At Surfside, We Use Three Basic Types of Contracting Agreements.

• Design/Build Contract- Contractor oversees the project from client conception to completion.
• Set Project Cost Contract- Contractor bids the project for a set price based on plans furnished by client.
• Construction Management Contract- Contractor agrees to perform contractor services for a flat percentage over and above the costs involved.

Brief Explanation of Each-

Each category has pros and cons. Although the three methods can be combined, or variations of each can be used, you should have at least some idea which is best for you after reading the descriptions below.

Design Build

Pros: A client with no more than a concept in mind can take that vision over to the Design/Build contractor and pay them to turn it into a finished product. A Design/Build contractor will work either in-house or use outsourcing, and what you receive is everything from initial color 3-D CAD drawings (if requested) to the final clean up. Your only responsibility will be final plan approval. Contract costs are usually negotiated out front (either percentage over and above actual costs, or set amount for finished project) and a reasonable deposit is given to the Design/Build contractor as a retainer.

Cons: It is by far the most costly, and the “out front” expenses can be considerable, since the contractor is expending considerable time before the job even begins.

Set Project Cost

Pros: Depending on the completeness and detail of your plans, you may be able to know exactly what the project will cost before beginning.

Cons: It is a sad fact of contracting that some contractors (both sub and primary) love to see jobs on which they can make more than a fair profit. More than anything else, they like to see incomplete or inaccurate plan detail. These contractors are not stupid by any means, actually they are very astute. They know the plans are not up to par and they bid the jobs knowing exactly how much the “extras” will add to their profit. Since most contracts will not allow you to bring in your own people to make changes, the client is basically handing their billfold to the contractor every time a change order is required. This is completely legal, and is even addressed by most all contracts, since contracts in construction use the plans as their reference point.  Extras, whether because of client changes or insufficient plan detail, have been known to add 100% or even more to the final cost.

Another problem with the Set Project Cost contract is that labor and materials costs fluctuate, especially metal, wood and concrete (the majority of materials in construction). Also, the time between bidding and actually starting can be anywhere from a few weeks to several months, depending on permitting and other factors. Coupled with unforeseen challenges that may squeeze profits, the contractor is many times forced to choose understaffing a job or eliminating some optional materials in order to make sure their profits stay high enough to make the job pay. This can reflect on job quality, completion time, and naturally on the client/contractor relationship.

Construction Management

Pros: You will save money on the project, and client is more comfortable when they are in control (working in tandem with their contractor) of the construction process.

Cons: It is not as “hands off” for the client as the previous two methods. Costs, while being estimated at the onset, are not as clear-cut, and are still are just as subject to change depending on the accuracy and detail of the plans.

If you are an absentee owner with only casual ties to the project, Construction Management is a poor idea. Design build is a better fit. If you absolutely have to have final costs in advance, and have near perfect plans and engineering, the Set Project Cost Contract can work well.
What Is Best For You?

At Surfside, we have used all three methods and have come to the conclusion that the Construction Management method is the one we prefer for many projects, especially commercial. Please read on and I can explain my reasoning.

First, two old contractor jokes that are more true than false!

• What is a Construction Bid? – A wild guess carried out to two decimal places.

• What Is The First Thing a Contractor Does When They Win A Bid?- Order more Change Order Sheets.

These sad but true jokes always come to mind when we are called in on a job that has gone bad. The poor judgments made by both the Sub and General Contractor have become a problem to both the contractor and client. Problems usually started when the contractor realized they will not make what they wanted to on the job. They try to re-negotiate the subcontractor contracts, un-report employees to their insurance company (putting the client in serious jeopardy if someone is injured), uslower cost materials, or under staff the job. Using one or all of these methods, the job has finally broken down, communication is terrible, the client is unhappy, the landlord (if the property is leased) is angry about the mess, and the permitting authorities are ready to put on the dreaded “Red Tags”.

None of this needs to happen if some guidelines are followed from the outset-

• Decide which of the methods of hiring the General Contractor best suits your needs

• Find a contractor you have faith in and has a track record you can check. Check references.

• Get detailed plans and drawings. The money you spend now will be saved over and over again. If a bid is based on incomplete or inaccurate plans, it will be an inaccurate and incomplete bid costing far more in the long run. Your contractor should work with your designer/engineer to get the best plans and detail possible.

• If you do not understand part of the procedure, ask before the project is started.

• Make sure your contractor has the proper insurance in place and is licensed to do the job.

• Do not do any work until the permits are on site.

• Make sure all sub-contractors sign client and contractor releases.

• Make sure the contractor does not proceed on the next stage of a job till the previous stage has been approved by the permitting authorities.

• Make sure partial payment releases are received with each partial payment.

• When the project is complete, get final releases from all vendors and subcontractors and General Contractors, also, make sure you have the final permitting closed out on the municipal records.

At Surfside, no matter which type of contracting you prefer for your new project, we have many years experience making projects run smoothly. Some of this experience comes from making mistakes. We are not perfect, but we are a family run company that will do our best to make your project run as smoothly as possible, while making your family part of our family.

No matter what your plans, call the Surfside family at 561-741-1338 for your next project.