BY ROBERT P. MADER
Of CONTRACTOR’s staff
CINCINNATI — Some residential radiant contractors may be thinking of diversifying into commercial markets. There’s more involved, however, than ordering more coils of tubing, Mike Hultgren and Larry Lang told contractors attending their “Scaling Up for Bigger Jobs” seminar May 9 at the Radiant Heating Conference and Expo here.
The biggest differences between residential and commercial work are money and management requirements, especially money, said Hultgren, manager of the engineering division of Bornquist Inc., a manufacturers rep agency in Chicago.
Radiant contractors need to obtain bonding and insurance, find jobs and learn how to work with general contractors, said Lang of Heating & Cooling Distributors in Shawnee Mission, Kan. Commercial work also has more players involved, more levels of complexity and different design criteria, he said.
Contractors first need to obtain bonding and credit lines, which means they have to demonstrate that they’ve performed on previous jobs and paid their bills on time. If a contractor can’t obtain all the bonding capacity needed for a particular job, the general might cover a portion of the bond with its excess bonding capacity, but only if the radiant contractor appears to be a good risk, Lang said.
Contractors can expect to pay 2% to 2.5% of the job cost for bonding – and shouldn’t forget to put that dollar amount into their bid, he said.
Money is slow, Lang said, with payments stretching out 60 to 90 days and sometimes 180 days. Contractors should arrange a credit line with their banker to keep interest costs as low as possible. Government jobs are even slower than private owner work.
And then there is another concept alien to residential contractors, 10% retainage. Commercial contractors plan interest costs to cover the shortfall, Lang said. If a contractor is finished with its work and there are no outstanding problems with it, the company should ask for half its retainage before the punch list is complete.
Contractors can find jobs through services such as F.W. Dodge, Hultgren said, and approach general contractors and architects about small portions of a project such as snow melting. Lang recommended asking manufacturers for job leads. In return, contractors should use the manufacturer’s materials or even pay the company a finder’s fee. Hultgren noted that building management firms are often also developers and owners’ representatives, so contractors should get to know them.
GCs want a job built professionally, on time, safely and at a reasonable cost, Hultgren said. Even if an engineer laid out the job, the radiant contractor is responsible for making it work. If there are any problems with a design or system, the radiant contractor should say so immediately, Hultgren said. That nurtures a good relationship with the general and saves time and money on the back end of the job.
A common problem is that Construction Specification Institute specs tend to be cookie cutter and, in worst cases, don’t match up with the plans. Contractors must communicate with the engineer to get a clarification, Hultgren said. Also, if the radiant expert has a better idea, he should tell the engineer, who may or may not listen.
Sometimes a radiant contractor can value-engineer in a product or feature that saves enough money to make the GC go to the engineer and insist upon it. ASHRAE standards, for example, might oversize the system compared with the calculations provided by boiler or tubing suppliers. A contractor should tell the general that he may be able to install a lower capacity, less costly system than the one specified.
Different types of owners have different personalities, Lang said. Government jobs are more sophisticated and highly engineered. Governments spend more money on a project and love high efficiency.
Utilities prefer to be the GC on their own jobs. They spend money wisely and often do design/build. A radiant contractor probably will work with the utility’s construction manager. And utilities always use the fuel – gas or electricity – that they generate.
Institutional projects are highly engineered. Many want snow melt. They are open to value adds. Customers such as hospitals want full facility automation that the radiant system will have to tie into.
Large corporations always have an agent for construction. They know what they want and how much they’ll spend. They may have an engineer but he may need advice on radiant heat and snow melting. Contractors will encounter a substantial number of energy management systems.
Radiant contractors will deal directly with the owner of small corporations, who will have a lot of say in system design. Contractors may encounter odd fuels, such as wood or waste oil.
Once a contractor gets on a project, he’s a member of a team, Lang noted. There are project meetings he must attend. He must communicate with all the other members of the team about when he needs to be on site to lay insulation under the slab, when he needs to be there to lay tubing and to tell the concrete contractor not to saw-cut through his tubing.
Everything should be communicated in writing. E-mail, because it’s date and time stamped, is one of the best ways to communicate, Lang said.