In just over a year, Capitol Construction has made a substantial mark in Boston’s construction industry. Sam McLain reveals how it’s being done
By Ruari McCallion
Here’s an idea: start up a new company in a market that’s in downturn. Take an approach that is far removed from the conventional wisdom. That’s what Sam McLain did, when he set up Capitol Construction in Boston, Mass, in June 2006, with himself as president and CEO. He was already working for an established construction company in an executive position and had years of experience and seniority. So why take what looked like a series of crazy risks, at a time when the industry was contracting?
“I saw a clear-cut niche in downtown Boston, for a smaller, well-managed company to focus on serving clients in a particular segment of the market – up to $25 million projects,’ he said. No-one at the time was aware there was a shortage of construction companies looking for clients – a point McLain concedes, but qualifies. “There are many firms in the Boston area who do a great job at larger commercial projects, and a group of guys who do very good work in the smaller segment.
But the perception was that the group focused on medium-sized work had various issues to handle and some companies pulled out completely. What we’ve found now is that the niche is even stronger than I anticipated. We’ve picked up an extraordinary amount of work – we’re probably 15-20 percent ahead of our original business plan and have contracts worth a total in excess of $100 million.”
Such a rate of growth, while welcome, can bring its own problems. There are businesses without number that have grown rapidly and then imploded, having extended themselves beyond the capability of their infrastructure or capital resources.
“The biggest challenge is to balance opportunities with capacity,” McLain said. Capitol Construction does that by staying focused on its target market, regardless of the temptations to reach further. It has meant turning work away, but focus is key. “For example, there’s a lot of laboratory work to be had in this area but we won’t take that on, because we’re not focused on it. We have three divisions within Capitol Construction: multifamily residential, dealing with apartments and condominiums; commercial, which undertakes interior office fit-out; and the restaurant and retail group. Our strategy is about building the business, attracting the right staff and building our client base in those three areas.”
Making its mark
Although Capitol Construction has been in existence for little more than a year, it has already made its mark in the Boston area. It won the contract to convert St Aidan’s Church, Brookline, MA (where John F Kennedy was baptized) into condominiums, selling at $1.5 million each. In June 2007, it was announced that the company was building a new McDonald’s restaurant at Logan Airport, as part of the Terminal B upgrade.
That contract win was probably helped by its work on Tossed, the new restaurant in the Prudential Center, and won’t have been hindered by the surprisingly long list of other successfully completed restaurant projects, including Cinco de Mayo in Chelsea, MA; K.O. Prime at the Nine Zero Hotel, Boston; The Charles Hotel, Cambridge, MA; two projects for Saks 5th Avenue in Boston; and another ten besides – at the time of writing. By the time you read this, there will probably have been more. Among its commercial successes are Bridge Street Clinic in Lowell, MA; three projects at Boston’s Seaport Center; and O’Connell Insurance, in Boston. As a new company, it has lower overheads and runs a very tight, lean ship, but that means little without an effective and attractive service offer.
“We truly want to be partners with our clients – building owners, operators, architects and vendors. We focus on selecting the right employees, people who share that vision. Everyone here buys into the idea of what we want Capitol Construction to be,” said McLain. The vision is to operate as a full-service construction company, offering a range of services from total design, construction management, general contracting and labor provision to a selection of services, from project management to co-design, or specific activities within the total process. Teams are assembled to deliver the right service at the right time. “It may seem obvious to say it but the future of our business is our clients.
The difference with us is that we truly service our clients’ requirements, day in day out. We are responsible to them – we never lose sight of that. What really sets us apart is our responsiveness. If a client needs some guys to come and look at a particular space, walk through it and get a price for work back by, say, Friday, we’ll do it. Secondly – but no less important – communications. Construction is inherently difficult. We try to eliminate unpleasant surprises by identifying challenges ahead of time, so we can work out how to meet and overcome them.
That route is more effective, saves money and delivers better client satisfaction.” That will sound like music to the ears of anyone whose experience of construction contractors has been colored by ‘variations’ – the slightest deviation from the original contract conditions, used as leverage to get the price up.
That is an approach Capitol specifically avoids, through identifying and working through all the issues ahead of the fact. It means projects are far more likely to be delivered to the agreed budget, and on time. The Capitol approach also means that the people clients need to talk to aren’t too distant or too senior.
Always open
“If a project executive tells me that I need to speak to a client, this weekend, say, then I’m available. You can’t get away from the personal touch – and we have to recognize there is the need to deal at the same level,” he said. “It’s not rocket science and I don’t know why others don’t do it. If you’re on the second or third project with a client, there’s no need to keep the traditional cloak-and-dagger mentality.
Once we understand that we want to work with each other, we want to work together, we believe in the partnership approach. That means open books, so clients can see how we get to our numbers. If, for example, the electrical contractor number looks crazy, we can work together to understand and improve it. That’s the approach we’ve already begun implementing in a number of projects, such as an apartment complex we’re working on in Charlestown.”
Capitol Construction is bringing a refreshing approach to the traditionally adversarial business of construction. It’s making strong progress in the private sector and even the public sector, with its tradition of lowest-bidder tendering each and every contract, is beginning to see the advantages of prequalification and partnering, particularly in getting projects in on time and to agreed budget. The company might just be in the process of changing the face of construction in Massachusetts.