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Not All General Contractors Are Right for Your CapEx Project

By March 16, 2021Press Releases

Posted March 16, 2021

Advice for selecting the best team for your renovation or development

All general contractors are not created equal

Selecting the appropriate general contractor (GC) for your upcoming renovation or large capital improvement project requires a good deal of consideration and due diligence to ensure that the selected firm is able to address your project’s specific requirements. We have found over the years that all GCs are not created equal.

Most GCs have experience and core strengths that may or may not be applicable to a specific project. You would not, for example, want a contractor who specializes in interior renovation work to lead your next ground-up construction venture. At the same time, a large, highly specialized urban tower contractor would be overkill for a soft goods, select-service hotel renovation. Additionally, over the last year, the pandemic has added stress fractures to the operations of even the most stable GCs and subcontractors. A viable company pre-COVID does not guarantee a stable company six months from now if cash reserves have been depleted and cash flow challenges have emerged.

So, how is one to choose?

The Plasencia Group’s Development Management Consulting team employs the following procedures to assist clients in selecting the appropriate general contractor for their projects:

  1. Assemble a list of stable GC candidates that serve the general geographic area where the project is located. Local companies usually have critically important relationships with nearby subcontractors that will be executing the work, as well as with municipal permitting and inspection personnel. These local relationships are sure to be helpful throughout the entire job.
  2. Narrow the list of GCs based on project specifics including ground-up construction requirements, interior renovation needs, or exterior project specifications such as a roof replacement, or a window system remediation.
  3. Request pre-qualification information from each firm if working relationships are not already in place with any of the GCs on the short list. Typically requested information includes:
    • Company specifics such as years in business, contractor license number and state of issuance, number of office employees and field personnel, including project managers and field superintendents
    • Insurance carrier information and coverage limits
    • Bonding company and bonding limits
    • Confirmation of self-performed work versus contracted work
    • List of recently completed projects including project name and location, work scope completed and award value
    • Current work commitments and pipeline of work secured for the next four quarters
    • Safety record
    • References from owners of recently completed projects
    • Audited financial statements and bank letter dated within six months indicating available balances, lines of credit and overall relationship with the bank. Such a request is typically reserved for larger companies bidding on sizeable projects. While records are held in strict confidence, however, not all companies may be willing to share them. Similarly, not all companies have audited financial records.
  4. Expand or condense the prequalification questionnaire depending on the project specifics and GC requirements.
  5. Narrow the bid list to four or five companies based on evaluation of the information provided, the firms’ capabilities and their demonstrated level of interest. Follow up with a final interview with a principal or team from each company.

Wrapping it up

In conclusion, the selection of a general contractor for your next lodging project requires substantial research and careful consideration to ensure an appropriate selection. The Plasencia Group’s Development Management Consultants has established relationships with hotel construction and renovation firms throughout North America. Should you need assistance with any aspect of a lodging development or renovation, from initial planning to brand negotiation to general contractor selection, our team is available to provide you with personalized expert guidance. Visit our Development Management Consulting page or call Senior Managing Director Doug Mills at (813) 445-8324.