What Questions Should I Ask My Commercial Contractor?
Building out a commercial space is often a new experience for business owners.
If you haven’t been through the process before, it can be quite daunting.
However, if you know what you should be asking your commercial contractor prior to getting the process started, you should feel more at peace with the entire operation.
Here’s a list of 18 questions that every small business owner must ask before hiring a commercial contractor, whether your project is new construction or a commercial renovation.
Questions You Should Ask Your Contractor:
1. How long have you been in business?
It’s important that you work with a general contractor that has been in business for a longer period of time or has enough experience to professionally handle your build out. General contracting can be a “fly by night” type of industry, which could leave you exposed to poor construction or an undelivered build out.
2. Have you worked on projects similar to ours?
You don’t want to hire a residential contractor to perform commercial construction. And not every commercial construction company may be a fit for what you need. If a company specializes in building out office space or commercial renovations for tenants, they likely wouldn’t be the best bet to build a new construction warehouse.
3. Do you have project managers and strong subcontractors?
General contractors are often only as good as their weakest subs. If they’re unable to get the subcontractors out on site to perform the work necessary to deliver you a high-quality project on time, you should explore other options. Having a project manager overseeing the work is also crucial to ensuring the work is done correctly.
4. Are you licensed, bonded, and insured?
Depending on the state, your general contractor may not have to be licensed, bonded, and insured, which leaves you vulnerable to not only shoddy workmanship, but also dangerous conditions. We recommend your contractor be licensed, bonded, and insured, even on a minor project like a commercial office renovation. Ask to see your contractor’s licensing and proof of insurance prior to hiring them.
5. How long will this build out process take?
It’s important that you both set expectations on the timeline to build the space on the front end. Make sure the contractor commits to a delivery date and have penalties and consequences in your contract if they do not hit the mark.
6. What is your payment schedule?
You need to know how the contractor is going to bill for this project. Never pay for the entire project up front - that is a recipe for disaster. Instead, start with a down-payment, progress payments, and a final payment. Discuss what you will require from them in order to make that final payment - such as a Certificate of Occupancy - and write it into the contract.
7. What sets you apart from your competitors?
Experienced commercial construction companies often have connections to the city, which could help expedite the process, as well as better project managers, subcontractors, etc. Depending on the size of your project, hiring a highly active contractor can be ideal, since they keep their subcontractors busy. If a subcontractor sits idle for too long, they will find another job.
8. Who will be designing the plans?
Does the contractor use its own engineers and architects or are they outsourcing the work to a third party? You may also want to work directly with your own space planner or architect and have them provide the construction plans to the contractor.
9. How soon can we get the project started?
Contractors will need time to line up bids after they’ve received plans from the architect or space planner. And these timelines can vary drastically, depending on whether you’re needing a completely new build out or a simple renovation. From there, they’ll schedule the subs and put together a timeline for completion. The sooner the contractor can get everything they need, including permits from the city, the sooner they can get started.
10. Do you guarantee and provide warranties your work?
Materials tend to settle after new construction. Wood framing loses a significant portion of its mass in the 1st year after installation due to water evaporation, which can cause drywall nails to pop and cracks - even if the contractor is the best in the business. Make sure the contractor guarantees the quality of their work and offers warranties on anything they install on the property.
11. Were your last three projects like this one delivered on time?
Construction is notorious for missing deadlines and delivering late. If your contractor has a consistent track record of delivering on time or close to it, they’re likely going to do the same on your project. However, if they consistently miss deadlines, expect them to miss yours, too.
12. How do you ensure project costs?
Contractors will typically lock in their pricing with subcontractors for a period of time after your initial bid. Make sure you commence the project within that timeline, or your pricing could change. Be careful with how the contract is written - they could be incentivized to have cost overruns if they’re collecting a percentage of the total project cost.
13. Do you have a claim record?
Contractors get sued all the time, whether they were in the wrong or not. Get access to their claim record, if possible, to see how these lawsuits and claims were handled. Some clients can be unreasonably upset and sue at the drop of the hat, but some have rightfully pursued legal remedies. You don’t want to get into a situation where you’re having to hire an attorney to sue a contractor who left the job half finished.
14. Do you keep a job safety record?
Attention to detail and safety is paramount when working in construction. Having a strong safety record shows that the contractor cares about their employees, which is a signal that they’ll care about getting your job right. If they have a poor safety record, it likely means they try to cut corners where they can, which means you’ll get a second class job.
15. Can you provide references for businesses similar to mine?
If your contractor is experienced in the type of project you’re looking to work with them on, they should have no issue providing references. Call these past clients to gather what it was like working on a project with that contractor - you never know what you’re going to learn.
16. Are your suppliers local?
If suppliers are local, that means the contractor will have more control over having materials delivered to the project on time. If they’re sourcing supplies from out of state, there’s no telling what kind of delays could be incurred through transit, embargoes, etc.
17. Is your bid an estimate of project costs or a fixed price?
Make sure you understand what you’re getting into when you hire the contractor. If they only provided you with an estimate of their total costs, your budget could get thrown off fairly quickly. You’ll want to have your costs fixed prior to moving forward so that you can limit your chance of having any overruns.
18. What does your schedule look like at the moment?
Your contractor could be the best fit in the world, but if they’re booked out for the next six months, it may not matter. Ask your contractor how their schedule looks so you know they will have the capacity to get to your job when you need it done.
About The Author:
Tyler Cauble, Founder & President of The Cauble Group, is a commercial real estate broker and investor based in East Nashville. He’s the best selling author of Open for Business: The Insider’s Guide to Leasing Commercial Real Estate and has focused his career on serving commercial real estate investors as a board member for the Real Estate Investors of Nashville. Learn more at www.TylerCauble.com