Mr. Cicero

Development & Construction

Performance Measures Can Help Hotel Owners and Managers Select the Right Renovation Contractor

By Sam Cicero, President, Cicero's Development Corp.

Understanding Performance Measures Can Help Hotel Owners and Managers Select the Right Hotel Renovation Contractor When selecting renovation contractors, many hotel owners' and property managers' decisions are based solely on the bottom line. In short, the lowest price bidder wins.

Other hotel owners and managers, however, carefully consider the intricacies of their project's scope and can assess the confidence they have in their selected contractor that the renovation can be finished on-time and on-budget. What these hotel owners appreciate that others don't are the many value-added, non-financial advantages that a talented contractor brings to the project. For the purposes of this article I will refer to these advantages as "performance measures." Performance measures may prove to be imperative for the successful completion of a hotel renovation, although on the surface it is difficult to put a price tag on them. Key examples of contractor performance measures include:

  1. Business Disruption

    Avoidance Business disruption avoidance refers to the contractor's ability to identify and categorize possible risks early on that could throw the project off schedule, resulting in cost overruns and guest dissatisfaction. The contractor should be able to draw up a detailed Risk Management Plan where the list of potential risks are identified. Each individual risk should be assigned a percentage of likelihood of happening, such as high, medium or low risk. At that point, the contractor needs to take any potential high-risk item and create a "what if" scenario including a work- around plan. One of the contractor's employees should monitor this Risk Management Plan daily with specific guidelines as to where and when to alert the entire project team, including the hotel owner, should that particular risk occur. A successful Risk Management Plan greatly minimizes costly overruns and change orders.

  2. Qualify All Bidders

    The success of a project greatly relies upon the general contractor's vetting of suppliers and subcontractors. It's the contractor's responsibility to ensure that suppliers and subcontractors alike have the same sense of value and dedication to the completion of a project as the contractor in charge. Professionalism, safety, good skill sets and communication, access to the right materials and supplies as well as respect for the owner, are all very important attributes when selections are made. Another key area of prequalification scrutiny is a subcontractor's financial data. General contractors may ask for particular details like annual contract volume, sales and net worth, or may request full financial statements. Another essential prequalification item is safety management history. General contractors should require that a sub's workers compensation experience modifier be 1.0 or lower, confirming that its loss experience has been on par with others. General contractors also may ask for Occupational Safety & Health Administration data such as illness/injury rates and lost workdays, along with information about a sub's own safety management programs and procedures. Work history, of course, is important, such as the type of work done, jobs completed or in progress and disputes over previous work. General contractors also should look at a subcontractor's schedule of upcoming jobs to be sure it is not overextended.

  3. Long-Term Subcontractor Relationships

    Subcontractors are valued partners to the general contractor. The general contractor's ability to maintain long-term relationships with their subcontractors provides a value-added proposition to your project by building efficiencies, increasing quality, as well as upholding a high level of trust. In addition, a general contractor maintaining a deep bench of subcontractors helps to keep the bid process open and transparent, and makes overall pricing more competitive.

  4. Cleanliness on the Jobsite

    There is no getting around it - hotel renovations are messy. Having a contractor team that's skilled in their craft, as well as organized, clean and professional will help ensure an overall positive renovation experience, both for you and your hotel's guests. A clean jobsite is an efficient jobsite. A site in good order and clear of debris encourages workers to complete tasks faster with improved quality. Also, because hotel renovations are very detail oriented, it can be easy to lose track of tasks and items if the site is a mess. A clean jobsite is a safer jobsite. The most cited OSHA safety infraction is called 'housekeeping." It's a very common infraction because people who tend to leave a mess have a higher chance of tripping or slipping. Messy job-sites clearly cause accidents, especially with jobs that start early in the morning when it's still dark out or go well into the night.

  5. Controlling Noise

    Levels As part of the management process the general contractor must be aware of peak times of hotel operation, especially in high occupancy properties. Awareness will help the contractor modify the work schedule so that noisy tasks are performed during off-peak hours or slow periods of the year to prevent hotel guests and employees from being disrupted. Controlling noise and maintaining cleanliness creates an environment where the hotel owner can continue to sell rooms to maintain cash flow throughout the renovation project by closing off just one floor at a time.

  6. Complaints by Guests

    In the world of social media, hotels can no longer afford to have complaints go unanswered in online reviews such as Tripadvisor, Fodors or Lonely Planet. Many hotels now have paid staff whose job it is to answer reviews whether positive or negative. Your renovation contractor should be mindful of social media backlash brought on by excessive noise, messes, or rude behavior to guests. This will ensure that any posted negative feedback is kept at a minimum if at all.

  7. Controlling Deliveries

    An important responsibility for a general contractor is ordering, approving, controlling and handling materials received on-site. For example, how will new carpeting, wall coverings and FF&E be delivered so additional costs are not incurred? Will elevators used in day-to-day operations be unavailable due to deliveries not being properly scheduled? Who is the contractor's "storekeeper" responsible for controlling on-site materials? How are materials registered? What forms are used to record the arrival and distribution of materials? Where will materials be properly and safely stored? A skilled general contractor will have all the answers for the hotel owner.

  8. Open Communications

    Open communications between stakeholders is a key to successful renovations. This runs through the initial stage of scope planning, to budgeting, the bidding process, performing the work… all the way through to completion of the project and long after it is completed. Elements of open communications include a daily report identifying manpower levels, deliveries, safety, and current areas out of service. Weekly phone calls should also take place to discuss the overall schedule, design and client operations so that all parties can work to manage issues as a team. For example, often a hotel renovation will require temporary "laydown" areas to store supplies. Specific dates and times for the space to be available can be negotiated between the renovation contractor and the owner/property manager prior to project start. Once the renovation is underway, it can be determined during the daily meeting if there will be delays in delivery of the space or the materials, as well as if guest are complaining that the space is closed.

  9. Punch Process

    A complete, detailed punch list is the sign of an experienced contractor. Identifying the punch process procedure at the front end of the renovation sets the bar for expectations of quality. Signing off on punched areas is basically saying everyone has reviewed the work and agreed the space is ready to sell or occupy. When properly prepared, it should identify which team members will be included in final punch-out, while allowing the recovery time needed to make a last minute repair or alteration in the schedule. In many renovations the punch-out is an anxious time and often the anxiety is due to not having expectations clearly set upfront.

The contractor you choose to renovate your hotel should work diligently to understand your project goals and provide you with all the necessary tools to help ensure a successful project with a high return on investment. These Performance Measurements can serve as an excellent gauge as to the contractor's professionalism. These behind-the-scenes, non-billable tactics all too often go unnoticed but are quite necessary for an overall positive renovation experience.

Sam E. Cicero, Jr. took over the helm as president of Cicero’s Development in 2012 after a successful 35-year career working in all departments of the company. His responsibilities included working on the construction team developing expertise in the various trades, as well as working in the administrative side of the business where his responsibilities included human resources, accounts receivable, information technology and sales and marketing. Today, Mr. Cicero oversees the daily operations of the business and is involved personally with each project, troubleshooting potential challenges and their solutions, communicating with project owners and representatives updating them on the progress of their project. Mr. Cicero can be contacted at 866-904-0141 or secicero@cicerosdev.com Please visit http://cicerosdev.com for more information. Extended Bio...

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