PM Bob Poch Talks Design/Build Projects, Working as a General Contractor, WiLL 3.0

Background & Education

Adam: So how'd you get into the
construction business? Have you always been in construction?

Bob: No, I haven't. Kind of fell into
it a little bit by happenstance. Went to college after graduating from WLA.

Adam: What'd you study?

Bob: A broad-area engineering degree,
which most people really haven't heard of. It's a degree at River Falls.

Adam: Was it construction-level
engineering, or product engineering, or just kind of an overview?

Bob: It was an overview of all the
engineering disciplines. What I kind of got excited about was environmental
initially, and then that led to mechanical, structural, and those kinds of
disciplines in engineering. I kind of gravitated towards environmental, so I
had an emphasis in environmental. And then I kind of liked the structural end
of things too, so I also did an emphasis in structural. Stayed an extra half a
semester to get my degree in that. Unfortunately, when I came out of school in
the mid-90s, the construction economy wasn't the best. It was okay. My first
opportunity was actually an environmental engineering job, and I kind of
learned quickly that I didn't know if I wanted to do that — could handle that
responsibility at 22 years old. My first job offer was being a county agent.

Adam: What is environmental
engineering?

Bob: It could mean a lot of different
things — soil contamination, whether it's oil, or dealing with farms that have
runoff issues, manure, or nitrate pollution, things like that.

Adam: We were just talking about a
soil project on site. Excavating and soil and that part of the ecosystem of a
building project — that's one of the more challenging aspects of it.

Bob: Certainly. It's hard to know
what's underneath the table until you really open it up. And that's where you
rely on your geotechnical engineers, soil engineers, that can evaluate your
options if you ever run into unsuitable soils. Unfortunately, in development we
run into it quite often. It's not a lot of fun to deal with — dealing with the
cost — but it's almost a necessary evil. You're building to hold up long-term.

What Keller Builders Does

Adam: So what does Keller do
specifically within general contracting? Do you guys specialize in certain
types of buildings and certain types of projects? I know one of the reasons we
ended up going with you guys for our project was you had a focus and a specialty.
How would you define that for people?

Bob: Looking at it from a 30,000-foot
view, we're what you call a design-builder. So you have architects on staff,
interior designers on staff, and then project managers, superintendents, and
all the field trades that you need for all the general construction trades. As
far as specialty work, we do a lot of industrial buildings. Industrial is very
hot — something we've done probably more of than anything. Dental is another
one we do a lot of — a lot of dental clinics, eye care, veterinary. Gas
stations, office buildings, retail. So just about everything across the board.
And right now the markets are pretty hot across the board. Retail is a little
soft, but we are seeing a lot of older buildings, like the Shopko building we
just did in town, putting a Big Lots and Hobby Lobby in.

Bob: We actually have quite a few
projects going on. We're doing the exact same thing over in Sheboygan for the
same developer that bought the one here in town and bought the one over there.
And next on the dock is West Bend and Stevens Point. So pretty interesting when
you get in — those second-generation buildings, we call them. Originally built
for a purpose, now you get to repurpose them.

Adam: Do you run into a lot of zoning
issues? I know in certain smaller cities, rezoning is easier. We actually
loosely looked at a couple of those — there was Shopko, Home Depot, Best Buy,
there were a few retail buildings. Not really knowing anything about the
construction process, it's like, what do you mean you can't buy a building and
repurpose it? How often do you run into those issues in this area?

Bob: When you have a change of use —
if it's retail and it's going to stay retail, there isn't an issue. But if
you're going to take it from retail and go to manufacturing, depending upon
where it's located, a lot of municipalities — it just doesn't fall into their
overall comprehensive zoning plan. But we have done it before. We actually took
the Home Depot in Beaver Dam and converted it into a manufacturing building — I
believe Naval Engineering owns it now. So it can happen, depending upon
location. We try to work through it as best we can. You get your local people
involved — like Envision Fond du Lac helped you guys quite a bit to get your
project off the ground.

Adam: That's who connected us
originally was Envision. That's right.

Delivery Methods: Design-Build, Architect-Bid-Build & CM

Adam: You mentioned design-build
construction. What are the other types of construction delivery methods?

Bob: There's three that are most
common and available to owners like yourselves. One is architect-bid-build,
which is something we don't do a lot of. Most of our projects are on the
design-build basis, which is yours — we like to have our architects and designers
in-house. The architect-bid-build option is independent architect, independent
builder, and then the owner hires both of those separate entities on separate
contracts. Whereas design-build — it's one contract for design and
construction.

Bob: And then the third one is
construction management, which we actually do a fair amount of, and that
division within our company is getting a little bit bigger. We use it mostly
for municipal work where projects have to be publicly bid. So we're acting as the
architect and engineer and construction manager, meaning we don't self-perform
anything — we sub all the work out. Every division of work is publicly bid.
Schools — we use construction management a lot. That's pretty common in the
school arena using that type of delivery, because there's a lot of value that
your contractor, your general contractor or construction manager, can bring to
the table through the design phase and value engineering. Helping the architect
bring a project in on budget — what materials to use that are cost-effective at
the time. Because last year was like, okay, everybody switched to steel when
wood was going up, then wood went up and we switched back to steel, and it goes
back and forth. Having that contractor knowing what the material costs are
really helps drive the design and try to make it as cost-effective as you can.
In this day and age, that's obviously a tough challenge.

Self-Performing Work

Adam: When you guys are doing
design-build and self-performing work, what types of construction are you
doing? I know across the street right now we see guys with the Keller uniforms
on. Is it concrete work, excavating — what part of the project are you guys performing?

Bob: Over there right now, we've got
our excavator digging foundations for us. Then our footing crews are following
behind them, and then our wall crews will follow behind the footing crew. So
that's really what's happening right now. We have specialized crews. We have
footing crews that all they do is footings, so they're done doing footings
here, they're going to go to the next job. The wall crews are going to finish
up and then go to the next job. And then we've got flatwork crews that all they
do is flatwork.

Adam: It's fascinating to see the
process and be a part of it. We're used to designing small things — controllers
inside of lights, lighting products, larger lighting towers. Right now we're
designing a 100-foot light tower for the military. But just to see a project
like this come together and see that design process — that's in part our
industry. We work with contractors and distributors and people that support
these types of projects all the time, but we're pretty far removed. It's
interesting to see the similarities, the differences, and the importance of the
schedule. One thing that you guys do a great job of is that planning and
execution phase. A lot of the projects we work on from a lighting standpoint
that are more discretionary — they're not planned — and there can be a lot of
schedule chaos once things kick in.

The Project Manager Role

Adam: As far as the project management
role, we were talking before we started — project manager can mean a lot of
things in different industries. When we first met, I thought you were part of
the sales team. You're on the very leading edge of the customer relationship,
but also managing the process, managing some of the design, helping the owner
envision the building. Within design-build construction, how do you define a
project manager? What does that role look like?

Bob: For us as a design-builder, it
might be a little different than a contractor that doesn't do in-house design.
There's really three skill sets — maybe you can water it down to two. There's
definitely the business development side of things. Our business is very
relationship-driven. Our project managers are out there living and working in
their communities, being involved, and hopefully building those relationships
that maybe create some opportunities for businesses looking to build or expand.
But also give back to their community. That maybe also could be considered
sales — that's kind of the second skill set. Being able to deal with people and
contracts, and doing what you say you're going to do, and making sure you can
deliver on the promises that you give. And then the third one is really the
project management side of things — physically doing the construction work,
scoping a project out, getting prices and estimates put together, conveying the
information to subcontractors and suppliers, obviously giving that to the owner
so they can see a complete package. And then, once the contract is executed,
being able to bring the team together — all the subcontractors, suppliers, and
all the internal people within your organization, like Joe, our supervisor,
running this job, and all the foremen. Basically, you're an orchestrator.
You're keeping everybody on track and making sure you're communicating so that
there isn't something left — there's always stuff that comes up.

Adam: I would compress the first two
into one, just from being a customer of Keller. You have the business
development side, you have the project management side. But I would say also
the technical and construction knowledge. It'd be really difficult for somebody,
based on what I've seen, to walk in with purely a project management degree and
say, okay, go get into commercial and industrial construction. You're not
necessarily understanding the nuances of structural design and engineering, but
just generally speaking, if it's going to work, being reasonable with customer
budgets without having to go through the nuances of putting together an exact
plan right away. Do you find it getting more difficult over time to train
people on that? If we have the sales side, the project management side, and the
construction knowledge, what's the most difficult to bring somebody up to speed
on?

Bob: They both can be equally
challenging. When you're asking someone to have that sales/business development
skill set, and then someone to have that detailed project management skill set,
you're almost looking for a needle in a haystack, because those people are far
and few between. If you look at the psychology out there in sales and in
general, you usually fall on one side or the other. If you're a people person,
you tend not to see the same person who's detail-oriented. So to find someone
that can do both, you're really a chameleon. That's what makes it so tough in
what we do, because we need that type of person. And to have a cross-section of
contracting knowledge — it's not just electrical, it's not just civil, it's not
just a specific sub-discipline. You really have to know a little bit about a
lot of things. And that does come just with experience and time. We've had,
believe it or not, bankers become project managers at Keller and been very
successful. Somebody that worked at a landscape company, who's actually our
president and CEO now. He went from selling landscaping to being president and
CEO of a $200 million company.

Subcontractor Relationships

Adam: You have to have the Rolodex of
subcontracting relationships, too. That was another interesting observation —
you have certain people you like to work with on a routine basis. For us, we
had a couple subs that we wanted to be part of the bid process. It's managing
the customer relationships, but really also managing the vendor relationships.

Bob: Absolutely. If there's already a
relationship there — mechanically, electrically, or whatever it is — we
certainly want to take advantage of that opportunity. We always like to broaden
our horizons, too. A lot of times, that's how we get into relationships with
new subs — through the owners that say, hey, this guy does a really good job.
You do a project with them, and I can think of a handful over my 26-year career
that have really worked out well. And probably some that haven't. They start
off well and then things change over time. We try to give people a second
chance to redeem themselves, but sometimes certain businesses aren't always a
good fit. You just have to figure out where they lie.

Key Terms: Owner, Architect & Discovery

Adam: Let's define some terms. I
remember when I first got into the lighting business and heard people refer to
the “owner” — I had no idea what that meant. But the owner is essentially the
end user of the project that's funding the project, sponsoring the project.
When people say owner, it's the person writing the check.

Bob: Yep.

Adam: Regardless of the three paths
the construction process takes, for most legitimate applications there's going
to be an architect involved. What's the architect's role in the project?

Bob: In general, the architect is the
one that has the creativity, does the space planning, and tries to understand
what the owner's needs are. Which, you know, you went through that needs
assessment with Tony. I think it was three, four, five hours — might have been
a couple series of meetings, really trying to ask good questions. We go into a
lot of businesses — we can't claim to know everything. So we've got to take a
lot of what's inside your brain and transfer that to Tony.

Adam: That can be difficult.

Bob: That really helps them come up
with a good design. We call that today — we're using the term “discovery.” It's
kind of a catchphrase today. Essentially, it's an initial meeting and process
to extract the intel out of the owners. I used to refer to it as a space needs
assessment for many years, and now the word “discovery” has kind of come out.
New word for the new age.

Engineering: Civil, Structural & MEP

Adam: So the architect tries to
understand the goals of the owner's project. Architects are obviously pretty
technical, they understand codes, they understand the local nuances of certain
geographies. When does engineering kick in? Is it after the initial master plan
set is put together? What does that look like after the discovery phase? When
do you guys get your engineering team or your outside engineers involved?

Bob: Good question. Once the architect
has a plan — all the spaces, building footprint, site plan pretty well set, not
changing anymore, owner's happy with it — then you get the civil engineer
involved and a structural engineer involved. The civil engineer does the site
design — erosion control plans, grading, drainage, storm water management. A
lot of times, a full-service civil will take care of your landscaping and your
photometrics, your exterior lighting plans, that you guys are very familiar
with. That's their role. We don't do civil in-house, so that's something that
we work with local firms on doing. Excel Engineering did a very nice job for
you. They take care of that end of it and do a nice submittal package to the
local municipality and the DNR for getting all the permits. We support them
through that process.

Bob: That takes care of the civil end
of things, the site-related items. Then you get into the structural
engineering, which is the skeleton. How big is the foundation going to be? How
big is the footing going to be? How much rebar? Size of rebar, placement of
rebar, slab reinforcement. And then the structural components of the actual
building itself, for dealing with wind and snow and all those kinds of things
to make sure the building doesn't fall down and meets the codes.

Adam: No snow in this area, right?

Bob: Sure do. Hopefully not anymore
this year.

Adam: So we've got civil, structural.
For mechanical and electrical — are you guys typically relying on engineers to
lay that out, or is it the electricians or contractors that are in charge of
that? Who does the electrical? Who does the mechanical side of it?

Bob: In design-build, we rely on our
trades. Our electrical contractor does the electrical design. HVAC contractor
does HVAC/mechanical design. Same thing with plumbing and fire protection —
they're all responsible for doing their own design to make sure they meet the
design intent. We give them a plan and write up a scope guideline saying, here
are the expectations of the owner. Like HVAC-related — here's the temperature
requirements, here are the types of systems we were thinking that would be
suitable, and give them parameters on the level of efficiencies we're looking
for, whether it's a 90% unit or 92%. They can put a price together based on
those parameters, and then ultimately they're responsible for the system
functioning properly. So if the HVAC system doesn't work, you have one guy to
go to because he designed it and installed it. That's one of the advantages of
the design-build, especially on the MEP side. There's a level of
accountability.

Adam: They call that “one throat to
choke.”

Bob: One throat to choke. Yeah, I've
had many contractors tell me, you were my throat to choke on this job when it
comes to the lighting.

Interior Process Systems

Adam: One of the really interesting
things I learned about this is, you also have contractors and suppliers for the
internal systems. If you guys are in charge of putting a powder coat line in,
or if there's some type of process engineering — it's not only the structure of
the building, the mechanics of the building, but there's other things that
could be in the interior. How often, when you guys build industrial facilities,
do you get in that far?

Bob: Like the powder coating line
example — one of our good customers, TTX, up in Sturgeon Bay, is I believe the
one that did BCI Burke's. So TTX is a customer of ours, but we rely on them or
a different paint line or powder coating manufacturer that's brought to the
table. There has to be a lot of dialogue. We just finished a large project for
MB Companies up in Chilton — they did a very sophisticated paint line/powder
coating system. So there has to be a lot of dialogue. The owner has a preferred
vendor for that. We work directly with them. They give us all their
requirements — a lot of times there's special foundations that need to go
underneath, ventilation ducts that might be under a downdraft booth, special
drains for washing down prior to painting parts, drying, a lot of ventilation
for the ovens and things like that. So yeah, they're very important to the
process. And if an owner doesn't have one, like in your case, you had a couple
maybe that you were dealing with, and we said, well, here's maybe a few others
that you want to consider that have done work in the area.

Adam: That's been a great part of the
process — just expanding our own network through other clients of yours that
are in different industries, that we're not competing against, but are in
similar types of manufacturing. Understanding what they do well, what we do
well. That's definitely been a benefit of the process.

Pre-Engineered Steel vs. Precast Concrete

Adam: We didn't look at too many
different construction options for metal building versus non-metal building,
but you and I had a conversation a few months back. Is it prefab, or there are
other types of materials that are now becoming more competitive with steel?
What are you guys seeing in the market right now for different ways to
construct the actual building, and where are costs compared to a couple years
ago?

Bob: As everybody knows, prices of
steel have gone up significantly over the last 18 to 24 months. Concrete hasn't
really changed all that much. So precast concrete buildings or tilt-up concrete
buildings — that difference isn't that great anymore. We're finding ourselves
giving owners options to do those kinds of buildings versus just pre-engineered
steel. We've done a number of precast buildings throughout Keller's years, but
now they're starting to become more and more popular.

Adam: A precast is just a concrete
section or concrete wall that takes care of the structure, the insulation,
pretty much everything? Concrete with rebar going through it, essentially?

Bob: Yeah. It's a layer of concrete on
the outside, a layer of concrete on the inside, with insulation sandwiched
between it. So from an energy efficiency standpoint, the precast is a really
nice solution because it's a continuous insulation envelope. With pre-engineered,
you don't always get every single square inch of that exterior insulated to its
fullest extent. So precast buildings are very efficient. Unfortunately, lead
times aren't always that friendly with precast. But right now, lead times for
precast and pre-engineered steel are about the same.

Adam: Do they cast it in standardized
dimensions, or is it done per the spec?

Bob: There's different — usually like
a six-foot or eight-foot panel. Sometimes you can get them 10 or 12. Depends —
a lot of times windows and door spacings and docks drive what the panel sizes
should be. Up in Valders — Spancrete — that's one of the companies that makes a
lot of the precast in this area. And then there's a couple companies in the
southern market, one up in Minneapolis. Those are kind of the four that provide
that to this industry.

Bob: And the other construction
material is — instead of being a pre-engineered metal building, which we do a
lot of, we also do a lot of what's called conventional steel construction,
which is essentially an engineer has to design every column, every beam. And
then you rely on bar joist suppliers that provide bar joists, which are the
members that carry the roof.

Adam: Within pre-engineered, it is
made to the site specifically, but there are standards for I-beams and tubes.
They're not making every single component of the building custom for the site —
or are they?

Bob: If it's pre-engineered, it's
still customizable because you can order whatever you want. But if you put in
the wrong parameters, it'll cost you a lot more. So you've got to know what's
an economical size. You don't want to be too long or too short and be outside
of a standardized length. Bay spacings really drive the cost — is it 25 feet on
center, 27 and a half, 30? There's some sweet spots that help with the
efficiencies.

The Trades & Workforce Challenges

Adam: One of the topics I wanted to
close on is just trades and some of the challenges. I've read things — I talked
to Jason Zellner about this too — but for every five people retiring in the
trades, there are only two people replacing them. What is Keller doing to
offset some of that? What do you see the area in general doing? Wisconsin, when
it comes to engineering, manufacturing, construction, the trades, on a relative
basis, I think we do a great job. But there are other states and areas that
have even greater challenges. What do you see happening at Keller, and what do
you see other people doing to help combat some of that?

Bob: I think there's some progress
being made. I think the biggest shift in the last three to four years is how
much college costs. That was always the thing — it was drilled into your head,
you've got to go to college. So I think that trend has changed. Wages have
really gone up, not only — in the field, you can make some very good money
being an electrician, plumber, steel erector, concrete worker. It's tough work,
there are long hours, sometimes the jobs aren't always 20 minutes from home,
and you may have some aches and pains when you're in your 30s, 40s, and 50s.
But that's the beauty of it — progressing. You become an office employee. We've
had one project manager that worked in the field for 20 years and came in as
one of my best project managers, because he has that field experience. He sees
things that I don't see. I spent six months in the field, so I didn't spend
enough time there. Maybe my learning curve would have been shortened.

Bob: The biggest thing is really
getting into high schools right now. That seems to be the hot thing — and
apprenticeships. WLA has it, Fondy High has it. I don't know about St. Mary
Springs, but most area schools — Campbellsport and around the area — have all
those construction trades classes to try to at least expose kids to the trades.
Hopefully get them interested. Hiring them on as summer help — it's a little
bit tough. We really can't put people under 18 in the field, at least in our
business, just for liability reasons. But we can put them in the office, and
they can at least see it and be exposed to it, shadow some project managers,
try to get a flavor for what goes on on a job site on a daily basis. So that's
probably been the best. We've created some pretty good relationships with
different school districts to get in and talk to them, give a little background
on Keller and the trades.

ESOP & Employee Ownership

Bob: And one thing that's been good
for Keller is, we're an ESOP — employee-owned. That really helps with
recruitment and retention. I can't imagine not having that — how hard it would
be, because it's hard even with that. People have a vested interest in sticking
around. Instead of the one guy in the corner, one owner getting the check at
the end of the day, it's split amongst the employees. That's a really nice
added benefit for retirement. It's a pension that is really special, and it
motivates people as well. They want to do a good job. They really need to act
like owners. It is really their money — if you make a mistake, you're costing
the company money and yourself.

Adam: And to know that there's
promotional opportunities where, if you do well over time, you might not get
stuck in the field when you're 50 and 60 years old. A lot of people in the
trades are making rational decisions to not necessarily want to get in there long-term.
But if you have options where you can tell high school kids or people that
didn't go to college, you're going to become a master in the field, and then
over time, when it comes to learning the project management role or learning
other roles, build the network, learn the project management process. When it
comes to the technical side, they've seen a thousand subcontractors, they've
seen a thousand different job sites. That hiring pipeline, promoting from
within, seems to be a great way to do it.

Bob: Absolutely. That's exactly what
we've done. We've had field people think, hey, maybe I should get an office
job, come in the office, and then maybe the office isn't what it was meant to
be — then they go back out to the field again. We've seen that happen too. They
say the grass is always greener.

Wrap-Up

Adam: Well, it's great. You guys have
done a great job on our project. We're excited. Still blows me away how fast
it's projected to get done. But the planning stages and all the front-end work
that goes into it, so that when it's go time, you can stay moving. We try and
do the same thing on a much smaller scale when we're manufacturing product —
get the planning, get the supply out of the way, so when we have a large
project, once the guys start building it, you really don't want to have to
stop.

Bob: That's the biggest thing —
especially with the supply chain interruption right now. Really educating our
customers that it does no good to rush and start and then wait for materials to
show up. So the schedule is really built off of when the materials are
available to be delivered. We really try to do our due diligence, find out what
those dates are, and then we build a schedule around that. So it's very
systematic. Everything flows just the way you want it to be efficient.

Adam: It's manufacturing on site.

Bob: Exactly. It really is.

Adam: Well, Bob, thank you very much
for stopping by, and thanks for all you're doing on our project.

Bob: You're welcome. My pleasure.