Construction industry execs reflect on year of full workloads, high costs, curveballs COURTESY PHOTO

Construction industry execs reflect on year of full workloads, high costs, curveballs

BY Sunday, December 05, 2021 05:15pm

High demand for new projects has 2021 shaping up to be a banner year for many West Michigan construction firms, even as executives grapple with higher costs and longer lead times.

Those were among the year-end reflections from West Michigan construction and design industry executives, who said they’ve been busier than ever even as the typical project planning and execution process has faced major disruptions.
Despite navigating through uncharted waters for the industry and the ongoing pandemic-related stressors, executives who spoke with MiBiz remain bullish, citing full project pipelines and backlogs stretching well into the future. 

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In separate interviews, MiBiz spoke with the following executives to get their take on the local market: 

  • Pat Cebelak, president of Triangle Associates Inc.: The focus for Walker-based Triangle Associates this past year and going into 2022 is building on its core markets in West Michigan, including K-12, higher education, health care and commercial retail. Cebelak said the company is committed to building up the communities with projects in West Michigan. 
  • Brad Laackman, president and CEO of Honor Construction Inc.: The backlog for Grand Rapids-based Honor Construction is “probably double” what it was in 2019. The company has been ramping up projects throughout 2021, and Laackman sees a promising future for Honor Construction for the next couple years with growth in the multifamily and technical office space.
  • Brad Thomas, president and CEO of Progressive AE Inc.: Over the past year, Progressive AE Inc. has tried to evaluate how each of the sectors it serves has been going through industry-specific changes so the company can best serve its clients on ongoing projects. According to Thomas, that’s meant in part helping clients reconfigure their physical spaces to adapt to the hybrid work model that many companies, including Plainfield Township-based Progressive AE, have been adopting at their corporate offices.
  •  Zachary Verhulst, founder and managing principal of PURE Architects: After founding PURE Architects in August 2020, Verhulst was named the 2019 Young Architect of the Year by the Grand Rapids chapter of the American Institute of Architects. The new Grand Rapids-based firm is finding its footing as it seeks to embrace remote working and take on additional projects and clients, Verhulst said.
  • Amanda Webb, vice president of operations at Catalyst Partners: Grand Rapids-based Catalyst Partners specializes in providing third-party certifications such as LEED, WELL and Living Building Challenge. Webb told MiBiz that the COVID-19 pandemic has Catalyst focused on how to optimize projects and improve the airflow inside of buildings. 

Here are some highlights from the conversations. 

What were some of the biggest challenges your firm faced in 2021?

Cebelak: As the economy has really taken off and work has gotten back on track from the pandemic, everybody is hiring and that creates a competition for talent and in some ways a limited pool of talent. We had to worry about COVID exposure within our employee base and also our subcontractors, and all of that affecting our ability to perform on jobs. We had to be very nimble and fluid with staffing, scheduling and contingency plans, all under the umbrella of being safe within the guidelines of the state and CDC. 

On top of that, we experienced several different cost estimations, pricing issues and supply chain availability issues. It started out with lumber, steel, roofing materials and ultimately then even simple things like drywall. All those different commodities we consume in the construction business became wildly fluctuating and their availability at times really became challenging.

Laackman: The challenges were there was so much work that was coming off the shelves. In 2020, projects didn’t go away, they just got shelved. 2021 was a restart, and there was this rough kind of starting the engine over again and adhering to fluctuation and material pricing. In early 2021, there was also a lack of good labor support and banks were a little more conservative and overwhelmed coming out of 2020. There were a lot of different things we were dealing with. 

Thomas: Adapting to the new normal was a challenge, and what I mean by that is finding how we integrate office and remote work and the return to office. We learned some new capabilities when everyone was sent home, but at the same time, we lost an element of collaboration and integration. We’re a highly integrated practice, so we wanted to find that right balance and I think we have. 

We’re now all in the office on Tuesdays, Wednesdays and Thursdays. We’re all in the office and working collaboratively, much like we worked prior to the pandemic, but on Monday and Friday employees can work anywhere. It’s working very well in the sense that people value being together again but also have some more flexibility; it’s a wonderful middle ground.

Some of our young graduates were losing in-person mentorship. Being in the presence of another professional, there is a lot of learning that happens by osmosis. This model of hybrid allows us to capture some of that back.

Verhulst: We are facing all of the same issues the industry is, including supply chain volatility, fast-tracked work, a shortage of human capital and deepening our understanding of mental and physical burnout related to the pandemic and our workload. For us, we are constantly innovating in our process and products to better serve human beings and the planet we live on. As part of that innovation, we’ve had to digitize pieces and parts of our workflow that we didn’t before. How we communicate through words, how we collaborate virtually, and how we educate and inspire our clients from a distance are all things that we are continually refining. 

True human connection through a screen — especially while iterating through a design problem — is hard to do, but as the world evolves, our people find freedom to work from wherever, and our clients are further and further away from us. It is something we must master moving into 2022 and beyond.

Webb: For design and construction firms, they were impacted more immediately by shutdowns from job sites and projects going on hold. A large part of our work comes from third-party certification reviews, so we didn’t see an immediate reduction in that work, but we’re seeing a delayed impact from the pandemic that is being felt more in 2021 than in 2020. We’re seeing it start to pick up again on the review side of our work as projects are getting funded and confidence is being built up again in investors.

What are some major projects you have underway or planned that you’re excited about?

Cebelak: We’re building a center for virtual learning at Ferris State University and we’re extremely excited about that particular project, which is a $26 million project. We’re really excited about that and being up at Ferris, which has been a good customer and client for us. We’re also continuing to work on a lot of K-12 school work, all in West Michigan districts. (As well), we were fortunate enough to be awarded the new Cascade fire station project.

Laackman: Our big project focus is the Victory on Leonard project, which is the 120-unit apartment building on the west side of Grand Rapids. We’re very excited about that because there is a huge need in Grand Rapids and West Michigan in general for more housing. We’re very bullish on affordable housing in general. We’re also generally working on more new restaurants, which is good for the soul as hospitality is slowly coming back into the fold. We’re also continuing to work on a lot of medical office buildings across the state, which is a nice staple to our company.

Thomas: I’m excited about what’s taking place in downtown Grand Rapids on the 201 Market Ave. site. There will likely be other projects that will come out of that, which we’ve had a chance to participate in. It’s very exciting and I think it will be transformative for the city over the next 10-15 years. 

When this pandemic started a year and a half ago, the two market sectors for us that took the biggest hit were health care and the corporate workplace. Both of those have come back in a pretty significant way. We’re working with four or five health systems and doing quite a bit of work. A number of projects are things recognized or borne out of the pandemic surrounding efficiency. In the corporate workplace, what we’re finding is a lot of planning for clients trying to solve that puzzle for themselves by embracing being in the workplace and working remotely. Our philosophy is really about the work that needs to be done and how to repurpose the space to best serve those needs when people do come together.

Verhulst: We are working on some very significant projects in West Michigan, many of which are in the 49507 ZIP code. The new 4,000-square-foot headquarters for Grand Rapids Area Black Businesses, construction is set to start in spring of 2022. (We are working on) seven child development center renovations in partnership with IFF through their Learning Spaces program which will be completed this year. (There’s also) the new headquarters for The Diatribe, which is in conceptual design.

Webb: An odd silver lining of some of the work that we do as it relates to the pandemic is the increased awareness of workplaces and spaces that we occupy. The healthy building movement was well underway prior to the pandemic, but it was brought to focus with COVID on the airflow of spaces. So because of that heightened awareness on the spaces we occupy from a health and wellness perspective, our work with different certifications related to that has grown as it relates to the standards they provide. We’re also continuing a lot of the partnerships we’ve established over the last 20 years. A lot of those groups are really strong advocates of the work we do and willing to push the envelope along with us when it comes to pursuing different building certifications.

What are some ways you’re eyeing growth in 2022?

Cebelak: We are focusing on our core markets. Those would be K-12, higher education, health care and commercial retail. Within those four markets, we’re making sure that we execute on our existing work at a very high level while looking for opportunities to expand our market penetration in any of those given areas. We’re not going to necessarily try for a new market or to go into a new state or region. We’re going to focus our efforts on our core markets in core territories in West Michigan.

Laackman: I know our growth will be in multifamily housing and I will also say it’s going to be in technical office space — so dental, medical, all of the support systems around medical office space. But we’re seeing the most growth in housing, specifically market-rate and affordable housing and we’re focusing on that a lot. 

Thomas: We examine that at an individual practice level. Each one of those verticals has a practice leader and we’re investing deeply in the business planning at the vertical level because each one is being impacted differently and we’re not assuming it’s business as usual. We’re looking at how we best serve them in how they are changing.

The pandemic slowed several sectors and caused us to shift. Now it’s about rebalancing to other sectors coming back like corporate and health care. Vlad Torskiy will focus exclusively on building in the health care sector. That’s part of our very specific growth strategy.

Verhulst: Pure Architects is very passionate about the work we do in the education, health care and workplace spaces. We are continually being approached by public and private schools, colleges and universities, health care clients and business owners that are ready for a new experience in how their projects are conceived and delivered. I believe we will continue to emerge as a premier firm to work with in this region. 

Webb: There are a couple growing efforts we see that won’t be going away any time soon like certifications related to the healthy building movement. We see a lot of opportunities for on-site verification of the health and wellness such as air and water quality testing. Not only building owners saying we’re going to design and construct a more healthy building, but come in and test that and make sure we maintain that. Many are putting human health and wellness as a top priority.

What are your thoughts on the vaccine mandate for companies with 100 employees or more that is being battled out in the courts currently?

Cebelak: As it relates to Triangle, the vaccine mandate would not affect us directly because we do not have more than 100 employees. We have not as a company mandated vaccination for our employees, but we have educated our employees to the best of our ability regarding the vaccines and have encouraged every eligible employee to get a vaccine if they can with consultation with a doctor. 

We really feel that the decision to vaccinate is really a personal decision that’s not for a company to decide, it’s for employees to decide for themselves. With that being said, there are certain customers, clients and projects that may require people who are working or on their campuses or working in their buildings to be vaccinated. If that’s required, we have to address that on a specific project-by-project basis. 

Laackman: We will always adhere to the OSHA standards. When you grow up in construction, OSHA is the rulebook for safety and health. I am a proponent of science, so the more people that are on sites protecting the other people on the site, I’m for it. 

Thomas: We were already 85 percent vaccinated in the office and 100 percent of our health care team is vaccinated, so I don’t necessarily see it having a strong impact on our firm. We’re strong advocates for the vaccines, not as strong for a mandate. 

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