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Huge expanses of wood floors covering an entire mall or running through a pricey corporate headquarters can cause some wood flooring contractors to turn green with envy. "If I could just get one job like that," they say, "I'd be set for months. And I wouldn't be spending all my time running across town doing a couple hundred feet here and there." Others think it would sound impressive to tell their friends, "I can't do it next week—I've got a job in Miami."
Those large commercial jobs can be impressive in scope or location, but are they really a contractor's dream come true? Do the owners of those wood flooring businesses really sit around and count their cash all day? How exactly do they do it? As with many companies, it's a combination of special skills, organization, professionalism and money that allows them to prosper in a tough market.
Backed by the Bucks
One of the essential factors in successful commercial jobs is financial fortitude. Contractors accustomed to being paid half the cost of a job up front from a home owner are in for a shock when it comes to dealing with the financial side of commercial work. On a commercial job, the job is invoiced, and if the wood flooring contractor is lucky, the check arrives the following month. More commonly, it arrives two or three months later. During that time, the entire cost of the job—typically much greater than the cost of a residential project—is carried by the wood flooring contractor.
At wood flooring contractor Eaglecrest Enterprises in Priest River, Idaho, those terms are a fact of life. "If I get money in 60 to 90 days, that's good pay," says Don Tucker, project manager. "You have to be able to provide your own capital." Contractors stress that good relationships with suppliers can be vital to success in the commercial world, especially during a financial crunch.
One of the holdups in the process is the fact that subcontractors are paid only if the owner pays the general contractor. A wood floor company may lay the most beautiful wood floor in the world, but if other parts of the job aren't up to par and the owner withholds payment, the wood floor contractor won't see his money.
Or, even if the wood floor company is paid most of the money, the general contractor holds onto a certain percentage. "You may bill $10,000 and the GC will hold back 10 percent retainage just in case something goes wrong," says Steve Becht of The Becht Corporation in Tewksbury, Mass. "You may not see the retainage for the year. That may be your profit on the job, and you don't see it."
The scope of commercial jobs also entails inherent perils. "It's a lot more risk—if you have a problem, that's a big problem," says Ralph Kuehn at Maryland Heights, Mo.-based Champion Floor Co. "Residentially, my risk is spread across all those jobs. You've got to be able to handle the negative cash flow and bad things that can happen."
The financial complications also come with benefits, however. "The good part is they're bigger jobs. Whereas I may have to do five residential jobs to generate $10,000 in revenue, you can do that on one commercial job, and it's 10 times less paperwork," Kuehn adds.
Depending on the type of work being done, commercial contractors also may find that profit margins are generally higher than in other segments of the business. "It can be a very profitable business," says Stephen Brown, director of new products at Harris-Tarkett. "The commercial people typically have more money to spend than most residential customers. They usually go for pretty high-dollar products."
The margins depend on where the job falls on the spectrum of commercial work. Margins can be high on projects such as office buildings or malls, but they can also nosedive on public work, especially gymnasiums.
"There's some negotiated work out there, but the majority of public work—gyms—is low bid," says Tucker, whose business focuses mainly on gymnasiums, with some other commercial work. For such projects, volume is the key to a viable business.
Commercial wood flooring contractors have to be prepared to demonstrate their financial stability. Most commercial general contractors' insurance requirements are substantially higher than those for residential work, and many jobs may also be bonded. To set up bonding, contractors must go through their insurance agent to provide audited financial statements of the company and frequently of the company owners, as well. If they meet the requirements, they receive a surety bond, which guarantees that if the subcontractor doesn't do the work, the insurance company will step in and pay to have the job completed.
For public work, there are additional paper trails that must be followed. Contractors must follow the Davis-Bacon Act, which requires that employees working on federally funded construction projects are paid "prevailing wage" rates. Employers must file certified payroll, which proves that the company has paid the prevailing wage and benefits. (For more details, go to www.access.gpo.gov/davisbacon.) Prevailing wages can change substantially from one county to another.
In some areas, subcontractors need to get qualified even to bid on a public job. The process varies for every city and state.
Under the Gun
On the commercial job site, contractors find that they have to perform—now. Whereas some builders may spend a year working on a single house, commercial general contractors may complete a $5 million building in five months. The accelerated pace demands organization and communication between the GC and subcontractor.
"In commercial work, it's performance. There's no such thing as, 'It's going to take me longer.' They don't want excuses, they want to be able to get the job done in a timely fashion," Tucker says. Those parameters require flexibility on the part of the subcontractor to cover for problems that are out of his control, whether that means adding more workers to the job, working longer hours, or whatever else it takes to get the job done. With the flooring contractor typically coming at the end of the project, the pressure increases even more to make up time lost by other trades or problems.
Other trades present one of the biggest challenges. On gym floors, it is typical for the wood flooring crews to have the space to themselves. On other work, the opposite is usually the norm.
Contractor Syracuse Floor Systems in Syracuse, N.Y., runs anywhere from five to 15 jobs across the country at one time. President Gail Greiner says that "typically when they're trying to open a 3,000- to 5,000-square-foot store, they try to cram the construction of it into six weeks." To be able to accomplish what they need to, "It's more productive and easier for us to come in at night," Greiner explains.
The job-site conditions also affect the products that can be used. Due to the tight time constraints, almost all stores and malls now specify prefinished floors.
"These crews are running 24 hours a day by the time the stores open, so for us to say, 'OK, we're done installing, we need three days without anybody on the floor to get it finished'—that isn't going to happen," Greiner says. "Even if we could sand and finish, it would be a lousy job because the other trades are walking through."
Acrylic impregnated wood floors have traditionally been a popular choice, but Greiner sees a strong interest in solid prefinished products due to their ability to be resanded and recoated many times. Engineered 3-inch products can simplify the job by making transitions easier.
In recoating situations or applications where sanding and finishing is an option, such as in office spaces, several factors must be considered. If it's a store that's being resanded, waterborne finishes are a standard choice since several coats may be applied overnight and be ready for business the next morning.
Long-term maintenance is another concern, explains Bill Matney, branch manager for Trinity Hardwood Distributors in Houston, Texas. "On the residential side, you can pretty much put poly down, and that's what they want," he says. "On the commercial side, poly may not be applicable to the situation. Sometimes an oil finish or some type of easy-to-maintain finish may be preferred."
Safety is also a factor to be considered. Wax finishes, which can be slippery, are almost never used in commercial settings. Odor can be part of the safety issue, as well. If the work is being done in an area that's already occupied, such as part of a department store, the wood flooring contractor has to work with the general contractor to make sure products used don't have any hazardous potential. "Some people are particularly sensitive to chemical odors—this is something you need to investigate," Matney says. "If you get one little lady passing out, she can shut a job down. If it is a factor, you have to start working on materials to get around it." The same caution applies to adhesives, as well.
A Different Breed
While commercial work puts different burdens on the company's finances, products and schedule, those demands are also transferred to the employees doing the actual work. The lifestyles differ for those whose company does solely local commercial work compared to those who work for companies doing jobs across the country.
Even if the work is local, there are differences between a large commercial job and residential work. "You might assign eight or 10 men to this project, and they'll be going to the same place all the time instead of driving all over town. That's one thing that guys like about it,"says Gayle Harris, commercial estimator/project manager for T&G Hardwood Floor Specialists in Denver, Colo. But at the same time, it takes the right personality, she explains. "There are men who cannot do large commercial work; it just stresses them out," she says. "They have to be in residential work where they can see they're getting done."
The emphasis placed on speed in commercial work can be another frustrating factor for crews used to working on residential projects. "In a house, it's craftsmanship first, production second,"says Tucker. "In commercial, it's production, then craftsmanship. The craftsman who's used to going into the house and taking pride in his work is going to be very frustrated when you say you need more production." The commercial work also has to be done well, he explains, but there simply isn't time for the meticulous attention to detail demanded in a residential application.
For crews working nationally, their jobs are more a lifestyle than simply a job. Greiner's crews typically log up to 80,000 miles a year driving across the United States to their various national accounts. Once they get there, it's heavy physical labor done mostly in the middle of the night. "I don't expect to get a whole lot more than three or four years out of the guys if I'm lucky," Greiner says. "As they age and get into their mid 30s, it's harder on them. Working nights is difficult on their health—they go long periods of time with very little sleep. It's physically demanding."
Tucker's crews also travel cross country, mostly doing gymnasium work. Tucker tries to prepare them for the lifestyle change up front. "I tell guys when we hire them, it's almost like being in the military or being a fisherman—you've got to go where the fish are," he says.
Once on the commercial job site, employers must pay rigorous attention to observing safety regulations. Due to the public nature of a commercial job, contractors report that OSHA surprise inspections are more frequent, and visits from the insurance companies backing the job also can occur. Hard hats, safety glasses, ear plugs and steel-toed boots are standard wear on the commercial job.
Conditions can be chaotic on the job site. Other trades on the job are a given. Getting materials in and out of the job site can be challenging—whether they need to be wheeled a quarter mile through a mall during restricted hours or taken up a freight elevator. Variations of several inches in subfloors must be fixed on the spot and in a hurry. And it's frequently happening when most of the country is asleep. To accommodate for the rigorous demands, pay scales for crews doing strenuous national work are usually adjusted accordingly.
The Foot in the Door
For contractors looking to get started in the commercial market, there are several key factors. Does the company have the financial strength? Does it have enough personnel with the skills to handle large jobs? What is the company's relationship with the architects and general contractors in the area?
To succeed in the commercial world, "you must do the marketing and convince the GCs that you can do the work—and sometimes that's pretty tough," Harris says. Once a good reputation is developed, the company is going to make it onto more bid lists and be chosen—even if the bid isn't the lowest one. Companies are looking for a contractor they can trust. Tucker makes it standard practice to spend time on the phone answering wood flooring questions from architects or anyone else, whether or not they are his clients. In the long term, he says, being seen as an expert resource benefits the company.
"Once you have their confidence, they're going to have specs and need specs," Matney says. "You're going to be the go-to person for them for wood flooring." With so many more product options available today, having the product knowledge is more important than ever. Designers and architects are looking for a contractor to provide the product necessary for their exacting needs.
Even when products are chosen without input from the wood flooring contractor, a good reputation is vital. At Syracuse Floor Systems, it was one local mall job that hooked the company into the national store accounts it services today. Most of those accounts buy their own wood direct, with Syracuse showing up around the country to do the installation. "A lot of people are surprised that we can actually be competitive around the country," Greiner says. "We're not always the low bidder, but we've been around here a long time and have a reputation. They know if there's a problem, we'll fix it."
Harris-Tarkett's Brown says that attitude is typical for large restaurant and store accounts, who are relying on contractors to jump through hoops to get jobs done by opening dates. "For them, it's not as much low bid. It's service, then quality, then price," Brown says.
Before a company aims for the big time, however, it should start small with local commercial stores or offices, other contractors suggest. "A lot of young guys get a big job, and they either don't have the financing or the manpower to get the job done. It really puts them in a strait," Matney says. Contractors looking to crack the commercial market should look at it as they would starting a new business, he suggests. Just as it takes about two years to get a new business functioning, he says they should plan on two years for the commercial segment of their business to get on its feet, and another two years to develop a reputation.
Once it's working, it can be vastly rewarding. "One of the nice things about the commercial side is that it definitely can grow for you if you develop it," he explains. "It's an exclusive, niche-type market. If you do it right, you can own it."