Owners Explore Contractor Options

12/01/1999

Mark A. DeSorbo

SAN FRANCISCO—Think about a typical construction site.

Usually, there are anywhere from 12 to two dozen subcontractors on hand, and a general contractor is running the show. A new trend, however, is taking shape, and the general contractor is getting phased out of the picture, while the mechanical subcontractor has become the focal point.

This seemingly new era is something that Rik Kunnath, chief executive of Charles Pankow Builders Ltd., has been keeping a close eye on and has referenced in a presentation he gave at the 1999 Sheet Metal and Air Conditioning Contractors' National Association (SMACNA; Chantilly, VA) convention in mid-October.

The trend, he says, has swept through the contracting industry, and more than half the time it is recurring in cleanroom design-build projects. "It's happening all over Silicon Valley—especially with cleanrooms—because 70 percent of the work tends to be mechanical while 30 percent is other work, like flooring," Kunnath says. "The building owner is saying, 'I'm going right to the mechanical contractor. What do I need a general contractor for when the mechanical contractor is doing most of the work?'"

A major driver to the trend is the turnkey operation that building owners seek, says Joe Korte, clean technology operations manager for ICF Kaiser Engineers and Constructors (Boise, ID), a provider of several construction services, including general contracting.

The general contractor plays no part in the design and build or the mechanical side and they no longer get the big projects, just small portions of them," Korte adds.

The greatest opportunities for the mechanical contractor are they are in control of the project and they are able to develop a rapport with the building owner, which could yield future work.

Within those opportunities, he explains, there could be disadvantages, like being considered competition by the general contractor, as well as the added responsibilities the mechanical contractor takes on as a result of being picked to exclusively handle the project.

Andrew Fimiano, president of Southland Industries (Long Beach, CA), says the lack of experience on the job site leads to many problems. "If you don't have that knowledge and experience, you have to wait, and that holds up the project, and many of these projects are time-sensitive," he says.

Southland is a mechanical contractor that has been hired exclusively for about 20 cleanroom projects for such companies as Motorola, Western Digital and TRW. One of the larger projects that it completed was for Motorola. "It was a $35 million job, and over $30 million of it was mechanical work," he says. "So, instead of hiring a general contractor to do $2 million of the work and subcontract the other $33 million, they hired us and we just did the work ourselves."

Kunnath and Korte agree that mechanical contractors indeed provide an efficient alternative for building owners. Likewise, builders are constantly seeking ways to remain viable in an ever-changing market.