CM Peletz

CM Peletz Co., with offices in San Jose and San Francisco, is a General Contractor and Construction Manager specializing in very high-end residential and complex commercial projects. Since its inception, C.M. Peletz Co. has been highly regarded for our integrity, attention to detail and client-centric approach to the building process.

Wednesday, July 29, 2009

Managing Expectations through Project Managers

I am often asked, in conversation or when interviewing for a project, how our firm goes about the operation of constructing a project. After discussing the roles of project manager, superintendent, foreman, etc, I am invariably asked, as the manager of the construction business, what my role is in the operation of constructing individual projects.

With quite a few years now in the business playing just about every role along the way, I have come to the successful conclusion that my role is to play that of the client or client’s advocate.

When it comes to successfully building residential estates of the highest caliber it is imperative that job one is to manage the expectations of the client at all times. The construction business is fraught with endless chances for misunderstanding and monetary loss by the contractor, so the construction staff is trained to protect the business’s shareholders. This is necessary to the survival of the business. However, the vigilant protection of the company does not guaranty a happy client or design professional -- or even that their expectations are managed correctly.

This is where I come in.

As the operations manager or “manager of the project managers,” I look at every issue as if I am the homeowner or design professional. What would I think if I were being presented with this proposal or request for information? Is this something I should be paying for? How will this affect the schedule? Is this what I am expecting?

Don’t misunderstand, our project managers and superintendents are highly experienced, capable, and extremely sensitive to the wants and needs of our clients and design counterparts. However there are times when client expectations collide with that of the general contractor.

The tendency of the project manager is to strive to build extreme quality within budget and schedule. When there is a change causing extension of budget and schedule to provide for the extreme quality it is up to the operations manager to scrutinize these situations so that fairness to the client is maintained. At times this creates confrontation and then compromise within the office prior to releasing information to the client. Compromise might include eating some costs that might otherwise have been imposed improperly onto the client. It also might mean coming to the conclusion that due to certain documentation, our take on the situation is correct and the client must bare the brunt. In the latter case, some explanation from me directly with client could come in handy to explain the situation or reason for our course of action. There we go managing expectations again.

Performing the tasks required by the client in the process of constructing a building is every bit as important to the outcome as the performance of the project manager. In our market segment, that of the very high quality estate home, most clients act in this capacity few, if only one time. How can we expect them to make the right decisions or understand the point of view of the contractor without any experience? Having been a client myself, who has also acted as a professional client representative on large estate projects, I have a pretty good understanding of the contractor/client relationship. I believe having the ability to view the process from a client’s perspective and using it as a tool to manage client expectations sets our firm apart when it comes to client retention and referral.

Wednesday, July 8, 2009

De-Selecting a Sub

I once attended a forum sponsored by CSI (Construction Specification Institute) where one of the topics was Contractor/Subcontractor relations. There were several executives of large General Contractors in attendance. When prompted on the subject, one of the panel members, Jim Balboni, an executive with Otis Elevator, stood up on his chair and shouted, “Why in the hell do contractors continually use subcontractors that fail them!” In the best humor there is always some truth.

The General Contractor/Subcontractor relationship is, for better or worse, a telltale of project health or for that matter Contractor health. A great subcontractor makes the job of the General less time-consuming and allows him more time to plan and budget and thus makes the General look good. A poor subcontractor bogs all facets relating to his portion of the project down and can make the project and the GC look like a disaster.

In order to truly represent the interests of the client, the subcontractor list must constantly evolve. Great subcontracting companies come and go. So by simultaneously trimming the potential subs-list and adding to it constantly, you are adding extreme value to your relationships with clients. Pricing will be competitive and current. Technique and communication will be modern. Trust will be there.

That is not to say that all subcontractors must go. We have several that we have worked with for more than 20 years and continually stand the reasonableness test.

Disengaging from a subcontractor prior to contracting for a project

As with any relationship, until we have experienced a project together, we really do not know each other. A Subcontractor who violates the basics needs to be let go before they start for

  • Improper insurance
  • Disagreement with our indemnity language in our subcontract agreement
  • Expired license
  • Poor or non-existent references
  • No office presence where phone calls, (e)mail and faxes are received, messages taken and phone calls, (e)mail and faxes returned.
  • A misunderstanding of the management necessary for the very high caliber building process

If a subcontractor fails in any of these or you get the gut feeling that you’ll be let down, pass early and often. Experienced Generals know the feeling.

Eliminating a subcontractor from the proposal list

Now that we have experienced a project together, besides pricing, what makes us know the Subcontractor should not be considered for the next team effort:

  • Poor product installation
  • Offers no consultation in trade
  • Improperly handles client/GC relationship
  • Improperly handles architect/GC relationship
  • Continuously late, inaccurate billings on improper form
  • Does not understands the key rule that additional or extra work will not be paid for unless approved prior to work being completed
  • Maintains a slovenly jobsite environment
  • Add your own here

There is some give and take with this list. A subcontracting field with a small number of competent competitors might warrant a little leeway on a few of the above items. There might be some give and take for a rock-star that does very fine work. However, if a few of the above are tied together, even the best subcontractor is expendable.

The bottom line is that the GC needs to pull off the project on time and within budget and make the experience for the client worth reliving. If a subcontractor isn't doing his part to contribute to that smile on the Client's face, perhaps their place on the subs-list should be reconsidered.