What questions should you ask a General Contractor (GC) when looking to hire one to build a property for you, renovate or expand it? How to even find general contractors for your projects? How should you pay them? Jeff Walston from Premise Construction will share his two decade experience with us.
Tell us a little bit about you?
I'm a commercial general contractor for two decades now. I worked all around the Western Hemisphere, Central and South America, and US on projects. And now I own my own company, Premise Construction, and we do anything from medical to retail to industrial construction and renovation. I have been living in Louisville, KY for most of my life now. Construction is one of my passions, to see something take shape and come into reality. I have two great kids and a fiancee. My whole career has mainly been general contracting, and a little development.
Tell us more about your development experience in Central and South America.
It was a great journey and learning experience with customs for each different country, that was very intriguing to me, as well as how they do business differently in each country. Some I wish the US would adopt and some I wish that other countries would adopt some from the US. You live and learn and go with the flow business to make everyone happy and have a great experience.
I'm sure we could do a podcast just on that!
Yes one for each country.
What are some of the major things that people should be aware of before hiring a general contractor?
You need to know the right questions to ask. If you're in search for a general contractor, you can go to either your Better Business Bureau or your city commerce centers, they will know a great contractor because they've dealt with them in the past and know that they have a good track record, first and foremost. As far as questions to ask prior to starting the commercial projects:
1. Making sure that they're fully licensed, fully insured, which is general liability, and workman's comp. Regardless if they are even going to be on the job site, you have to have that to protect everyone involved, it's very important.
2. Their experience. If, for instance, you're hiring a contractor, and you want to do a restaurant build out, if they don't have any experience in the restaurant sector of commercial construction, maybe they have just been doing office buildings, you might have a few hiccups going through that whole process, because it's going to be a learning process for them. You need someone to know what they're doing in that specific sector.
3. Once you figure out if they've done those projects, ask to see them, see if he can get references, ask around about their particular companies and do your research on them. It doesn't hurt to Google their company and Google their employees as well, I'd highly recommend that.
By Googling, we're talking about looking at their reviews?
Yes, if you Google their company, their reviews will pop up, and you can read through them and see if they had any issues. If they did have any issues, it's not a red flag, just see how they took care of it. Things happen. Even in my company, I try to eliminate as many as I can, but accidents do happen, things happen. What matters is how they take care of that problem, or that issue, what solution they found for their customer, and then how the customer felt about it at the end. You can also see if maybe they have a dispute on Better Business Bureau. If you Google their name, more than likely, you'll get the red flags pretty quickly, outside of any reviews that might pop up.
Maybe I'll take you through my journey on trying to find one. And maybe you can, as an example, enlighten me. I'm looking at expanding a self storage facility in an area that I don't live in. I asked people for some referrals, and they gave me referrals to three contractors. The closest one is within a two hour drive of the property and the other ones are a little further away. And just one of them responded to begin with. I'm sure I'm not the only one going through this. These were referred by people that have expanded their facilities. What would you do next if you were me, since they're not responding?
A lot of people are overwhelmed with how much work is actually going on, and a lot of times, it falls through the cracks. And that also can be on the other side of the coin that can show you that they're not as organized as you would like for that contractor to be. If they're not already communicating back with you right away about the job, because they could at least make the phone call back and say, I'm very sorry, but if want me to come out and look at it, it might not be until two months from now for me to even look at the project, and then six months from then to even start it. That would have been great for them to do that for you so at least you would have known.
On the contractor side of things, a lot of times they're afraid to reach out and tell people that they are busy, because then you're going to tell your fellow people in your niche of self storage, that they were too busy for you. But three months later, they may not be anymore so they don't want that to come out. My advice would be to reach out to them again, through several different avenues, email, call, etc, if you really want them to get a bid. If that's a respectable company, you can always Google who their team members are, and try to reach out to them on social media and say, Hey, I see that you're doing a great project and I have a project coming down the line. Can I get you guys to come take a look at it, or are you too busy? They may not contact you back, but I would keep trying to get more contractors, especially from referrals out there. The one that did reach back, were they the one that was further than two hours away? Or were they the closest ones?
I believe it's the one that is the closest one.
That's another thing, a lot of contractors aren't willing to travel because they don't have big enough crews, and they have enough work in their area that they can just make their profit goals and everything else in that area. And they don't need to travel. I have to ask a lot of questions before I travel more than two hours away to someone, for instance are they willing to pay a little more? Because not only am I going to be paying everything that would cost to do your project, but I'm also going to be paying for food and lodging for all my employees that I would have out there. That's an additional expenditure, and that can be why these contractors aren't reaching back. They just think, Well, I'm not in the running, there's no way that she'll pick me because I'll be too high because of that additional expenditure of, stay and travel time and such.
I would just keep reaching out to other people, and try to find contractors a little bit closer that would be willing to do that. What type of addition is the material?
You can also reach out to metal building contractors to see if they've done something in the past that's like that, because they might be strictly doing buildings, but it's a metal building, which is an addition, even though it's storage, it's still the same material and such, a few more doors, a few more walls. So that could be an avenue for you to reach out. It's hard to say how to get another contractor to reply to you. I personally try to reach out to everyone as quickly as I can, it might be a day or so since I'm extremely busy. But I do reach out and see what type of project it actually is and if I'd be interested. I ask a lot of questions to the customers, I'll say, I have all these questions, I'll send it to you an email form, if you want to answer them and then return them to me, then we can see if we can work together. Until then, to go out to a property that is two hours away, I'm not going to do that until we can feel that we can actually work together and have the right expectations towards one another. But to get contractors to call you back, unfortunately I don't have the magic answer. I just try to do the thought process in my shoes of what they could be going through.
Let's say that we're down to a couple of contractors that actually responded to the inquiry. What are some questions that people should be asking them to make a decision on which one to pick?
If it's not down to price, if they're close in pricing, and you're just trying to figure out, who am I comfortable with, it's actually different for every circumstance, it's how you feel about the person that's representing the company. Some questions to consider are:
- What expectations do you want them to have?
- Can they meet your communication expectations?
- Do you want daily updates? Do you want weekly updates? Do you want monthly updates?
- Do you have project managers that are going to be managing our project daily?
- Do you guys still perform work? Or do you subcontract everything out? And if so, how do you manage those subcontractors?
- If they do have subcontractors that they're utilizing, you can ask them, How strong are your subcontractors? Do they show up on time? Are they managed well within their company? Get a feel of what they say about their subcontractors.
- Is every subcontractor fully licensed and insured on your property?
- You also want to see, from a liability standpoint, if they have any safety protocols, and if they do, what are those safety protocols, and maybe even see if you can get their safety protocol to see if everyone's following it. With any commercial property, the public safety for anyone involved in the project is vital. Not just the people that are working there or people that are going to be utilizing it. It's through the whole process, anyone who sets foot on the property, make sure that they're going to be safe, and that you do not have to worry about any safety concerns and such.
- Another really important question is, I know that you've been doing this for a long time, but when problems arise, how do you handle it? Can you give me an example of that one problem? Or the most recent one? And what did you do? This is to see how they would react and see what they say. Because that may not be what you think is how it should have been handled. And then on the same token of that is, contact some of the referrals and see how the project went, because now you're comparing the nuts and bolts of each company. So you really have to figure out how are they handling certain projects? And are they a fit for me, as the project owner on that particular project?
In terms of payment, is it standard to pay half up front and half when it's completed? What is the protocol there?
It depends on how the contract states, I know a lot of people have been trying to get so much upfront to pay for materials, because as we all know, right now, materials on certain things are still hard to come by. Your project isn't going to start in three months, because you have site work to do, but you want to go ahead and order your metal, because that's going to take three months to get in. A lot of companies just don't have, half a million dollars to pay towards that steel, nor will the suppliers wait that long anymore for three months to wait on it, so a lot of times you have to pay for that.
And now you're sitting waiting for shipping to get your material. But after that, you can do payments, or you can do pay as you go. A lot of contractors have been doing pay as you go, and they enjoy that because it's not taking too much of their payroll and money that they have saved up out of the equation each time that they're going through. Basically they pay for everything out of their account, and at the end of the month, you'll write them a check for that. That basically replaces and replenishes their bank account so you can ensure next month that they have enough funds to keep your project, as well as everyone else that they're doing at the same time as yours, funded and moving along critically.
How can someone know that the price is right for that particular project and that there are no surprises in at least the materials cost moving forward? Is there something we can put in the contract? How does that go? I ask that because for real estate projects, as we all know, we have to get a certain amount of dollars allocated for that project. So you actually need certainty in price.
I know for a fact that if it's a new construction, and or even addition, depending on your region, even in Central and South America. Where I'm from, you need to get site assessments, which is earthwork, and you have to figure out if that's contaminated, or if there's anything in there, so you have to get environmental testing done. That could be a surprise at the very beginning of the whole project. During the process, on new construction or additions, there shouldn't be too many surprises, unless it's under the earth from what we can see. Maybe they hit a limestone deposit or some type of mineral or a deposit of sand. And now they have to add reinforcements to hold the building up. Other than that, the pricing, typically, if it's an ongoing project, and you can get that price set with a supplier that the contractors are utilizing, you can set it for 30 days, they don't want to go much further than that.
Suppliers around here, depending on what type of material that we're using, which supplier we're using, they don't even want to go beyond two weeks. That has been difficult. When it comes to renovation, it's all about experience. Depending on how long that contractor has been in the trade of what he knows, for instance, I'm walking into a building that was built in the 70s, behind that wall could possibly have some type of lead or asbestos, etc. So you have to add that to your investment dollars. For any contractor and owner out there, please ask questions to each other because this is the way that we're going to educate people the quickest way, and also do your research online to see what other people have found in all these situations and renovations.
You have to think about public safety and everyone involved that you're going to have to remediate all those issues that are coming up. Renovations are a little bit trickier. I think that all goes off experience of what that contractor has. I have two decades, I'm not saying I'm an expert still to this day in construction, I'll say I'm professional. Once I put in 50 years, I might say, now I'm an expert. Until then, I'm still a professional. In my mind. It's about asking questions, and communicating very well.
How far do you go for your projects?
It depends on the size of the project, but we've been going around to different states like Tennessee, Ohio, Indiana, and Kentucky. We're in Kentucky, so it's centralized. Four or five hours is our radius of drive. Anything over one and a half hours, we typically will stay to knock the project out and be there as much time as possible. If not, we'll just take care of it within the city limits or Southern Indiana which is very close to us.
Is there anything else that we haven't covered, that is important for our audience to know?
On one more thing about contractor selection, I want to make this clear to people because that's been happening in the past is a lot of commercial contractors are very busy. It's worth waiting for a commercial contractor who has the experience in the commercial field, instead of utilizing a Residential Contractor. Residential contractors do not have to think about public safety. Most of the time, they're just thinking about the single family use and their construction crews, they're not thinking about, Once I open these doors and hand the keys over, I'm going to have 1,000 to a million people walking through here each year. In my house, I don't have a million people walking through my front door every year. So please don't use a Residential Contractor. And if you do happen to use it, I would say for a very small contract based, something like drywall and painting. But if it's a full scope project, and they have to get a lot of subcontractors involved, you're getting into some issues that will cause you headaches. It could be a lawsuit down the line if you use someone inexperienced. Don't use residential contractors for commercial projects. There's way too much risk involved if you do that.