Developing Long-Term Industrial Clients: Build, Serve, Repeat.
2 years, 11 months 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 manufacturing plants, process labs, office buildings, grain storage and seed handling facilities, processing plants for food ingredients and livestock, wastewater treatment and pre-treatment facilities, power houses 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,” 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.
“The familiarity with our operations, our people, and methods makes our projects go significantly more smoothly,” said Michael Regier, capital projects manager for Iowa Corn Processors in Glidden, Iowa, where CANCO is working now as construction manager at-risk for a rail loadout sifting project. Maintaining a relationship with a trusted builder, he said, “is critically important for us.”
Carl A. Nelson & Company also has left a good impression, and been selected for multiple projects, at the Conagra plant in Fort Madison, Iowa (formerly Pinnacle Foods), including a current project to provide design-build services for a hydrostat relocation.
“When you develop a positive working relationship with a familiar company along with trust and knowledge of what they can deliver, each project is so much more efficient since you know what to expect, the processes used and most importantly the people leading and doing the work,” said Bryan Langerud, plant manager for Conagra in Fort Madison.
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.”
“First-class company to work with!”
— Bryan Langerud, plant manager, Conagra, Fort Madison, Iowa
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?”
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.
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.
It is shown, too, in the company’s core values of Fairness and Honesty, Quality Workmanship and Service Second to None.
“The proof is in the details and in the results of our projects,” said ICP’s Regier. “There are numerous instances in which CANCO has been up front with information, reasonable with changes, and quick to respond. I have not had any complaints on these fronts.”
For quality, reliability and trust, Langerud from Conagra agreed, “CANCO is at the top of the list.”
Franck Hille, who worked on projects with Carl A. Nelson & Company for Royal Canin on a pet food production plant, corporate headquarters and regional quality control lab for Royal Canin Canada Company in Ontario, said CANCO project managers went beyond just looking at the construction drawings. He cited their interest in actually learning the production process, as well as the company’s “competent, honest, kind and hard-working” project staff “with an unexpected and unique capacity to learn on the go.”
It was important, he said, to work with a company capable of working with quality while maintaining food safety standards and protecting confidential production processes.
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.
“(CANCO’s) familiarity with our operations, our people, and methods makes our projects go significantly more smoothly.”
— Michael Regier, capitol projects manager, Iowa Corn Processors, Glidden, Iowa
Some clients that are long-time repeat CANCO customers primarily use general contractor construction. Culp said that often is because of corporate requirements, or because the client is large enough to have construction management staff in-house. Those clients frequently use a short-list of previously qualified contractors to seek bids from without using the competitive bid market, or may negotiate directly with a preferred builder. Yet on occasion, hard-bid owners will ask CANCO for pre-construction services on a specific project. 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.
“A very good example of that is a client that we have that tends to bid out all their projects,” Culp said. “We’ve done two, very large design-build projects for that client because they recognize the value of what we bring to that particular project. And even though their corporate structure says, ‘You need to hard bid this,’ they fought against the corporate structure to say, ‘This particular project, we want to do design-build. And we want to do it with Carl A. Nelson.’ ”
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.
“Commitment, management and problem-solving excellence led us to continue the relationship with CANCO without hesitation for a second line.”
— Franck Hille, Royal Canin Canada Company engineer for CANCO’s $49 million pet food production plant, office and lab project in Guelph, Ontario
Showing those benefits, and having a demonstrated track record of success, are important in assuring owners the value of working with repeatedly with a builder.
Langerud experienced it during construction of a 14,500 square foot plant addition and installation of complex equipment at Conagra that was crucial to a significant increase in production.
“During that first project, we were extremely impressed with their management of the project as well as continuous updates on progress,” he said. “They brought the project home within budget and ahead of expected timing.”
While developing long-term clients makes good business sense in the construction industry, CANCO clients said it pays dividends for them, too.
“Case in point, in our current project,” Regier at Iowa Corn Processors said, “CANCO was involved in helping develop a project budget, and as we are nearing the end of the project, we are within 1% of that budget.”
Hille, meanwhile, citing work by Carl A. Nelson & Company on Royal Canin projects across North America, said he believes “it was the best choice we made when once we contracted CANCO for the first time.”