Succession Planning: Call to Action for Owners and Leaders

The construction industry is confronting a huge demographic shift in firm leadership and ownership.  Baby Boomer owners are retiring, and they are looking to cash-in on their ownership positions and turn over their management responsibilities to the next generation of leaders.  Construction trade industry publications are increasingly discussing the need for developing and adopting ownership transfer and succession plan strategies. 

The importance of planning is summed up in the adage: “Failing to plan is planning to fail.”  Failure to plan can have disastrous results, including financial losses, unanticipated taxes, and, even, business failure.    

At Hill & Wilkinson, we have seen two of our big competitors without succession plans fail to make successful transitions.  One of the firms had to declare bankruptcy, and employees who saw that the ship was sinking began to leave.  One family-owned firm failed because the father tried to give the firm to the son, but the son was incapable of leading the business.  That firm was about a $300 MM firm that failed. So much is at stake in failing to plan.

The construction business is not unlike many other privately-held businesses, such as law firms, architectural firms, and thriving restaurants where there are no more than one or two key players at the top.  Ownership is typically concentrated, often with family members. 

Unlike other services companies, the construction business can have its own set of challenges, such as bonding, which may impact any succession plan.  Bonding companies want to understand a company’s short and long term business plan in order to continue to underwrite their projects. The bonding issue can be especially important for those companies that have reached a sustainable, critical size.

The benefits of having a succession plan are numerous.  Employees want to know what is going to happen in the future.  Customers and vendors want a sense of security.  At Hill & Wilkinson, we have used our succession planning as a positive and competitive advantage.

 

Building Sustainable Student Housing

 

We routinely serve institutions who seek LEED certification for their projects and use numerous project delivery methods such as design/build, design/bid/build, or construction management at risk (CM at Risk) methods to name a few.

Two new UT Dallas living-learning communities are particularly exciting for us.  These living-learning communities offer unique opportunities for students to interact academically with their peers and faculty while contributing to the university’s goal of attaining tier-one status.

The University of Texas at Dallas Student Housing

Living Learning Center Phase IV and Dining Facility - LEED Silver Registered

This $75 million, 235,000 square foot building will accommodate freshman students with a total of 600 beds. The new central dining facility will serve all five residence halls on campus and will seat 800 students at a time. It features “Pulse on Demand” dining where students can choose from a variety of cuisines that are prepared in front of them. The second floor of the dining facility includes a 25,000 square foot gymnasium and fitness area. Additional amenities include multi-purpose/classroom space, breakfast/snack bar, lounging/study areas, outdoor athletic areas, gaming area, laundry and associated site improvements.

We are currently in preconstruction and will break ground in June. The project will also seek LEED Silver Certification from the U.S. Green Building Council.

The University of Texas at Dallas Student Living Learning Center Phase V

The $30 million UT Dallas new Student Housing Living/Learning Center Phase V will be constructed on a fast-track basis in order to open this fall. This 150,000 square foot building accommodates students and staff in 144 suites with a total of 404 beds. Additional amenities include a multi-purpose classroom space, breakfast/snack bar, lounging and study areas, music practice rooms, gaming area, laundry and associated site improvements. The project will also undergo extensive MEP and building envelope commissioning.

Construction on campuses requires that contractors have significant expertise in the building types and building environments.  Safety is paramount.  Using Building Information Modeling (BIM) and knowledge of sustainable building practices is imperative. 

Working with an outstanding project team enables us to build healthy, diverse and sustainable facilities that attract and retain students, engage local communities, and serve the public’s goals for years to come.

Serving the State to Improve Student Retention

It takes years of research, planning and establishing public/private initiatives to create a great institution of higher learning. 

I had the privilege to serve on the Texas State University System’s (TSUS) Board of Regents from 2005 to 2011, and I must admit that I love it when a plan comes together. Education is critical to reducing poverty and creating dynamic, economically robust communities. 

Student recruitment and retention is a vital part of a great institution, and student housing holds the key to accomplishing good metrics in this regard. 

Part of my contribution to the TSUS as a regent was my personal and professional experience in the construction industry.  Capital expenditure programs represent a large budget expense for universities and colleges.  Being able to provide guidance and insights at this level of governance was truly an honor. 

As co-chairman of the Board of Hill & Wilkinson, I have also been in the unique position to understand the complex challenges of construction.  Our firm has been engaged in this market for more than two decades and built projects ranging from administrative buildings to auditoriums, classrooms to science/research laboratories, and athletic facilities to performing arts facilities.   We have also been deeply involved in redefining student housing for this decade and beyond.

Higher Education as an Economic Driver

In Texas, the public higher education system, including the UT System and the Texas State University System, is a vast network of entities. With nine health science centers, 38 universities, 50 community college districts, three state colleges and four state technical colleges, spread across 10 different regions of the State, higher education can be a significant economic driver in many communities.  Texas is also home to many private colleges and for-profit colleges who compete for students.

However, we lag in parity with the other top 10 most populated states.  For example, Texas has only three tier-one universities, compared to nine in California and seven in New York.

To meet the challenge of achieving academic parity, the Texas state legislature and voters adopted the state constitutional amendment to establish the National Research University Fund (NRUF) to assist universities in achieving tier-one status. 

The original “emerging research” universities are: University of Houston, Texas Tech University, The University of Texas at Arlington, The University of Texas at Dallas, The University of Texas at San Antonio, The University of Texas at El Paso and the University of North Texas.

The latest report from the THECB regarding Capital Expenditure Plans for FY 2013-2017 details what is planned for Texas public higher education institutions over the next five years. 

It is an ambitious plan with over 830 capital expenditure projects over the next five years for a total of $17.4 billion and over 60 million square feet of space to be acquired, constructed or renovated. 

Aviation and Airports: Key Drivers of Urban Planning & Growth

Aviation is just one of the markets that Hill & Wilkinson serves.  However, aviation projects require that general contractors have achieved a significant level of experience in building in an airport environment.  

Numerous regulations regarding quality dictate that General Contractors know the codes and metrics of performing the work.  Airport construction is also predicated on:

·        Safety

·        Security

·        Sustainability, and

·        Successful track record of the GC in performing similar work.

At Hill & Wilkinson, we have been fortunate to work with DFW International Airport, TxDOT, the City of Dallas and Love Field - Southwest Airlines, as well as the Fort Hood Airport and Allied Aviation, among others. 

Project scopes have included aircraft maintenance hangars, flight simulator training centers, FOBs, terminal gate enhancements, airfield improvements and support space for baggage handling. 

You can learn more about our expertise in aviation construction at www.hill-wilkinson.com.

Welcome to The Age of the Aerotropolis

“Airports will shape business location and urban development in the 21st century as much as highways did in the 20th century, railroads in the 19th and seaports in the 18^th.”

                                                                           Dr. John D. Kasarda

                                                                           Co-Author of Aerotropolis: The Way We’ll Live Next

As an engineer and a master builder, I am intrigued by thinking about the future.  At Hill & Wilkinson, we take our client’s visions and we build them.  We are always working with current knowledge and best practices, but we also anticipate what is new on the horizon or how better to plan for unforeseen contingencies.

The term “aerotropolis” is gaining traction in today’s lexicon of urban development, global trade and economic growth.  Basically, it means the combination of an airport, planned city, shipping facilities (e.g. roads, rail and ports), and a business hub. In other words, these attributes create an airport city. 

In Texas, we are seeing a lot of activity in renovating and expanding existing airport operations, as well as the greenfield building of new facilities to support future capacity and new growth. Did you know that Texas has 393 airports for the public to use – the most of any state?

The Dallas/Fort Worth area satisfies the definition of an aerotropolis with the DFW International Airport and Alliance Airport, our highway and rail systems, power and communications infrastructure, and the region’s diversified business activity. 

DFW Airport’s Terminal Renewal and Improvement Program (TRIP) began in 2011 and is a seven-year, $2 billion program to set the stage for further development in the first half of the 21^st century.  If you would like more insights into the future through 2030, visit DFW Airport’s Vision of the Future Realized at:

http://www.dfwairport.com/vfr2030/index.php

Healthcare Construction

Healthcare construction has been an important part of our business for over 30 years.
Here are some statistics about the future of healthcare construction in this country.

According to FMI’s Construction Outlook - 1st quarter 2012 Report -  the U.S. growth in health care construction is expected to turn to a positive 6% in 2012 (over 2011 levels) or $42.1 billion with even stronger growth projected after 2014.  Healthcare construction continues to be one of the strongest components in the overall Non Residential Construction Index due to several drivers:  

• Increasing population and an aging Baby Boomer generation 
• Quickly advancing  technologies 
• Outdated facilities 
•  Healthcare reform (Affordable Care Act) and Accountable Care Organizations – fueling mergers and acquisitions; emphasis on primary care in smaller, local facilities; prevention and wellness

Source: FMI’s Construction Outlook - 1st quarter 2012 Report http://www.fminet.com/media/pdf/forecasts/Outlook_2012Q1_FMI.pdf

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In the 2012 Survey of The American Society for Healthcare Engineering (ASHE) -  respondents cited the following types of construction projects most frequently for future plans:

• emergency departments,
• outpatient facilities,
• medical office building expansions,
• primary care clinics and urgent care centers,
• renovations and modernization

Source:  Health Facilities Management – February 2012/ASHE 2012 Construction Survey

http://www.hfmmagazine.com/hfmmagazine/images/pdf/2012PDFs/HFM0212_HCSurvey.pdf

Here are some of our recent projects:

• Parkland (PHHS) Health Center, Grand Prairie, TX – Community Oriented Primary Care – New construction
• St. David’s Medical Center, Bastrop, TX – Free Standing Emergency Department - Renovation
• Scott & White Memorial Hospital, Temple, TX – Outpatient Clinic – Renovation
• Wilson Creek Surgery Center, McKinney, TX – Ambulatory Surgery – New construction
• Lone Star Family Health Clinic, Conroe, TX – new construction