The more you know about a potential construction project, the better prepared you’ll be to take it on. As the old adage goes, “Knowledge is power.” This is especially true when you’re considering a project with a new General Contractor. It’s crucial to do some homework and prequalify a GC. If you’re bidding on a new project, you want to make sure the GC has the chops to manage a successful project, collect payment from the property owner, and distribute funds on time. If the General Contractor has a history of red flags – payment disputes, poor reviews, or predatory contract language – make sure you are protecting your interests, and minimizing risk.
Of course, prequalifying your subcontractors and suppliers is equally as important.
The 5-Step Process for Prequalifying a General Contractor
Prequalifying a General Contractor is a critical first step to help ensure your project runs smoothly. Following the prequalification process will help you understand whether or not they can complete the job — and make sure everyone gets paid on time.
Here are 5 steps to take when prequalifying a General Contractor before a new project.
1. Review their payment history on past projects
Payment disputes are a clear red flag for both subcontractors and property owners. Everybody wants to avoid mechanics lien or bond claims. They slow down the project, they strangle cashflow, and end up costing everyone a lot of time and money.
Levelset’s Contractor Payment Profiles makes prequalifying a General Contractor simple. The platform makes information about payment practices publicly available, and uses a variety of data sources to calculate the company’s payment speed. A contractor’s profile will show a record of liens or legal actions filed against the firm. This can be an excellent indicator of whether or not this venture is worth it for you.
Take a look at the GC’s history of disputes, both actively and historically, and dig into the details. Keep in mind that conflicts and disputes occur on jobs for a number of reasons.
While the General Contractor may not always cause a payment dispute, their role is to help facilitate the payments and their smooth distribution. Issues at this stage in several projects might give a clearer picture of the GC’s practices.
Keep in mind that the sheer number of disputes won’t always tell the entire story. A history including 10-15 disputes may seem like a dealbreaker, but over the course of 500 jobs, that’s a pretty good track record. Three disputes may seem like a safe number to take a gamble on, but not so much when you consider the GC has only completed ten jobs.
For example, if you’re looking into working with ABM Construction in Benicia, CA, their profile shows that they have a fast payment speed. It also shows that out of 67 recent jobs, subcontractors were paid on time on 61 of them. That’s a good track record. Property owners who hire ABM are more likely to avoid lien claims on their property, while subcontractors can expect fewer payment delays.
View Contractor Payment Profiles
Learn more about the contractors you work with! View their payment history, risk factors, and customer reviews.