Performance Measures Can Help Hotel Owners Select the Right Renovation Contractor
By Sam Cicero President, Cicero's Development Corp. | August 07, 2016
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