General Contracting Help - SCENARIO: Residential business has opportunity to land large commercial job

[kevintri99]

I just started a new residential contracting company, and I've found a few great subcontractors to complete projects based on mine and their AoE. However, due to professional networking, I have the possibility of landing a large scale commercial remodel project with an estimated budget of $400k. Talk about a massive first job!

However, I feel the scope of the project is outside of my AoE (both in scope of construction and the commercial aspect), and I want to make sure my first customer is happy with the end result.

A few options have been considered:

• Find and refer a highly rated commercial GC to bid the project and request a commission
• Take on the project and hire highly rated subcontractors within each scope of the remodel (as well as hire an independent contractor for project management)
• Turn down the offer

I'll be the first to admit that this opportunity is extremely intimidating, and I want to make sure I do the right thing by my potential client, as well as (obviously) make money from this if I can. In case this helps, I will add that my background before this was in corporate senior management which involved high level management of P&L and 40+ employees at any given time. Any advice is greatly appreciated!

 

[katypeach]

@kevintri99 Keep in mind, unless this project is out of the ordinary, that commercial work is typically billed on a monthly basis with payments often taking 60 or 90 days and retainage taking up to 6 months.

There won't typically be a deposit such as with homeowner. Most residential subcontractors aren't setup to operate outside of the deposit structure, you would need to review payment terms and make sure even if they say they can handle it that they won't be out of cash and unable to complete the work due to cash flow reasons.

There are many residential contractors with infinitely better people skills and housekeeping but I've had very poor success using them on commercial jobs. The money issue has been a constant, even when I received assurances it wouldn't be they often couldn't handle change orders , schedule delays etc... without running out of funds and needing a bailout or to be replaced.

 

[erin27]

@kevintri99 Take it and hire professionals under your guidance. Get references, past projects and all. Planning is key but you can do it. I’m doing something similar but in the manufacturing sector. Same difficulty, tossing a coin but trying to get all the odds on your favor.

 

[sweetpotato11]

@kevintri99 !!!Also, performing Commercial Work over a certain $$ amount often requires a special license such as a GENERAL CONTRACTOR’S license. In my state that threshold is $50,000.00! So, if performing a job over $50k you would need a general contractors license. If you take a contract/work on over $50k you get in BIG Trouble, big fines $10k +, and more, such as having a restraining order put on your business for that job - meaning you can’t complete the job and will probably get sued by the customer.