Selecting a Contractor

When a Church begins to plan a building project, the focus usually centers around two primary questions. The first question is, “What type of building will our Church need?” The second question is usually, “How will our Church pay for the new building?”

The first question is usually addressed by the architect, who can present the Church with alternatives in design, which can complement the Church’s existing ministry and programs.

The second question is usually addressed by the Church finance committee, who can determine fundraising and borrowing needs, as well as evaluate what a realistic construction budget might be for the project.

A third question, and one that is often overlooked, is “Who will actually build the facility?” Selecting a contractor can be a very important factor in a Church construction project. However, it is often done late in the process.

When a new construction project is finally put out to bid, many Churches are surprised to discover that the lowest bid from a contractor is somewhat higher than the building cost initially quoted by the architect. This can present the Church with a problem, since the financial models assumed that the construction cost would be lower. The Church may have already conducted fundraisers, and announced to the congregation a specific cost or budget for the project. In many cases, the Church may have secured a loan commitment from a lender for a specific amount. At this point, it can be extremely difficult to go back to the congregation or a lender for more money. Usually, the only choice at this point is to reduce the size and scope of the project. This can cost the Church more in architectural fees and puts pressure on Church leaders, who at some point will have to convey to the congregation that the project must be scaled down.

One solution to the problem of differing project cost estimates is to begin a dialogue with reputable contractors in the area very early in the planning process. The following are some questions to ask a local contractor:

• Have they had any experience with a particular architect?
• Ask about the cost feasibility of the project.
• Do the contractor’s construction costs per square foot agree with the costs being represented by the architect?
• Are there any unique architectural features of the new building, which could increase the construction costs?

When selecting a contactor, you probably will find a number of design/build firms versus an independent architect and contractor. There are numerous design/build firms which point out the fact that they provide architectural and construction services in order to ensure that the architect and the builder are working as one cohesive unit. These firms are very good to provide a realistic budget for the project.

However, there are also benefits of hiring an independent architect to work with the contractor. An independent architect can act as an independent third party by monitoring the progress of the contractor during the construction period. If the contractor and architect are part of the same company, the potential exists that an error made by either side could be overlooked by the other. Hiring an independent architect would give the Church the ability to own the plans for the new building, and to solicit bids from different contractors. If the Church were not satisfied with the performance of the design/build firm, it may not be able to use that firm’s architectural plans with a different contractor.

When selecting a contractor, many Churches select a contractor based upon who offered the lowest bid, as well as references provided about past work. There are other important factors that should be considered:

• Ask a potential contractor for a recent audited financial statement. Most reputable contractors will not object to sharing this information with you. The construction industry by its very nature is cyclical, and a contractor that is experiencing financial difficulties can leave the Church in a bad situation if the contractor were to either go out of business during the construction project, or did not pay its subcontractors.

• Although Great Nation does not require a performance bond, ask the contractor if they are bondable, and for what dollar amount. Contractors that are strong financially will have very reasonable bonding costs. If a contractor were not bondable, it could mean that the contractor might not be financially strong enough to handle the project.

• Inquire as to the rate of growth, if any, that the contractor has experienced recently. Many industries have their share of good companies that have grown too rapidly and have lost quality control of their product or service. Ask potential contractors for a three- or five-year history of their construction volume.

• Select a contractor with experience in building Church projects of similar style and size.

• Ask for, and check references carefully. Find out if the building project was completed on time and on budget.

A reputable contractor is critical to any major construction project, and potential contractors should be included early in the planning process. If selected properly, a contractor can be a very valuable resource that can greatly assist in a smooth running building project.

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If you have questions at any time, please don't hesitate to contact us at:
GREAT NATION INVESTMENT CORPORATION
Attn: Martin Northern Vice President and Branch Manager
P. O. Box 1302
Benton, AR 72018-1302
Phone: (501) 316-3100 * (800) 468-3007
Fax: (501) 316-3110
Email: martin@martinnorthern.com

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