Taking the plunge
ANCHORAGE, Alaska - In 1999, Klebs Heating and Air Conditioning took a risk that many sheet metal contractors think about trying: they dropped the "heating and air conditioning" from their name and launched a commercial plumbing department.
While the Anchorage, Alaska-based company had some in-house plumbing experience from their residential business, the move was still a risky one.
Klebs started in 1986 as a two-person company specializing in commercial sheet metal ventilation and exhaust ducting. The company now boasts 60 people and their commercial sheet metal business accounts for a little more than half of the work performed in Alaska, including large contracts with the U.S. Army Corps of Engineers. They decided to take that experience and see how the other half - plumbers - lived.
"Picking up the plumbing side was a natural for us," said Gary Klebs, company president. "At bid time, we were going in as the primary mechanical company and adding plumbing subcontractor numbers to our bids. It just made sense that instead of subcontracting all that plumbing work out, we should do it ourselves."
Better project control, increased sales with a limited increase in overhead, and the ability to leverage established supplier relationships are all motivating factors for any sheet metal contractor thinking about jumping into the plumbing market, Klebs added.
"If your sheet metal company is going into bids as a prime mechanical, then you need to have your own plumbing department," he said.
Employees are keyThe two key factors for success with a new contracting division are your personnel and your estimating system, Klebs contends.
"What really drives your company are your employees. If you take care of your employees, treat them well and pay them well, you can't go wrong," he said. "They will put their best foot forward for you and they will make your company."
Klebs officials stress apprenticeship-training programs, and according to Gary Klebs, that has paid off.
"When you start training an apprentice, you don't see the benefits the first year, you see them three and four years down the road. We now have four or five apprentices that have really turned out," he said.
Three years into the plumbing "experiment," the company had reached $1.5 million in sales, but officials said it became obvious that their current estimating software systems were holding them back.
"It is very important to have a good estimating program, especially with a new business," Klebs explained. "In today's market, as competitive as it is, the only way to succeed is to be more accurate."
ChoicesAfter extensive research, they purchased an AutoBid estimating system from Denver-based QuickPen International. The company was able to provide the estimating software for both their mechanical and sheet metal estimating needs, meaning all support and training could be done through one company. In addition, Klebs found that the QuickPen estimating software offered more features and details that fit their needs.
One factor that was not an issue was price.
"All the systems we were looking at were right in there, except one which was quite a bit lower," he recalled. "But with software, you get what you pay for. The least expensive programs are always the hardest to understand."
The new systems have made an immediate impact, especially for the growing plumbing department.
"Having solid estimating software has really helped our plumbing department grow," said Klebs' son Mike, who now manages the division. "Since the purchase, we have experienced aggressive growth, with over a million dollars more in sales the first two years."
The reason for this growth is two-fold, he added.
"We're able to bid more work," said Mike, "and we've had the confidence to bid larger jobs."
That's thanks in part to the software's spec-based takeoff, which officials said is much faster.
"With our other software," Mike explained, "we had to always manually factor in additional labor hours for different floors, different heights, multiple floors, and higher structures."
More workAccording to Tom Even, sheet metal department manager, his department has seen a similar increase in bids. Even, who does all the estimating for the "dry" side, says his takeoff time has been cut at least in half.
"The system is a lot faster than our old one," Even said, adding that fittings are automatically figured. "I am able to do a lot more takeoffs.
"With our old estimating system, I was still having to take a scale and measure things off and enter them in."
In addition to producing more bids, it also allows Klebs to bid more competitively. Alaska's short building season presents some difficulties for estimators.
"Up here, there's quite a bidding frenzy between March and April," Even explained. "The time frame to bid a set of drawings is very short - sometimes you only have two days to turn around a bid. Knowing that AutoBid will get it done allows us to go after the jobs we want and bid larger projects."
According to Even, a typical sheet metal job Klebs would bid is between $50,000 and $500,000, but they were recently able to bid on a middle school project that was a $2 million sheet metal job.
"That's a big sheet metal job for us," Even said, "but I have full confidence in the program. We didn't get the job, but we were right in there, and I know our numbers were good."
The software's spec-based design has also contributed.
"One of the big things that has made us more comfortable is that the numbers come out consistently all the time," Mike Klebs said. "With our other system, we were never able to do the entire bid within the software. We always had to finish it out on a piece of paper, and when you do that there's a danger of introducing errors."
Even feels that the accuracy is due in part to the wealth of fittings and materials available within the system's database.
"With AutoBid, you can bring everything into your bid, where our other system was still more a guessing game," Even said. "For example, if I were taking off a restaurant with welded stainless steel, I would have had to take that off manually. With AutoBid we're allowed to take off grease duct and welded stainless steel."
The bottom line for both Even and Klebs: "We're confident that the bids we submit are going to make us money," Klebs said.
(This article was supplied by QuickPen International, a Denver-based company that makes software for contractors.)