Relationship Building for Construction Companies

With licensing in 47 states, Lanham, Md.-based Herman/Stewart Construction (HSC) is able to work on projects in most regions of the US.As Ray Herman explains, he and his team shift their focus according to client demands. "If a client wants to build stores in the Southeast, we'll go ahead and focus operations there. If someone wants to build in the North, that's where we turn," said the president and co-founder of HSC.

The organization was established in 1990, and a client-centered philosophy has allowed it to grow significantly during the last two decades. Now, it staffs a team of 120 employees, generates more than $150 million annual revenue, and has a diverse portfolio that includes several large projects, like a 75-store rollout for Speedo and other national retailers.

Roughly half of HSC's revenue is generated from work in the hospitality industry; the remaining 50% is split between retail and food service. But no matter which industry Herman and his team are working in, they use the same trademarked slogan: "We Build Relationships."

"Construction can be a very stressful process for a client. We tryto make each project as low-risk and reasonably priced as possible so we can relieve a lot of the pressure from our clients and help themfeel more comfortable throughout the process," Herman said. "It's a combination of the services we provide as well as the interaction we have with the client"

He believes the company's ability to alleviate stress is one of the reasons HSC sees a high number of repeat clients. In fact, the majority of the company's work is made up of repeat business and multiple-location business, and it's not uncommon for a client to fall under both categories. This is true in its hospitality, retail, and food service divisions.

"Clients want at least a degree of specialty. You have to have a significant track record to build something like a Marriott Courtyard or a restaurant chain, which is why it helps that we build these overand over for many of our clients," Herman said.

"The rollouts are where we really cut our teeth. We have taken on many national retailers and restaurants as clients, and that's reallyhow we got our start working across the country," he continued, noting the company once rolled out 80 locations in 12 months for a telecom client. "When you take on projects like these, you end up with a national presence, and you build relationships with subcontractors and vendors across the US."

Going green

Currently, the team at HSC is working on a project in Virginia that will culminate in the establishment of one of the first LEED-certified Hilton Garden hotels. The project is designed and built for silver certification. The company is also working on a trio of Marriott LEED-certified hotels in its home state, and in the past, the organization has handled an assortment of sustainable projects in the retail field.

According to Herman, the impetus to incorporate LEED standards into a project comes from a number of areas. Sometimes, it will stem from the location where construction is set to take place; other times, an organization decides for itself that sustainability initiatives are beneficial.

As the green movement continues to pick up pace, HSC makes sure itkeeps a knowledgeable staff. Today, the company's in-house team consists of two LEED-certified employees.

"We've made it a point to become educated because we know it's a growing trend," Herman said. "We took two of our existing employees and had them earn certification, and we attend seminars where related topics are explored. We also learn a great deal while working in the field on projects, gaining experience that way."

Time for a turnaround

In the last 12 to 18 months, financing has been the biggest challenge facing Herman and his team. The current economic climate has madeit difficult for even the top-performing businesses to gain financing, which means many of HSC's clients have been forced to postpone projects.

Herman said this is especially true for projects totalling $10 million or more, but he's optimistic about the coming year. "I'm starting to see glimpses of hope in regard to financing," he said. "The construction financing market has been challenging since late July 2008, and many projects have been pushed back, but it's starting to turn around."

Despite the tough economy HSC has been able to remain strong throughout the last year and a half, primarily because of its team's ability to keep pace with the changing trends in each of the sectors it works in. He refers to the development of the limited-service hotel as one example.

"I don't think we're going to see the return of full-service hotels being developed in suburban areas. They're being replaced by limited-service hotels, which haw adopted many of their amenities. Twenty years ago, a Hampton Inn was a basic hotel, but today it's really not," Herman said.