A Lion's Share
Kraft Construction's strategy is easy to say, hard to carry out: Plan ahead. The firm has used long-range planning to grow 40% over the last year, passing $500 million in revenues.
COMMERCIAL REAL ESTATE FOCUS
by Mark Gordon | Managing Editor
Like many executives, the top people at Kraft Construction Co., from President and Chief Executive Officer Fred Pezeshkan on down, plan every hour of every day.
But while scheduling is important, it's not the next appointment that matters to the long-term health of the company. It's what's going on in two or three years that is really important. Planning ahead like that is how a company with $330 million in annual revenue nearly doubles in size in only two years, Pezeshkan says.
The CEO concedes, though, that it also helps to have a top-shelf reputation with contractors, sterling reviews from customers and a diversified business plan that fosters growth.
Any company can project what certain aspects of the commercial real estate market will be doing in 2008 and 2009. Take the medical office building segment: A drive up Interstate 75 in Sarasota and Manatee counties to see all the doctors' offices being built, combined with a glance at Florida's demographic trends, will cement that market as a good one for a construction company.
But planning in excruciating detail is what separates the "men from the boys," Pezeshkan says, especially in a tightening market.
Naples-based Kraft, the largest privately held construction firm in Florida, focuses on four markets: commercial, government, schools and luxury high-rise condos. Projects run the length of the Gulf Coast, from Naples to Tampa, with jobs ranging from $100,000 to more than $100 million. It has about 460 employees, although the number of workers can balloon to 2,000-plus when counting all the contractors and sub-contractors working on various projects, says Jim Clemens, a Kraft vice president in charge of the Sarasota and Tampa regions.
The construction industry was different two decades ago, Pezeshkan says. Back then a firm would spend two months - at the most - researching, bidding and being assigned a project. Then it was time to build. Projects now take up to two years to analyze, plan and prepare for, he says. To succeed, a firm like Kraft must know what the market will look like when the project is being built, usually years after its conception.
In addition to economic trends, the company analyzes the projected prices of materials needed for projects, such as steel, aluminum and copper.
While the company preaches diversification in it projects, education construction has been a growth area for Kraft. Using the oft-cited 1,200 people move to Florida a day stat has a backdrop, Kraft has bid for many education projects over the last few years. And Kraft has even micro-diversified in the education department, working on projects for students of all ages. Recent and future projects include Ave Maria University, a massive project in Immokalee, Collier County; Ida Baker High School in Cape Coral, a $27 million project completed in 2005; and Lamarque Elementary School in North Port, Sarasota County.
Building schools has become more challenging over the last few years, Pezeshkan says. Shrinking state and county budgets squeeze project costs. And as populations grow quickly, Pezeshkan says, "the schools are getting bigger, but need to be built in a shorter period of time."
Pezeshkan says his goal over the next few years is to take a "lion's share of the market" from Marco Island to the Tampa Bay area. Pezeshkan plans to grow the company in the same steady, deliberate way he's been doing since 1968, utilizing long-range planning and continuing to be diverse in the markets he builds in. Clemens says the firm isn't going to bid on every project; it isn't trying to "be everything to everybody."
Kraft Construction Co. successfully used two of its gold-standard strategies when building the biggest elementary school in Sarasota County: First, it planned ahead, and, second, it perfected the team concept, leaning on a bevy of others involved with the project to succeed.
The end result, says Kraft executive Jim Clemens, was a $24 million, 165,000-square-foot school that can a hold a whopping 1,100 students. What's more, Lamarque Elementary School will double as a Sarasota County Emergency Operations Center - a facet of the project not determined until it was about 70% done.
And the entire project was completed in 10 months, a record time for a Kraft school project, Clemens says.
Lamarque Elementary was built in North Port, an up-and-coming city in southern Sarasota County with more students than classrooms. The school is scheduled to open later this month with about 850 students.
The challenge in building the school was two-fold: Build a technologically advanced school in less then a year, as opposed to the normal 18 months, and do it on land with logistical and structural issues.
Clemens says Kraft project managers teamed up with school district officials, architects from Suntree-based architecture firm BRPH Co. and others involved with the project to get creative. They used a system known as tilt-wall construction to build the outside walls of the school. That eliminated the need for masonry work, saving money. It also sped up the exterior building process, so the teams could get to the inside work - the meat-and-potatoes of the project - quicker.
Next, the team had to figure out ways to get about two miles of water, gas and sewer lines into the building, when normally those lines are just outside the front door. They also had to modify roads and intersections, and even build a footbridge over a creek to assist school bus traffic.
And with roughly three months to go in the project, Clemens and company were temporarily thrown off their game when county officials decided the building would be used for emergency operations. That took extra wiring and programming.
Clemens says his team took the extra work in stride. They utilized a hunker-down mentality to get it done. "As we were running 100 miles per hour," he says, "they tossed in some gasoline so we could keep going."