S.1 Ep.1 TMH Subcontractor- General Contractor Relationships
Join Host Chad Prinkey (Well Built Construction) and Co-host, Stacey Holsinger, (Steel Toe Communications) every Tuesday morning at 8 a.m. EST. on LinkedIn as they interview top A/E/C industry experts. Guests can participate in the conversation live!
Transcript:
Speaker 1: 00:00
All right. Welcome, welcome, welcome. This is Chad Prinke. Welcome to our first episode of the Morning Huddle, brought to you by well Built Construction Consulting and our partner, Stacy Holzinger, the owner of Steeltoe Communications. How are you this morning, Stacey?
Speaker 2: 00:34
Good, how are you?
Speaker 1: 00:35
Excellent. Thanks so much. Our first guest today, our guest for our first show, I should say, I should say, is Kenny Mallock, who is the owner of Malloc Mechanical. Kenny, how are you this morning?
Speaker 3: 00:52
It's been a. It's been a great start with a nice morning, morning cup of coffee.
Speaker 1: 00:59
Excellent. Good man. That's exactly what we're hoping for. And I hope everybody else is, you know, enjoying their morning cup of coffee while they're joining us right now. Kenny, by way, a little bit of an intro. Kenny is a good friend of mine. We've known each other for about a decade. I've learned a few things about Kenny. He's a lifelong learner. He is constantly working on improvement. He is an incredibly straight shooter and not afraid to admit when he's wrong or when he sees something wrong. And for that reason, in that kind of sense of, I don't know, friendship and confidence in the quality of our conversations over the years, Kenny, you were a no brainer to invite as a first guest. So I want to thank you for accepting and joining here today. And, you know, with all the dozens of different things we've talked about in the building industry, the stuff that we're passionate about, the stuff that drives us nuts, I think the thing that I wanted to bring to the audience for our first conversation today is really just to get into something that you and I have talked about probably a hundred times, which is what's right and what's wrong when it comes to effective general contractor and subcontractor partnerships. So that's today's topic. Now, before we dive into the topic, Kenny, introduce yourself a little bit to the audience. How long, how long have you been doing this? How long have you been running Malloc Mechanical?
Speaker 3: 02:51
So officially, I think it's around 28 years. I've always had customers, though, since I was probably 13 years old. So in essence, it's been a long time. How's that?
Speaker 1: 03:05
Right on. When you say you've always had customers, what do you mean?
Speaker 3: 03:09
Well, it could be from, from shoveling snow, cutting grass, raking leaves, whatever. You know, growing up in good old Twinbrook, usa, it gave me a great opportunity to meet a lot of different people, and I guess I learned how to hustle.
Speaker 1: 03:26
You must have had some, some motivation to make some cash. When you were a kid, what was the first big thing you bought?
Speaker 3: 03:34
Levi's.
Speaker 1: 03:36
No kidding.
Speaker 3: 03:37
Yeah. My parents wanted to send me to high school with tough skins unless I paid for half of my Levi's.
Speaker 1: 03:43
So weren't having it.
Speaker 3: 03:44
I wasn't having it.
Speaker 1: 03:45
That's awesome. That's awesome. So what is. I mean, you've been doing it for more than three decades in one way or another. What's your favorite part of the industry?
Speaker 3: 04:01
The customers. Good customers is the favorite part of my end of the industry for me, somebody that, that, you know, that. That appreciates and values what you do, that trusts you and believes you and lets you do your thing. That's the favorite part.
Speaker 1: 04:20
That's awesome. Have you been fortunate enough to be surrounded by those folks your entire career?
Speaker 3: 04:27
No. It's a navigation. It's a navigation. It's a journey. And sometimes they're good ones and sometimes there's bad ones or not. So good ones.
Speaker 1: 04:38
Yeah, yeah, yeah, I get you. So, all right, so I'm gonna. I'm gonna kind of start to dive into the topic. I think that's actually a good lead in for you. The customer today, right, is the general contractor. And you know, that maybe has differed on one level or another over the years. And I know it's not your only customer. There's a service business involved and all that type of stuff. But for the sake of our conversation here today, when you think about the general contractor subcontractor relationship, describe how that should work from a subcontractor's perspective. Obviously a mechanical subcontractor's perspective too. Right. Because there's different nuances to every trade category and how they want, you know, the relationship to work, how ideally paint the picture of the optimal subcontractor general contractor partnership from your point of view.
Speaker 3: 05:44
Once you have a. Once you have trust established or credibility established from the organization perspective, which is. Which is another part of the journey. But once that's established, it's about a contractor that has a good customer, and that customer trusts the contractor. If the trust work, trusts the general contractor to do his job and do it well, that general contractor will engage his subcontracting community, which is basically supposed to be the experts in their chosen field, to involve and engage them in the construction, in the project itself. So in a perfect world, you know, sometimes I'm assuming a GC might meet with a client and, and, and go over a bar napkin sketch of what somebody wants to build and the general contractor gets excited about it. And they figure out how to navigate through building it first. And I'm assuming they have to go through some, through some conversations about fee structure and stuff like that. But once that fee structure stuff is established and nailed down, then we start collaborating, we start building. In a perfect world the GC is gonna, you know, maybe get, get his subcontracting community involved in projects at 30 documents and when he does, you know, our pre construction group is going to look at those documents and they're going to quantify and estimate and provide budget pricing on what they see. And then the next step is to from their knowledge is identify what's missing. But you know, it's necessary and you identify these items, quantify those, write a lot of RFIs to poke holes in the, in the project to help develop the project. And we're going to do this at 30%. The information goes back to the architect and engineer teams, they perfect the documents, we look at it again at 60%, do the same thing, the feedback gets back to the architect and engineers and we do it again at 90% all with the desired goal of reducing change orders, eliminating scope creep for the GC between the GC and subs, keep the thing on track and make it constructible.
Speaker 1: 08:17
So and what's, what's interesting is I, I, and of course we're going to be talking to some general contractors on the morning huddle in the future but one of the things that I, I wonder is how much does that differ from, from how a general contractor would draw it up? Because for, from my perspective it sounds an awful lot like what they would like too. So, so, so ultimately you know, it kind of comes down to this question sort of like so why exactly doesn't it happen that way? And, and, and what are the forces at work? And, and, and so, so before we dive into our some hypothesis about why it doesn't happen that happen that way I guess describe what it looks like when it's broken, when, when. So, so if I can recap in a sentence or two what I heard you say it's super early involvement, 30% design docs, we start partnering early. Every trade is involved in you know, pre construction assistance, you know, essentially informal design assist. Tell me if, you know, tell me if that.
Speaker 3: 09:22
Right, yes.
Speaker 1: 09:24
And, and then the documents mature, the design matures and we end up with a very efficient, extremely well orchestrated plan. That's the way it should work. Now in there. One quick question, sorry. When do you know it's your job? In a perfect world.
Speaker 3: 09:53
In a perfect world you don't know until, until all final numbers are tabulated and they present the GMP to the owner and the GM and the owner approves it and then the general contractor does the selection. And we don't expect to get a project just because you provide these level of services but you do want to be treated, you know, somewhat. You want them to remember did we bring value to the table during our pre construction services? We want to make sure in a perfect world we would have like minded competition, leveled competition. Competition is a good thing. And there's, there's time and place where we might even go to the pre con services and help develop the project. But schedule wise it doesn't work out for us at that point when the thing just starts moving forward. So I can, I can relate and I can understand why they, the contractors might have to have two or three different people running this exercise with them to have options. You never want to be in life without options.
Speaker 1: 10:52
Yep. Yeah, but and note. Right. I'll just draw a circle around that. Two or three. Right. Not like seven or eight.
Speaker 3: 11:01
Two or three.
Speaker 1: 11:02
Yeah. Yeah. And I think if it just becomes unwieldy for everybody involved past a certain point that's really interesting. So. All right, so just talk a little bit about what it looks like when it's broken. When it's, when it's, you know, really not the way that a subcontractor would want to draw it up.
Speaker 3: 11:21
That's the hard bid plan and spec market. That is a broken. That's what's broken and you know, what causes that is something different. We can get into that if you want to later. But ultimately when it's hard bid plain inspect, you know, there's, we get engaged late. You don't have the time to massage it. The, the drawings are already done. You Write as many RFIs as you can. Typically try to level the playing field to make sure that when we look at a project, even if it's hard to plan inspect, we still want to build a successful project. But the RFIs that we're writing at that point there are trying to level the playing field to make sure that other people, other, you know, because hopefully there's some transparency with the RFIs that we write and other people get them and pay attention to them to try to level the playing field and make sure that people are capturing items that are really going to be needed and required to make sure their pricing includes it.
Speaker 1: 12:20
Yeah. So the broken model is hard bid plan and spec and I think, you know, just from previous conversations I think the thing that drives both of us nuts in that environment is that there's actually a reward for dishonesty. Right. There's a reward for playing games for subcontractors in that environment. And the motivation is to look low. Right. If the motivation is to look low, there's all kinds of creative ways for a subcontractor to play dumb and look low and end up winning that work. You know, I know from talking to you that that's just. You're not going to sleep well at night if you do it.
Speaker 3: 12:59
Yeah. Now it does not feel good. You know, again, just like you said, it's a game. Some people are good at playing it. But if I was going to play that game, I would have to renovate my house here with people, you know, change orders, for example. You know, when it's hard bit plane inspect, there's, there's not the margin and you have to find the margin in it. You have to nickel and dimensional the project. You have to, you know, go aggressive after scheduled delays that you don't have any margin for error in. And I need to have a different subset of people for project managers to be able to document and chase. It's not, it's not good. The last recession, and I think it was 9, 10, 11, whatever it was, it's. We did a lot of hard bid plan and spec work, and the hard bit plan and spec work prior to that actually had margin in it that allowed me to continue to build the projects without nickel and diming things so I didn't have to chase it. But when those margins went away during that recession, I would have had to renovate this place. I was, it was, I was an unhappy person at that time because in order to survive, I would have had to again, renovate this company with personnel and hire people that are change order kings, change order hungry and trying to exploit every opportunity you can get to make a buck.
Speaker 1: 14:34
Yeah. Yeah. So I think we, you know, we know that there are some environments where the, that hard bid plan and spec, it's kind of, it's out of your control, that that's the way it's gonna work. We'll leave those off to the side. We could expl. I do believe that it's worth trying to change that over the long haul. Right. That, that, that's more of a movement to try to get, you know, funding agencies from the government as an example, to take a look at, you know, redesigning procurement models so that they don't go hard bid plan and spec, but Leaving those off to the side. Do you see that in the private development world? You know, right now? Is that happening at all?
Speaker 3: 15:16
It is, it is right now. And there's like, there's a swing and whenever that there's a swing in an economy, you know, Covid has been the example since the commercial office building market got pretty much annihilated during this thing. Developers that typically would, when things are busy and they're looking for their GC friends to sit down and negotiate a project on a GC and a fee and they're more excited about building the project and then all of a sudden the model, the market swings and now the developer market is going to go out and they're going to hard bid the same project to two or three different GCs. And that's where, that's where it starts going down.
Speaker 1: 15:56
Yep, yep.
Speaker 3: 16:00
I guess they trust, they trust their GC partners in a good economy and then all of a sudden that trust or that value goes away when they know that the general contractor and subcontractor market is hungry, looking for work. And they, I think there's some assumptions in there that, that we profiteer in those good times and, and actually our pricing goes up. That's not the case. You know, good contractors and good subcontractors, their, their cost perspective and their profit perspective remains the same because that, you don't, it's kind of weird. You don't do what you do for money.
Speaker 1: 16:42
Comes back on you. Right. I mean, hitting, hitting a home run can come back on you. Right. If you, if you think. Right. And when I say come back on, it's, it's you, you don't want to take advantage of, of the trust because the moment, the moment that happens, you have to assume that that's not going to remain private. Right. And, and, and, and so, yeah, I'm with you. I think, I think there's a, a belief that, you know, subcontractors are out there, you know, cracking heads and taking money when times are good. And I think there's some of it, I do think there's some of it. And, and, and because of that, you know, it may fuel some, some of that lack of trust or, or, or worry when times tighten up. I also think there's probably some influence from funders, right. Where it's not maybe the developer, but it's the source of the money. And the source of the money is now feeling jittery or demanding. And so sometimes it's not always that, but it's interesting. You're Seeing it right now. So I want to talk to the audience here for a second. We are going to, if, if I can manage time correctly, we're going to shift gears and want to start answering some questions. Please start typing some questions into the chat. And that way we kind of have a sense of how many questions we want to get to and still wrap up by 8:30. I'm going to ask you one more question at least though, Kenny, which is I think so much you said earlier. You know, I imagine that a general contractor is getting together with, with, with their customer and they're sitting down and maybe doing a napkin sketch and then they're talking about. There's so much value in really understanding one another's perspective. So what really happens behind the scenes with general contractors? If you can get a good clear sense of that and appreciation for that and empathy for that as a sub, I think it helps you to serve them better. What do you wish every general contractor understood about being a sub? You know, if there was one thing that could help them to gain some insight, some empathy for what subcontractors are doing. What's one thing you wish that gcs knew about? Subs.
Speaker 3: 19:13
We're here to help. Really sincerely, good subs are really truly here to help to, to make the project go smooth, minimize risk, minimize stress. One time, one budget, happy customer. And we can, if you engage us, we can help. And again, earlier I stated it's kind of weird when I'm interviewing somebody, we tell them this. We don't do what we do for money. We do what we do for the fun of the game. Money is a result. It's not the driver, the game. Which is again, there's two different games you talked about the hard bed plan and spec game. I hate that game. I would prefer to engage and actually engage my people, engage everybody around us to build a good project. That is the game. We had this company as a bus. We have a lot of different seats. If everybody that we hire is in the right seat of the bus doing the right job that they're happy and best at doing, the result is money. And the same thing goes with client selection and subcontractor selection to build good projects, money will be.
Speaker 1: 20:25
Yeah, that's awesome. That's a really, really interesting answer. And I think something that if you think about 30 seconds for me to editorialize, if you think about your subcontracting community as there to help, that that frames them up as partners. It frames them up as friends. And I think Kenny, Kenny is one of the most, again, straight shooter, one of the most realistic people I've talked to in the building industry. I asked him what the perfect world looked like. He was like, I'd compete, right? But I, but I would be, I would be remembered for the quality of my pre construction services and, and you know, those things, you know, if I was adding value, those things would translate into having a leg up on the project. But what you definitely wouldn't do to somebody who is trying to help you is you wouldn't withhold information, you wouldn't lie, you wouldn't change the rules of the game at the last minute. Right. You would operate in front of them. Even if I know you, and I've talked about this before, Kenny, Even if operating in front of them is, hey, Kenny, I need your help. Like, you're gonna win it, but I'm not. This one's not gonna be yours. That's great information for you to have. And to your point, you're still gonna help and you're gonna help 100%.
Speaker 3: 21:42
And I know that, yes, honesty is always the best policy.
Speaker 1: 21:48
Awesome. All right, cool. I'm gonna invite Stacy on to help us to sort through some of these questions and help us to, to answer, you know, questions as they come in. So Stacy, what do we got for questions? We probably have time for like three or four.
Speaker 2: 22:05
Okay, sure. So, Scott, friends said, how are you keeping up with the lead times becoming longer and the lack of resources to build the job better? Asked how have you and your GC partners been able to team up to show the owners that schedule simply can't be an aggressive right now given the current climate.
Speaker 3: 22:30
It's about laying out your, your resources. It's not, it's, it's about not over committing. You can only produce what you can produce with the resources that you have. And if you, as soon as you start going out trying to find work that you don't have resources for, that's going to be ugly. That's been the private nightmare that, you know, I probably dealt with 15, 18 years ago, when you find a job, you didn't have the personnel. Now you have to hire the personnel to do that work. And it's never a good recipe. You don't know what you're getting with.
Speaker 1: 23:02
So that's a, I mean, that's a great piece of advice as it relates to your own internal resources. Let me ask a question. Have you, have you turned away work that you would want?
Speaker 3: 23:15
Unfortunately, yes. Unfortunately, over the last month, we've had to turn away work that we were running pre con one and you know, I hate to say it, but it's. It's come down to first come, first serve with a lack of transparency, lack of communication, a lack of commitment that I picked up something else and I wasn't able to. To execute, to procure another contract with somebody else.
Speaker 1: 23:41
Well, I think it's a really important message for the general contractors who are watching this to, to, you know, pay attention to, which is, you know, buy as quick, as early as you can from the people that you really want to buy from. The faster you can get them on your team, the more. Like, to your point, first come, first serve, when you don't know whether you're going to get this one or this one, when this guy comes to you and says, hey, it's your job, you're saying yes, even if this one was a little bit better. Because it's not like you can. It's not like you can wait.
Speaker 3: 24:12
Money's not money as a result. And again, I have an obligation to my people to keep my. Keep work in front of my people. And a bird in the hand is worth better one in the bush better than one in the bush. So you gotta do what you gotta do. And it's unfortunate.
Speaker 1: 24:26
Yep. Thank you. All right, good. Other questions. Stacy?
Speaker 2: 24:31
Yeah. Tara McCarthy said, How do you rebuild trust with a client after it's broken?
Speaker 3: 24:39
Don't break it. Don't break it. You know, be honest. If something is. Something's going south, have a straight up conversation with them and, and just be honest. Trust is the foundation of every relationship. And whenever you're not transparent with things, just be honest and come at them and tell them the truth what happened. Let the dice, you know, let the chips fall where they fall. It is what it is. But honesty is the best policy.
Speaker 1: 25:06
Kenny, I freaking love that answer. There is a, you know you're gonna screw up. So the question wasn't how do you rebuild relationships once you screw up. The question is how do you build, relate. Rebuild relationships when you lose trust and losing trust is within your control, people aren't going to lose trust for you for screwing up. They're going to lose trust for you because of the way that you handled the screw up. Did you try to hide it? Right? Did you lie about it? Did you try to blame somebody else? Did you try to save a couple of bucks rather than saving the relationship? Right? That, that's the. And I love it. I think that's exactly right. You can choose whether you lose trust. And if, look, if somebody Wants to say, I'm not going to work with you again because I don't like the way that went down. At least their, their trust in your honesty and integrity shouldn't be undermined.
Speaker 3: 25:53
I get it. I get it. I'm sorry you feel like that. Hopefully we have another opportunity to, to show you something different in the future.
Speaker 1: 26:00
That's it. Yep. Excellent. Good. Stacy, how about another?
Speaker 2: 26:04
Sure. Scotch Montgomery said buying earlier is even becoming a chance, is even becoming a challenge, though, especially in a world where escalation is becoming more and more unpredictable. Where's the happy medium in buying early and mitigating escalation risk?
Speaker 3: 26:24
The happy medium. You got a job to do, you just got to do it. You got to know your own schedule. And again, the, the farther, the earlier that the owner can get you involved in it to where you can actually have the time to do your job, the better off everybody's going to be. But again, if it's hard bid plan, inspect late deadlines, they want it, you know, they bid it on a Thursday, want to start it on a Tuesday. You can't be proactive. You can't be proactive. You, especially the owners got to understand now there is supply chain disruption. So they got to get their projects engaged with early to give people the opportunity to do their job. You know, we're, we're finding ourselves, you know, documenting and timelining when we're awarded the project, when we have released our subs and vendors and documenting the whole process because there's certain things that are outside of our control, be prepared for transparency.
Speaker 1: 27:21
I think there's a, I think there's a right now an immediate world situation related to supply chain delays, you know, pricing, escalation, all those different types of things that, that have created a whole other set of challenges and questions. I would, you know, I think what, what I'm hearing you say, Kenny, is buy early regardless. Doesn't matter, man. Just get, get, you know. So have you seen any interesting clauses, contractual clauses that are protecting people against, you know, price escalation or anything like that if they do sign up early?
Speaker 3: 27:56
No, no, I haven't seen anything new come up, come out in contract reforms with this, but I've seen good general contractors engage early and, and, or through the scope process. They want to under. They want to understand what the long leads are. Good general contractors are asking the questions early. And, you know, some of the things that they're even considering doing is maybe doing an early release for a small package. Their documents might not be 100% but maybe the underground portion of it is and they'll do an early release package to get somebody signed up and working on it so they can hit the ground. Veri. With. With trying to do the best they can to avoid delays because of supply issues.
Speaker 1: 28:34
Yep. Awesome. All right, cool. You know, rather than running long with this group, I want to try to set a good expectation that we're going to wrap up at 8:30 on the dot. I just want to take a moment to thank you so much, Kenny, for taking, you know, some time this morning and joining and having this conversation. I'll talk to, you know, the audience here for a moment. I, we, we, we came up with. Yes. Well, okay, so first off, Stacy came up with this and, and I want to thank Stacy and Steeltoe for, you know, forcing the issue and, and creating this opportunity for this kind of dialogue. Without Stacy's, you know, intention, intention on this and pushing me along, we wouldn't be here. So thank you so much for that and, and for, you know, you know, producing and organizing this show. We thought we were going to do six. I think we're going to do this every week. You know, we've gotten an overwhelming response. Tons and tons of people are reaching out, asking if they can be a guest, asking to participate. I think we have guests lined up through January now. And, and, and so if that's something that appeals to anybody who's watching, if you have something that you're passionate about and something that you feel like you can add value by talking about, I'd love to hear from you and, and you know, welcome that kind of interaction. And on next week's show, we have a person named Chris Blyk. He's an expert in the industry workforce and he's going to be talking about emerging construction tech opportunities, construction tech jobs, and talking about what is new and trending and what we can expect coming up as it relates to the job opportunities that are being posed by technology and construction. Kenny, any, any last words that you want to shout out to the group that's watching here today?
Speaker 3: 30:27
Make a difference, join the show, talk about what you're passionate about it and let's fix this industry.
Speaker 2: 30:33
Thank you.
Speaker 1: 30:35
Thanks so much. Have a great day. I'll talk to everybody soon.
Speaker 3: 30:38
Thank you.
Speaker 2: 30:39
Chad, guys, thanks for joining us.