Residential Contractor vs. Commercial: What’s the Difference?
Thinking of making the leap between residential contractor gigs and commercial? While many contractors are more than happy to stay in one field, it’s not uncommon for contractors to want to diversify. Some are just looking for a change of pace. One option many consider is making the leap from one area of expertise to the other.
But there are profound differences between residential contracting and commercial. Commercial contract work can be an order of magnitude more complex and has its own set of benefits and potential pitfalls. Here are the areas where you’ll see the biggest differences.
Sales and Bidding
As a commercial contractor, you’ll go through a variety of bidding processes. Many will require more layers and red tape than you might be used to from a residential project. You’ll probably want some good ol’ American contractor software to help you manage these.
For residential projects, you’re probably relying on referrals, review websites, local advertising, and local real estate connections. Many of these are fruitful avenues for commercial work too, but commercial work, due to its size, has other important avenues of seeking and finding work. Here are a few.
If you’re a residential contractor seeking commercial work, you’ll need to find where the bids are. Enter reporting companies.
These reporting companies include BidClerk, Construction Market Data, and Government Bids,. They are searchable aggregators of current bids for work and requests for proposals (RFPs) for commercial projects. And they can be an indispensable resource for cracking into the field.
Larger Commercial Contractors
When you’re just starting out with a smaller company, larger commercial contractors, rather than being competition, can be a fruitful avenue to find your first commercial work. These companies will often pass on bids that are too small for their current capacity. So make some phone calls and try to develop relationships with the larger operators in your area.
Tenant Improvements of Existing Businesses
Another good avenue to seek out when breaking into commercial work is tenant improvements. These include remodels to existing retail or business spaces and follow the same logic as working with larger commercial contractors. They’re simply work that are too small for the higher bidders, but they include a lot of the same kinds of work and on-site experience as larger gigs.
Compared to residential work, commercial contractor gigs are more business-like. Because you’re not working on an individual’s home, emotions don’t necessarily run as high (though you’ll still encounter your fair share of characters).
There are also a lot more cooks in the kitchen on a commercial project. Architects, owners, municipal governments, and developers – to name a few. All will expect a high quality of work and prompt delivery of services.
Materials and Work Differences
Another difference between residential and commercial contracting is expertise in materials and construction. You’ll usually be looking at steel and concrete work instead of wood framing, accommodating three-phase electrical work instead of single-phase, and differences in roofing and finishes.
The good news is that commercial materials tend to be more standardized than residential ones. This can make sourcing and accurate estimating easier.
With different materials and techniques, you’ll be managing a host of different skills. If you have an existing company, you might need to make adjustments to staff and crews to accommodate this new work.
Code and Compliance Differences
Speaking of adjustments, while residential building codes are no joke, they go up an order of complexity for commercial gigs. Transitioning from a residential contractor to a commercial contractor means studying up on these.
For instance, one small change with big implications is accessibility. Unless you’re working a commercial project with historical exemptions, you’ll need to build and plan for accessibility complying with the Americans with Disabilities Act.
Commercial construction also has more stringent code requirements for fire safety (sprinklers, fireproofing, etc.) and exit points, as well as materials regulations from the Environmental Protection Agency. Your worksite will also need to be in compliance with OSHA, which you’ll have to plan and budget for.
Insurance and Warrantees
Then there’s insurance. Unless it’s a small or medium-sized project – like certain tenant improvements – you’re likely to need more of it.
Commercial properties, by their very nature, tend to be more expense. So everyone’s got more skin in the game. Contracts you enter into as a commercial operator are therefore more complex and may include line items like warrantees – assuring the client that you will deliver services at the quality agreed upon – and a surety bond to ensure the contractor fulfills the promise. Surety bonds are especially common in government work.
Look into the requirements for your particular state to see how much you need to be bonded for, though this can also vary project to project.
Ready to Start?
This is just the tip of the iceberg of what you might have to learn as a newly minted commercial contractor.
You may have to learn:
- The ins and outs of commercial blueprints and how they differ from residential.
- New skills and ways of scheduling your crews and tasks differently.
- The values and efficiencies of a new set of materials.
And… you may have to hire a lawyer to help you navigate all those new contracts and liabilities.
Making it Easier: Residential Contractor or Commercial Software Solutions
The good news is that you don’t have to do it alone. Comprehensive contractor scheduling and management software can also assist you with estimates and the bidding process, and it can save you a ton of time.
Check out FieldPulse – contractor software that’s designed for contractors big and small – residential and commercial.