What GCs Really Want to See During Prequalification
Furuyama has a clear idea of what GCs truly prioritize during the prequal process:
- Audited Financials: GCs prioritize financial stability, prompting them to ask for a few years of audited financials, balance sheets and profit & loss statements. Shaky finances can put off a GC who was otherwise interested in working with you. The hard truth is that subs often end up financing the jobs they work on. So, despite thin profit margins and tight cash flow, they’re expected to have the financial fortitude to front materials and labor for a long time, well before a pay app ever comes in. GCs want to see that financial fortitude on paper.
- Strong Banking Relationships: A solid financial profile doesn’t just mean good cash flow, of course. It means maintaining strong banking relationships that you can tap during the project if you need to. “If you don’t have that banking relationship, you’re dead on arrival,” Furuyama says. Financial fortitude doesn’t begin and end with banks, though. Billd is an excellent financial tool to have in your arsenal, helping you front the cost of materials for seamless project starts and get pay apps in your pocket sooner so you don’t experience crippling cash deficits on the job.
- Relevant Past Project Experience: Like any job, the person hiring you wants to see that you have experience specific to the role you’re applying for. That holds true with construction projects. According to Furuyama, that may mean you have to tweak your past project list to highlight the projects most relevant to the one you’re trying to get prequalified for.
- Honesty: This can’t be overlooked. Don’t try to hide a lack of experience, or anything else for that matter, from the GC. Let’s say you’re looking to move into a new line of work and don’t have much experience in it yet; be honest about that, your goals and the state of your business. They’ll appreciate the honesty. Even if it means you can’t work together, better to know that now rather than later. And if you can work together, then you’ve already laid the groundwork for trust. To put it plainly, Furuyama says, “Don’t lie during prequal, because you’re killing any chance you have of doing business with these people. Anything you lie about, they’ll find out about.”
- Responsive, Prompt Communication: In your prequal packet, Furuyama recommends that you always include 2 points of contact at your company who can handle a call from any department of the GC. If they try to call you, they’re not gonna call again if they miss you or you don’t promptly return their voicemail. One time Furuyama missed one such call on vacation and he lost the opp because of that. Designate people who can answer any question, any time.
The Lost “Human” Element of Prequal, and How to Get Around It
If you’ve been in construction for at least 15-20 years, you’ve seen a shift in how things get done. Filing cabinets have been replaced with computer files. Phone calls have lost favor to emails and texts. In the case of prequal, online portals where you submit documents have become the centralized hub for the entire process.
Unfortunately, that means that the human touch that used to be present in this process has largely diminished. Nowadays, if you don’t have the right document in the prequalification packet, you’re not going to get a phone call and feedback, you’re probably just going to get rejected. You won’t talk to a real human until your packet lands on the desk of the risk manager.
Go Out of Your Way to Seek Out Your Point of Contact
There are conversations you should be having before that point to improve your chances of getting approved. If you have some missing document or other abnormality in your packet, find someone you can speak with to clarify that. Without finding that person, “you’re playing a game of submit, reject, submit, reject. And without real human feedback, there’s no notes,” Furuyama says. We all know that having a personal relationship with a real human is one of the best ways to improve your business outcomes. That holds true with bankers, clients and the gatekeepers of the prequalification process. “Reach out to the local office and find out who the prequalification/risk point of contact is. The local office can usually point you in the right direction,” he says.
Find Someone at the GC Who’s Really Pulling for You
Having a human point of contact at the GC is critical during prequal, but it extends deeper than that. If you can, Furyama encourages you to find someone at that GC who wants to get you onboarded and is pushing for you in real life. It can have a huge impact on your ability to land the project.
Common Causes of Rejection
- Bonding Issues – Furuyama has seen plenty of subs struggle with bonding issues, leading to rejections in the prequal phase. If you don’t have a sufficient bond for what they’re looking for, there are surety bond agencies that specialize in helping subs attain a bond or a “good guy letter” that states they are eligible for bonding up to a specific amount. Some subs already have someone they work with for bonding, who will tell you if a bond can be issued for certain criteria.
- Lack of Respect for the Prequal Process – GCs don’t take kindly to subs ignoring or not respecting the prequal process. “It’s not just about you not having a required document; that doesn’t hurt you as much as trying to be shady about it or fly under the radar,” he says. That brings an undue level of scrutiny when they do notice, and can make them less likely to work with you.
- If you don’t have a requested document, Furuyama recommends including a transparent letter saying where you’re at with it. Ask them to reach out to you via phone or email so you can discuss it further. This also helps you get that real, human point of contact earlier, killing two birds with one stone.
Prequalification Timeline Limits
Furuyama’s personal Excel sheet for tracking prequals focuses heavily on “Date originally submitted,” and there’s a reason for that. This process is time sensitive and lengthy, which isn’t the best combination. Your documents can “expire” in the time it takes a real human to get to them. That’s why he encourages not submitting your documents piecemeal, but waiting to have all of them ready before you submit. That way, your other documents aren’t “aging” while you wait to submit the one you don’t currently have.
For Example: If the clock starts January 15th and everything is going to expire 3 months from that day, then don’t submit some documents on the 15th and the rest 1 month later when they’re ready. It might take the GC 6 weeks to even look at this packet, at which point half of your documents are closer to expiration than the other half. And after 3 months, you’ll have to resubmit everything. All your docs will be out of alignment. Furuyama goes out of his way to avoid that.
“Qualify” the GC Who’s Prequalifying You
A GC’s prequalification process tells you a lot about their quality as a company. It might be a process for qualifying you, but it also tells you whether they’re qualified to work with you. Furuyama encourages you to do ample research on the companies you’re trying to get prequalified with. That may even mean driving around and physically scoping out the projects they’re doing. You want to feel confident in the caliber of the GC you’re going to be working with, especially with how long construction projects can last.
Prequalification demands a careful, strategic approach with ample transparency and proactivity. Armed with Furuyama’s insights, your next prequal may run noticeably smoother.