getting down to business...getting down to business ….. shared practices on subcontractor...

Gilbane Building Company | June 2017 1

Getting Down to Business ….. Shared Practices on Subcontractor Prequalification

IMPORTANT NOTICE: This document contains confidential information proprietary to Gilbane Building Company, including but not limited to trade secrets and/or copyrighted material. Any unauthorized disclosure, duplication, or use – in whole or in part – of such confidential information for any purpose is strictly prohibited. All rights reserved by Gilbane Building Company.


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Agenda

WHO’S IN THE ROOM?

Banner Image

FOCUS AREAS & RISK

MITIGATION

BENEFITS & PLATFORMS

GILBANE SNAPSHOT

INDUSTRY TRENDS Q & A

NEXT STEPS


• Who’s In the Room?

• Trade Contractors

• Professional Service Providers

• Suppliers

• Participated in a Subcontractor Prequalification?

• Participated in a Business Certification Process?

• MBE

• WBE

• LBE


Prequalification in the Construction Industry

• Prequalification has become standard throughout the industry. The number of GCs/CMs requiring prequalification will only continue to grow.

• Protects all project stake holders

• Client

• Construction Manager/General Contractor

• Subcontractors

• Lenders

• Insurers


• The inability or failure of a subcontractor or vendor to successfully execute their scope of work will negatively affect everyone on the project. • Compressed Schedules

• Quality Issues

• Unsafe Working Conditions

• Coordination issues

• Prequalification is about putting sub contractors and vendors in a position to succeed.

Benefits of Prequalification


• As the industry has continued to recognize the importance of prequalification a propensity of third party systems have hit the market.

• Some of these systems require upfront registration fees and/or fees to transfer prequalification information from one CM/GC/Owner to another.

• Gilbane utilizes its own, open and free system for prequalification and bid management.

Prequalification Platforms


Prequalification procedures focus on three areas • Safety – Ability of a contractor to operate safely

• Experience Modification Rate

• OSHA 300 Logs

• Safety Plans

• Certificate of Insurance

• Experience – Ability of a contractor to successfully execute the scope of work

• References

• Workforce

• Completed Projects

• Financial Strength – Ability of a contractor to finance a project and meet future obligations

• Financial Statements

• Surety and Bonding Limits

Prequalification Procedures & Standard Documentation


The construction boom has lead to contractors expanding their operations.

While more work can lead to more profits it also puts stress on a company’s existing assets.

Contractors should anticipate an increased focus on their financial and operational capacities and also expect the use of Risk Mitigation Procedures such as:

• Joint Checks

• Direct Material Purchase

• Performance and Payment Bonds

• Fund Management/Escrow

• Letters of Credit

• Personal Guarantees

Risk Mitigation


Gilbane at a Glance

50+ OFFICES WORLDWIDE

1873 ESTABLISHED

2,600+ EMPLOYEES

ANNUAL REVENUE

$4.8 Billion


Gilbane in Florida

200+

STAFF

$512 Million

51 PROJECTS

currently in construction

45 years IN FLORIDA

6

LOCAL OFFICES

#1 FLORIDA GENERAL CONTRACTOR South Florida Business Journal, 2016


• 1845

• Gilbane family migrated from Ireland

• Great famine

• Faced discrimination

• Gained appreciation of importance of diversity

Gilbane History


The U.S. Small Business Administration defines a “Small Specialty Trade Contractor” as a company with revenues under $15 million

> 56% of Subcontractors in Gilbane’s Prequalification System

> Qualify for Small Business Classification

Financial Statistics

Rev < $15ml 56%

Rev > $15ml 44%

Gilbane’s Subcontractors


• Gilbane utilizes smaller subcontractors than the industry average.

• 43% under $10 million

• Majority under $25 million

Gilbane identifies subcontractors and provides opportunities that fit their experience and financial capabilities

• Outreach activities

• Communication

• Open prequalification system

Financial Statistics

< $10ml 43%

$10ml-$25ml 27%

$25ml - $50ml 14%

$50ml - $100ml

8%

> $100ml 8%

Gilbane Sub Revenue Distributions

(iBidPro Database)

< $10ml 16%

$10ml-$25ml 24%

$25ml - $50ml 19%

$50ml - $100ml

20%

> $100ml 21%

Industry Sub Revenue Distribution (2015 CFMA)


Success Stories – Curtain Wall Contractor

Q3 2012 Q1

2013 Q2 2013 Q3 2013 Present

• Gilbane Regional office is bidding two large Curtain Wall packages

• Project A - $20ml • Project B - $25ml

• Only qualified contractor available is approved up to $2.5ml.

• Limited bonding capacity

• After extensive scope reviews and meetings with owners and management Gilbane awards Project A to Contractor

• Gilbane and Contractor developed plans to ensure positive cash flow and effective supply chain management

• After positive references from Project A, Gilbane and Contractor begin bidding process for Project B

• Utilized same partner driven approach

• Contractor is awarded Project B and has a $45ml backlog with Gilbane

• Contractor has successfully completed Project A and is in the final stages of Project B

• Excellent reviews from Owner, Architect and Gilbane

• Contractor doubled their revenues while maintaining a 10% margin

• Gilbane/Owner/Contractor setup bi-weekly payment terms to increase cash flow

• Joint checks on Contractor’s major subs and suppliers

• Setup quarterly meetings with Contractor to review cash flow and WIP


Success Stories – Flooring and Painting

Project Pre-Bid Bid Benefits Present

• Gilbane is awarded a $300ml office tower project

• Award predicated on significant use of small and minority business enterprises

• $1.8ml painting package

• Gilbane worked with Contractor’s ownership and identified risk mitigation procedures that would enable Contractor to successfully complete the project

• Bi-Weekly payment schedule, direct material purchase and payroll verification

• Established a template for Gilbane and small contractors for future projects

• Contractor has completed 11 projects with Gilbane

• Positive public relations for Owner

• Contractor, a SBE/MBE flooring and painting company, is not approved to bid due to negative working capital and inexperience with large projects

• Contractor more comfortable with project cash flow

• Significant savings to owner due to Contractor’s decreased financing costs

• Helped meet the projects SBE/MBE goals


• If you are a first tier contractor please visit www.ibidpro.com

• If you have not worked directly with a large CM/GC please visit www.outreach.gilbaneco.com

Subcontractors/ Vendors Gilbane Building Company

Get Prequalified!

iBidPro

http://www.ibidpro.com/

http://www.outreach.gilbaneco.com/


Q & A


Contractor registration

• Register with Gilbane

• Commitment to Learn More

• Network & Meet at least three

new people today!

Next Steps…

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