Choosing a General Contractor

By L. Bruce McCardle

I was recently reminiscing with an industry colleague about “the good old days” in the steel business. The punch line was, those days were about six months ago. To put things in the terms of Dr. Spencer Johnson, the “cheese” has not just been moved, it has become hard to find and very expensive.

Since the crisis in the availability and cost of steel, the daily routines of many self-storage suppliers have changed. Some things we used to take for granted are no longer. We have to work harder to accomplish what used to be simple to achieve. We have to pay more attention to every task. The industry has changed significantly, and to not make proper adjustments in the way that we think and conduct business would be detrimental to our companies and our customers. To continue doing business as usual would simply not be wise.

The bottom line is, you can put whatever spin you want on recent events in our industry, but no amount of catchy advertising or “this too shall pass” thinking is going to make this one go away. There are shortages and price increases in steel, concrete and lumber. Fuel surcharges are through the roof, and shipping has become a problem. At some point in the near future, interest rates will start to rise. Whether we like it or not, and whether we choose to recognize it as relevant, the commercial construction industry and its market have changed, and more changes are coming.

As I shared this list of woes with my colleague, a friend and customer of mine, his reply was, “That’s your problem. I just need to get buildings from you.” He makes a good point. The American public is still going to buy stuff and will still need to store it. And developers are going to continue to build. Selfstorage facilities are still a sound investment that provides a great return.

With all of this in mind, it is obvious the same old routine for selecting a general contractor is not going to cut it. To excel in our businesses in this altered market, a new attitude is a must. Therefore, a novel approach when selecting a general contractor for your self-storage project is paramount.

Instead of looking at theoretical or academic reasons for choosing a contractor, let’s look at the most common deciding factor: price. Until about six months ago, every builder’s goal seemed to be to have the lowest price, usually topped off with an unreasonably short construction schedule. Customers said, “I want the best, I want it cheap, and I want it fast.” We laugh at this now, but it is exactly what was driving the commercial construction market. These days, however, with the costs of some materials having doubled and some lead times exceeding 12 weeks, this is no longer a realistic expectation.

I am always amazed when successful, intelligent businesspeople evaluate bids for construction and respond by saying, “These three bids are really close, but this one company is 30 percent cheaper. Wow, am I getting a deal!” Usually, they’re not. Even in this dynamic business environment, you still get what you pay for. If you shop construction as a commodity, you will end up with materials and labor. If you hire a general contractor to provide professional services, you will likely end up with money in the bank.

Keep in mind the final result of the construction process will be a product you are going to have to live with every day, as long as you own the facility. How many times have you made a major purchase or completed a significant project, having skimped a little here, cut a corner there, or “made do” with something, and later thought, “I should have . . .”?

Of course you have a budget to consider. Also consider that paying for the services of a good general contractor can result in getting more for the money you spend. A contractor with experience in building selfstorage will save you time, help you avoid common mistakes, and assist you to planning and coordinating with other components of the industry that are key in making a facility work.

When hiring a general contractor, the most important thing is to make an informed decision. I shouldn’t have to say it, but I am going to: Check as many references as possible, old and new. It surprises me how often owners choose their hired professionals without talking to those who have worked with them. Also check a contractor’s credit. Ask subcontractors and suppliers about their experiences working with the company. This advice seems basic, but many people tend to overlook the obvious.

Maybe choosing the right contractor has more to do with you than it does the service provider. Maybe there are some questions you should ask yourself before you start interviewing potential hires. Here are three key questions to address up front:

1. How much money do I have?

2. How much expertise do I have?

3. How much time do I have?

Most of you have careers or other businesses. You have family and friends and hobbies, and now you are considering whether you can be your own general contractor, build your own storage facility and “save a ton of money.” Over the years, I have watched a lot of people try to save money this way; usually, it costs them more in the end. General contracting is a profession and more than a full-time job. You may be very sharp and good at what you do, but think of how many years, how many “hard knocks” it took for you to get to your level of success.

Decide what expertise you can lend to the construction process and how much time you can truly commit. When you have honestly answered these two questions, negotiate with a contractor and determine what your contributions are worth. A construction budget should include more than materials and labor. If you are going to be involved in the project, decide how much you are going to do, where you are going to need professional services, and budget accordingly. You may find the time you take away from other endeavors will cost you more than you can save by doing things on your own.

In business, our success is usually due in part to our ability to judge peoples’ characters. In choosing a contractor, you are about to enter a relationship. You don’t necessarily have to like this person, and you probably don’t want to choose someone who is just like you.

As in any relationship, there are going to be good times and challenging moments. Choose someone you feel you can trust, someone with whom you can be upfront, and who will be straight with you in return. Choose someone with whom you feel comfortable dealing. One of my mentors always said to new clients, “I want us to be as good of friends when this project is over as we are now before it starts.”

In the end, the lowest price won’t ensure a contractor can address all the other essential issues. Look past the slick sales presentation, the “we are better than them” marketing, the “we’ve been doing it this way for 40 years” spiel, and the “no problem” reassurances. If it was my project, my choice for a contractor, subcontractor or supplier would be the one who said, “The construction market is changing and can be really volatile right now. We are going to do all we can to stay on top of it, quickly adjust and respond accordingly, and keep you involved and informed at every step.”