The "FATTY" of General Contracting

Good day all! I’m new in the BP community. I have read a few hundred posts, listened to a few dozen podcasts, and even stepped in to say something once or twice. But I’m not new to the wild and wonderful world of General Contracting (GC). I’ve built and renovated houses, neighborhoods, apartment buildings, office buildings, high-rises, an airport, and even a couple of US Embassies. I grew up doing this, went to school for it, and have made a pretty decent living at it.

As I’ve read posts and conversations, a common frustration stands out as folks set out to perform the construction side of the process. Some hire their own GC while others, tempted by the promise of more green backs, endeavor to self-perform the GC role. For the faithful patrons of the GC community, thank you, I appreciate where you’re coming from. Hopefully the below will remind you of the sore reasons for your patronage. For the rest, I’ll share a few insights to help you on your journey. If it becomes too exhausting for you, give us a call, we'll be here to pick up the pieces and tow you across the finish line.

To start, I've compiled five key components in the process of General Contracting. Enjoy!

Finding: I have come to categorize “finding” as the hardest part of the equation. I’ve read many of the Posts saying “never hire an unlicensed contractor” or “never hire off Craigslist”. While those make great Monday morning quarterback comments, my experience differs. For many trades and states, licensing is irrelevant. Further to the point, some of my worst tradespeople were licensed, bonded, and insured. I’ll take it one step further and say that some of my best tradespeople came from…wait for it…yes that’s right, Craigslist. I say this not to stir up contention on the subject but rather to illustrate a point…don’t arbitrarily place limiting factors into your formula for finding good tradespeople. What you’re looking for are serious and conscientious tradespeople. Rather than assume a tradesperson is good because they have a cool website or a license number printed on the side of their truck, figure out what finding methods play well to your strengths and weaknesses. Use resources that help find tradespeople that work well with your style of management and business.

Analyzing: Just as great effort was put into analyzing that real estate deal you purchased, don’t skimp on your homework when selecting tradespeople to perform the work. Get references and VERIFY them! But don’t just ask for references, ask them for the five most recent jobs they completed. Were the projects recent? Were the customers satisfied? Were their recent projects similar yours in size and complexity? Be creative and spontaneous in your verification. There really is no wrong question. If you want a guy that takes his shoes off or wears boot protectors, ask. If you want to make sure you can understand their English, ask. If you want a guy that doesn’t need to be paid up front, ask. You get the picture. Time spent verifying yields a high ROI.

Teaming: While not an employee, a subcontractor is a member of your team. I won’t go all millennial generation on you with the “everyone gets a trophy” bit but, if your feelings for your subcontractor are on par with your affinity for the Bank of America’s customer service hotline in 2009, you’re headed down a rough road. They too are running a business. They too have to buy groceries this week. They too have much to learn and aren’t experts at every aspect of business. You may find that when you step off the kings/serfs approach a bit, the road to success has a few less pot holes (or your upgraded suspension makes the pot holes less noticeable). I’ve found one of the best ways to accomplish this to clarify expectations on all sides. Prepare a written scope of work (SOW) which delineates responsibilities and expectations in clear language. Review and sign this with your tradespeople. No lawyer is necessary, just a simple one to three page document that both can agree upon. Things a SOW would likely capture are types of materials, time frame to perform, terms of payment, specific exclusions, and quality standards (manufacturer’s instructions, construction reference manuals, etc.). Tailor your SOW to your business, management style, and caliper of tradespeople you want to attract and retain. Your tradespeople will become familiar with your standard SOW allowing them to give you consistent performance and pricing.

Treating: So you found a decent tradesperson, you’ve verified their past performance and they are on par with your expectations. You actually got them to work for you and your first project went well…or so you thought. You have another project for them, but they won’t return your call. Is something wrong with them or is there something wrong with you? That’s right, sometimes the role is reversed and the tradespeople blacklist the investors (and we talk about it when we all get together to play bridge). So how do you avoid the poo-poo list? Please scroll back up to bullet point 3 “Teaming”. Most importantly, do what you agree to do. Don’t come up with lame excuses. They don’t sound any better coming out of the investor’s mouth than they do from the tradesperson. If you agreed to certain payment terms, follow them. If you agreed to have the house empty when they worked, have it empty. If something comes up, treat them like your grandma taught you and communicate. Just as tradespeople can easily develop bad reputations, so can investors.

“You’re Fired”: Ok, here’s the part that you’re really going to like. You nailed the teaming thing, you’ve held up you’re end of the bargain, you’ve asked nicely, you’ve thrown a few concessions their way, you’ve communicated, you even barked a little, but they still won’t perform. You’ve had enough…you don’t know where that tradesperson with the good references went, but this guy is the pits. You could hire monkeys and get a better job. This guy should refund all of your money and pay for a decent person to do the work right. Take a deep breath, go for a walk, and buckle down for this one…more times than not, you’ll find that you’re better off trying to limp the guy or gal along to the finish line than to fire them. I know, it doesn’t feel good and it’s certainly not fair, but in the long run, there is a lot of hassle in firing a contractor. Yes I know, you agreed on a price and a schedule. You did everything right. But experience shows that if you can make a few more concessions and maybe even take a day off to be their helper, you may end up with the desired product sooner and cheaper. The time and money lost in finding another tradesperson willing to come in behind someone else’s mess will be significant. You don’t have to take my word for it, but try a few more options before firing. Don’t get me wrong, sometimes you just have to do it, but know going in, it’s going to hurt for a while either way.

Well that’s that.  Keep enjoying the jollies to the wonderful world of General Contracting…