In the October 2012 Apparel NZ issue Mark talked about choosing a designer, this month explores how to select a shopfitter.

I have read a number of articles warning that building a house is one of life’s most stressful activities. I haven’t yet seen any about fitting out a shop but, given the tight time frames, compressed site and complexity, I suspect that fit-outs are even worse! One of the very best ways of smoothing the process is to have a good shopfitter.

Having discussed choosing a designer last issue, in this article I want to discuss the selection of that shopfitter and, then next month, how you might manage him through the building process. (At the risk of being politically incorrect, I will refer to the shopfitter as “him” as I have yet to meet a woman shopfitter, but would be keen to!)

First lets explore just what a “shopfitter” is. By my definition a “builder” is not the same as a “shopfitter”. Builders working on residential or industrial buildings, for example, operate in a fairly sequential process, on relatively roomy sites with comparatively long construction programmes. Shopfitters, on the other hand, usually have many trades working at once in very tight spaces with fixed dates bounded by the tenancy handover at the beginning and the opening date at the end. Whereas a house builder may run days or weeks late in completion, with only some frayed nerves as a result, in most retail fit-outs there are fixed dates when stock, staff and customers will turn up, along with launch dates for advertising etc. These generally can’t be moved at short notice. So, in my opinion, the main thing you need to look for in a shopfitter is a supernatural ability to organize his staff and sub-trades and to work to a tight programme without any loss of quality. Obviously price is important but having the mall-opening pass with your stock, staff and customers sitting outside on the street shop would be more disastrous than a slightly higher quote! 

Generally we can categorise shop-fitting firms into four categories: Those who have builders and cabinet makers on staff, builders who contract out their cabinet-making, cabinet-makers who contract out the on-site building works and those who are project managers who contract out all work. We have worked with all categories over the years and all can be satisfactory if they are well organised.

Where there are major building works on site, we tend to prefer the firms who have their own builders. Where carpenters are sub-contracted by the “head premium quality paint sanded between coats….” etc. or “Replace door hinges with 3 pairs of stainless steel bolt hinges and fit an ‘x’ brand stainless steel dead lock, paint front face with….” etc. When faced with a less specific scope of works, a tenderer is likely to price for the minimum amount of work so as to keep his tender price competitive.

The result is that when you note on site that the paintwork is substandard or that the door hinges are rusty you will be charged an “extra” cost to remedy the “fault”. Without evidence of instructions to the contrary, you will likely have to pay this cost or put up with what is built.

The alternative to tendering is to “nominate” a contractor and negotiate a price with him or her. Discuss a budget, time-frame and standard of work you require and invite this contractor to come up with a means of achieving these. In some cases you can negotiate an “ open book” basis for payment whereby the contractor gives you copies of his invoices from suppliers and sub-trades along with summaries of his workers’ timesheets and hourly rates. You then pay this amount, plus the shopfitter’s agreed margin. This is much more transparent and potentially you, receive the benefit of any time or cost saving made.

The downsides are that if costs over-run you will be billed for these (although, as I mentioned above, this is likely in any form of contract). Also there may be less urgency to compete on site, although this may be dictated by the opening date anyway. Another side benefit of the negotiated contract is that building materials can be ordered earlier. Obviously no tenderer will order materials before being awarded a contract. Many products (e.g. floor coverings or light fittings) are sourced overseas and may have up to a 12-week lead-time. Not good if you award the contract two weeks before a four week fit-out period! And remember that accurate tendering will take around two weeks from the time the tenderer receives all the accurate plans and specifications by the time the shopfitter obtains prices from his subcontractor.

A word of warning: unless you are very brave, organised, knowledgeable on contract law and have plenty of time on your hands, don’t try to act as your own shopfitter or “head-contractor”. If anything goes wrong, you will be solely liable for getting it sorted and paying for any costs for contractors standing around waiting for materials, sub-trades or documents to arrive. You will also be liable for insurance and code compliance issues (at the very least) as well. This is potentially very expensive. Similarly, don’t offer to supply materials or services to the shopfitter unless it is something that can be easily added after the main building works are complete. E.g: the till, computer, security system, loose furniture, fitting room curtains etc. This way you won’t be liable for costs or delays if the shopfitter is held up. Don’t get your brother-in-law to do the electrical work, for example. If he turns up a day late then the lining of walls could be delayed, GIB fixers, stoppers, painters, racking installers etc are all affected and it may be days (or even weeks) until they can all get back on site. Your shopfitter’s regular subtrades are one of his greatest assets in getting work done quickly and well. Where possible get the shopfitter to supply as much as he can. Not only will this save you time you could better spend running your retail business, but also make the contractor responsible for it. If you supply, say, the sink bench and it mysteriously develops a big dent, in the ensuing finger pointing you will most likely be hard pressed to find out who did the damage and you will most likely end up paying for it one way or the other!

The contractor will normally put a “margin” on his work – typically between 5-15% but usually more like 7.5-10%. This is cheap insurance for him taking responsibility for ordering, installing, finishing, insuring and protecting these goods or organising these services. In many cases you also get a cost advantage too, for example if the shopfitter gets a 30%-40% discount on timber, for example, and puts 10% back on, you are miles better-off than if you ordered it yourself.

When assessing a shopfitter’s tenders or prices there are also many traps. Find out exactly what is and isn’t included. Typically GST is not included in most quotes (as the retailer will claim it back anyway). It is important to note carefully what is “tagged out “ for example the “cheapest” quote may not include insurance, building permit, producer statements, transport, mall/landlord charges (eg: sprinklers, air-conditioning etc) fees, levies or even the PC sums. Note that if the tenderer makes a genuine adding mistake he can legally modify his price to correct this even if you try to accept the incorrect figure. Check the adding!

By now you have possibly decided to give up all thoughts of a new shop and pursue another line of work! If, however, you seek good advice from your architect or designer, lawyer or perhaps even a quantity surveyor to check pricing, the process can be relatively hassle free. The vast majority of New Zealand shopfitters are honest and competent. Choosing one who has good resources and has been doing this type of work for a while will give you your best chance of the project going smoothly while you, more productively, get on with running your business. contractor” (i.e.: the person you have contracted to build your shop) you may have little control over the on-site work without going back to your main point of contact. The closest we have ever come to missing a store-opening deadline was with a project management firm who were extremely reliant on people not on their payroll and largely selected on the basis of the cheapest price so they were not overly motivated.

Obviously price is very much an issue for these types of firms as they make a living by putting a mark-up on the work of their contractors and suppliers. This means that their price will be (all other things being equal) higher than if your employed the sub-contractor directly or they have somehow negotiated reduced prices on those good and services which may produce some corner cutting. My advice is to find out before employing a shopfitter just what his resources are and be aware of the possible ramifications if “Joe Bloggs Shopfitters Limited” is, in fact, just Joe Bloggs and a mobile phone! Having said that, if they have a track record for producing a great job and on time, the extra costs aren’t necessarily the main criteria.

In finding a shopfitter there are a number of places to start: Ask for recommendations from your designer, the mall, the Retail Interiors Association, look at great designs in magazines, on websites or awards publications or just ask the owner of a shop you admire. Ask to see examples of their work and check with the shop owner that the work was completed to a high standard, on time and to budget. Check particularly whether the contractors were well organised and helpful. When you are speaking to the prospective shopfitter ask who will be on site managing the building site. This person is very often the key to a smooth project. In smaller firms, the foreman may be the boss himself. With larger firms there may be a roving project manager who is in charge of a number of sites. Ask for a programme of works up-front (i.e. with the price) so you can see how the project will run and this will also give you a guide as to the progress during construction. Ask how many builders will be on site and whether out-of-hours works is required or if this will cost extra. In terms of the “price” for your fit-out, let us differentiate between a “quotation” (quote) and an “estimate”. Obviously the former is fixed and the latter is variable. When asked which option they would prefer, most retailers will opt for the fixed quote but – and this is a big “BUT” – there are some snares in obtaining a “fixed” price. First, no price is truly inalterable. Most quotes will incorporate a number of “PC sum’s and “tags”.

While I won’t go into the lengthy definitions of “prime cost sums” or “provisional costs”, these are variable amounts within a quote. Sometimes these are for items where the exact amount of work is unknown until construction has commenced, for example floor preparation. Sometimes sub-trades will not give an exact price at the outset. If your job involves work on an existing building, the number of PC sums is likely to increase dramatically as it is very difficult for the shopfitter to ascertain exactly what is inside a wall, for example, without partially demolishing it.

Most standard building contracts allow a “fixed” quote to be amended to suit cost fluctuations, delays or virtually any hold-up not of the contractor’s making. Often the slightest change by the retailer is blamed for a hefty cost escalation or delay. If you press a contractor for a fixed price, it is likely that he will simply cost for the worst possible scenario and pocket the excess if that scenario fails to materialise. As a result, the retailer’s intention of reducing prices by fixing them often has the opposite effect! It is unrealistic (and unfair) to expect a shopfitter to simply absorb the costs if things go wrong. He will find a way of billing you for these costs and your attempts to stop this will often lead to corner cutting delays and cost increases in other areas as well as the breakdown of goodwill in the project.

It is essential to have a clear understanding, one way or another, of likely costs, payment dates and what is included before starting on site. The other downside of attempting to fix a price is that your designer or yourself (or both) will have to put in considerably more work to obtain an accurate and non-inflated price. Obviously this will cost you more time and money. For example it is insufficient in a tender process (i.e.: obtaining two or more competitive quotations as a means of selecting a contractor) to simply say, “Paint the wall” or “Repair the door”. Instead, the drawings and/or specifications must be quite specific. For example, one coat of GIB sealer, one under-coat and two top coats of ‘x’ brand, ‘y’ colour semi-gloss acrylic premium quality paint sanded between coats….” etc. or “Replace door hinges with 3 pairs of stainless steel bolt hinges and fit an ‘x’ brand stainless steel dead lock, paint front face with….” etc. When faced with a less specific scope of works, a tenderer is likely to price for the minimum amount of work so as to keep his tender price competitive. The result is that when you note on site that the paintwork is substandard or that the door hinges are rusty you will be charged an “extra” cost to remedy the “fault”. Without evidence of instructions to the contrary, you will likely have to pay this cost or put up with what is built.

The alternative to tendering is to “nominate” a contractor and negotiate a price with him or her. Discuss a budget, time-frame and standard of work you require and invite this contractor to come up with a means of achieving these. In some cases you can negotiate an “ open book” basis for payment whereby the contractor gives you copies of his invoices from suppliers and sub-trades along with summaries of his workers’ timesheets and hourly rates. You then pay this amount, plus the shopfitter’s agreed margin. This is much more transparent and potentially you, receive the benefit of any time or cost saving made.

The downsides are that if costs over-run you will be billed for these (although, as I mentioned above, this is likely in any form of contract). Also there may be less urgency to compete on site, although this may be dictated by the opening date anyway. Another side benefit of the negotiated contract is that building materials can be ordered earlier. Obviously no tenderer will order materials before being awarded a contract. Many products (e.g. floor coverings or light fittings) are sourced overseas and may have up to a 12-week lead-time. Not good if you award the contract two weeks before a four weekfit-out period! And remember that accurate tendering will take around two weeks from the time the tenderer receives all the accurate plans and specifications by the time the shopfitter obtains prices from his subcontractor.

A word of warning: unless you are very brave, organised, knowledgeable on contract law and have plenty of time on your hands, don’t try to act as your own shopfitter or “head-contractor”. If anything goes wrong, you will be solely liable for getting it sorted and paying for any costs for contractors standing around waiting for materials, sub-trades or documents to arrive. You will also be liable for insurance and code compliance issues (at the very least) as well. This is potentially very expensive. Similarly, don’t offer to supply materials or services to the shopfitter unless it is something that can be easily added after the main building works are complete. E.g: the till, computer, security system, loose furniture, fitting room curtains etc. This way you won’t be liable for costs or delays if the shopfitter is held up. Don’t get your brother-in-law to do the electrical work, for example. If he turns up a day late then the lining of walls could be delayed, GIB fixers, stoppers, painters, racking installers etc are all affected and it may be days (or even weeks) until they can all get back on site. Your shopfitter’s regular subtrades are one of his greatest assets in getting work done quickly and well.

Where possible get the shopfitter to supply as much as he can. Not only will this save you time you could better spend running your retail business, but also make the contractor responsible for it. If you supply, say, the sink bench and it mysteriously develops a big dent, in the ensuing finger pointing you will most likely be hard pressed to find out who did the damage and you will most likely end up paying for it one way or the other! The contractor will normally put a “margin” on his work – typically between 5-15% but usually more like 7.5-10%. This is cheap insurance for him taking responsibility for ordering, installing, finishing, insuring and protecting these goods or organising these services. In many cases you also get a cost advantage too, for example if the shopfitter gets a 30%-40% discount on timber, for example, and puts 10% back on, you are miles better-off than if you ordered it yourself.

When assessing a shopfitter’s tenders or prices there are also many traps. Find out exactly what is and isn’t included. Typically GST is not included in most quotes (as the retailer will claim it back anyway). It is important to note carefully what is “tagged out “ for example the “cheapest” quote may not include insurance, building permit, producer statements, transport, mall/landlord charges (eg: sprinklers, airconditioning etc) fees, levies or even the PC sums. Note that if the tenderer makes a genuine adding mistake he can legally modify his price to correct this even if you try to accept the incorrect figure. Check the adding!

By now you have possibly decided to give up all thoughts of a new shop and pursue another line of work! If, however, you seek good advice from your architect or designer, lawyer or perhaps even a quantity surveyor to check pricing, the process can be relatively hassle free. The vast majority of New Zealand shopfitters are honest and competent. Choosing one who has good resources and has been doing this type of work for a while will give you your best chance of the project going smoothly while you, more productively, get on with running your business.