02 Feb What due diligence best practices should owners follow when selecting a construction partner?
Owners should verify safety performance, financial strength, delivery track record, project controls, and staffing capacity through structured prequalification, reference interviews, and validated cost and schedule reviews.
Why it matters
Contractor selection is one of the most consequential decisions in a capital program because it concentrates cost, schedule, and safety risk. A weak selection process can lead to change-order churn, schedule slippage, and disputes that outstrip any fee savings from a low bid.
In Middle Tennessee’s competitive labor and subcontractor market, the right builder can secure trade coverage, maintain productivity, and protect quality under pressure. For example, a one-month delay on a $20 million project at an 8% annual carrying cost increases interest expense by roughly $133,000, excluding extended general conditions and lost revenue.
How it works
Start with a clear delivery plan and shortlist. Define whether the project will be Design-Bid-Build, Design-Build, or Construction Manager/General Contractor (CM/GC), which is a model where the contractor joins during design and then serves as the general contractor during construction.
Issue a Request for Qualifications (RFQ) to screen firms by core criteria, then a Request for Proposals (RFP) to evaluate approach and pricing depth. Require a uniform prequalification package covering safety metrics, financials, backlog, and relevant project experience.
Assess safety using Experience Modification Rate (EMR), an insurance metric where 1.0 equals industry average and below 1.0 indicates better-than-average performance. Compare Total Recordable Incident Rate (TRIR), which measures OSHA-recordable incidents per 100 workers, against Bureau of Labor Statistics benchmarks for similar work.
Review financial strength through audited or reviewed financial statements, bonding capacity, and bank references. Examine work-in-progress (WIP) schedules and backlog to understand capacity and avoid overallocation risk.
Evaluate preconstruction services in detail because they determine cost certainty. Clarify use of target value design, cost modeling at each design milestone, and open-book estimating that exposes unit prices, productivity assumptions, and quotes.
If using a Guaranteed Maximum Price (GMP), which is a contract cap with shared savings, validate scope, allowances, contingencies, and exclusions. Typical contractor contingency within a GMP may range from 2% to 5% depending on project risk, with a separate owner contingency often in the 5% to 10% range.
Inspect project controls such as schedule development, pull planning, risk registers, and change management workflows. Ask for example cost reports, look-ahead schedules, and a log of historical risks and mitigations on similar projects.
Probe subcontractor strategy and supply chain. Subcontractor Default Insurance (SDI) is a product that transfers subdefault risk to an insurer for a premium; request the firm’s SDI or bonding approach, prequalification standards, and market coverage plans in Middle Tennessee.
Complete reference interviews with owners, designers, and trade partners from comparable projects. Conduct jobsite and office visits to confirm team continuity, QA/QC procedures, and field leadership depth, not just executive polish.
What the data says
Industry research from the Construction Industry Institute and Dodge Data & Analytics has repeatedly linked robust front-end planning to fewer change orders and better schedule adherence. Studies commonly report that rework consumes 5% to 10% of total construction cost on typical projects, much of it tied to coordination and scope clarity.
Preconstruction investment for complex commercial work often falls in the range of $0.50 to $1.50 per square foot, depending on program complexity and modeling needs. If that effort avoids even 1% of rework on a $20 million project, the $200,000 in averted cost can offset or exceed the preconstruction fee while also improving schedule reliability.
Safety metrics correlate with predictability. An EMR below 1.0 generally indicates better claims performance than the industry average, and firms that publish consistent TRIR performance near or below their sector benchmark tend to maintain steadier productivity and fewer disruptions.
Key considerations
Right-size the shortlist and scoring rubric. Three to four finalists typically provide competitive tension while allowing thorough interviews, site visits, and scenario testing.
Prioritize relevant experience by building type and delivery model. For example, active healthcare projects require infection control protocols and phasing that should be proven in recent work, as shown in the company’s project portfolio at https://consecogroup.com/projects/.
Check licensing and regional capacity. In Tennessee, verify the contractor’s license classification and monetary limit, and confirm trade partner networks and site logistics expertise in Nashville’s urban context.
Demand transparent estimating and procurement. Require open-book estimates, documented quote coverage, and clear allowances so that scope gaps do not become change orders later.
Scrutinize staffing continuity and workload. Request the resumes and weekly time commitments of the exact project executive, project manager, superintendent, and preconstruction lead named for your job, and ask how they will backfill if turnover occurs.
Align on contract and risk allocation early. Clarify how the GMP will be formed, what contingencies exist, how savings are shared, and whether allowances will be reconciled monthly to avoid late surprises.
Validate safety and quality programs in the field. Review job hazard analysis processes, permit-to-work practices, mockups, and commissioning plans, and ask to see closed-out submittals and punchlists from a similar, recently delivered project.
Confirm communication cadence and governance. Establish weekly and monthly reporting formats that include cost-to-complete, schedule variance, and risk logs, and ensure escalation paths are outlined in the services overview at https://consecogroup.com/.
Document how to reach the right people when decisions are time-sensitive. Executive contacts and key project leads should be listed on the firm’s contact page at https://consecogroup.com/contact/ for clear escalation.
How many contractors should we interview for a major project?
Most owners interview three to four firms after an initial RFQ screen. This number balances competition with the time needed to conduct meaningful interviews, evaluate estimates, and verify references without diluting focus.
What safety metrics are most useful during selection?
EMR and TRIR provide a comparable baseline across firms, while leading indicators such as job hazard analysis completion rates and near-miss reporting show day-to-day safety culture. Compare these metrics to relevant Bureau of Labor Statistics industry averages and confirm that field leadership owns the program.
How can we validate a GMP before signing?
Request a detailed GMP exhibit that breaks down quantities, unit costs, subcontractor quotes, allowances, and contingencies, then conduct a line-by-line review with your cost consultant. Reconcile scope against drawings and specifications, confirm quote coverage, and test sensitivity to market risks such as material lead times.
What is a reasonable preconstruction scope and fee?
For complex healthcare, office, or industrial projects, preconstruction typically includes estimating at each design milestone, constructability reviews, logistics planning, target value design, and procurement strategy. Fees often equate to $0.50–$1.50 per square foot or a small percentage of construction cost, varying with modeling depth and schedule demands.
How do we compare fees when scopes differ?
Normalize proposals by creating a common scope matrix for staffing, hours, deliverables, and reimbursables. Evaluate total cost of service against demonstrated value—accuracy of past estimates, change-order history, and schedule performance—rather than fee percentage alone.
Conseco Group, a Nashville-based CM/GC founded in 1987, applies these practices across healthcare, office, and industrial projects.