E7: COVID-19 & Paradigm Shift in Design-Build

Drew Enstice is Director of Business Development with ARCO Design/Build Industrial.  He lives in Baltimore and is based in ARCO’s Columbia, MD office.  Prior to ARCO, Drew worked at Trimble as Northeast Regional Sales Manager in their Buildings division and as a project manager at Whiting-Turner.  He graduated from Virginia Tech with a degree in Industrial and Systems Engineering.

ARCO has 22 offices across the country and focuses mostly on design/build construction of industrial properties.  Here in the Mid Atlantic, they have offices outside of Baltimore, Philadelphia, New York, and Raleigh and specialize in construction of warehouse and similar buildings including, ecommerce, light manufacturing, cold storage, and pharmaceutical work.

Warehaus:

My name is Matt Falvey and I’m your host for today’s episode. Today we will focus our conversation on how the COVID-19 pandemic has impacted construction management with a specific emphasis on design-build industrial work. Our guest today is Drew Enstice. Drew is the director of business development with ARCO Design-Build Industrial. He lives in Baltimore and is based in ARCO Columbia, Maryland office. Prior to ARCO, Drew worked at Trimble as a Northeast Regional Sales manager in their buildings division and as a project manager Whiting Turner. He graduated from Virginia Tech with a degree in industrial and systems engineering. ARCO has 22 offices across the country and focuses mostly on the design-build, construction and industrial properties here in the mid-Atlantic. They have offices outside of Baltimore, Philadelphia, New York and Raleigh. They specialize in construction of warehouses, and similar buildings, including e-commerce, light manufacturing, cold storage and pharmaceutical work. So welcome, Drew. And I thought we’d start off by having you telling the audience a little bit about yourself and what led you to the construction management path.

Drew Enstice:

Yeah, sure. Matt, thanks for having me. As far as the construction path, I wish I can say that it was my lifelong dream from when I was in elementary school. I mean, I love construction but what got me into construction is, I was doing engineering at Virginia Tech and one summer, Whiting Turner was at the intern fair down there looking to hire people. And they were based in Baltimore, which is where I live, where my parents live.

So I got an internship, kind of, out of convenience. But then, that summer I was on an interesting job, and really thought that it was something I could do well. So, I ended up getting a job there fresh out of college, and then one thing led to another. And here I am.

Warehaus:

That’s great! That’s awesome! Hey, let’s get started here and talk a little about this pandemic that’s just really throwing a haymaker for many industries like yours, and mine included. So, I guess given this COVID-19 situation, how do you see this changing construction and construction management? And maybe if you can focus a little bit on the mid-Atlantic region and maybe, even in south central Pennsylvania?

Drew Enstice:

Yes, sure. I mean, it’s a good question.   During the actual pandemic, we’ve had all kinds of challenges as far as executing current work, you know. As you probably know, projects have been shut down in Pennsylvania to a large degree. We’ve had a similar situation in New Jersey with some of our projects, and those are all looking to open back up …it looks like in the next few days. Maryland projects have been open for the most part, but we’ve had things like manpower issues. You know, you say conventional wisdom would be, you know, a lot of people are out of work, how are you having a tough time getting people to show up the job sites? But, you know, they do have a job there, but then there is all kinds of factors behind the scenes. You know, people have childcare issues because all schools are out. You know, people are, especially at  the beginning of all this,  were worried about getting sick and no one was sure how dangerous the disease was. And I guess we still aren’t.

So, we had some issues where jobs were in critical parts of the schedule and we’re kind of scrambling to get crews there to execute the actual work. And then things like permits and inspections have been tough. You know, inspectors are working with reduced capacity. They can’t be in the regular office. They’ve got, you know, many jobs to go to. So, we’ve had some challenges executing as far as we have jobs that are, straight up, shut down, that we are not able to work at. So, obviously that’s not good. And then, some of our other jobs we just have, you know, monkey wrenches being thrown in there from some of the things I just described. And we’ve been trying to adapt to this as well as we can. But I think we’ve done a pretty good job. Though, it’s been tough.

Warehaus:

Any major changes you see happening that, perhaps, may become permanent or even maybe, best practices? And then I guess on the negative side of that, any changes that you see perhaps hurting construction management and the industrial manufacturing space going forward?

Drew Enstice:

I don’t know if there are going to be permanent changes from this other than, you know, things like. Construction projects that just aren’t going to happen because, you know, whoever the developer or building owner …whoever the players were…that were going to make this thing happen, know that their business model has changed in a way that makes the project not happen.  I’m not sure that construction practices will be changed as much.

But, you know, it’s interesting things like utilizing some of this technology more. We’ve been utilizing Microsoft teams a lot more, which we always had. We really weren’t using it. You know, we had changed just, I guess, by luck of the draw about two months before all this happened. We had upgraded our computer network, and it just made it easier for people to log on remotely. And we could always do that. But it’s a lot more seamless now, which has worked great now that everybody is working from home for the most part. So, I think things like that will continue to evolve. Also, and just being maybe faster to adopt any kind of new technology that comes out, in case, you know, there was any sort of shutdown – hopefully not to this scale – in the future.

And then, you know, it’s a great reminder to all of our…really, everybody but I was going to say young project managers, you know, to not wait on anything. The thing is that, in construction, we always talk about the critical path of the schedule, which is that anything that delays the critical path, delays the entire job. So, that’s kind of the most important thing schedule wise. Even if something is down the critical path, there’s no reason to wait on making sure you order whatever it is – steel angle or approval for that paint color or whatever it is. Because if things come to a screeching halt, something that wasn’t on the critical path suddenly can delay the schedule when everything changes.

Warehaus:

Yeah! Totally! I love what you’re saying. And this is a consistent theme, by the way – technology. What we’re finding doing these interviews, and also talking to our peers, clients and various partners, is that those firms that – whether it was two months before or a week before all that shut down went down – those firms that invested in technology for their employees really have been able to transition, adjust and be nimble in staying operational. So, that’s kind of interesting. The other thing, too, that I found is professional development. I mean, you know, there are all types of things that you can do during these shut down times. Some things become less priority…. priority shifts and things shut down, et cetera. Have you guys been doing anything as far as professional development or, you know, war-gaming to come out of the gate, when the faucet turns back on, with some new ideas?

Drew Enstice:

My answer to that is, is sort of two-fold. A big part of my job is going out and trying to meet new people in the industry, and networking and stuff like that. And I feel like that has definitely been more difficult because you don’t have these networking events where you can go and get introduced to someone by someone else that you know. And it is harder to ask somebody if you’re able to come, drop by their office because obviously we’re not able to do that right now. Like things like that. So, yeah, we’ve been trying to come up with some better ways to kind of get our message out there.

You know, we’ve been increasing our …… we have a marketing team and they’ve been increasing our LinkedIn posts, you know, posting the stuff from social events, or community outreach, etc., that we’ve done months ago. We are saying, “Hey, we can’t wait to get back to doing this, and just trying to get our name back out there on the airwaves. But then, we have, I think, gotten better at getting specific tasks done remotely.

So, you know, anything that we were already working on, relationships that we have with people, we’ve been calling all those people to check on them, to see how they’re doing. We’ve been able to have meetings using Microsoft teams or Zoom or whatever, with some of our customers. And, we’ve had a couple of happy hour events and stuff like that on a smaller scale.

But a few of us have had a beer on the facetime thing at your house, which I never would have thought of doing three months ago.

Warehaus:

So, I just did – it’s funny –I literally just did a happy hour last night with a business development person from a major construction company here in South Central P.A., as well as a business development person for a Geotech engineering firm. So, it was a good time and it was nice, and we had some good laughs. So that is great! The other thing I think technology is allowing us to do – of course, we were doing this when we were in the office – but have you had any challenges at all providing pricing or constructability feedback, site analysis, et cetera?

Drew Enstice:

No, not really. I mean, that part of it is what has worked out well for us and hasn’t really stopped. So, we were lucky in that we were involved with a couple of customers that were having to evaluate some projects that they knew about before all this happened. And that is now a big part of what we do, that is, helping our customers, potential customers evaluate a construction project. Looking at the site, providing analysis on pricing, on schedule, on the layout of the building, constructability feedback, stuff like that. So, we had a couple of those things already on our schedule to work on.

And normally, what we end up doing is…. it seems to come down at the last minute. Drawings and scope changes and things like that seem to happen right up to the deadline. And, you know, a couple of days before the thing is due, whoever is working on in our office, we will basically lock ourselves in a room and, you know, be in there for hours until we go through this design matrix that we have in this spreadsheet. And then we fill all this stuff out. We have been able to get that done pretty easily, remotely! And it is actually worked out a little bit better because everybody’s on [Microsoft] teams. You know, one guy has the spreadsheet up and he is kind of controlling it, but everyone else can open a copy of it.

So, if you want to flip back to another section on your own, you can, as you’re checking something. We are all able to work together, really, a little bit more efficiently than being in the same room. That was interesting because we’ve had tons of times where we’ve been at the office until midnight to crank out a proposal, and then we turn around and show back up at five-thirty in the morning because the thing is due at noon.

And going forward, maybe we can do that until six o’clock and then take a dinner break and let us meet back on the Internet at 8:00pm from everybody’s house. So, yeah. That may be something we’ve learned from all this.

Warehaus:

Yeah! You hit on it or allude to it a little bit. Efficiency. You can be so efficient with this, with this intuitive technology and being able to do what you just said with spreadsheets et cetera is great. I mean, the efficiency and getting things done without the distractions…. I mean, listen, I’m like you. You are involved in dealing with people. I am involved in dealing with people. That is what we get paid to do – build relationships. And we love it. We enjoy it. But at the same time, you know, when you’re in the office, how often do you find yourself, you know, getting sidetracked and having, you know, conversations outside, you know, getting a project done. So, this has been pretty interesting. And I think there might be a happy medium, just to see how this plays out personally. If someone has kids, for instance, do we see construction project managers that have children being provided daycare? Will that let you have a balance between working remotely and coming into the office? I do not think they have to be mutually exclusive. What do you think of that?

Drew Enstice:

Yeah, I agree. I think there will be a lot more of that. You know, we have a 7:00 a.m. meeting every Monday. And the norm is that you’re there every Monday, but if you have something…there are times someone will say, “Oh, I have an inspection on the job site or whatever, so they don’t come right out”. I’ll have a meeting, you know…..if I have a meeting north of our office…. because I live north of the office….. at nine o’clock. I don’t go down to the to the meeting at 7.00am and drive all the way back. I just don’t go. Now that we have realized that we can do all this so effectively on these …. I keep saying Microsoft teams, just because that’s the platform we use, obviously. Now we’ve realized we can use this so effectively, think we’ll use it a lot more, and we probably will have reduced time in the office for those reasons. So, people aren’t you know, you’re not commuting somewhere if you’re only going to be there for two hours or whatever, then commuting back. You can just call in.

And I think I was telling you, it’s funny. Like, I would never …. we’ve had [Microsoft] Teams now for, I don’t know, six months or something. I would have never thought…. I was a guy that had a Post-it over my camera on my computer because I was paranoid that it would accidently turn on some time and I am picking my nose or something. And now we know we are  on that all the time. We are talking with people that we would have just talked on the phone. We are talking face to face with them, which is really, really, cool.

Warehaus:

Hey, before we wrap up here, you and I kind of run in the same circles in Baltimore, Maryland area, up here in South Central Pennsylvania, and even Lehigh Valley. Wouldn’t it be great…one of the things that I’m kind of excited about for our industries is the potential reshoring of manufacturing, coming back here. Given the disruption of global supply chains, I’d love to see from Sparrows Point to the Lehigh Valley to the Interstate 83 corridor, just explode. Any thoughts on that? What do you see coming with industrial warehouse development?

Drew Enstice:

Yeah, I mean, it is a good question. And I am not an expert on that per say, but it is part of what I do. As you know, I try to keep up with the news on that. I am in touch with a lot of brokers and people like that who are pretty smart about that topic. Everything I’m hearing is that, it sounds like people think that the industrial market is going to come out of all of this stronger than it was before. For the exact reasons that you just said, it sounds like, you know, maybe people are realizing that we were too dependent on manufacturing that was happening in other places. So, some of that may come back to the US and come back to, you know, local regions of the US. They can get things we need to be faster. What I am hearing from people is that similar argument with inventory.

So people are going to….we’re relying a lot on Just-In-Time shipping where, you know – I’m just making this up – a TV manufacturer that may have needed to keep a thousand TV’s in a warehouse so they could send them out to stores or send them out to shipping online, is now realizing that if the supply chain gets disrupted, that thousand TVs doesn’t last them very long. So now maybe they need 3000 TVs or whatever, which means they have to build more warehouse space for that. So, everybody that I have been talking to is thinking that in the long term, the market is going to look really good.

I think it’ll be interesting to see what happens in the short and medium terms, you know, later this year. I’ve also talked to a decent amount of people that are just seeing decreased activity right now, just from people not being able to get out and meet and get things done. So, you know, I am wondering if in the short to medium term, we see a little bit of a downtick because of the lack of productivity.

But it sounds like, overall, that the need is still going to be there, and potentially be there more. So that is good to know.

 Warehaus:

Yeah, absolutely! Amazon is not going away. And then, we look at people that come back. Toilet paper will have its day again, getting restocked in the stores, right? Well, Drew, this has been great. Any other themes or thoughts that you’d like to share in addition to what we already discussed that, maybe, I didn’t ask you about or we just forgot to talk about? And no, I mean, I don’t think anything super specific.

Drew Enstice:

One thing people have been asking me a lot about is – something we have been studying pretty closely, and we’ll continue to study – is construction costs and sub-contractor availability. You know, before this all happened. Material costs were relatively high. Everybody was really busy in the construction industry. So, sub-contractors pricing was probably higher than it would been in other situations. And schedules can be very difficult too because if you don’t book a certain sub by a certain time, they go to another job, etc.

I think coming out of all this, it looks like some material costs may go down a little bit, at least in the short term. And we are going to have subcontractors that have a little bit more availability. We were talking about the industrial market continuing to be really hot. But if some other markets are not as busy, you know, a lot of these …. whatever you want to call it ……steel erection sub-contractors, concrete subs, earthwork movers…., they are doing all kinds of different work, across a bunch of different industries. And if those things [industries] are less busy, some of these guys are going to have some extra time available, and we may be more aggressive on scheduling and costs. So, it will be interesting to see how all that shakes out. We are tracking pretty closely.

Warehaus:

Yeah, that’s great! Interesting, too, on what happens when we fire back up here with labor and costs. And that is it to be determined, as you kind of discuss.

Drew Enstice:

So, yeah, I mean, it is interesting. Kind of on a side note, but a guy called me yesterday, there was there was a job that we put some pricing to down in Florida earlier this year.

Then the job is on hold for a number of reasons, one being the virus. But this was a site where a contractor ………and he called me yesterday ……. part of this job was they aregoing to have to bring in about 7000 truckloads of dirt to raise the grade of this site, because it was too low, and it had a flood risk. And the guy was telling me, “Hey, if for some reason you guys want to pull the trigger and do this in the next two months, we can reduce our price because we are less busy and can bring in that seven thousand trucks. There’s so much less traffic in the area where this is going, that the trucking company would reduce their price. Things like that. That’s just a small example. I’m wondering if there will be more things like that on a larger scale, you know, across our entire region.

Warehaus:

Really interesting. I guess, to be determined, for sure. Drew, this has been awesome! Thanks so much for your time. Why don’t you tell everyone how they can get in touch with you and ARCO in Columbia, Maryland. You know, give them your phone number, your website, email, whatever you want to say.

Drew Enstice:

Yeah, sure! Well, my name is Drew. And you can look me up on LinkedIn. You can call me at 202.845.3289. You can email me at denstice@arcodb.com. ‘Db’ is for design build. That’s ARCO D-B. You can go to our website, which is arcodb.com. It is ARCO Design Build Industrial. We are actually… one of the things we were already working on but is getting supercharged now because our marketing team is not able to plan in-person events and stuff like that, is re-doing our website. So, we have it up, but it should be a new and improved website in about three or four weeks. But anyway, that was a long answer to your simple question. I can’t tell. But there is.

Warehaus:

You know, it’s awesome. It’s awesome! It’s comprehensive. We love it. So listen, have a great rest of the week. It was great having you on. Thank you so much. And I look forward to this quarantine being over and catching up in a real time visit.

Drew Enstice:

Thanks. Thanks for having me. Appreciate it. Yeah. Take care, buddy. Thanks.