“Staying within the headlights” is how Vann Cleveland, vice president at specialty contractor Cleveland Electric Co., describes the family-owned company’s vigilance against overextending its capabilities in the vigorous Georgia construction market.
A couple of years ago, however, someone must have turned on the high beams.
In 2014, Cleveland Electric’s revenue jumped 44%, the result of several major, long-planned projects that kicked off at the same time. The company’s three service lines—electrical, mechanical and communication/low-voltage technical services—contributed to keeping revenue steady last year. The firm reported regional revenue of $170.62 million in 2015 for this year’s Top Specialty Contractors survey. With that total, the contractor placed 9th in ENR Southeast’s annual ranking of specialty firms. The solid performance also helped Cleveland Electric earn its selection as ENR Southeast’s Specialty Contractor of the Year.
Even though Cleveland says the company is on pace to reach $182 million in revenue in 2016, he admits to some trepidation about 2014’s great leap.
“We nearly did too much, because we’re driven by profit, not growth,” he explains. “We want to add to our bottom line without compromising quality.”
That philosophy dates back to 1925, when Vann’s great-grandfather, Ras Cleveland, started the business as an electric motor repair shop. Today, Vann Cleveland shares company ownership with Ras’ other descendents: John Cleveland, president; Ken Harbour, chief financial officer; and James Cleveland Jr., chairman and CEO.
The industrial process and power generation market, long the cornerstone of Cleveland Electric’s construction business, remains a stalwart sector with longtime clients such as Atlanta-based Southern Co., the parent of Georgia Power, which provides a steady stream of assignments.
Last year, for example, Cleveland Electric provided $13.3 million in mechanical and electrical services for the conversion of two coal-fired boilers to natural gas fuel at the utility’s Yates steam-generation plant in Coweta County, Ga. Meeting that project’s demanding 14-week schedule required working as many as 300 craft personnel across two shifts seven days a week.
Cleveland Electric’s current projects include the $200-million, 485,000-sq-ft Spring @ 8th office tower in Atlanta’s Midtown Tech Square; electrical power and systems work for the 20-MW Hazelhurst Solar Farm in southeast Georgia; a central energy plant to support a 200,000-sq-ft data center expansion west of Atlanta; and $36 million in electrical work for the Landside Terminal Modernization at Hartsfield Jackson Atlanta International Airport, another longtime client.
When the project’s scope of work demands extra resources, Cleveland Electric joins other subcontractors in joint ventures to maximize its own resources, which include 3D modeling and prefabrication. For instance, the company is part of a three-contractor joint venture providing electrical power and sports LED lighting for Mercedes-Benz Stadium, the $1.2-billion, 1.8-million-sq-ft new home for the National Football League’s Atlanta Falcons.
Cleveland notes that while the Atlanta market’s sustained burst of activity is keeping most subcontractors busy, the level of competition has yet to translate into price increases. But skilled labor remains a concern.
“There is a shortage with journeymen electricians,” he says, “but we’ve been able to plan for that so far.”
What distinguishes the current business climate, Cleveland says, are owner-driven demands for greater collaboration and efficiency, particularly on larger, more complex projects. “That’s actually good for us,” he says. “That’s the kind of work that plays to our strengths, so those are the kinds of jobs we look for.”
Cleveland believes the firm’s most extensive problem-solving effort came with integrating nearly $90 million worth of process, electrical and communications systems at the recently completed $1-billion Program Covington Biologics Facility, located 45 miles southeast of Atlanta. The 100-acre campus houses more than 1.2 million sq ft of research, manufacturing and utility operations, all of which depend on precision building systems to support cutting-edge pharmaceutical research on therapies that will be used to treat patients suffering from burns, immune deficiencies and other medical conditions.
Since construction got underway in 2012, Cleveland Electric has worked with construction manager Fluor to mitigate numerous issues as new buildings have come on line so that the facility can quickly transition to full production in 2018.
“They want you to challenge them,” says Mark Allnutt, McCarthy Building Cos.’ project director for Emory University Hospital’s 450,000-sq ft patient tower, for which Cleveland is providing all electric power and systems as part of a joint venture.
Allnutt adds that even when starting out with limited design documents, “they’re very good at understanding how projects go together, yet establishing a solid budget.”
Creativity is also a hallmark of Cleveland Electric’s work. Allnutt recalls how the company’s strategy of installing permanent lighting early in construction eliminated the need for temporary lighting that would likely have been discarded later in the project.
Cleveland Electric has also gained a reputation for problem-solving and, more importantly, problem-prevention.
Ken Aschbacher, Archer Western’s project manager for Metropolitan Atlanta Rapid Transit Authority’s $38-million Brady Avenue Mobility Facility, says that over the two-year construction phase, Cleveland Electric helped maintain seamless operations across the 11-acre site. The firm’s work included setting up temporary power, electrical connections and switchovers, and performing as much work as possible overnight to ensure uninterrupted operation of MARTA’s Mobility vehicles the next day.
“They are willing to do things that aren’t ordinarily expected of subs,” says Aschbacher, and that was particularly important given that the project is design-build, a delivery method rarely used by MARTA. As such, the agency had set exacting standards for its communication equipment, some of which had been superseded by technology changes.
Yet Cleveland Electric found a strategy for meeting MARTA’s requirements with up-to-date equipment and only minimal change orders.
“They were truly interested in giving the owner an optimal solution for the least cost,” Aschbacher says.
While these project attributes may seem unique today, Cleveland predicts that they will gradually become routine in the coming years as owners expect contractors to provide greater value at virtually the same cost. Fortunately, he adds, BIM and other construction management software have evolved as well, helping contractors be more proactive with identifying prefabrication opportunities and clash detection in the field.
“The pressure is on everyone,” Cleveland says, adding that opportunities to participate with the better lead contractors come only to those subs that put a premium on safety. “Fortunately, our EMR has never been lower,” he says.
Another strategy that Cleveland Electric employs to cut costs and save time is its partnership with two preselected vendors that compete to supply basic materials (e.g., wire, conduit and fittings) for specific projects. Because the vendors are also responsible for material packaging and delivery to the jobsite, Cleveland Electric’s field workers can focus on installation, not chasing down parts.
Yet even with their emphasis on efficiency, Cleveland Electric employees still take time to work with the Phoenix Boys Association, a program for at-risk youth in west Atlanta. The company hosts meetings of the group’s Boy Scout troop and provides mentoring opportunities for inner-city students.
Sustaining the Cycle
With the total value of Atlanta’s construction starts having doubled since 2012—and projected to touch $13 billion this year—it would appear that Cleveland Electric will continue to enjoy opportunities to pursue its time-tested strategy, one that Vann Cleveland believes will help provide a degree of protection from any sudden disruption.
“The key as always is to keep on top of the marketplace by talking to customers about what they’re doing,” he says. “If we can get ahead of the opportunity, we can be ready for it both to bid and to deliver the service.”
Capitalizing on an existing reputation for quality, collaboration and problem-solving won’t hurt either, says McCarthy’s Allnutt.
“You can trust them,” he says, “which is important in this business.”