch with minimal information. Be skeptical of large-scale and vague cost per square foot assumptions!
Relationships and Partnerships
A contractor who does not have established relationships with reputable vendors and suppliers may not be trusted. The company should be able to provide verifiable proof of relationship with known suppliers and competent sub-contractors. If they cannot do this, it may be because other parties do not trust or respect that contractor. The quality of their alliances will count toward their ability to provide you with the best service.
Safety Records and Insurance
In addition to the adequate liability and umbrella coverages, as discussed earlier, a general contractor is also required to have workmen’s compensation insurance, pollution insurance, vehicle insurance and professional liability insurance. Another good indicator is to ask for the GC’s EMR for the past 5 years. EMR stands for Experience Modifier Rate. It is a number used by insurance companies to determine the likelihood that a business will experience worker’s compensation claims. A high EMR (over 1.0) will drive premiums up, while a low EMR (below 1.0) helps keep your insurance rates low. Symmetry Builders Inc.’s current EMR is 0.74 (a great value to the clients).
The Details of the Contract
You must have a written contract with the contractor you eventually choose, but before you sign the contract, ensure that every detail of the project is included in the document. It must clearly specify the scope, proposed duration, and cost of the project. It must contain details of materials to be used, the project milestones, and payment schedules. And, most importantly, it must state the options that are open to both parties if any disputes arise over the project.
At the end of the day, the contract is the terms of business you are doing together and that requires that the expectations of each party be clearly understood and mutually agreed upon. Anything left unwritten is always subject to interpretation.
To sum it up, choosing the right general contractor can make or break an otherwise successful project. Implementing these items listed above will greatly improve the outlook of your multifamily construction project. Visit our website for more information on what we do at Symmetry Builders, Inc. and we wish you great success in your future endeavors.