More than a decade ago, two buddies kicked back at the pool with a few beers and started tossing around ideas for their new construction company. Like so many other entrepreneurs, they grabbed a napkin and started jotting down their business plan.
The four main points decided by founders Bob Fleckenstein and Maylon Boatwright? One, never do jobs more than 100 miles away from the company's Jacksonville, Fla., headquarters. Two, hire no more than six employees. Three, never exceed $5 million a year in volume. And four, serve as project managers on all the company's construction projects.
So much for the business plan. Founded in 1989, Summit Contractors Inc. rapidly grew into a regional general contracting firm. "We stuck to the business plan maybe about six months," says Fleckenstein, president, as Boatwright, now executive vice president, nods with a chuckle.
Perhaps that's all they needed. From its humble beginnings in a 640-square-foot office with only six employees, Summit has grown into a $263 million company, starting more than 8,000 units in 2003 in states across the country. (Thanks to that starts performance, Summit landed the No. 1 spot on Multifamily Executive's Top 50 builder list this spring.) Guided by principles of customer service and construction quality, Summit has built its reputation and revenue on quality construction practices, through on-site management at job sites, and with close relationships with both clients and employees.
One of Summit's greatest strengths is its easy going executives, says Jose Perez, president and CEO of Jacksonville, Fla.-based PQH Architects Inc., who has worked with Summit from the beginning.
"They [the two principals] are real friendly guys, down-to-earth guys," he says. "You would never think that they have a company that does so much volume." But they certainly know how to handle all the business, he adds. "They're knowledgeable, they are service-oriented–you call and they are there."
Trek to the Top Both of Summit's principals have always had a strong foothold in the construction industry. Fleckenstein spent 21 years at Blosam Contractors, a Jacksonville, Fla.-based construction firm, where he started as an estimator in the 1960s and worked his way up to president and co-owner in 1984. That's where he met Boatwright, who was Blosam's vice president of estimating when Fleckenstein asked him to join Summit as a partner.
"That's when we sat down to do the business plan that we so graciously stuck to," recalls Boatwright with a laugh.
The company got off the ground thanks to several Blosam clients who brought their business to the new company. As Summit's customers began to increase their portfolio, so did their work for Summit. "A lot of our clients did one project a year, and now they are doing four or five projects a year," says Fleckenstein. "We've been able to grow with them." Grow indeed: To create more space at its corporate headquarters, Summit built an office annex and a warehouse–and quickly had to convert the warehouse into more office space.
Before long, the company found itself where few general contractors have gone before: with a coast-to-coast reach. "A lot of the developers that we have become associated with are national developers, like Tarragon," says Fleckenstein. "They develop in five or six states, so they asked us to come with them, and we certainly aren't going to say no because they are a great client."
Summit's versatility extends beyond its geographic scope. The company builds virtually every type of multifamily rental and for-sale housing, including market-rate, HUD, tax credit, senior, military, and student housing. On the commercial side, Summit constructs hotels and resorts, retail centers, institutional facilities, warehouses, and office buildings.
That flexibility is key to the company's success, especially in unstable economic times, says Matt Robinson, Summit's senior vice president, executive committee. "When things are good, everybody flourishes. When things are bad, Summit has an advantage that we can travel effectively," Robinson says. "The developers never stop looking for deals, and when they do find them under that rock, we have the advantage that we are able to be there."
Of course, such diversity has its challenges. "One of the things that is most complex is going into areas that we haven't worked in before and estimating the projects correctly," says Boatwright. For instance, the company has learned to set aside more time for completing projects in places such as North Dakota and South Dakota due to weather challenges.
Quality Control While Summit builds thousands of multifamily units a year, none of the projects gets lost in the shuffle. "We are extremely quality-conscious and do everything we can to build a project that we can be proud of," says Fleckenstein. "When the owner comes to do the punch list, I am proud to walk with him."
That's because when it comes to construction quality, "we go overboard," Fleckenstein says. General superintendents, in addition to job site supers, travel to all projects to ensure quality production, keeping a close eye on the company's 4,000-firm subcontractor base.
Those superintendents are one of the most important members of the Summit team. "I think the strength or weakness of a general contractor really rests not with a Bob Fleckenstein, but the superintendent who is on site," says Bob Rohdie, president and CEO of Orlando, Fla.-based Tarragon Development Corp., whose company is a long-time Summit client.
The team pays particular attention to waterproofing to prevent mold–a builder's worst enemy. To protect Summit and its buildings' owners from mold lawsuits, Summit recently hired an independent environmental consultant to inspect job sites prior to drywall to ensure that no dampness or water problem exists.
If a construction mistake is made, Summit isn't afraid to take responsibility, says Jim Cox, the company's CEO. "General contracting is a very tough business, [there's a] lot of liability out there," he says. "We don't try to mitigate or hide our problems. We pay for them, [and] in some cases we work through them. And I think that shows up in the repeat business we do."
Of course, uncontrollable issues always arise, like the ever-increasing costs of building materials. Because most of Summit's projects are wood-frame, high lumber prices pose a huge pricing problem to the company and its clients. (Due to forest fires, rain, high gas prices, and a building boom, lumber currently is vastly undersupplied.) "[Lack of lumber is] a big problem," says Fleckenstein, "and one of the biggest things I think may threaten the multifamily industry right now." Concrete prices also are soaring because of high demand. To get the concrete it needs, Summit sometimes agrees to pour projects in the middle of the night because that's the only time it can get the materials.
Watchful Eye After quality, Summit watches the schedule. It has several management systems in place, including a two-week near-term scheduling meeting–an on-site gathering with the project manager, subcontractors, architects, and owners to ensure the project is delivered on time. "This is one thing we do that most don't," says Robinson. "Conversation is of the utmost importance because we don't know what they are thinking, and they don't know what we are thinking."
While a project manager could handle up to four jobs, Summit tends to only assign one or two projects per manager. "We don't like for a project manager to be starting two jobs or starting and finishing a job at the same time," says Paul Sowders, Summit's COO. In addition, each project is supervised by multiple levels of employees, from the superintendents and project managers all the way up to vice presidents, the CEO, and the COO.
To help building owners keep up with their projects' progress, Summit two years ago created a Web page for each project, detailing everything from proposed change orders to submittal and RFI documents. "Even though they have gotten large, they still give that service of knowing what's going on," says Perez of PQH Architects Inc.
Relationship Building Regardless of whether they are building a market-rate apartment or a tax-credit property, Summit executives never forget that they are in the service industry. "We've got to service our clients, and that is extremely sacred to us," says Fleckenstein. "It's our reputation and our trustworthiness in the marketplace."
Summit markets itself as an in-house builder, offering everything from preliminary estimates and construction analysis to value engineering–with all work done on an open-book basis. "We are honest with our clients, trying to build trust at all times," Fleckenstein says. "We don't hide things from our clients, and that gives them a level of confidence and trust."
The company's executives also are extremely accessible, adds Quinton Perry, president of Jacksonville, Fla.-based Perry Development Co., whose building projects have been pursued by several large contractors. But Perry didn't like the fact that those big contractor owners were unreachable. That's not the case with the Summit principals, with whom he has worked for years. "Bob and his partner Maylon are just a phone call away," Perry says.
And the Summit leaders are known for their willingness to fix any problems that arise. "I have known a lot of contractors and dealt with a lot of contractors over years, but I have never ever seen a contractor that will do more or spend more of his own money to correct a situation," Perry says. "I have seen Bob go back and do work on a job five years after he completed it."
Keeping clients happy is a top priority, admits Fleckenstein. "It's building client relationships," he says. "When clients are loyal to us, we will be loyal to the client. If we just messed up and did something wrong, I don't care if it's 20 years [later], I'll go back and fix it."
Their customers notice. Seventy-five percent of the company's clients have done business with Summit before.
Building strong relationships with its employees is just as important to company leaders. "A lot of people look at us and think we are a large company. We think we are a small company that just happens to be doing a lot of work," says Sowders. "You get that small company feel. People like coming to work here. There are lots of people who have been here forever."
Sowders isn't exaggerating. He has worked with Fleckenstein and Boatwright at Summit and Blosam for 18 years; one receptionist has been with the principals for 23 years; another secretary has stayed for 20 years; and the list goes on.
The company didn't always have such a low turnover rate. In the early years, Summit managers weren't hiring the right type of people, personality-wise, says Fleckenstein. So seven years ago, the company hired an industrial psychologist. "We never hire anyone now without doing a psychological and intelligence test, and that test is formatted to create a personality envelope that we want our people to be inside," Fleckenstein says. The retention rate is now close to 99 percent.
Being well-liked by employees means a lot in the Summit interview process. "We have had a lot of people go through here that have a lot of experience, but we just turn them down because they were not going to be liked," Fleckenstein says. "They were going to cause problems."
That won't work at Summit, where no matter how much the company has grown, it continues to retain its close-knit culture. Two years ago, Kathy Garrison, the company's estimating director, had a serious illness and flew to California several times for treatment. Her fellow employees paid for her airline tickets and hotel stays out of their own pockets. "That's taking care of your people," Garrison says.
Perhaps that's because Summit's principals set a good example themselves. "Bob and I have been partners a long time, but we are also best of friends," says Boatwright. With Summit expecting $30 million in revenue, it's obviously a strategy that works.
Tax Break To some, building a tax-credit project is nothing but a headache, but to Summit Contractors, it's a business opportunity. Since 1998, the company has dedicated a division to the construction of tax-credit projects, now one of the company's largest businesses. "Probably 30, 40 percent or our work is tax credit," says Bob Fleckenstein, the company's president.
Summit's experience and expertise is one of its selling points to developer clients. "In tax credit [work] you really have to understand the program so you can help the developer with some of the qualms he has," Fleckenstein says.
In addition, Summit understands the coordination of the numerous funding sources involved in tax-credit projects and works with a developer from the beginning of the project's application process, into the design phase, and through construction. Summit's national scope offers another advantage. Tax-credit developers typically apply in anywhere from four to 10 states, and they don't know where they will land the award. Because Summit–and its contractors–can travel, the developer can rely on the Florida company and avoid the hassles of finding a new general contractor.
"We already know the project," says Matt Robinson, senior vice president, executive committee. Plus, Summit's extensive subcontractor base helps keep costs down in high-cost-labor areas.
Summit Contractors at a Glance
- What: Provides general contracting, construction management, design/build, pre-construction, construct ability analysis, value engineering, and cost module services.
- Leaders: Bob Fleckenstein, president; Maylon Boatwright, executive vice president
- Headquarters: Jacksonville, Fla.
- Markets: National with a large presence in Florida, Tennessee, Virginia, Georgia, and California
- Founded: 1989
- Employees: 199
- 2004 Revenue: $302 million (projected)
Notable: With the help of its subcontractors, Summit's principals built a 42,000-square-foot office building and donated it to Dreams Come True, a Jacksonville, Fla.-based non-profit dedicated to fulfilling the dreams of children with life-threatening illnesses.