Developing Long-Term Clients: Build, Serve, Repeat
10 months, 4 weeks ago
Construction is the product, but at Carl A. Nelson & Company, the focus of business is customer relationships.
By Craig Neises, Director of Marketing
During 107 years in business, Carl A. Nelson & Company has built thousands of projects.
That history includes wholesale replacement hospitals, additions and renovations to expand or modernize hospital services, medical office buildings, acute care and dental clinics, Community Health Centers, long-term care centers and assisted living communities and more. In each of those projects, the large majority of which were for repeat clients, the product was construction, but the aim was service.
“Our focus is building relationships with our clients so we can help them in their business. It’s not just about building their building. It’s about understanding the ins and outs of their particular business, as best we can,” said Dan Culp, Director of Business Development at CANCO, referring primarily to the company’s work as design-builder and construction manager, but also to general contracting projects.
“We’re looking at their processes,” Culp added. “And we’re looking at their business and trying to help them make the right decisions during the project.”
Clients attest to this approach, and see its value.
“They are a trusted partner who we feel we can continue to
collaborate with to work on our behalf to assure our projects are
successful,” said Robb Gardner, the CEO of Henry County Health Center in
Mount Pleasant, Iowa, and vice president of government affairs for West
Burlington, Iowa-based Great River Health.
Carl A. Nelson & Company was selected in 2011 for a new surgery addition, major remodeling of the hospital’s outpatient services, and construction of a new energy center, and is again working for HCHC, this time on a family practice clinic remodeling. Both projects were in the role of construction management agency.
Larry Mitchell, the recently retired facilities maintenance manager at Jefferson County Health Center in Fairfield, Iowa, where CANCO was construction management agency for a replacement hospital and dialysis center, cited a similar experience.
“We have developed a trust and a good working relationship,” Mitchell said. “This saves cost and assures a product we want in the end.”
The opportunity to provide that depth of service varies depending on the type of job.
Design-build and construction management projects offer the greatest chance to demonstrate commitment to a client’s best interest because of the focus on pre-construction services. In general contracting, a builder’s role is different, and the ability to influence design, cost and schedule is usually limited.
Contractors who seek only hard-bid opportunities are not concerned with the added services that produce best-value results for the owner. Their sole interest is landing the project by providing the lowest price. But that approach isn’t one that creates an environment for building connections with clients to solve their business objectives.
“There are some contractors where relationships aren’t important to them,” Culp said, adding, “they’re not worried about having that client as a repeat client, because they’re just looking for the next hard-bid project.”
At CANCO, though, every project is treated as an opening to develop a long-term client.
“We approach projects differently,” Culp said, “because we want to build that relationship that leads to repeat work, and to a long-term business relationship we believe is beneficial for both the client, the Owner, and us as a contractor.”
While that philosophy applies across project delivery methods, demonstrating its wisdom can be challenging amid a construction market where many decision-makers are looking only at the upfront cost of a project based on a low bid.
The alternative is looking for savings by applying the builders’ expertise to design, budget, and schedule before, during and even after construction. Hiring a construction contractor that is qualified to provide that sort of input contributes to an owner getting the best value for the investment being made.
Culp pointed to one example where Carl A. Nelson & Company project managers were able to save a client significant project cost, as well as operating expense for the life of the project, by encouraging redesign of an unnecessarily costly HVAC system. The change saved more than $100,000 during construction, and about $20,000 annually in operating cost.
“That’s the thing we’re trying to show to our potential clients, is
that it’s not always about the initial cost,” Culp said. “It’s about
what kind of value do I get out of this relationship long-term?”
That approach is especially valuable for organizations that have little or no in-house construction management capability.
“CANCO has made two very large projects feel as painless as they possibly could’ve been,” said Samantha Cannon, CEO of Community Health Centers of Southern Iowa, Inc., citing a clinic expansion and renovation project, and construction of a new behavioral health center. Both were delivered as design-build projects.
“Their team does an exceptional job managing the various elements and contractors involved, identifying and addressing potential issues before they become problematic,” Cannon continued. “The CANCO team really does a tremendous job minimizing the stress and burden of major projects off of our team.”
to market conditions, a challenge to maintaining long-term
relationships with a customer is leadership turnover. Within a period as
short as three or four years, Culp said, leadership changes within
client organizations can sometimes be significant.
New leaders often bring different ideas and different ways of doing
things to an organization, he said. Some new CEOs or managers will
choose to maintain an existing relationship with a builder, but others
may prefer to test the market. Emphasis on cost-cutting works in favor
of testing the market, but isn’t a guaranteed path to the best price, or
even more so, to the best overall project cost or value.
Longevity among CANCO’s project managers and superintendents, many of
whom are employee-owners of the company, provides continuity on the
part of the builder amid client leadership changes. Maintaining a
relationship through change keeps that history intact.
Staying in touch with clients allows CANCO project leaders to learn
if there are any challenges from a previous project or if something new
has come up, which helps support ongoing relationships. It isn’t
uncommon, Culp said, for owners to ask for specific office and field
leadership on a project.
“We try to maintain that contact with them over time so that they
realize that we’re there for them whenever they need us,” Culp said.
Mitchell, from Jefferson County Health Center, said CANCO can be
counted on to support its customers long after the work is done.
“They will still do their best for you,” Mitchell said. “You are not forgotten.”
The mentality that comes from employee-ownership, Culp said, results
in looking at projects as more than just one-time work, but as an
opportunity for the future. That is seen in the “Would I Buy It?”
quality assurance philosophy that gives this newsletter its name, and
the entrepreneurial spirit encouraged among employees to seek out
projects and build relationships.
“They were honest, good news or bad news. They showed good judgment and thoughtfulness through the whole project.”
— Larry Mitchell, facilities maintenance director, Jefferson County Health Center
It is shown, too, in the company’s core values of Fairness and Honesty, Quality Workmanship and Service Second to None.
“The pledge is an accurate depiction of the level of service and quality of work they provide on projects,” HCHC’s Gardner said. “The values of CANCO are apparent by CANCO employees.”
Forging relationships requires trust and confidence in a builder,
plus qualifications, and either referrals or direct project history. A
track record of safety that includes exceeding 1.5 million and 1 million
man-hours without a lost time accident within a nearly 10-year span,
and a corporate focus on job site safety that frequently goes above and
beyond OSHA requirements, contributes to that as well.
Another ingredient is faith.
“As an owner, you have to take a step of faith and say, ‘We believe
this is the best contractor to work with, and we believe that in the
end, we’re going to get the best value from them.’ We see many clients
think that way,” Culp said, “and they use Carl A. Nelson & Company
because they have seen that value.
“But for someone who’s never approached a project that way, it’s a little more difficult.”
On hard-bid projects, an owner typically isn’t able to take full
advantage of CANCO’s pre-construction experience, Culp said. Where that
differs is when an owner has maintained a relationship with the company
over a series of projects, and has come to rely on CANCO’s expertise.
Depending on state law, public healthcare clients may be limited to
seeking the lowest-qualified bidder. Private healthcare clients
frequently use a short-list of previously qualified contractors, or may
negotiate directly with a preferred builder — which accounts for the
bulk of CANCO’s general contracting experience in healthcare. Both types
of owners will, at times, pursue a builder’s pre-construction services,
either in construction management or design-build, for specific
projects. Earning those opportunities, Culp said, comes down to
consistent performance on previous work, and a demonstrated interest in
the owner’s business that goes beyond the profit potential.
In those instances, an owner’s experience in the marketplace actually can work in favor of developing a long-term builder/owner relationship. Dissatisfaction with change orders driving up costs, lack of accountability and not having anyone looking out for the owner’s best interest, Culp said, can lead a client to look for something different in its relationship to builders.
And that’s the key: the desire to make a change.
“It’s very difficult to convince somebody who’s had good experiences
in the hard-bid market that there’s a better way to do this, and there
are general contractors out there where you don’t always have a bad
experience,” Culp said. “But there are better ways to deliver
construction and design for our clients.”
Defining better includes a client-focused project approach, such as
CANCO brings even on lowest-qualified bidder projects. It also includes
choice of delivery method.
Supporting that latter notion is a study by the Construction Industry
Institute, in conjunction with Penn State University, conducted in 1998
and updated in 2018, that showed design-build construction outperformed
construction management at-risk and general contracting on overall
project cost, cost and schedule growth, and speed of project delivery.
The 2018 update showed design-build delivery was the
single-most-important factor in limiting cost growth on projects.
“We felt we had support and very good leadership from CANCO throughout the project. As a result, when another large project arose we worked with them again.”
— Robb Gardner, CEO, Henry County Health Center
For public sector owners, construction management agency delivery offers many of the same advantages.
Referring to the ongoing clinic renovation, HCHC’s Gardner pointed to CANCO’s pre-construction “expertise in identifying value engineering,” and ensuring the project scope, quality and timeframe meet the hospital’s goals.
Showing those benefits, and having a demonstrated track record of success, are important in assuring owners the value of working with a repeatedly with builder.
While developing long-term clients makes good business sense in the construction industry, CANCO clients said it pays dividends for them, too.
“We are a growing organization with ever changing needs,” CHCSI’s Cannon said. “It is incredibly important to us that we maintain an ongoing relationship with our builder.”
“It promotes a sense of trust,” Jefferson County’s Mitchell said, “of looking out for us. That, in return, gets us a better end product.”