C. Terry Brannon, P.E.
There’s nothing like a bad economy to make a pool contractor rethink his career choices. Let’s face it, swimming pools are what economists term “discretionary spending items,” meaning that many homeowners will defer a new pool or spa in uncertain times.
That said, the commercial pool market has shown steady increases over the last couple years and, for the right contractor, can prove to be a good alternative to residential construction.
Making the switch to commercial pool building is a challenge for an educated contractor and a disaster to those who would go blindly into a new market. Certainly, commercial pool building can be attractive. The projects are often larger in scale and, therefore, the potential profits are higher. Notice the word “potential.” Not everyone wins. Be forewarned.
Why is it so difficult to go from residential to commercial pool building? After all, “it’s just the same, only bigger,” right? Wrong. Let’s look at a few key areas that often cause problems.
Codes
Due to a higher bather load, commercial pools are subject to different health and safety codes than their residential counterparts. To that end, builders must abide by state and local health codes. The model pool code by the Center for Disease Control and Prevention, which forms the basis for some local codes, is more than 660 pages. State codes will generally fill 50 or 60 pages at least!
Federal requirements such as the Virginia Graeme Baker Act of 2007, which mandates certain safeguards for preventing entrapment, and the Americans with Disabilities Act, with its measures for guaranteeing access, do not apply to residential pools (yet), but they do to most commercial pools built in the United States.
Equipment
To say commercial construction is the same as residential, only bigger, is tantamount to saying driving a big rig is the same as driving a Prius. The pipe is bigger for one thing. A 2-inch PVC bend costs about $3.85. An 8-inch bend costs approximately $205.47.
The filters are different. Commercial models are beefier than residential ones and consequently are more difficult to handle and install. They have deeper sand beds and heavier collector pipes. These commercial filters have automatic and semi-automatic backwash options. Some can be stacked. A single commercial filter can equate to six or more residential filters. Time and again we see residential pool contractors attempt to match commercial pool filters with multiple tank/multiple pump installations which, for reasons of dependability, efficiency, hydraulics, space utilization and a host of other factors, cannot match the performance of the commercial products.
Chemical monitoring and control
Even though the residential market has seen a recent surge in chemical automation, commercial pools have a head start by at least a couple decades. Simple erosion feeders and hand feeding of muriatic acid cannot work in commercial environments, and larger installations now have monitoring loops with sensing probes and proportional feed for all disinfection and pH control. Some units have IP addresses that can be reached from all over the world by Internet. Monitors can cost upwards of $5,500 for a single body of water.
Ultraviolet light disinfection of commercial pools has been around since the 1980s. Like other commercial equipment, the UV disinfection systems are costly. A typical installation for a competition pool might run $40,000. Be aware that many residential UV units will not meet health department standards in most states.
Exposure
The nature of the commercial market means that any contractor building a pool will see significantly more financial exposure. Here are a few examples.
Project financing. The projects are bigger with larger budgets. The carrying costs for a project can be enormous, and you may be required to finance huge sums without payment for several months. Payments may be delayed for a variety of reasons and for very long periods of time if they are made at all.
Role as subcontractor. While residential pool builders are largely independent contractors who have control of the entire project, the commercial pool contractor is inevitably a subcontractor, possibly several tiers removed from the general contractor or owner. As such, instructions filter down slowly, and decision-making can come to a standstill. Owner objections to the work of any other contractor higher up the food chain may result in project collapse. And if construction is delayed for any reason, those above you will not hesitate to throw you under the bus to take the blame.
Bonding. Many commercial projects require bonding. This coverage is difficult to obtain for new contractors, and premiums can be double that of your competitors with a bonding history behind them.
Contractor’s insurance. The limits are higher for commercial work and, consequently, so are premiums. You may be called upon to tack on additional insured under your policy or add coverage like builder’s risk or completed operations.
Contracts and lawyers. The stakes are higher and consequently the contract you sign will be more lengthy and thorough. You can count on efforts to transfer liability to you. You may be required to sign indemnification clauses to relieve everyone but you of liability.
Low bid. Unfortunately, most commercial pool contracts are still awarded solely on the bid. A reputation for honest dealing and exceptional quality isn’t valued in the commercial market. It should be, but it isn’t, and it will not help when an award is based on price only.
Engineers. Commercial projects, whether employing the conventional design-bid-build or design/build methods, will have to be designed by a licensed engineer. The only difference in these two delivery methods is that, in the former, you work to plans and specifications by someone else’s engineer; in the latter, the engineer works for you. In design/build projects, prepare to fork over professional fees.
Recommendations
Here are suggestions for making the transition from residential to commercial as painless as possible:
1) Hire a good lawyer to review your contracts.
2) Make friends with a good engineer, preferably one familiar with pools.
3) Proceed slowly from residential projects into apartments and condos, and work your way up. Don’t start with 50-meter competition pools with diving wells.
4) Hire experienced counselors and labor.
Commercial pool building can be enormously profitable, rewarding and an excellent option for growing your company. However, go into this new line of work with eyes wide open.
