"Best Value" Case Study: Coastal Construction Group

By Ted Garrison

As a high-performing contractor, Coastal Construction Group's success demonstrates the benefits that contractors receive when they implement "best value" principles. Typically, discussions about "best value" revolve around a method of selecting a contractor by other than price. However, the real benefit to the entire industry is the improved performance that "best value" creates in the contractor's efforts.

Best value contractors experience improvement in both their efficiency and effectiveness, which results in making them more competitive regardless of the method used to select the contractor. This is the perfect win-win situation for the contractor and its clients.

First, Coastal is totally committed to protecting the client. Founder, chairman and CEO Thomas P. Murphy Jr., reinforces that position by telling his people, "Make it right before you leave it." Tom C. Murphy, vice president of pre-construction services, expands by stating that "we look out for the owner's best interest."

This process starts with the company's focus on the project's triple constraints: quality (performance), schedule and price. Tom C. stated that when estimating a project, Coastal's mindset is on delivering the best quality with the fastest schedule, while balancing both of those concerns against the cost - and not on just delivering the lowest price possible. Coastal works with its clients to determine the best balance to meet the clients' requirements on its projects.

However, Coastal takes the client's best interest to a higher level by finding ways to increase the client's revenue. Instead of only concentrating on construction efficiency, Coastal differentiates itself by determining how to deliver a more effective product to its client.

By focusing on the project's total value to the client, Coastal avoids the overemphasis on the construction bid price. This helps create an environment where owners feel comfortable negotiating with Coastal. As company president Dan Whiteman explained: "We have succeeded in setting higher expectations than our competition."

That's a critical point, because when this condition exists, the owner understands the true value that Coastal delivers - and reduces the owner's focus on the construction price. Price is always a factor, but when clients concentrate on value, price is placed in its proper perspective.

Coastal acknowledges it wasn't always able to negotiate work, because it first had to develop a reputation as a quality contractor. However, equally important to negotiating successful projects is the selection of what Coastal refers to as "good" clients. These are clients that understand the importance of value and aren't just focused on the contractor's bid price.

The quality of the client is critical. In fact, Murphy said, even if it's a good project with good financing, he'd rather walk away from it if it's not a good client. In short, Coastal's success is not just about growth, but the right kind of growth - and that means growing with the right kind of owners.

Another factor that causes its clients to view Coastal as a high-performing contractor is the contractor's concerted effort to set high expectations among its clients. Company officials - often Murphy himself - meet with all clients before the start of the project to make sure everything is clearly defined. In other words, he makes sure the client understands exactly what it needs and what it should expect.

This process also helps reduce the need for change orders and even more importantly, the elimination of any litigation. Murphy proudly stated, "We have never been to the courthouse."

Tom C. further explained that it's not only about Coastal, and that it takes a team effort. Therefore, Coastal takes pride in collaborating with its subcontractors and therefore treats them like valuable members of the construction team. Tom C. said Coastal works with high-performing subcontractors and often listens to them to determine the best course of action.

Coastal also invests in the final members of the team - its own people. This makes sense, because the only way to achieve consistently high performance is with knowledgeable, skilled and talented people. This investment almost always pays off.

In summary, Coastal Construction is a successful high-performing contractor because it does everything within its power to protect the client and deliver the highest valued product possible to meet the client's specific needs. And its reward for all of this is a stable of profitable repeat clients.

Ted Garrison, author of Strategic Planning for Contractors, works with businesses in the construction industry. He can be reached at Growing@TedGarrison.com.