Ask a PRW operator who has just completed a greenfield construction project – or even a modest expansion – if it is enough to have a decent working relationship with their construction contractor and you’ll likely get an emphatic “no.” Design/build (D/B) experts specializing in PRW construction will give an identical response.
“Partnership is critical,” explains Jake Stefan, President of ARCO Design/Build-Build To Suit (ADB BTS). “PRW operators need a contractor that understands their business, their equipment, their energy needs, regulatory compliance, and who can offer recommendations that are aligned with the operator’s vision of how they are going to operate their building.”
“We’re looking not so much for a construction company as for someone who will partner with us, become our de facto construction manager, and be willing to invest the time and expertise to provide that level of comfort we need to assure us we’re headed in the right direction,” says Brooks Royster, President of MTC Logistics. “We want our D/B partner to act like a consulting company on the front end, immersed with us in the ‘why’ as much as the ‘what’ in deciding what kind of building we want.”
And to further illustrate the importance of choosing the right contractor to partner with, Stefan adds, “These are complex buildings with lots of moving parts – all tremendously more complicated than a dry warehouse, for instance. And because PRWs are complicated buildings, they have really expensive problems when something goes wrong.”
Industry Experience
Marko Dzeletovich, President of Coldbox Builders, thinks it is always a good move for PRWs to choose a D/B firm steeped in experience building temperature-controlled warehouses. “Would a PRW operator advise their ice cream manufacturing client to use an automotive parts 3PL to provide logistics needs because that provider knows logistics?,” he asks.
Dzeletovich adds that it’s important that PRW operators understand they’re not just shopping for a builder, they are sourcing an expert who can make or break the success of the project. “I think many IACSC (International Association for Cold Storage Construction) members have been brought in to fix messes left by consulting and contracting teams that might know how to build office towers or water treatment plants, but didn’t understand the fundamental principles of refrigerated warehouses and what’s important in designing and constructing them.”
“We have ever-increasing challenges in our industry that impact how we build or modify our warehouses, such as regulatory requirements for food safety or cubic capacity maximization to be competitive with energy efficiencies,” notes Tim Ludwig, President of Bradner Cold Storage, Ltd. “In our case, we want to be knowledgeable about new trends in technology and are looking at a number of novel things for our next building, and we don’t want to be educating a construction contractor who’s wallowing in indecision and uncertainty.”
Royster points out that similar to his own company, PRWs are typically smaller, family-owned companies, but could have large, highly sophisticated and expensive facilities. And though they may have multiple locations, they are not major corporations with unlimited funds, so it is essential that any construction meet criteria for capacity as well as labor and energy efficiencies.
“What we have experienced with our construction partner is a willingness to get on a plane and go to Europe with us, at their expense, to learn along with us about cutting-edge techniques,” Royster says. “Traveling halfway around the world to look at new processes shows not only a commitment to their current client, but a willingness to deepen their investment in providing services to the PRW industry.”
Kick-Off
“We don’t even go into a meeting with potential contractors until we’ve done our pre-work and talked to people they’ve done buildings for,” Ludwig notes.
“Every warehouse is unique with a different approach and specialization and builders are the same way. We’re trying to find somebody who matches our style and understands our business – that’s what creates positive experiences.”
Stefan says the initial sit-down between the bidding D/Bs and the PRW team should be a two way conversation about both companies. He points out that while most of the operators and contractors in the industry know each other, they have to discover if there’s a good connection. “The PRW operator should talk about where the PRW is heading, what goals they’re trying to achieve, and what’s important to them. The contractor talks about what they’ve done, how they run projects, what their vision is in terms of their future in cold storage construction, and how important that is to them.”
Stefan’s counsel to PRW operators is to whittle down their contractor choices to three top picks and then spend significant time with them going through the proposal process. “Putting together proposals on these PRW projects takes a lot of effort and is tremendously time consuming,” Stefan points out. “But the D/B candidates recognize if they’ve made it that far, they have a good chance of winning the project, and the time and energy spent on the proposal is well-invested. The proposal should be thorough, complete, and zoned in on cost.”
“Everything starts with what you are storing and how you want to store it,” suggests Erik Gunderson, Executive Vice President, Primus Builders, Inc.
“Bigger PRWs have tried-and-true specs issued with their RFP – different types of refrigeration systems, capacity and performance specifications, and certain ways of doing things,” Gunderson says. “We like having that baseline from which we can bring new things to light, should the opportunity arise.”
Gunderson says they are also contacted by smaller companies with no specs and no idea what they want or need. “To feel compelled to hire an architect before the bid process is from days of old. Today, design/build is the way to go in this industry.”
“What I look for early on in a new client encounter is a willingness on their part to meet and explain what their goals are to my team. The window to innovate disappears quickly,” says Dzeletovich. “We want to know what the client’s drivers are – maybe energy efficiencies or a high degree of flexibility for future operations – so we are all very clear on what we’re ultimately trying to achieve.”
Dzeletovich says many D/Bs do feasibility or pre-engineering exercises to create a concept design, and then put a budget to it. “All the possibilities that a building has, from floor design to refrigeration systems, are on the table for the PRW and D/B to evaluate and discuss and offer ideas for consideration. You get at what’s important and you get a more accurate costing and timeline based on the concept design.”
One of the final steps in the proposal process is for operator and contractor to sit down face-to-face and go through the proposal page-by-page, Stefan suggests. “At that point, you should have moved beyond citing qualifications and business approach to the nuts and bolts and deliverables of the project. There are a lot of different ways to skin a cat, and this process will bring all manner of issues to light – I’ve won and lost bids at this juncture.”
Stefan notes that after the initial review of the proposal, modifications are usually made to the competing proposals to get things close to apples to apples – tweaks and adjustments to scope and schedule. In this process, PRWs should take care to keep each D/B firm’s ideas confidential in the process, as they are similar to intellectual property. Once this is done, the operator makes their selection, provides feedback in that process to the unsuccessful bidders, and it’s time to build.
“If all the proposals are on par, you adjust accordingly and have everybody make amendments. But if you know you’re going to eliminate somebody, do it immediately,” recommends Stefan. “It’s painful to say ‘no,’ but better to tell them early before they invest additional time.”
Pricing
“We prefer to work with a contractor who is totally transparent through the budgeting and pricing process, and we will ask questions until we get that transparency,” Ludwig says.
A position a PRW operator never wants to find themselves in, says Dzeletovich, is to commit to a D/B only to find there’s a big mistake in the budget due to lack of expertise and then have to go back for additional capital approval or financing.
“The goal is to bring in a budget that is true to the project you’re considering,” Dzeletovich recommends. “Cost ranges in proposals are acceptable so long as the builder and PRW understand the process and nuances of a refrigerated warehouse D/B. They have a lot to consider and informed decisions to make to ensure success.”
“For operators that build or renovate infrequently, it’s fundamental to not rely on square-foot costs when asking for free information, and don’t expect the square-foot numbers you get to be reality,” Dzeletovich suggests. “New development, depending on the municipality, can have extremely different start-up costs and things can change drastically the cost per square foot.”
“It’s hard to get details and numbers, but we do the best we can to understand what the marketplace looks like and benchmark around what our peers in the industry have done,” explains Ludwig. “Although we rarely make price the starting point in a build, we want to know how the contractor’s last project did and what it cost. You don’t want to get too far down the rabbit hole and then discover you’re spending more than 25 percent over budget.”
Communication
The number-one element in the process is how well you and your client mesh together, Stefan notes. He says some PRW operators want zero involvement and don’t want to be bothered along the way, while other operators are on the other side of the spectrum and want to be very hands-on, involved in all kinds of decisions, and want frequent progress updates.
“In our kick-off meeting with the PRW owner, we use the opportunity to introduce the team and recap the project we’re embarking on, and then we talk about communication,” Stefan says. “First, it’s tremendously important for the owners to identify a single point of contact – one head chef in the kitchen who communicates with the builder. Second, its good to discuss upfront what level of communication the PRW expects so all parties are clear on those expectations and miscommunications are avoided.”
“It is critical for the client to select a decision-maker to represent them, and that the decision-maker and D/B adhere to regular meetings to establish the channels of communication and the process by which decisions will be made,” Dzeletovich asserts. “Then it’s about regular, ongoing communication.”
Stefan says that the PRW operator should understand that there may need to be uncomfortable conversations over the course of the project but at the end of the day, the operator has to feel comfortable about the need for those conversations and confident that issues can be worked through successfully with the team assembled.
“In addition to frequent meetings with the owner, especially during the design/review process, we are fans of using BIM (Building Information Modeling) 3-D architecture,” says Gunderson. “Visualizing the build creates a very educated consumer and is especially helpful to PRWs without much building experience.”
Another aspect of good communication between PRW and D/B is flexibility.
“PRWs don’t know who their next customer will be so they often need the most flexible space possible. That requires a contractor who can think out of the box, is enormously customer friendly and willing to accept change,” Royster declares. “Some contractors would say no to a change of direction mid-course, but that’s not what a PRW needs because change, beyond our control, is the nature of our business.”
“We try to build in flexibility,” Gunderson notes. “We try to develop a frame within the building, should a customer vacate the PRW – inches can provide untold flexibility down the road.”
“My general philosophy is that I’ll be involved with the builder for two years but I could be another four decades in this building,” reflects Ludwig. “You want to try to move forward as quickly as possible but not feel like you’re rushing ahead because the consequences of the decisions you are making are so enormous, you want to take the time you need.”
“The number-one most important thing about a partnership between PRW and D/B is that you mesh together,” Stefan notes. “Somehow, miraculously, all the other components that are thrown into the pot – costs, history, safety modifiers, the way people work – ultimately get worked out if you work with people you feel comfortable with.”
Alexandra Walsh is a Senior Publishing Consultant with Association Vision and Managing Editor of COLD FACTS. This article was originally published in the September-October 2017 issue of COLD FACTS Magazine.
