Selection Criteria When Choosing a Contractor

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Each healthcare organization, based  on its current strategic capital planning initiatives, should create its own specific criteria for the Contractor selection process, financing requirements of their Capital planning needs, as required union agreements, community/municipal needs, etc.

Selecting the right contractor is crucial for the success of your project. We have experienced that some owners make their decision in selecting a contractor based on subjective reasons without attempting to conduct a disciplined criteria based selection process. Given that the construction cost is typically 60 – 70% of your total project costs it is the largest category of cost and must be given the proper attention in mitigating this business risk.

Each situation may vary that your organization would encounter for a capital project; however depending on the situation, we use many of the following selection criteria when selecting a contractor:

1)      Relevance and quantity of proposed project manager’s and superintendent’s         experience

2)      Relevance and quantity of firm’s overall experience in the recent past

3)      Proposed team’s cohesiveness, strength, and attitude

4)      Firm’s reputation and depth of proposed team

Pouring concrete

5)      Chemistry with the owner’s team

6)      Past experience of proposed team members with the architect’s or owner’s team

7)      Availability and commitment of proposed team

8)      Amount of experience in the area where the project is being built

9)      References (ALWAYS CHECK REFERENCES, YOU NEVER KNOW WHAT YOU MIGHT LEARN)

10)   Knowledge and proposed use of “local” labor, subcontractors, and material suppliers

View from the hospital looking East

11)   Project approach:

  • Work plan approach
  • Cost management approach
  • Schedule management approach

12)   Knowledge with Union versus non-union uses of labor

13)   Committing to hiring local labor

14)   Preconstruction experience

15)   Experience in bidding in a hard bid or competitive bid process versus a negotiated basis

16)   Financial Stability

17)   Bonding capacity

18)   LEED or sustainability experience

19)   Perceived level of collaborative attitude

20)   Knowledge and experience with regulatory authorities City, County, State)

Interior framing progress

21)   Extent of outstanding disputes

22)   Ability and interest in doing self-performed work (this can be a double-edged sword)

23)   Extent of exceptions taken to the proposed agreement (if included with the RFP and it should be)

24)   Fee percentage / cost competitiveness (ONLY USE THIS CRITERIA IF YOU HAVE A DETAILED DEFINITION OF WHAT IS/ISN’T INCLUDED IN THE FEE VS THE COST OF WORK)

25)   Safety program and EMR rating

26)   Main office and satellite office locations in relation to the project

27)   Always remember to verify if there are specific regulatory or financial lender’s selection criteria

28)   Commitment to Transparency in the working relationship

If any readers have any criteria you have used in selecting a contractor and it is not mentioned here, or if you have any comments regarding this list, please feel free to reply and let us know your thoughts. Thanks for reading!

Walker & Associates would like to thank Nicholas Balagurchik Jr. FACHE, Senior Director for Hennepin County Medical Center for his contributions to this post. 

One thought on “Selection Criteria When Choosing a Contractor

  1. Criteria No. 24 is way down the list and is so very important. The "cost of the work" defined early is so very important and really impacts the fee. We require measurable criteria, one of which is stated "Completed 3 projects of similar size that were completed on time over the past 3 years." We ask for contact information of the owner on those projects and then confirm how the project schedule was determined and if the owner would confirm that from their perspective the project was completed on time. This is so very difficult and many rocks in the road for completion on any size project anywhere.

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