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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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.
Gilbane Building Company | June 2017 2
Sample Header
Sample Text > Sample Text
Agenda
WHO’S IN THE ROOM?
Banner Image
FOCUS AREAS & RISK
MITIGATION
BENEFITS & PLATFORMS
GILBANE SNAPSHOT
INDUSTRY TRENDS Q & A
NEXT STEPS
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• 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
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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
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• 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
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• 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
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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
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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
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Gilbane at a Glance
50+ OFFICES WORLDWIDE
1873 ESTABLISHED
2,600+ EMPLOYEES
ANNUAL REVENUE
$4.8 Billion
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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
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• 1845
• Gilbane family migrated from Ireland
• Great famine
• Faced discrimination
• Gained appreciation of importance of diversity
Gilbane History
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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
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• 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)
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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
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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
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• 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