GCs, Residential V. Commercial

ChrWright

Good evening GCs...

Any of you out there do both residential AND commercial?

What's your experience in doing both... Profit margins consistent? Headaches?

I've thought for some time of starting a commercial division. I have a number of contacts that would generate a substantial amount of work, I'm just weighing the pros and cons of growing in that direction.

Would be curious to hear from any of you with experience doing both.

__________________

Christopher Wright, CR: President @ WrightWorks, LLC/President @ Central Indiana NARI, Named to the 2010 REMODELING Big50
www.WrightWorks.net - Facebook - Twitter - Carmel Remodeling
Indianapolis Kitchen Remodeling Contractor - You Can Get There From Here

Tscarborough

I would only caution you that there are different sets of specifications for resi VS commercial work, even for similar systems and methods of construction. It can bite you in the arse real quick, for example, when your masonry wall tie costs you a buck a unit, as opposed to the residential one at 4 cents, and you let it go un-noticed. Other than that, there is in general more inspector scrutiny, closer owner control, and usually an architectural presence, to say nothing of the sheer amount of people on the jobsite. Scheduling is tighter, penalties are higher, and there are generally more dollars involved overall.

The rewards, obviously, are greater.

tnt specialty

One could go on & on, but basically, in my experiences. Commercial can be much more competitve, but far less headaches. You dealing with professionals, all, pretty-much with the objective of getting the job done efficiently and correctly.

With residential your dealing with homeowners, and sometimes irrational behaviors. Not that commercial is void of that, it's just much more prevelent in residential.

Commercial typically affords more revenue on a "per customer/contact" basis. In other words. In my experience; It may take 3 - 4 small residential remodel projects to equal one commercial tenant improvement project. That's 3 - 4 homeowners, (typically, couples), you have to deal with for managing/collecting, etc..., as opposed to one single commercial client.

thom

TNT is dead on about giving up the pickiness when you do commercial. On commercial you can make more money per day, in my case I figured about 4 times as much.

You won't get away with the crap a lot of contractors pull on residential. Showing up when you feel like won't cut it. You will be working to their schedule, not yours.

You will wait for pay. Oftentimes 90 days. Figure it in your bid and live with it.

When you're dealing with large companies, especially the national ones, price is less important that service. If there are call backs, delays, business interference, it will make the guy who hired you look bad. That's bad for you. If things go really smoothly and the customer gets what he wants, when he wants it, and yo are conscientious about their business the dollars become secondary, you will get additional work. This guy is judged on your performance, not your price. If you look good, he looks good.

Don't screw around and don't be penny ante. If something is uncovered that needs additional attention, communicate right away along with your suggestion and price. Give the guy options, AND give him something to defend himself with if asked why that wasn't included in the contract. Make the guy who hires you look good.

Dealing with local small business is much the same as dealing with homeowners. You can get paid immediately, you probably won't make as much. With these customers, money is important. They take things personally. They can get picky.

woodman42

I agree with tnt. I am already working on going totally commercial.
Not that I won't take on any residential anymore but I won't go looking for it.
Commercial is more lucrative and has far less headaches. It is a whole lot easier to follow a set of commercial standards than to follow the ever changing whims of a HO.

Luke

All of the previous posts reiterate pretty much my feeling about commercial remodeling - generally less headaches, more competitive bidding than negotiated work so everything has to go smoothly because the bid margins are normally less than residential and there normally are good plans and specifications so the scope of work tends to be more evident. For my company, the problem I encounter is it is tough for my employees - and myself - to accept the lower level of quality of work both accepted and generally required by the commercial client. Commercial jobs are normally bid fairly down and dirty and if there is a little wave in the metal stud wall, no problem. We just can't seem to accept that so I tend to have too much time invested in the commercial work hence my profit margins are less than what my competitors are. I still like the occasional commerical project if nothing else, just for a break from the high-end residential projects we normally complete but I don't do any competitive bidding - it has to be a negotiated job for a customer or referral. Whatever you do, don't go after prevailing wage jobs until you have your costs/time factors down pat. I don't know if you have these jobs in your state, but these are jobs where the pay rate is set by the State on any state-funded project like school work, libraries, municipal buildings, etc. The hourly rate is typically double my pay scale so lost time adds up in a hurry. Good luck!

L. B. Condulet

FWIW, 20 years ago I used to do prevailing wage work for the Veterans Administration. I worked alone back then. Small jobs, commercial rehabs and stuff. Working alone made the paperwork very easy, and I MADE A FORTUNE!

Ah, those were the days...

JumboJack

I do both.On the comercial side it is mostly T.I.'s(tenant improvemant).Usualy very lucritive and way fewer headaces.