Construction, as we all know, is hyper-local. For our Industry Spotlight series, we’ll focus on cities in the U.S. with influential construction sectors, as well as what experts in those key areas are saying about their market and the industry at large. This time, Pam Hummel, Executive VP of Marketing & Industry at Briq sat down with Rich King, CFO of Schlouch- for a quick chat about the state of construction in Pennsylvania and the East Coast. In this article, Rich provides insight into:
Let’s dig in.
The Pennsylvania market + Covid
“Pennsylvania was one of the states that actually shut down. I think it was the Thursday after we got back from ConExpo. And as a management team, we really needed to react very quickly to communicate with our employees and do everything we needed to do. There was just a lot of uncertainty as there was for many other folks across the country as well. As you said, PA was a little bit different because construction was not deemed essential. Pennsylvania had more of a life-sustaining industry (exclusion). So construction initially was not permitted at all.” -RK
“It was definitely very challenging just getting our arms around what all the protocols were, plus things were changing almost day by day. But I really feel like the construction industry was geared up better than many industries to respond to those safety requirements and the health side and make the adjustments. We pretty much approached it the same way we approach safety on a construction work site. We applied those same concepts to COVID. So instead of a fatal five, in our business adding COVID, it became a fatal six. And basically we applied all the same types of tools and controls, avoiding the hazard, engineered controls, et cetera, in order to address COVID and keep our employees safe and healthy.” -RK
Background on Schlouch
“We're well situated here in the Northeast, in the middle Atlantic states, for logistics and distribution. So we are seeing a lot of warehouse activity. We're seeing a lot of medical healthcare, other commercial work, as well as good residential construction here in PA as well. And those are really the primary areas where we do our work.” -RK
“We do everything from the ground down: surveying, heavy earth moving utility installation, blasting, concrete curbing, asphalt paving, erosion, and sedimentation controls. We do everything to get the site ready for its intended use. We work primarily in Eastern Pennsylvania. We have about 75% of our work with a repeat customer base. So we work with a lot of the same types of clients, and we do primarily private work. We also do a lot of commercial work, residential work, as well as some energy, track and turf, and a little bit of public work on road, heavy highway type stuff as well.” - RK
The importance of ELM forecasting (for self-performing site work contractors)
“For us, people and equipment are really the two primary resources that we historically have always focused on in our business since 75 to 80% of our work is self-performed. We certainly have also always focused on our subs and our vendor partners, but that's been a smaller part of the overall focus, just because they're resources that we're coordinating versus more directly managing. Recently, that's been changing. There is a good amount of work, I think, in Pennsylvania and across the country within construction right now. And that's really put a lot more pressure on hiring and the labor market, but because of supply shortages and delays in shipping, it's also put much more of a focus on materials right now, planning and forecasting, as well as subcontractors.” -RK
How to decide which job is right for your company
“One challenge that I would mention is lead time with equipment. In that process of forecasting, the lead times to obtain new equipment have lengthened as well. For example, normally we would kick off our 2022 capital expenditure process or budget at the end of August, beginning of September, and look to have that buttoned up by the end of September, beginning of October, and then begin to execute on that. Because of equipment lead times, we're accelerating that process, moving the kickoff of that to the beginning of July.” -RK
“We take into account, who's the customer, what type of work it is, where's the location, what's the competition, all the types of things that I think you look at during that pre-construction phase to evaluate that funnel. And then at some point, based on a certain confidence level, let's say 80, 90% or greater confidence level that we think we're going to do that work, those resources need to begin making their way onto our schedule and our outlook as part of that forecasting process.” -RK
Best practices for ELM forecasting
“I update our sales projections, and then every two weeks on the following Wednesday, we meet as a team, this being some of the folks from the operations department, as well as our estimating team and a few of us on the financial side. We discuss all the numbers. We review the schedules at that meeting and the resource needs. And then right after that, they roll into some discussions on go or no-go decisions, upcoming sales opportunities. And then every two weeks that cycle repeats.” -RK
“The other thing is we try to include our field coordinators early on in the pre-construction phase, so that when we're doing a bid review there are multiple folks that are familiar with those discussions. Most times the field coordinator who will ultimately run the job, they would be involved early on. If it's a job that is heavily weighted to paving, for example, we'd make sure our paving coordinators are there. So I think we try to include them in that process, as well as this ongoing evaluation of the resource needs and scheduling.” -RK
The Briq team would like to thank Rich King for joining us and for his expert insight.
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