Developing Long-Term Clients: Build, Serve, Repeat

Developing Long-Term Clients: Build, Serve, Repeat Gov. Kim Reynolds, center, joins leaders of the Community Health Centers of Southern Iowa, other elected officials from south-central Iowa, and project team members from Carl A. Nelson & Company in December 2019 for a ribbon cutting to open the new CHCSI Behavioral Access Center in Osceola, Iowa. (CANCO photo)

Construction is the product, but at Carl A. Nelson & Company, the focus of business is customer relationships.

By Craig Neises, Director of Marketing
cneises@carlanelsonco.com

Community Health Centers of Southern Iowa, Leon, Iowa
The Community Health Centers of Southern Iowa, Inc., first selected Carl A. Nelson & Company to remodel and expand its clinic and office building in Leon, Iowa. (photo provided by CMBA Architects)

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.

“CANCO has exceeded our expectations every time we have utilized their services. They are incredibly responsive to our needs and concerns. It was an easy decision to use them for our second project (and any future projects).”
— Samantha Cannon, CEO, Community Health Centers of Southern Iowa, Inc.

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.

Jefferson County Health Center, Fairfield, Iowa
Carl A. Nelson & Company was the construction management agency on the construction of a replacement hospital for Jefferson County Health Center in Fairfield, Iowa. (photo by Steve Henke)

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.”

In addition 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.”

Recovery Unit, Henry County Health Center
A new recovery unit at Henry County Health Center in Mount Pleasant, Iowa, where Carl A. Nelson & Company was construction management agency. (photo provided by INVISION)

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.”