Carolina Commercial Real Estate Connection

Gordon Davis Reveals Key Strategies for Commercial Real Estate Success: Mastering Development, Contracts, and Subcontractor Relations

• Tony Johnson and Cameron Pearson • Season 2 • Episode 31

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Uncover the secrets to success in the complex world of commercial real estate with Gordon Davis from Finn Advisors. His remarkable journey from a 15-year-old in construction to a pivotal consultant is not just inspiring, it's loaded with practical advice for anyone looking to navigate the real estate development industry. If you're seeking to maximize efficiency and profits on your next project, Gordon’s insights into the critical relationship between owners and general contractors are indispensable.

Delving into the fine print of construction contracts can make or break a project. Get the inside scoop on the pros and cons of negotiated versus hard bid agreements and understand the strategy behind successful bidding. Our discussion shines a spotlight on the importance of being first to market and the art of fostering effective communication channels with subcontractors. We even take a practical look at the preparations that can streamline the bidding process to set you up for success.

Finally, we tackle the nuances of construction budgeting and subcontractor management, with a focus on transparent and strategic pricing. Learn about the value of pre-construction agreements in design-build projects and secure compensation for early-stage consulting. For contractors craving growth, discover the coaching and consultation services that can propel your business forward. Join us for an episode brimming with wisdom, and leave with actionable steps to elevate your commercial real estate endeavors.

Reach Gordon Directly
gordon@finadvisorscorp.com

Gordon Davis RFP Video Link
https://www.youtube.com/watch?v=qNYBryTGOf0

Tony Johnson is a Commercial General Contractor.  Timeless Properties Construction Co. has been in business since 2007.  He does all things commercial.  Developing, Building, Upfits, and Renovations for Retail, Office, Industrial, and Multi-family.  Timeless Properties is licensed in North and South Carolina.  Contact them today for your construction needs.  www.timelesspropertiescc.com
info@timelesspropertiescc.com

Discovering his passion for construction when entering the industry over 20 years ago, Tony obtained his general contractor license and created Timeless Properties Construction Co in 2007. The company has performed an Proving that grit and passion can overcome any challenge, Timeless Properties Construction Co navigated the worst real estate collapse in our lifetimes under his leadership. Coming out of the recession Tony made sure he kept a strong focus on building relationships, quality work, honesty, and integrity.  With over 160 million on construction volume to date Timeless Properties Construction Co has grown to an area leader of Commercial Construction in eastern North Carolina.

Tony launched Timeless Capital Investments LLC in 2022.  This company was formed to create an avenue for partners to invest alongside Tony Johnson on commercial development and value add of existing commercial buildings.  Tony aims to help fellow investors take part in profitable projects that they otherwise would not feel comfortable undertaking.  By leveraging his construction and development knowledge Tony offers his partners a leg up against less experienced investors.  Offering the ability to self-perform Construction, Construction Management, Entitlement and Other functions of projects creates tremendous value for any project.

Tony hosts and produces Carolina Commercial Real Estate Connection.  This is a CRE Platform for investors, agents, lenders, or anyone else involved in commercial real e

To learn more about Tony Johnson and Timeless visit us at:
https://timelessci.com/
https://timelesspropertiescc.com/

If you would like to discuss investing in Commercial Properties create a profile and schedule a call:
https://timelessci.investnext.com/

Reach out to us directly at:
info@timelessci.com

Speaker 1:

Coming to you from the Tar Heel State. This is the Carolina Commercial Real Estate Connection, bringing you industry insights and hot takes from Carolina real estate experts, helping you begin, grow and scale your commercial real estate portfolio. And now your hosts Tony Johnson and Cameron Pearson.

Tony Johnson:

Welcome to another episode of Carolina Commercial Real Estate Connection. Today we have Gordon Davis with Finn Advisors. Gordon, thank you so much for joining us today.

Gordon Davis:

Thanks for having me. It's always good to talk to you and always great to share ideas.

Tony Johnson:

Yes, sir, I've known Gordon for quite some time and we connect a lot on a weekly call. And, gordon, could you tell everybody a little bit about yourself to get a background?

Gordon Davis:

Sure, sure. So I came up in the construction business, you know, started to do work around the age of 15 when I wanted to date a roofer's daughter and the requirement was that Saturday I had to roof with him if I wanted to take her out on Sunday. So you know, that's how it had to happen. So, anyway, so that progressed and you know I found I was fortunate enough to find a contractor level working for large commercial general contractors, household names in the commercial construction business nationwide, and had a good career, served as a superintendent, project manager and spent a lot of time in estimating. And then, after the Great Recession, when I came back into the workplace, I went on the owner's side and so I built a number, I worked for a number of owners and when I got to the owner's side I realized exactly why it was so easy to make lots of money as a GC because the owners didn't really know how to put stuff together, didn't really know how to put a package together, didn't know how to manage projects. And so I found a place in the market where I jumped out on my own and I do contract owner's rep work for developers and business owners and property owners, and that's what I do on a contract basis, help owners that way and help contractors build projects effectively, and so they make money too. And so and that kind of, is how you and I connected.

Gordon Davis:

We have a mentor in common, greg Dickerson. A mentor in common, greg Dickerson, and you know we're I'm doing a project with him here in Wildwood, florida, for a mutual client of ours, and I've got a number of projects here in Orlando, mostly multifamily market rate projects here in Orlando. There's a lot of that going on in the marketplace down here and with all the influx of folks coming in and lack of housing in general, and you know we just can't build stuff fast enough down here. So you know that's what I do. I spent a lot, like I said, spent a lot of time as a general contractor and I've spent quite a bit of time as an owner now, and so you know, so I just enjoy building projects and you know my motto is is that we all get out alive and we all make some money. That's the end goal. If we can work together again on a project we've, you know we've achieved a big goal, right.

Tony Johnson:

Yeah, absolutely so. A lot of times, you know, just so people are understanding explicitly what you're saying. So, gc side, you know, obviously, on the builder side, from the owner side, owner's rep basically is, more or less you know, gordon is, you know, partnering up with the owners of projects and guiding them through the process and being an intermediary between the owner themselves and the GC. It's basically a consultant for the project to make sure the project runs smoothly and he basically makes sure the communication is done the right way and the job is defined properly for someone who has money and has a vision. Normally they have that, but they don't have the intricacies of the understanding of construction, how to properly request bids from people, and so that's the big thing that Gordon brings to the mix in order for the project to go smoothly between the owner and the GC.

Gordon Davis:

Yeah, yeah, that's that's. That's a big part of it. Yeah, yeah, that's a big part of it. You know, like, just as an example, the client that I mentioned before, you know, former NFL football player, has a big piece of property in his hometown, wants to develop it, wants to build something on it to hold for the long term. You know and knows a lot of people you know and, but doesn't know anything about development. He would tell you that too, you know. So that particular client, his nickname for me is, he says that I'm the tip of the spear, right. So you know, consultant the word consultant kind of gets a bad rap at times. You know, I like to say that like I'm a consultant with running shoes on right, like so I do a lot. I mean, I do all of the heavy lifting and footwork for these developers and you know, a lot of times they're on the call but I'm running it right. So you know, that's kind of that's just what I do.

Tony Johnson:

So, yeah, you are the safety net to keep them from messing the messing themselves up and going completely over budget and out of whack and having a messed up project or picking a gc that is completely wrong for the project.

Tony Johnson:

Tons of different components that you bring and then monitoring everything's getting done per the drawings and the specifications. So you know what we want to do today, I think, is walk through that and you know how you get out, as you know how to draw in the proper GCs, how to send packages out to GCs and then for GCs, how those GCs then also send out and get you know proper proposals from subcontractors. So I'd love to just kind of let you go through all these things and kind of chime in as we go. So please, Sure sure.

Gordon Davis:

So let's let's back up a little bit and how we got to this point, with you and me sitting here having this conversation, and that is that that I did a. I did a similar discussion with Greg Dickerson about a process that I kind of vetted through called the RFP and the build and the threads that bind them, and so you know, basically you know, if you haven't seen that video, I think you did post it out here, did you not, tony, in this group.

Tony Johnson:

I will put a link to that.

Gordon Davis:

Yeah, that'd be good.

Tony Johnson:

Within this video. So you can look down below in the show notes here It'll have a link to that.

Gordon Davis:

yeah, that'd be good within this video, so you can look down below in the show notes here it'll have a link to that prior video yeah, and so that that video is more so what I do on a daily basis and one of the things and and then when that video kind of went out to our little crowd here we've got some feedback that was like, man, if you could do this to help GCs, you know, understand how to better RFP to the subs and better understand the process with the owner, man, that would be great. And so that's kind of how we got here. And you know, in vetting through we met weeks back and I've said I just can't figure this thing out. Let me go back to the drawing board. And in figuring this out and trying to put pencil, pen to paper on it, you know, one thing that I realized is and I think it's a pretty important point is that you know me as the owner. You know, if I'm the owner, I have a considerable more, I have considerably more control over the process and how I want it to pan out than a general contractor does in that process, right? So, like you know, our, our clients and end users are like the marketplace and the equity partners and the banks. You know, those are kind of the people who we try to attract and and and keep happy during the process, so they don't care at all how we run the RFP process right, but an owner is going to push things down on the GCs, like I went through in that other video, that kind of say this is how we want to look at it, these are the options we want, the ad alternates, these are the different things that we want you know to see. And so you know we have the luxury of having kind of control over how we get our deliverable back right.

Gordon Davis:

And so you guys, as the GCs and when I was a GC I felt this too like you know, there are pressures to try and figure out how to communicate that to the sub market, to get it back. You know the way that you want to see it too, right. And I kind of, over the years I spent when I was the general contractor, I spent most of my time in the pre-construction department, you know, running bids and running those departments and stuff like that. And so over the years I've kind of developed some spreadsheets and some processes that I think you know are valuable to share today, and you know one of those, one of those you know I have a list here, a brief outline, and I just want to run through it and so, like you said, I'm going to kind of say here's, you know me as the owner, this is why I would want this situation, and here's how you can best respond as a GC, right?

Gordon Davis:

So you know all of this starts with relationships, right? And so you know it all starts with relationships, and business relationships are defined by contracts, and then the RFP process is then, you know, further defined by what contract types. You know you're talking about eventually going to with an owner, right? And so you know you guys, as the GC, I remember, like you have all sorts of different owners. You have some owners who are very sophisticated, like me, and then you have some owners who just they don't know anything that they're doing and they just kind of send you to the architect to get the drawings, who just they don't know anything that they're doing and they just kind of send you to the architect to get the drawings and they don't really have a bid date, even it's. You know it's kind of a mess, right, and so I think it's important.

Tony Johnson:

They haven't even looked at the drawings. They just said here they wouldn't know what they're looking at anyways, right so and you know, hey, that that's a client, right.

Gordon Davis:

So you know, one of the things that you know I was really good about doing when I was in the pre-construction role was, like I looked at myself like the technical side of the sales Business developer. You know he was the partier right, so he'd just go out and he'd hit every event, he'd party and he didn't know anything about. You know, construction. Again, I worked for fairly sizable general contractors.

Tony Johnson:

They know how to go out and schmooze. They love to go to every party and that's their job If they're good at that that's their job, right and?

Gordon Davis:

so sometimes you know, when I was looking at, you know, when I was sitting behind my spreadsheets all day long flying a desk, I'd look at those guys with envy, you know, because they're out just partying, right, but that's their job, right? And so I built a good relationship with those business developers. As you know, I am the technical side of the sale, like when you need somebody to talk the technicals, to talk the numbers, to close a deal. You know that's when, that's the point, when you bring me along, like when you feel like you're getting to that point, and so it would always start with this one, this, this, this first question, right? So, like, what kind of contract are you looking for? And sometimes they would know and sometimes they wouldn't.

Gordon Davis:

And so I would take it further and say are you looking for a lump sum contract relationship where you know we hard bid this thing, where we, you know we are going out to the market, you are telling me that your drawings are perfect and we are putting them in the market and we are bidding this for the cheapest price and we're gonna go the lowest bidder as the GC is going to win the contract, right?

Gordon Davis:

So is it that or is it a negotiated contract? And naturally I'd always try to steer them toward the negotiated contract. And naturally I'd always try to steer them toward the negotiated contract. And so you know those are the two predominant like contract types, right, and they both require two completely different processes in the bidding process, right? So you know that first thing is, like you know, try to educate the client that they want a negotiated contract. And that's not really, that's not solely a selfish thing, like, yeah, naturally you'd want to be the person you know that they decide they want to build with right there and they're not going to go talk to anybody else. But the risks of taking the low bid, just putting your drawings out there, having a bunch of contractors quote, bid on it, and taking the low guy and sending him a contract and saying let's build this thing, that's a very risky proposition there.

Tony Johnson:

And so I've done, I've executed Especially, a risky proposition if you are an owner that doesn't really understand the process and the project Correct. Even if you take that risk and it's five tenfold it is extremely risky and that is the biggest. Where you get the worst reputation for general contractors is because of the uneducated owner taking the low bid and not really even understanding why the bids are different. But I'm sorry to interrupt, I just want to make sure.

Gordon Davis:

No, that's where all the cliches come from, right, right, that's where all the cliches come from. If an owner was to go into Google right now and type how to hire a contractor to build your project, the only thing they're going to see is you have to get multiple quotes and go with the low guy and all this stuff, right, it's just going to be prevalent. So if somebody is shooting for this, you know run of the mill, like retail level execution process on their construction project. You know that's that's what they're going to lean toward construction project. You know that's that's what they're going to lean toward. And you know contractors, man, you know you can really take advantage of that situation. But you know, and that's like it's kind of one of those things like, like when I'm building a project and we get a change order and the owner is's like oh man, these contractors love their change orders, I'm like, no, they hate change orders, right, like, change orders are the biggest time suck and resource, you know distractor and schedule slower. I mean, you know they hate change orders, right, and so you know.

Gordon Davis:

But when you put yourself, when you back yourself, into a corner and do a hard bid situation where every contract, you know the only contractors left standing is going to be the low guy. Contractors will, do, you know, desperate times, call for desperate measures, right, and so contractors will do stupid things and and work it out later, and you know so. I always, always try to steer, you know, our clients to a negotiated GMP situation, right? So before we get into negotiated GMP, let's just understand that there are like two. You know predominant contract types. You know the hard bid situation with the lump sum contract. Our drawings are perfect, you build it for this price. And then there's the negotiated contract, which it takes a lot more thought and work, and you know cooperation between the owner and the contractor and cooperation between the owner and the contractor. But at the end of the day, it's a better situation for everybody, because it creates a relationship that is likely to be repeated, than the hard bid process, right, I mean how many?

Gordon Davis:

hard bid jobs have you built? And that was the only project you built for that owner, right Like you hate each other at the end. Project you built for that owner, right, like you hate each other at the end. If you get out of it without suing each other, that's great, you know, that's the win. But you know, in a negotiated situation, you know, I don't think I've ever done a negotiated project with an owner who had a program to build multiple projects to build, where we didn't build multiple projects with them. Right. So, um, but before we go into that, let's talk about hard bidding and what a contractor has to do, the things that he has to do in order to be successful in a hard bidding situation. Right, so you get something from the owner, you get drawings. Let's just say you only get drawings, right? So one of the things that contractors don't understand about hard bidding is that it's clearly just, it's a numbers game all the way back deep into the process. Right, process, right.

Gordon Davis:

So when you're hard bidding a project, your priority is to be the first contractor into the marketplace with that project, because there's chances are that owner's talking to multiple GCs. Right, and so you want to be when the subs get an invitation to bid for that project. Yours want, you want yours to be the first one. You know you want their mind to think of you when they think of that project, right. And so you know, one of the things you do when you're bringing in these projects is like naturally you want to understand the scope. But it's important to understand the scope on a very broad scale, to the extent that you have to build your sub list right. So, like, what kind of subs do I need? That's the most. You know. That's the cursory level of understanding you need of that project in order to produce an invitation to bid and start getting it out in the marketplace and start to drum up your subs.

Gordon Davis:

You know, ideally like the perfect situation was. You know the business developer would come to me and he said I've got a project in Nashville, tennessee, and you know I'm sitting here in Orlando and he's like it's going to be an interior build out of a restaurant. He's like, okay, great. So now I know, you know the second he starts talking to me about it. I'm building my sub list in my head, right. And so now I might not get those drawings for a week, but I'm not letting that stop me. You know I'm starting to drum up subs now so that when those drawings hit, I have a sub list to publish my invitation to bid to, right. And so you know you want to do everything you can to be the first guy to the market with that, with that project. And so when those drawings do hit, you put your invitation to bid together and I'm going to share my screen real quick and uh and and share my my invitation to bid.

Gordon Davis:

Uh, this uh kind of process that I I put together. Let's see here. So this is a template form and it looks red. But what I used to do is when I was running staffs, I would have templates like this. It's like start with this template and all you have to do is fill in all the red, whatever is red here. You just fill that in and turn it black. So whenever you look at it you know what things you still need to come up with, right.

Gordon Davis:

So what I would do is, like you know, I would have this set up for the project and when the drawings would hit, I'd just start populating all this information, the if you want to do a pre-bid meeting on site, you know, with the subs, which I highly encourage. You know when is the? When is the owners? You know, when does the owner telling us that it needs to be? You know, and then fill out the owner's contact information, the site contact information, the architect, this sheet here, answering these 10 questions and having this sheet, I think it ends up being like two pieces of paper right. So, front and back, you have this piece of paper and everybody who's working on this project just has this piece of paper on their desk. It has most of the information for the project that you need to know is right there, right, and so as you're filling out that information, you know this populates other spreadsheets in the system and everybody you know everybody's an Excel whiz at this point in our you know, our industry, so I'm not showing anybody anything that they haven't built before, but this is just kind of how I've done it Right.

Gordon Davis:

So you know you just kind of extract, you throw some budgets in there. How much do you think the project's going to be? You know, is there any liquidated damages identified? Do they want a payment performance bond? Is it, you know, osip, owner controlled insurance program? Is it anything like that going on? Owner direct purchase and some of the, you know, public work. You do owner direct purchase and stuff like that. But you know you just kind of rattle through and go through these and answer these questions and it populates, you know, the rest of the spreadsheet that you're, you know you're going to need to work on throughout the process, right? Your general condition sheet.

Gordon Davis:

This is kind of where I input all of my sub numbers on bid day, you know. And then you know this is like the owner's bid form, like if the owner gives us a bid form, this is what it. You know what it would look like and you know I make all the links and then color code it, right? So this dark red is you know these two dark red numbers you know from the bid sheet, right, so that I know where to go to when I'm trying to figure out what that number is. The owner might not want that cut into five, six different numbers, but I might have two or three trades bidding on that line item, right? So you know you kind of take that owner's bid form and automate it so that you're not scribbling it on bid day.

Gordon Davis:

You know you do spend some time but, like I said, the priority is to get this invitation to bid out to the market, right, and so a simple one-page invitation to bid. You put your company name up here, you put your company logo here. If there's an association like the ABC or something like that that you're associated with or that you know is going to catch the sub's eyes, maybe you want to put that logo there too. And then you know just the information on the project. Again, this is like this is for a petroleum station, actually, this invitation bid, this specific one, and so you know you can quickly look at the drawings and pull some you know some scope and even some quantities out. So, like you know, if you send it to a concrete guy, you know you're not getting that phone call like how many square feet of concrete is it right? You know you're not getting that phone call like how many square feet of concrete is it right? Like, if you can quickly come up with you know the building's 5,000 square feet and the apron looks like it's 50,000 square feet. You're just going to put that information in there, right, so that you know.

Gordon Davis:

And the idea is, is you put enough scope in here for a contractor to be able to look at it and make a decision as to whether or not they want to build the project without having to pick up the phone, call and talk to you, right, and so you know. And then you ask that they send it back, right, like fax it back to us or email back to us, and just you know I'll build the project or I won't. You know, here's my name. You know I'll download the drawings or I'll get them from a plan house, like you know. You know I'll download the drawings or I'll get them from a plan house, like you know.

Gordon Davis:

I don't know if you guys even do this these days, but, like in Florida, here locally, we have a plan house. You know we have a. We have a reprographics company. That's like old school, I mean, you walk in there and you think you're in the 90s, but they operate. You know that's how they operate, man, they do a good job, you know so, and a lot of GCs use them still where they'll have a plan room and the contractors can just go and print their little bid sets up and they'll mail it to them and all of that stuff. I mean, how are you guys handling that these days? You still do that, or is it all electronic?

Tony Johnson:

right behind me. I just actually got an updated plotter. I actually were my old-school contractors. I print out their sheets that they require I do. Also, I can send them to a place to get them printed out. But since we have the plotter, I would say most of my subcontractors that are still old school are spoiled and they just email us. We print them out the sheets they ask for. But yes, there are still. It's down to maybe about 20% of the old school subs and those are normally some of your best subs, by the way. Oh yeah, they have to have them on paper. They're old school and those are a lot of owner operator subs that the owner might be out in the field. He'll read some blueprints, does everything by hand still old school. But yeah, a lot of people still want the paper version, especially, you know, the owner operators for sure, and then the larger companies. Everybody does the digital format now, so we send them out all digitally and then, by request, we'll print them, or you can send them to a plan house, yep.

Gordon Davis:

Yeah, so so you know. So you, you know your biggest goal, like as soon as a project hits, like you know, I want this invitation on the street. You know, if your project hits 9 in the morning, I want that out by 2, 3 pm in the afternoon. Like you know, and one of the companies that I used to work for, I came in and you know they hired me as the lead pre-construction guy and you know they were like carp launch, whatever you want to do. I was like OK, great. So I showed up and I just said I'm going to sit here for a month and watch you guys, and you know, and I'm just going to take notes, I'm going to listen. And so at the end of that month, you know, I realized that sometimes these guys weren't inviting subs to projects. You know, till a week after they had it they were doing all of the estimating and all of the takeoffs and all of the work, you know, before they would send it out to the subs. And that was crazy to me because you know, now you're the last contractor to the market with it right. Now you're the last contractor to the market with it right. And so you know, yes, it's important to do takeoffs and understand the scope. You know, take off the things that are gray.

Gordon Davis:

You know like my strategy was always like if there is something that doesn't look right in the drawings, do a takeoff, but rely on the subs. Understand that you have X amount of concrete, x amount of masonry. You know X amount of squares of roofing. I mean, you have to know those big numbers in order to be able to talk to the subs about the project. But, like you know, you don't need to know millennial footage of flashing. You know. Like you know, let the roofer do that and you need to know that there is flashing and if there's some weird piece of flashing somewhere, you need to make sure that somebody picked it up. But you know. But you don't have to do a full blown takeoff and you certainly don't have to have that before you're sending an invite out, because you're you're late to the market at that point.

Tony Johnson:

And I think that that is a very great point. It's a very good point because that is one of the biggest hurdles to overcome as someone that's newer. One other thing that I wanted to touch on is when you're doing this detailed package that you're putting together, one thing that newer GCs struggle with is a bid response rate and so some of these things that you're laying out, the reason that you have a terrible bid response rate might be that, as opposed to doing what Gordon's here beginning to lay out for you, you might just be sending out the drawings with zero details, just like the owner sent you just forwarding a drawing asking for bids, sending it to these subs. And they've got other bids coming in, they've got active jobs and with your little bit of effort of just sending them a PDF of a drawing, how much effort are they putting in back to you? Probably very little, and it's going to be difficult for them to justify putting in a bid.

Tony Johnson:

When you're giving them, when you give that scope that Gordon has on the screen here and you're showing, give that detailed scope, you kind of lay out, you're showing that you know what you're doing, you're showing you're putting in the time and the effort. Hey, here's kind of a quick synopsis of what I'm going to need. You know you dig in, but here's on a high level to draw that interest, as opposed to them having to pull up, dig in, find all this waste 30 minutes to even find out if you did the prep work, to know if they've even got work in the job.

Gordon Davis:

Yeah, yeah, no, and that's terribly important, like you know, and that also continues through the process too. Like you know, it was brutal, like I would when I was running pre-con. I would talk so much on the phone that my jaws would hurt at the end of the day. That's how much I was on the phone. Being on the phone calling the subs, calling the suppliers, that's a big part, big part of it. But once you get over that kind of initial hurdle of you know, you have five or six or eight, hopefully, contractors in every trade who've said, yes, they're kind of interested in the job. You know, you kind of you kind of whittle your list down to those folks and you, you make calls to them fairly regularly. But what I always wanted to do was, like, when I had a call with them, I wanted to give them something Like I didn't want to just call and say, hey, you still interested, here's our bid, you know, reminding them of the bid that they have coming up. I wanted to call them and say, hey, you know, on sheet S14, whatever, you know there's a pad footing there that you know it doesn't match the schedule or something like that. Right, and just something for them to be aware of or to kind of generate RFIs, because that's the thing too, like if you can generate some RFIs and get those moving back to the architect and get you know and kind of create, if you can, as the GC who really wants this project, create an atmosphere of participation around you. Those contractors are going to look at you, as you know, this is the guy who's going to be building the job, right, and so, just you know, a minimal amount of effort goes a very, very long way in this process, right? So let me step back in the process quickly with this. So how do you generate these subs? How do you find subs? How do you get their interest? And I will tell you that, like, a lot of my work was done in out-of-town situations where I'm in Orlando and there's a project, like I said, in Nashville. So one of your best friends in that market and any market, are the suppliers. So if you can identify your concrete, your masonry, your wood suppliers and these are people who you might not even be buying directly from, but they are critical, key members on your team because they know the good subs who pay their bills on time, who do a lot of work. They have a huge list of subs and they are typically willing just to take that list of subs and email it to you and just say here are the 50 people that I know who do this work in this region. Here are the five that I would really make sure you're talking to about this project. Make sure you're talking to about this project, right. And so if you can crack, like concrete, masonry, air conditioning, like train, and carrier those suppliers of air conditioning units, air conditioning contractors, square D, like all the city electric and all those supply houses to electricians, I mean you take every trade, every trade's buying their materials from somewhere, and so if you can try to figure out where they're buying their materials from, that's where your richest, richest sub lists are coming from. And one of the other things that's pretty critical and important in drumming up subs and interest in your project is if you can go to the market, right, like, like.

Gordon Davis:

I ran a pre-construction process for a project in Nashville just a couple of years ago. It was for a large developer who is a self-performing GDC, right, so they're like, we have a project that we're building in nashville, we don't know anybody. Can you, can you help us? And I'm like, yes, like so, you know people in nashville. I'm like, no, but I can help you, you know I can. I can you know, two weeks from now, I can know everybody in nashville, and it was because I had done this in the past. Right, it's just, it's simply a process.

Gordon Davis:

Right, you know, you hit those suppliers, you go to the town, you hit that industrial complex, those three or four industrial complex areas in those towns. You're knocking on the doors, you're talking to people that I mean when you show up physically, like like, one of the things I always love to do was I would call the suppliers, call the suppliers, and then when I, when I showed up in town, I go and I meet them at their office and I'd be like, hey, I was the guy that called two weeks ago, because how many times has somebody called you just never met them. Right, they just go off into oblivion. And so people always are just like, oh my gosh, you're human being. And I'm like, yeah, this is me. Right, like you know, thanks for your help. You know, can I take you out to lunch, whatever, right? And so you know, these are the differentiators.

Tony Johnson:

Those are differentiators. Those are how you set yourself apart in the market. That's, that's awesome, Very inspiring and yeah, that that shows you do take the real time and the real effort.

Gordon Davis:

So that's awesome. Go ahead, I'm sorry. And you know you're in the market anyway. You've got to eat lunch. You know you don't know anybody yet. So you've been on the phone three or four times with suppliers. Go, go talk to that human, you know, and go, you know, and then you know, and then you know he's going to think of it. You're going to be at the forefront of his mind for the rest of the time you're working on that project, right, like I mean, if he talks to somebody he's just going to be constantly sending you unsolicited you know subs that might not be working on it and stuff like that. So, and then they have friends too, like that, you know they have friends in other. You know construction materials, you know trades that you know who do I need to be talking. You know you're constantly, you're constantly prospecting. You're just digging deeper and deeper and deeper trying to find that vein of gold right. And so you know, and this is, you know this can be done. I mean, I would do the same process on a, you know 5,000 square foot restaurant build out in a little retail space. You know I go to a town and you'd spend a couple of days. I would print up drawings and FedEx them to the location and, you know, set up a table and have, you know, subs come by and pick up drawings and shake their hand. You know, just those little things are. They go a long way in communicating that you're serious about. You know, about winning that project, you know. So that's you project.

Gordon Davis:

So there's a whole bid process associated with the hard bidding situation too. That's probably a whole other module. We don't have time to even talk about it today. But I also wanted to talk about the and let me stop my share here. I wanted to talk about the GMP process, which is totally different. Right, I mean the GMP process. You're still probably going to be talking to suppliers and things of that nature, the same way that you would be in the hard bid situation, but in a GMP, your priority is different. And so I've said this a couple times, and if you have one takeaway from this, it's what is the priority for each of these? Right, the priority for the hard bid situation, you know, is that you are the first to the market, right, like? Your priority is to be the first person to the whole market with an invitation to bid for that project. That's the priority.

Gordon Davis:

The priority on a GMP, I believe, is understanding the client's priority with respect to the project. And so I say that because typically in a GMP situation you have a more sophisticated owner who either understands business or really is like you know like, for example, the example I use for the hard bidding was like gas station restaurant. The example that I use for GMP is medical research facility, right? So, like you know, you're building like a medical research facility for a massive company and it's maybe a 50, 60 million dollar project and you know you're you're, they're more sophisticated, they know what they want, they know what they need, and so your priority there is to understand what their need is. Because, once you understand what their priority is and what their need is, everything priority is to you know, to do these lab tests. You know their priority is the labs and to create a situation where, one, you know their labs are operating in perfect condition and, two, they have an auditorium where they want to do some teaching of their staff, right, so, yeah, these two things that they really want, badly everything. You know your specs have to be tight and perfect in those situations, but everything else is pretty much negotiable. So that's where you go to work.

Gordon Davis:

You know, doing what I call the design bid process right, because in a negotiated situation typically you're coming in very early in the process maybe 30% design drawings, right, conceptual design drawings where they have schematics and it's just kind of like this mess and you take that and you do a internal budget on.

Gordon Davis:

This is what we think the medical research facility is going to cost. But then you take that conceptual design and you work with the architect and you work with the owner to try and trim the fat, like, if we're specking stuff over here that aren't a part of your priority, let's look at a different spec to save you money, right. If your building is this certain ridiculously expensive building process and you don't really care, you know too much about what the exterior looks like, well, we can. Let's attack that a different way, right, and save piles of money for you so that we can get within your budget, right. So in that let's back up very briefly in that negotiated process. So typically what you do too, which is beneficial, is I always try to secure a pre-construction agreement also in those negotiated contracts. And have you been successful at going into pre-construction agreements, tony?

Tony Johnson:

Yeah, so I have been burned enough times to, yes, be forced to do that. So I have put in the work, and that is one of the biggest pitfalls for contractors that are not experienced in the design build negotiated contract is you can spend months and months with these people going back and forth, helping them through the design process, basically doing consulting work for free. If you do not get something inked and you're not inking an agreement that they're going to use you, you're just inking an agreement for all of this initial time where you are basically consulting for free and helping, yeah, and you know, and then you have to also you know exactly what you said you have to then find those subs in that design process and you know work with them, and I'll let you go into more detail with that, but it's extremely important.

Gordon Davis:

Yeah, so what I would do and I had it down to like literally a one-page letter contract, right, I mean, this is an elaborate contract, like this is a pre-construction services agreement and the nature of it is is, if you build the project with us, this agreement goes away, like you don't owe the bill, right? If you decide that you don't want to build it with us or that you don't build it at all, then you owe us and I would keep it. I would keep. I want a reimbursement of our costs, right, I mean I'm not looking to make money on a pre-construction agreement, right, I'm looking to not go broke and out of business pre-constructing everything for everybody, right, and so.

Gordon Davis:

But the the the rub is is is you've got to provide good deliverables, I mean, you got to provide solid deliverables to the owner, and so. And the GMP is also a pretty open book process too. You know, and and I always, I always try to negotiate GMPs with with general contractors, you know, with me being the owner, because you know, I'm a little bit more of a sophisticated owner and so I can run a GMP process a lot. It's it's it's a lot more I'm more comfortable with with with a GMP than I am a hard bid situation, and so you know that pre-construction agreement, it's like I'm going to be giving you deliverables over the next months and if you build it with us, great, if you don't, you owe us a reimbursement of our costs.

Tony Johnson:

And so you know, I would say and so you know, I would say like that, what's that? Can you go through just a quick synopsis of that? What would be the deliverables you would give? Okay, so that's a good question.

Gordon Davis:

Yeah, that's a good question and let me share with you another screen, that is, it's a tool that you have to use in the bid process and you've seen it 100,000 times I'm sure. The bid tab but you know this is kind of this is the bid tab that I would use to bid. You know, to work on projects. So essentially, you know you have a workbook for every trade I mean, I've got probably 50 workbooks in here, right and so, by division, right and so the deliverable, the main deliverable that you produce, is your. You know you're working in meetings, like you might have a, you know, a weekly or bi-weekly meeting with the design team and the owner, where you know you discuss the development of the project, right, but it all starts with, you know you'll do, at the 30% design drawings, at the 30% design drawings, you would do a like a budget, an internal budget, and that internal budget is like we built medical research facilities.

Gordon Davis:

We have two of them going on right now. This is how much they're costing per square foot. That you know, and you put some other screws to it like you know what kind of exhaust system you have. Is your vivarium X amount of square foot? What's your square footage of lab versus vivarium, versus educational space, versus you know all this other stuff, right. And so you crunch it based on square footage of areas and you come up with a really educated budget. And you also work to break it down into sub-trades so your deliverable at the end of the day might look a little bit more like the owner's bid form, like this form here that I showed you before, like this might be your deliverable to them for your budget. And then you're also going to have qualifications and assumptions, like how did we come up with these numbers, right? So you're going to you know it's going to be a budget and it's going to be qualifications and assumptions and that's, you know, that's how you, that's a deliverable to them.

Gordon Davis:

And then you take that 30% budget and you say here's how we get there. You know the qualifications kind of communicate, how do you get there? Right? But then those qualifications have to make themselves into the design on the next round. So you know you work with the architect and the owner and sometimes the owner says I don't like five of these qualifications here and this looks good, so let's, let's, you know, let's get rid of these five qualifications If I got to spend another million or two dollars. You know, because of that, that's fine, right, like you know that that's. You know we'll add that to the budget. So it's a back and forth between the owner and the contractor and the designers. It's this big circle. That's why I call it design bid, right.

Tony Johnson:

Yeah, and it allows them to say, okay, here's what we see as a budget from experience and what's going on in the current market. And you know, if we're way over budget, before these drawings are so far longer in the 30% stage, we can make these major modifications to the drawings to get it closer to that owner's budget. Something else that you're going to want in a 30% you know qualifications, assumptions, budget you're going to want a contingency on top.

Gordon Davis:

Oh yeah.

Tony Johnson:

Have all this, and then you're going to put a larger contingency, maybe upwards of like 10% almost of the contingency, because we only have 30% drawing. So, yeah, that's important as well. But, yeah, go ahead. So that's perfect what you've laid out.

Gordon Davis:

Yeah, I totally forgot the contingency element. And so you know the contingency is going to start big and get smaller and smaller and smaller, right? The idea is is that you know by the time you're going to contract, you know, on something big and complex like this, your confidence level is such that that contingency should be one and a half, two percent. You know at the end of the process, right and so, and your budget hasn't changed much at all. Ideally your budget has stayed the same, but yeah, that's a great point on contingency. So then you're going to do a second round of pricing. You're typically going to do three rounds of pricing before you're going to contract, right. And the second round is a design development. You know kind of pricing effort and that design development pricing effort.

Gordon Davis:

This is where you bring in your subs. And I say subs, you want to bring in that one favorite sub per trade, and I don't mean your brother-in-law, I mean like, who is best suited in your arsenal to build that project, right? If it's a gas station, it's this guy. If it's a medical research facility, it's this guy, right. And so you know, you pick that list of favorites that you want to use and you're open with everybody about it. You tell the owner this is who we want to use and you're open with everybody about it. You tell the owner this is who we want to use when we build the project and you tell the sub you're who we want to use when we build this project.

Gordon Davis:

You also tell the sub that you have to bid this out in the market competitively when the drawings are completely designed, and that it's essentially their project to lose. You know they, you know you're talking to them right now because you want to build this project with them. That's a fact. And but you also, you know, need to understand that we have to bid it out into the marketplace to see where the numbers fall, just to keep everybody honest too. Right.

Gordon Davis:

So that first kind of design development, you know, might be a 60% to 80% drawing that you send out to the marketplace and you get sub input and that's going to, that's really going to correct your internal budget that you did initially and it's also going to engage those contractors to provide value engineering. So at this point you want to start talking about VE cost engineering, whatever you want to call it, and that is when you start to see, hey, if you change this, you'll save this from each of these subs and you can really come up with a great list to help manage your budget. And again, like you said, your contingency is going to shrink a little bit, but it's probably because you're taking money from contingency and solidifying it in the budget with your contractor numbers, right?

Tony Johnson:

Correct Yep.

Gordon Davis:

And then you're going to do a round of pricing out to the whole marketplace when you have permit drawings. You know, hopefully, that design development, you know that construction drawing development phase kind of, you know, generated enough interest where you can tweak the drawing and get it submitted for permit. And so once that's submitted for permit, then you typically, when you're a month or so out from getting your permit in your hand, you're going out to the entire market with the project and getting it bid out with subs and hopefully the market kind of confirms your favorite subs number. And even if it doesn't, there have been a number of times where you know my favorite contractor wasn't the low number. I mean it's not uncommon in a GMP situation where you know the person who you end up using is not the lowest sub in the marketplace, right? So what's good for the GC in that situation is also good for the sub market, you know too. And so it's not, especially in this type of a situation, you know too, and so it's not, especially in this type of a situation.

Tony Johnson:

you know, when you have, let's say, you have a sub, where that sub has not only been in communication with you, they've been in communication with the owner. They have shown they are educated on the project, they've shown they're invested in the project, they've shown that they're going to do it exactly as the owner wants and some of those things when you discuss at that sub, even if he does come in, let's say, 10% or 15% higher, that's not 10% or 15% of the whole job, it's 10% or 15% of his trade. Maybe is 1% to 2% of the total job price difference and that owner is already comfortable with that sub. So having that conversation with them explaining, hey, well, here's what we're going to get with this sub, even though it's a little bit more, we know that they completely understand the scope, we know they have priced everything right. They've been through the whole process so that, and coupling all that and going through the process, having that sub, you have educated the owner. All of these things make a big difference.

Tony Johnson:

And then you know the little bit of difference in price. You, you know that might be that you can tell the internet this guy's going to get everything done on time, on schedule. He has the experience. The other number is lower, but that doesn't mean they're going to hit the schedule, the time frame. They don't have the manpower set aside for it. There's tons of different things, that components, that come into play. So, yeah, it's not always all price, especially in this type of a situation. You can definitely sell it in other fashions, which is the thing I love the most about it, because you get the most quality product at the end of the day.

Gordon Davis:

Oh yeah, it's, you know it's, it's and it's a real team effort across the board. You know and, and you know, even when things come up in the field, they always do. You know and you know, even when things come up in the field, they always do. You know everybody's. You know everybody's started with a cooperation mindset, right, but you know, one of the biggest deliverables here is actually, you know, these bid tab sheets that you would do for every sub Because you go through these with the owner where you build the scope for that trade In this case it's steel you would build that scope out here for the project and then you'd have all your subs up in here on these line items and then they're pricing running through and so when this is filled out, man, it's a rich situation. And so what you know, the ultimate in a GMP relationship with an owner is where you know you sign off with the owner in this signature block on each of the you know, on each of the bid tabs. So you use this as a purchasing element where you know the contractor and the owner, the GC and the owner buying themselves to this. You know this bid tab and saying that like this is our understanding of what the scope and costs are for the plumber that we've been talking to the whole time. Right, and so this is, I mean many times like, my deliverable goes from you know, two to five sheets of, you know, a bid form and qualifications to a binder full of these bid tabs and quotes and everything like that that I'm giving to the owner.

Gordon Davis:

Right, like, you know, that's the deliverable that they get. You know, this's the deliverable that they get. You know this rich data set of exactly what it costs to build their project right, and they can take that and budget other projects. You know, and you know it's a really, really solid deliverable at the end of the day for the owners. And you know, and it's a good, you know the GMP is a great. You know, and, and it's a good, you know it's the the GMP is a great, you know is is a great way to just, you know, show owners how smart you are and how good you are and and how much they want to. You know they'll want to work with you again. I mean, it's, it's just, you know I, I never met a hard bid that I didn't hate and I never met a G bid that I didn't hate and I never met a GMP that I didn't love, right.

Tony Johnson:

Well, the GMP to me, really embodies the professional contractor. Anybody can go into a bid situation and do the low bid right Now. The low bid doesn't mean they're going to perform the project to the owner's expectations. As a matter of fact, that's normally where they are not producing the project to the owner's expectations. The GMP just exactly what you went through and the detail that you went through with that what the owner gets on the front end. That continues normally throughout the entirety of the project and it builds a long-term relationship for future projects.

Tony Johnson:

I mean, typically, if you are with an educated, developing owner, they are going to not this is not the only project they're ever going to do. They're going to want to continue to do projects right. And so what you're doing is you're differentiating yourself from the market, proving your value, improving your long-term worth as a partner for them in the long run and as any successful general contractor who's wanting to grow. That is the route that you want to pursue for long-term growth and expansion of your company and to build those long-term relationships with clients so you can begin to get steady, long-term work right.

Tony Johnson:

Yeah, in order to grow, but Gordon this has been an amazing time.

Tony Johnson:

I think you're extremely detailed in what you've done, and so a couple of things I kind of want to go over for anybody listening right. So one, a general contractor that would want to get in touch with you are you going to think about providing a package that someone could purchase from you, maybe a thin down version of what you have and then a full version of what you have? Or maybe are you thinking about ever doing any coaching for GCs with this type of stuff? I think all the things, all the knowledge that you have, have so many things that they can offer the GC community. So I just kind of want to touch on that and see what you have for the future.

Gordon Davis:

So so I am in the process of developing some of that stuff. It's, you know I try to. I try to put myself in the contractor's shoes too, right? So you know so much of a contractor's ability, you know it'd be great if I could put these spreadsheets together and just throw them out there and say, have at it, right. And you know, I don't see that there's anything wrong with that. But every contractor, even every owner, is a very detailed and custom situation. And so, yes, I am planning on doing some generic, high-level discussions like this. This can be broken down into four or five modules. In itself, what we've talked about today, right?

Gordon Davis:

How to how to perform on bid day when you're hard bidding right, like how to, how to package something to the owner in a GMP situation and conduct those meetings right. So all of those can be broken down. But what I'm finding is is like the best thing to do is to have a conversation whether that's a 30 minute conversation like this with someone, and in having that conversation I can pinpoint what your pain points are. And I've got piles of spreadsheets built for all sorts of situations. I've got piles of contracts written for all sorts of situations, you know. But if I can pull together two or three of those and tweak them even a little bit and get them to somebody, I think that that's probably more beneficial right. So that's kind of where maybe coaching comes into play or something like that. But for right now it's kind of a case by case situation.

Tony Johnson:

You know, and you can reach me via email and LinkedIn, you know, and those are the two places where I method for someone who just wants to connect with you get, maybe, a consultation to understand how you, you two, can align and where you can, you know, fill in and guide them through processes to help them grow.

Gordon Davis:

Yeah sure, uh, you know, probably email is the best way to do it, just uh, uh, if you drop that into the show notes, I guess can you do that yeah, put my email in there and say it, since it's uh, it's g Gordon.

Gordon Davis:

yeah, it's Gordon G-O-R-D-O-N at Finn Advisors Corp. That's Finn, like a shark fin Advisors with an S corp like corporationcom. So, and then LinkedIn, it's Gordon Davis. You'll see, I got a headshot out of my bald head on the LinkedIn there. And so if you look up FinAdvisors FinConstruction too I have a license in the state of Florida but I don't practice, you know, but I have that out there too. But if you bounce around and you see that I've got kind of a wave like I have in the background, that's kind of what my logo looks like too, and yours too, peggy. You have a C wave too I have in the background. That's kind of what my logo looks like too. So I and yours too, you have, you have a. I see you at the same artwork.

Tony Johnson:

I have a C wave too. The other thing you know I want to make sure people understand. You know Gordon is not just in Florida, you know it's throughout the U? S. So if you have something anywhere in the United States you know this he will be able to guide and help anybody. So it doesn't matter what state you're in, you know, please do reach out to him. He would be a great asset for you if you're wanting to grow and get your GC company to a level way beyond where you are now. He will help you eliminate your limiting beliefs on where you can go. So I think he is a valuable asset and someone to definitely consult with and bring along. It's well worth your investment, the time and the energy.

Tony Johnson:

Gordon, thank you so much for joining us. Yeah, hope to be able to get you on again. Again, I'm going to have in down in the show notes. You'll see his prior video that he did with Greg Dickerson, who is a mutual coach of ours, a great gentleman and a great person to reach out to for business advice. Gordon Davis, thanks again so much for joining us. We sincerely appreciate it.

Gordon Davis:

Thanks for having me have a great holiday, you too, sir. All right.