Behind every commercial and institutional building going up in the Rio Grande Valley is a general contractor. Years ago, contractors would bid on a project, win a bid, hire numerous subcontractors, oversee the work and strive to finish it all on time and on budget. The contractor would oversee the contractor to confirm that everything is done according to specifications.
One alternative to traditional contracting is Design and Build. The architect is typically employed by the contractor, and together they build what the owner wants.
In Construction Manager at Risk, the architect and contractor work together on a design and provide the client with a guaranteed maximum price. The construction manager, who is at risk because he bonds the workers, is paid a fee based on direct costs and a markup. Clients like the arrangement because they feel less pressure to hire the low bidder.
Across the Valley, many general contractors have considered school construction their bread and butter. While growth in the educational sector remains very strong here, other commercial work is filling up the calendar for local and state general contractors.
Centralized information
The number of general contractor members in the industry group Associated General Contractors/Rio Grande Valley chapter has increased by 40% in the past 18 months, according to Perry Vaughn, executive director.
Construction in the Valley is at a turning point. “We see a huge amount of work that will be coming down the pike,” Vaughn said. But the impending boom brings with it a major problem that already confronts the rest of Texas. “Contractors are turning down work or not bidding on jobs because they cannot find qualified sub-contractors to man the project. That’s what we caution people about now.” In Brownsville alone, the Port of Brownsville expansion and a new tractor part plant will require hundreds of construction personnel. Add in the proposed $20 billion LNG facility and the need rises to 3,000.
“We are not seeing an influx of new people into construction,” Vaughn explained. High schools have eliminated or shrunk their construction technology classes, wages in the field have not risen, and skilled, baby boomer tradesmen are retiring. “For every four leaving construction, only one is coming in. We’re not seeing the pipeline.” Attempts to change the apprenticeship systems have met with stubborn resistance.
How many UTRGV projects have gone to local contractors? Vaughn made zeroes with his hands. “Very few general contractors in the Valley can bond at the level these projects will require, at least $50-60 million,” he said. In addition, South Texas College has $150 million in construction projects coming up. For now, many large scale clients look outside of the Valley for a general contractor, although a few major contractors are establishing Valley offices.
AGC maintains a room where contractors and subcontractors can review hard copies of building plans, although its online plan room gets more traffic.
Scaling up
When Noel Munoz Jr. returned to the Valley after eight years in the Air Force on the construction side, he became a risk manager at Joe Williamson Construction. He credits Joe Williamson’s mentoring for his current success. “I wouldn’t be where I am today without him.”
Munoz left to concentrate on a small sub-contracting business he and his father had started, but “I didn’t like being a subcontractor. You don’t call the shots.” He wanted to work “where the more I put into it, the more I got out of it.” So six years ago Munoz founded NM Contracting. “I knew I would be competing with my GC customers, and they would cut me off. We had to struggle for two years. But I still do sub work for Williamson and D. Wilson on their bigger jobs.”
Running a general contracting business is not like being a sub. “As a subcontractor, I didn’t have to worry about bonding, financial reviews or having a CPA. But I know what it’s like to be a sub, too, so I’m more compassionate with the subs I work with.”
Munoz’s three sons, ages 28, 26 and 22, now work with him, something he hadn’t foreseen. “I always thought it would be cool to have a son working with me. I enjoy working with my family. It’s hard, though. The spillover sometimes messes up our relationship. I hear, ‘I want you to be a dad, not a boss right now.’”
When Noel III, Andrew and Derrick began coming into the business, Munoz split his company, keeping 50% and dividing the balance and the responsibilities between them.
NM Contracting’s first job as a general contractor — the reconstruction of St. John the Baptist Catholic Church in San Juan — won an Outstanding Construction award from Texas AGC. Currently NM is working on the Highway 511 entrance at the Port of Brownsville, classrooms at St. Joseph the Worker and improvements at Tom Landry Stadium in Mission as well as high school projects in Edinburg and Brownsville.
Like father, like son
Tre’ Peacock returned to his father’s construction company right out of college in 2002. He had no money to buy into the business, which had been established in 1974 and endured the booms and busts typical of the industry. Tre’ and Bill Peacock set up a separate corporation, Peacock General Contractors, where the son was 100% owner/president and the father the comptroller. “Every new job we got, we put under the new company.” Licenses were transferred over time.
“My dad and I eat lunch together every single day,” Peacock said. “We talk about what is going on on the job sites, the good and bad, new things. Whenever I run into a problem, I always ask his advice to see if he has been in that situation. We do the exact same thing, but we don’t overlap as project managers.”
The company optimally runs three to five jobs simultaneously. The Peacocks spend much of their time estimating projects or managing the administrative side of construction. They visit the job sites run by superintendents multiple times weekly.
Peacock admitted contractors have two or three favorite subcontractors for each trade: electrical, plumbing, heating/cooling, roofing, masonry, structural steel, flooring and painters. “In a competitive bid, we are not always afforded the luxury of using our favorites.”
In a private job, the architect and client/owner get bids from contractors. “They don’t have to go with the lowest price. They go with the contractor and price they are comfortable with,” he said. Even some public bids (schools, government buildings) use a ranking system based on experience, bonding and other qualification. “The low bidder may not be ranked number one.”
Peacock’s conference room has a wall of photographs of completed projects, although the most recent – such as First Community Bank in McAllen, St. Anthony’s gym and classroom, Plains Capital Bank in Weslaco – are missing. But it doesn’t take a multi-million project to contribute to the quality of life in a community. Peacock said the Harlingen Rotary Bark Park was the signature project during his term as Rotary president.
For more information, see Agcrgv.org, nmcontracting.us, and Peacock at 423-6733.
August 2016 cover story by Eileen Mattei