The Truth About GCs

The Truth About General Contractors

Subject: the role of general contractors on a job
The Truth About General Contractors

Successful general contractors excel at managing the subcontracting process. Some don’t self-preform much work — don’t pour concrete, install ductwork, fit pipes, or apply roofing, however, they all select and manage others that do.

The Middle Man

A General Contractor contracts needs to be able to seek out, employ, and manage a collection of skilled craftsmen to build a project for the client he contracted with. GCs are sandwiched in the middle. They sign contracts in two directions (both up and down the construction ladder) with owners who want the project built and with sub-contractors who want to participate. To be successful, General Contractors have to orchestrate all of this. If any of the subcontractors underperform they are all in jeopardy.

Seek Out

The general contractor may not pull wires or hang dry-wall, but as the “orchestrater” of the project they need to know how to find the best organization that can. In fact, discovering the “best organization” is the general contractor’s stock and trade.

Traditionally, subs were selected through the easy-to-understand “low-bid” process. However, “low-bid” is based on the erroneous assumption that all contractors can deliver the same performance. In future blogs, we will be talking about the alternative concept of best-value selection, a procurement process where not just price but other key factors are considered in the sub-contractor evaluation and selection process. Key factors such as reputation, experience in project type and size, technology, cooperation, standard operating procedures, leadership, and risk management are evaluated, weighed, and factored into the selection equation before deciding who is the “best organization” for the job?

Employ

The second skill required to be a successful general contractor is being able to select and administer complicated agreements and reduce them to a contract. This may be self-evident, but the industry suffers from the disruption and problems that arise between generals, subs and owners because important details were not spelled out in the original agreements between the parties. Well-written contracts designate specific parameters in – budget – schedule – quality standards – payment policies – extras – punch lists – penalties – recourse – and a variety of other details particular to individual jobs. Project success begins with a carefully thought-out, well-written agreement. Without it, conflict is almost certain to arise. 

Manage

Too many losses for GC’s and subs have resulted from the non-performance or failure of one sub on the job. After the participants (subcontractors and vendors) have been carefully selected using best-value selection processes and their performance defined in a well-conceived and written contract, success depends on the ability to manage and coordinate the day-to-day performance of the carefully selected participants. 

Successfully managing the construction process in the field depends as much on “attitude” as “technical” knowledge. Positive motivation trumps discipline and audit in orchestrating the process towards a well-coordinated successful conclusion. Your attitude toward participants dictates their attitude toward you. Superior performance requires appropriate attitude.

  1. Respect Profitability – The bedrock of subcontractor management is to recognize and expect your subcontractors to make a profit and let them know you care about that.
  2. Be consistent – Efficiency and productivity are drastically affected by consistency in managing and supervising the work. A major complaint from subs is that they are often treated and managed very differently from project to project by the same GC – even on the same project.
  3. Be Fair – Often, we tend to favor subs we have worked with in the past over the newcomers. Avoid this tendency. It only takes one sub to turn a project into a loser. The sub are created equal (unless they prove otherwise) and deserve to be treated consistently and with equal respect.
  4. Be open – What is lacking for subs new to your organization is their level of expectations. If a sub knows what is expected before the work commences they are better prepared to meet those expectations or to deal with differences or objections up front.
  5. Try something new that works: Develop a subcontractor policy statement that outlines your firm’s expectation and operational methods and provide it to subs pre-construction and even better pre-bid so they know how you intend to treat them during the construction process. State right up front that you understand and expect them to make a profit, but not at the expense of others.

Conclusion

General contractors think of themselves as builders, not as orchestraters. This self-image often distracts them from honing the advanced subcontractor management skills required for success in their true calling. Selecting, employing, and managing teams of skilled companies and craftsmen is a highly complex and demanding process that requires a specialist skill set not a general practitioner. General contractors are more than builders; they are highly-skilled management consultants. Try that self-image on for size.

This site has a sample Subcontractor Management Policy template that is self-explanatory. Take a look at it and if you don’t already have a formal Subcontractor Management Policy we recommend you develop one immediately. Read more about business planning and Project Site Management.