Integrity and Accountability Are Central to Barr & Barr’s Business Philosophy
While the volume of work is not up to pre-recession levels, Stephen Killiam says, state-agency work and private work are starting to come back.
Stephen Killian was asked to put the Great Recession and its many — and still-lingering — consequences into perspective, with regard to both his company, New York-based Barr & Barr, which has had a presence in Western Mass. for a decade now, and the construction industry in general.
He paused for a minute and exhaled as if to indicate there would be a lengthy, multi-faceted answer (and there was), before summoning an analogy to a large, powerful, fast-moving storm that leaves damage in its wake. Those in the construction sector, and many others, could see the storm approaching, he told BusinessWest, and did their best to prepare. But few could have predicted just how big a wallop it would pack and how deep the impact would be.
“We’d had multiple discussions about it,” said Killian, Barr and Barr’s COO, of the downturn. “It was too fast and too big, and we started to reduce internal costs. By 2008, when the economy really hit the skids, we lost hundreds of millions of dollars of contracts that were ready to go, but then the owners pulled the plug. But we’d already pared down … so we weathered it.”
Translating that phrase with more detail, he said Barr & Barr saw a 30% drop in volume, or construction in place, over the next 18 months, and experienced a reduction in project backlog from $350 million to $80 million. But the now-85-year-old company hung in, doing more with less and successfully fighting for a limited number of contracts, and emerged from the storm battered, like everyone else, but resilient.
That’s one of the adjectives that have defined Barr & Barr, a construction management (CM) firm that has gained a reputation in recent years as a leading CM at risk, or CMaR, a firm that takes on the risk in a bid number (hence the name) by essentially guaranteeing that price and then partnering with the customer to ensure that the number is hit. Success in that realm, as well as a problem-solving approach and a reputation for innovation, have earned the company an 85% repeat-business rate, one of the many factors that has enabled it to weather a number of downturns.
But while the big storm has passed, the company, and all its competitors, are still dealing with the aftereffects — and there are many.
Indeed, while the economy has improved in some respects, players in the many sectors Barr & Barr serves, including healthcare, higher education, and commercial, remain wary about building in what is still considered an unstable climate. Meanwhile, the competition for available work is growing, and margins are becoming increasingly thin.
“I think the construction industry is coming around, but the amount of construction managers around — even some of the small ones that were doing development and commercial work — is growing,” Killian said. “There are more people getting into the healthcare sector and education, so instead of a normal job having six to eight competitors, you have 14 to 20.”
Bill Aquadro, vice president and senior project manager of Barr and Barr, agreed. “Firms are coming out of the woodwork,” he said, adding that, to win projects, companies are bidding low — sometimes lower than reality dictates they should — and customers are being overwhelmed by those numbers.
In this climate, companies have to stand out and be able to offer more than price, said Aquadro and Killian, noting the CM-at-risk model has helped Barr & Barr, as has an ability to stay at the cutting edge of technology, especially with a process known as building information modeling (BIM), which, as the name suggests, allows contractors and architects to build a computer-generated 3-D model of a project before and during the building process, which saves time — and, therefore, money — by reducing errors and eliminating problems (more on this later).
For this issue and its focus on the construction sector, BusinessWest takes an in-depth look at a company with a deep and diverse portfolio — which includes everything from Rockefeller Center to the latest addition at Cooley Dickinson Hospital in Northampton — and a track record for excellence and partnership building that has enabled it to weather a number of storms throughout its history.
Building on a Legacy
Recognized by Engineering News Record as one of the nation’s top 400 construction companies, Barr & Barr’s New England annual volume during the recession seesawed between $135 million and $190 million, said Killian. Company-wide (in New York, New Jersey, Connecticut, and Massachusetts), the annual volume is finally back over the $300 million mark — with $70 million of that in Western Mass. last year — or what amounts to pre-recession levels.
A look at recent projects undertaken in the Bay State reveals the level of diversity within the company’s portfolio, and its ability to stay busy during difficult times. That list includes the $80 million Bridgewater State University Science and Mathematics Center, the $25 million Greenfield Community College Student Center, the $24 million Creighton Hall at Mount Holyoke College, the $23 million Hanover Theater in Worcester, and the $45 million addition at Cooley Dickinson.
Barr and Barr has earned high praise for its work in healthcare and higher education, including the $80 million Bridgewater State University Science and Mathematics Center.
From the beginning, Killian noted, the company has been a CM firm, meaning it forms a contractual and collaborative effort with the owner and architect that allows them the ability to handle time, cost, and quality management; human resources; and decision making.
Transparency is the key, Aquadro added, because the CM is involved from the start of the design-build process. When an owner or developer contracts with a general contractor (GC), the money for anything that is not in the initial construction document — say, a sewer line — comes from the owner. The no-surprises relationship with a CM is the difference between a job staying on budget and, in Aquadro’s words, “a pile of change orders waiting to happen.”
By the time the construction process begins, everything is vetted out, said Aquadro. “We’re not fighting with the owner or the architects, and subcontractors aren’t fighting with us — we’re just one big happy family,” he explained. “That’s what you try to achieve; that’s the CMaR process — getting everybody on board.”
In recent years, Barr and Barr has gained a quality reputation as a CMaR, which has differentiated Barr & Barr from other CMs and GCs, because it is essentially taking on risk and guaranteeing a bid price. With “skin in the game,” as Killian called it, Barr and Barr becomes partners with the client, the architect, and subcontractors.
“A general contractor is not going to get involved in the pre-construction process or work with the design team like we do,” Aquadro added. “He’s going to bid on it and try his best to work with it, and fight about it at the end. But with us, it’s a collaborative effort from the start.”
Killian has seen more general contractors venture into the CM delivery method over the last six years. This trend is another after-effect of the recession, and it has prompted struggling GCs to venture into markets they’d never been involved in before.
Barr & Barr’s main Northeast competitors — such as Gilbane, Turner Construction, Bond Brothers, and Daniel O’Connell’s Sons — are large, experienced corporations, Killian said, but the process for bidding jobs now, especially for healthcare and state-agency jobs with the Division of Capital Asset Management and Maintenance (DCAMM), has far more entities at the bidding table than ever before, and not all of them are qualified to be there, in his estimation.
This saturation of the market, he went on, is affecting the request-for-qualifications (RFQ) and request-for-proposals (RFP) process, bringing not only more players into the mix, but more challenges for those who will award contracts.
A typical RFQ, which is meant to pre-qualify firms for work, usually results in five qualified firms. At that point, the firms are asked to prepare a full RFP, said Killian, who pointed to an RFQ that Barr & Barr had been short-listed on the day before. “We were one of 14 firms … and, realistically, what agency or what owner wants to go through 14 RFPs?”
The tough part for an experienced group like Barr & Barr is that GCs, or those now calling themselves CM companies, are bidding low, and developers and owners are being swayed more by those bid numbers than they are by a company’s track record.
And often, they’ve lived to regret it, said Killian, adding that, as contractors move out of their comfort zone, there are often consequences in terms of quality and meeting budgets and deadlines.
Other surprises lurk for those CMs, GCs, or subcontractors that have not kept pace with technology, specifically BIM, which is becoming a revolutionizing industry standard for the design/build process, said Killian, one that has been evolving for years.
And while it was first marketed to save 25% in hard construction costs, Killian shook his head as he talked about that number. “That’s unrealistic; what it does do is it saves you time, and time is money, bottom line.”
Through BIM, the architect generates a 3-D rendering of the building that can eventually encompass literally every last nut and bolt, as all players involved in a project add layers to that rendering to create a full-scale virtual replica.
Killian cited, as an example, a 50,000-square-foot floor plate that years ago would have taken three to four months of old-school, back-and-forth coordination to conceptualize — even with 3-D modeling, which was new more than a decade ago. Now, those floors can take shape in a month using the BIM model, said Killian, adding that this process has evolved to such a degree that as steel is being erected, two to three floors are concurrently being built out below, faster than ever before.
BIM 360, the next generation of BIM, allows Killian or Aquadro to stand with the developer in a partially constructed building, mark their location on an iPad, and peel away the wall on the visual image and see what structures and utilities are behind it.
“It’s accelerated the building process in the sense that we’re working with the designers during the development of the construction documents with the BIM model, and once a week or so, our BIM coordinator will work with the designers, mechanical people, and electrical contractors to get the model right where we need it to be, so when we turn it over, some of the steel companies will actually bring that BIM model to fabrication to verify a couple of things,” said Killian.
But the BIM model is only as strong as each user updating their changes, Aquadro said, adding that, if changes are not recorded and the model remains outdated, everyone after that is working with outdated plans, which results in what are known as ‘clashes,’ such as steel beams running through doorways.
During a recent BIM model meeting, more than 1,100 clashes were found and reported to team members; by the time the model went to final construction documents (CD), the clashes were down to six. The input by Barr & Barr over that four- to six-month process saved considerable time and money in future conflicts that could have resulted in multiple work stoppages or lost materials.
“In the past, we would have found a good percentage of those clashes, but not in that time span, and not all of them; that’s perfection,” Killian said. “BIM is not a panacea for the entire project, but it’s such a great tool.”
And by staying on the cutting edge of new developments in BIM, the company is positioning itself to better compete for projects moving forward, he went on, adding that, increasingly, bid specifications are mandating BIM. “And it’s not cheap, so those GCs and subcontractors that want to stay in the game are going to have to make that investment.”
With the cyclical nature of large-scale construction, a good backlog was created in 2011 and 2012, and while 2013 wasn’t as big a year in New England as company leaders would have envisioned, Killian said Barr & Barr is definitely healthy, and the outlook is positive.
“The healthcare reform made some of the hospitals shy away from any major projects, but some are starting to come out now,” he said, noting that one of the jobs in the BIM process now is the Sisters of Providence Health System’s new $15 million expansion of the Sr. Caritas Cancer Center at Mercy Medical Center.
It’s a job that will require talent, technology, and teamwork, he said, adding that these have been the company’s calling cards throughout its history, enabling it to weather all manner of storms — even one as large as the Great Recession.
Elizabeth Taras can be reached at email@example.com