Education is great but real world experience is better. That’s the valuable lesson that continues to fuel success at Fortis Construction...
By Lynn Haber
Fortis is a young, mid-size construction company headquartered in Portland, Oregon. With dozens of commercial projects under its belt in the healthcare, education, industrial, retail, corporate office, seismic upgrade and tenant improvement markets, Fortis has seen steady growth since its inception in 2003. Starting with only four employees and $6 million worth of work, Fortis is now a 60-plus person operation with approximately $38 million in revenue.
Growth
Fortis was ranked the 23rd fastest growing private company by the Portland Business Journal, with 173 percent revenue growth over the last three years. The company has 40 full-time professionals including superintendents, project managers, project engineers, administrators and estimators and another 20 to 30 craftspeople, such as carpenters, framers, concrete workers, metal stud and dry wall workers.
Fortis Construction founders, Jim Kilpatrick, president, David Aaroe, executive vice president, and Rene Gonzalez, secretary/treasurer, have utilized the lessons learned while working for a large, successful and fast-growing international general contracting company to create a local, sophisticated yet nimble organization.
Responsible for complex projects for national and international clients in their earlier careers, the three partners gained experience, competency and aptitude that today serve as a key differentiator between Fortis and its competitors.
In fact, Fortis is a sophisticated user of technology, something the company founders learned about from having access to dedicated IT staff at other large companies. All of the company’s managers use laptop computers and sophisticated electronic document management and collaboration tools. All employees use laptop computers and have real-time access to job cost information. Web-based management software allows the company to manage a large number of files including CAD drawings, specs, progress photos, RFIs, and submittals.
General contractors who pride themselves on rolling up their sleeves and getting their hands dirty, Fortis takes on preconstruction work, construction management, green building and general contracting.
A broad scope
The average construction project taken on by Fortis is under $100 million. The real sweet spot for the company, however, are projects in the $2 million to $10 million range. Unfortunately, that sweet spot puts Fortis in a big pool of competitors many of whom are very capable contractors, according to Kilpatrick.
But unlike many competitors whose sole focus in on the build, Fortis offers its customers a broader scope of expertise and services from concept, budgeting, development of design, administration of the construction to offering value-add services such as helping clients deal with building compliance issues or water rights or resolving municipal issues.
Recent Fortis project awards include a complete renovation, encompassing mechanical upgrades to the State Capitol House and Senate Wings, scheduled for completion in November 2008. The company was also awarded the seismic upgrade and interior renovation of Oregon State University’s historic Education Hall. Construction is scheduled to begin summer 2008.
“All of our managers have an innate drive to build the project and lead the process,” said Kilpatrick. “It's second nature to what we do.”
The bulk of Fortis’ work is in the Salem/Eugene/Portland area, or mid-Willamette Valley region. Seventy percent of the company’s customers come from word of mouth referrals. Another 15 percent is negotiated proposals and the rest competitive bids.
Joint venture
A couple of years ago, Fortis seized a unique opportunity to work locally on joint venture projects with DPR Construction Inc., ranked one of the top 50 general contractors in the country. The two jobs currently underway involve work for large ISPs. Aaroe says Fortis brings to project “expertise that DPR no longer has in the Pacific Northwest”. DPR is the former employer of the Fortis partners. In 2003, DPR pulled its operations out of the area, driving Fortis founders to start their own business and keep their families in a part of the country they had come to love.
Fortis and DPR formed a new company, DPR/Fortis, a 50-50 joint venture. Fortis senior management believes the joint venture adds value beyond revenue to Fortis, enabling the company to flex its vast knowledge and expertise in the construction industry. Aaroe is currently dedicated to DPR/Fortis management. Revenue-wise, financial projections for total company revenue in 2007 is $90 million for Fortis and DPR/Fortis combined, and $130 million is forecast in 2008. The joint venture is expected to add about $52 million to the company’s bottom line in 2007 and $70 million in 2008.
Despite all the benefits of the DPR/Fortis partnership, Fortis partners worried about the potential downside of the business arrangement. “We actually created a separate company with its own identity to insulate us. When you’re seen as a big contractor there can be a misconception by local customers that you’re too big to work on their smaller projects,” said Kilpatrick.
A company open to change, new ideas and growth, Fortis partners don’t expect the joint venture to last forever. “We want to stay in the Pacific Northwest, not follow large projects elsewhere,” he added.
People development
Since founding the company, the economic climate in Oregon has produced a steady stream of work for Fortis. An area not driven by large corporate companies, people who move to Oregon chose the state for its quality of life. As a result, Fortis tends to see young creative type businesses, such as marketing, retail branding, advertising and design, for example, flourishing.
Providing an environment for employees with challenges and growth opportunities, and encouraging a work/home life balance, Fortis has a pool of candidates to fill management type positions. More challenging to Fortis, and the construction industry as a whole, is finding quality young trades people as the workforce ages.
The construction company encourages open discussion, communication and debate among management and an environment that promotes collaboration where many individuals can influence decisions. In fact, it has monthly in-house training sessions lead by senior managers. Employees learn by interactive role playing how to negotiate contracts, do scheduling, and how the company’s software management system works.
The partners are also keenly interested in developing the future leaders of the company and building their percentage in the company. There are seven owner shareholders who meet monthly to discuss key strategic issues, such as financials, training, safety, personnel, etc.
Fortis sees a bright future ahead and believes its formula for success - to continue focusing on its employees and “to go longer, work harder and give more than anyone else” - will keep its customers not just satisfied but coming back.