Recently, I’ve been meeting more and more managers tasked with general contractor selection that opt for nationally dispersed partners. Being biased toward the regional side of things, I was curious of the pros and cons of each side.
First, the obvious difference of a national GC’s geographical span presents a few situations.
Although there is one point of contact for all construction concerns, this presents a limitation scenario potentially sparing competitiveness for simplicity in a construction point-person. The competitiveness trade-off also can be seen from the overhead requirements of being present in a wider range, from the staff, office, and transportation/equipment demands associated with a broader project vicinity.
However, with more comprehensive contracts comes less administrative needs to coordinate a project on the execution end, and less overhead related to those tasks. Also, with equipment there are efficiencies as one national general contractor has this cost pool bundled into their contract, as opposed to multiple regional GCs each charging mark-up for their coordination of their individual project equipment needs.
I like the way Lloyd Facen coined some of the agility benefits regional teams see in a Punchlist blog post from a few years ago:
“Large construction companies typically standardize their services, and in many instances these services are rigid and pricey. On the other hand, as a small company you may be hungry for almost any new business and can be more flexible in meeting potential clients’ needs.
You have the ability to make quick and firm decisions as opposed to the slow methodical bureaucratic processes that often paralyze larger competitors. If you are able to be nimble while offering quality services, you may have just found a competitive advantage over the big boys.”
The choice really boils down to the client’s needs and how they’re willing to operate. I’ve seen relationship benefits in servicing a select region, as there’s unanticipated needs that being a nimble firm allow you to service in a way that a larger firm wouldn’t be able to do. However, many firms without a strong internal construction team seek to rely on a national GC to handle the in’s and out’s of projects that their team simply doesn’t have the bandwidth for.