Hard Hat Chat

Observations and Conversations about Commercial Construction, Development and Management

How Working with a Design-Build Construction Firm Can Boost the Bottom Line

As we move further into 2015, Englewood Construction has been fortunate to entertain a lot of new business opportunities. All signs have been pointing to a robust commercial construction pipeline, with activity consistently on the rise. In fact, last year, the value of all commercial construction contracts signed in the Chicago area was close to $10.6 billion, an 18 percent jump over 2013, according to Dodge Data & Analytics, a New York research firm. Based on our backlog and client activity, we predict record growth in 2015.

Interestingly enough, we have found owners for many of the commercial construction projects out-to-bid are looking to work with design-build construction firms. As a former architect and member of the AIA, this couldn’t make me happier.

There are so many benefits to using design-build construction firms, it surprises me more owners and investors don’t hire design-build contractors for their new commercial construction projects.

Englewood Construction is currently working on a design-build project for the renovation of Stratford Square mall in Bloomingdale, Ill.

Englewood Construction is currently working on a design-build project for the renovation of Stratford Square mall in Bloomingdale, Ill.

It’s not really a secret, but architects, engineers and commercial general contractors don’t always see eye to eye. An architect may dream up an architecturally significant commercial construction project, but once a commercial general contractor takes a look at the drawings and the proposed site, a different reality may have to be addressed. Likewise, if a contractor gets behind on their construction schedule, the subcontractors might not be able to complete their work on time. In short, while these three entities have to work together, the coordination and camaraderie is often lacking and an adversarial relationship is formed if the owner has bid out the work solely on price in a competitive bid process.

However, a qualified national design-build construction firm can eliminate these problems by quarterbacking a project, working closely with owners and investors and controlling all commercial construction elements from start to finish.

Working with a design-build firm can include:

  • Subcontractor harmony. A design-build firm will likely work with a trusted set of subcontractors that they know will deliver a successful commercial construction project on time and budget. Relationships on a project count for a lot. Time is money and if a project has a better chance of staying on schedule because of familiarity between the development team members, it will prove valuable to the client.
  • Financial savings. A tenant or developer may be set on using certain materials, but perhaps there is a less expensive alternative that still delivers the same capabilities or appearance. These are the kind of things a good design-build contractor will let a client know. Controlling construction costs is in the design-build  firm’s best interest, as there is typically a profit share system worked out between the client and contractor if the project comes in under budget, with the client receiving the lion’s share of savings.
  • True partnership. The relationship between a design-build firm and a client is much more of a partnership than the traditional competitive bid process allows for. Rather than simply following plans and doing strictly what the documents require, a design-build contractor will work with a client from the very beginning to determine the scope of the project. During the development process, the client and the design-build construction firm will work together to establish a realistic budget and list of wants and needs, and lock in prices on materials and labor for the project.
  • Less responsibility for owners. Owners can also rest easy knowing that any change orders that arise during commercial construction or any extra work that takes place due to unforeseen circumstances are the responsibility of the design-build contractor, not them. Fortunately, these situations rarely arise, as it is in the design-build construction firm’s best interest to complete their due diligence.

Working with a design-build contractor guarantees a much smoother development process, generating savings on materials and labor and delivering a quality product backed by experienced, proven subcontractors.

To me, it’s no secret as to why an owner would want to work with a design-build contractor. In fact, it’s always puzzling to me why they would choose not to.

When the right circumstance arises and we decide to develop retail and entertainment venues, a design-build relationship will be the only option.

Here’s to more design-build construction work in 2015.

Bill Di Santo
President
Tel: 847-233-9200 x710

Questions? Comments?
You can reach me at bill.disanto@englewoodconstruction.com
www.englewoodconstruction.com

3 Solutions to Help Solve the Commercial Construction Labor Shortage

Englewood Commercial Construction Team

Bill Di Santo, president of Englewood Construction (second from right), and the Englewood accounting team receiving recognition from the Chicago Chapter of the Construction Financial Management Association (CFMA) for participating in their 2014 Accounting Intern Program.

Activity is setting up nicely for commercial construction in 2015, but just as the industry seems to be back on its footing, the dreary recession of years past is giving us one last gasp of annoyance and pain. Believe me, no one will be happier than me when we can stop referencing the Great Recession that rocked the general commercial construction industry and the overall economy. Unfortunately, that time has not come yet.

While activity is good, the recession still hangs over us in the form of a commercial construction labor shortage. Between 2007-2009, the construction industry lost 2.3 million jobs. In fact, it’s fair to say that commercial general construction may have been the hardest hit sector of the economy.

Now, as contracts are coming back, skilled workers are in short supply.

In the past five years, commercial construction has lost skilled labors to a wide variety of places. Many immigrant workers have returned to their home countries or taken on work in other parts of the world, experienced commercial construction workers left the industry to pursue other careers, and a lot of accomplished skilled workers just decided to call it a day and retire.

This has had an adverse effect on our industry in two ways—as projects come back, they are on a slower timetable as it is often difficult to locate adequate subcontractors for a project, and, the price for commercial construction labor is often higher as many commercial general contractors are bidding for the services of the same subs.

The commercial construction industry needs workers of all backgrounds to fill in, but most importantly, it needs experienced commercial construction managers and operators. Yes, we need skilled electricians and plumbers, but what’s lacking the most seems to be the management positions. I’ve been in the commercial construction industry for 24 years and I still have no idea how to bend a conduit…it’s magic to me. However, I know how to manage an electrical team on site, while simultaneously managing foundation and drywall contractors. The managerial element of the industry is sorely lacking.

How do we fix this? Happily, as opportunities arise, the problem is beginning to sort itself out, but we are still a ways from being healthy. Here are three things that the commercial construction industry needs to do to fix the current construction labor shortage and get back to a balanced market.

  1. Apprenticeships need to increase. According to a recent Crain’s article, this is already happening. It couldn’t come at a better time. The industry needs a new batch of young, skilled commercial construction workers who know their way around a job site. With the proper training in an apprenticeship program, hopefully subcontractors will be able to staff up at a better rate.
  2. Veterans need to come back. The industry lost a lot of talent, especially on the management side, to premature retirement. Commercial construction was in a prolonged slump and many successful professionals thought it would be better to hang it up, rather than wait for the commercial construction industry to come back. With big new retail construction and restaurant construction projects in the pipeline, it would behoove commercial general contractors to approach some of these newly retired individuals and try to lure them back with high-paying opportunities.
  3. Align with education. Commercial general contractors in the Chicago area would be smart to partner with some of the great universities and colleges in the Midwest to offer internships to construction management students. Last year alone, Englewood had four interns—two in estimating, one in operations and one in accounting—from major Midwestern colleges. We feel it’s great to help mentor these young students, but also it gives us a chance to possibly help mold and shape future talent for our team. In baseball terms, we use it as our farm system.

Whether it is at the apprenticeship, management or internship level, mentoring is really the key to bolstering the commercial construction workforce. Learning is a process that should never stop and all commercial construction professionals should stay up-to-date with trends and code changes.

I remember back to my days as a young laborer and one of my mentors, Leopold Hanke. He came up through the ranks and went from apprentice to journeyman to foreman to superintendent. In his time, he had built nearly everything imaginable. I asked him once how he accumulated so much knowledge of the commercial construction industry and he said “Kid, I wake up every day with the goal of learning something new.”

I took that to heart and I approach my job the same way. If I’m lucky enough to pass that along to several young commercial construction workers in our industry, I’ll have done my part.

Chuck Taylor
Director of Operations
Tel: 847-233-9200 x712

Questions? Comments?
You can reach me at chuck.taylor@englewoodconstruction.com
www.EnglewoodConstruction.com

Looking Back at Commercial Construction 2014 – The Year that Was

Commercial Construction 2014

With new hotel construction on the rise, Englewood is reconnecting with clients such as Value Place for projects in 2015.

When I look back on 2014, I’m kind of sad to see it go. While it was a good year for commercial general construction, it was by no means a record setting year. What does set 2014 apart is the excitement it generated for the commercial construction industry, the optimism it set for the near future, and, perhaps mostly for sentimental reasons, the opportunity it provided to rekindle professional relationships.

These are the three most important commercial construction trends I will take from the commercial construction industry in 2014.

  1. Retailer reinvention is good for commercial general contractors. Consumers came back to the market in 2014 and retailers and restaurateurs felt the benefits. This meant a new wave of restaurant construction and a nice uptick in retail construction, especially with international retailers as they continue to take large foot prints at street level locations and in major shopping malls. However, this came with a caveat. Retailers were not content to simply put up new locations with old blueprints and designs. With competition heating up, owners are trying to reinvent the physical location and create an experience for the shopper. This is happening with everything from your corner Red Lobster all the way up to a 1 million-square-foot shopping mall renovation project. This is the effect Apple’s successful retail construction model has had on the industry. Apple stores are always packed and other retailers are looking to capture the same buzz. The good news is commercial general contractors are finding themselves on the ground floor of this process, working with retailers and restaurateurs to revitalize the brick and mortar location. As a result, it is a very exciting time in commercial construction.
  2. Rekindling relationships. It’s no secret that new construction was on hiatus for a few years, but now that consumers are back, retailers and hotel owners are venturing out to begin new retail construction and new hotel construction projects. This has allowed us to work with real estate directors we have not seen for some time. Interestingly enough, many old contacts have shifted to new brands and have brought us new retail construction opportunities. It’s actually been a lot of fun getting to know new professionals and brands as well as reacquainting ourselves with old friends. We are optimistic this will all lead to many new retail construction opportunities in 2015.
  3. Self-reinvention. As the times change in the commercial general construction industry, so too should the commercial construction contractor. At Englewood, we definitely try to keep up with the times and differentiate ourselves from the competition where we can. It’s why we started this informative, award-winning blog a few years ago. As retailers and restaurateurs set to reinvent themselves, so do we. In 2014 we began a rebranding and redesign of our web site, and all of our on-line marketing efforts. Expect to see more changes from our website in 2015 to give Englewood a fresh look. We are also excited to announce that we are expanding our services and have begun work in the multifamily construction and healthcare construction sectors. It’s an exciting new era at Englewood Construction.

We look forward to all of the opportunities and projects 2015 will bring the commercial construction industry, and, as we see 2014 go, we appreciate the seeds it sowed for what should a very busy future.

Bill Di Santo
President
Tel: 847-233-9200 x710

Questions? Comments?
You can reach me at bill.disanto@englewoodconstruction.com
www.englewoodconstruction.com