February 18, 2025 • 61 mins
Zach Simmons from Stronghold Construction shares his journey from his origin story to founding the company. He emphasizes the importance of building trust and selecting the right partners in the construction industry. The discussion covers managing relationships with subcontractors, fostering leadership, and the role of data-driven decision-making. Zach reflects on legacy and work-life balance while navigating industry challenges and delivery models. He explains the role of an independent cost estimator and managing change orders, as well as pre-construction cost structures and achieving project savings. The episode also addresses overcoming resistance to change and offers industry advice, concluding with Zach's closing thoughts and contact information.
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Episode Transcript
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(00:00):
Sure.
Well, and let's, let's create a deviation onwhat legacy is because you know, in the company
that I grew up in, the idea of legacy was okay.
You know, Zack's going to take this over and,you know, it's going to continue for the, you
know, the next generation.
That was the viewed legacy, but what's thereality of that legacy.
Okay.
If you don't touch that business for the nextthirty days, it's not going to exist.
(00:25):
There's no controls.
There's no planning.
There's no support staff.
There's no systems or process that if you'renot touching that on an hourly basis, that you
don't have a negative impact in in thestructure of that company.
Have you ever wondered how successfularchitecture, engineering, and construction
(00:46):
companies scale their business?
Or have you ever wanted guidance on how to getmore growth, wealth, and freedom from your AEC
company?
Well, then you're in luck.
Hi.
I'm Will Forat.
And I'm Justin Nagel, and we're your podcasthosts.
We interview successful AEC business leaders tolearn how they use people, process, and
(01:06):
technology to scale their businesses.
So sit back and get ready to learn from theindustry's best.
This is
building scale.
Hey listeners, it's will here.
Our mission is to help the AC industry protectitself by making technology easy.
If you've ever listened to our show, then youknow that the three pillars of scaling a
(01:29):
business are people, process, and technology.
So if you suspect technology is your weak link,then book a call with us to see where we can
help maximize your company's IT cybersecuritystrategy.
Just go to buildingscale.net/help.
Today's guest is Zach Simmons, a cofounder ofStronghold Construction, a company built to fix
(01:53):
the systemic issues in the constructionindustry.
With experience on both the general contractingand development sides, Zach saw firsthand the
inefficiencies, budget overruns, and misalignedexpectations that plagued projects.
In February of twenty twenty two, he and RoyLewis founded Stronghold to create a real
change, prioritizing transparency, efficiency,and long term value over a typical low bid
(02:16):
mentality.
Stronghold construction has grown let me makesure I get this number right.
600%.
That's a lot for those who aren'tmathematicians.
Since 2023, bootstrapped through performanceand profit.
The company is veteran and first responderowned with a culture first approach that values
leadership, discipline, and merit basedstructure.
(02:39):
They specialize in alternative deliveryprograms for large scale projects offering
innovative solutions that challenge the statusquo in Oklahoma's construction industry.
And with all that said, Zach, welcome to theshow.
Thanks for having me.
We're excited.
I love the mentality of the alternative,delivery programs.
(03:00):
So, like, that is something that I as close asan insider, I can get to construction without
actually swinging a hammer.
I love this concept, and I think it's,something that should be throughout the whole
industry.
So we're gonna talk a bunch about that.
But before we get into that, let's hear yourorigin story.
How did you get in construction and then, howdid stronghold start?
Yeah.
Absolutely.
Probably like a lot of people in construction,I got into it because the family was in it.
(03:24):
So I'm a second generation builder.
My father started a commercial industrialelectrical company as an electrical
subcontractor in the late seventies.
So it had been pre established for quite sometime by the time that I came around, but, it
was homeschooled.
And so it was do your work and your schoolworkin the morning, do your chores, and then we're
(03:46):
in the truck and headed to a job site of theoffice by seven.
And, you know, I, I think back and, I'mcautious to say, I think I don't break any
child labor laws at like 13, but, you know, itwas, it was really early.
So, you know, just being exposed to that and,the different aspects of the business of
(04:11):
construction.
Yeah.
We really kind of span the gambit, built a lotof churches.
My dad really had a passion for buildingchurches, which obviously we started on the
electrical side, but as we grew and asrelationships grew there was a really defined
crossover between just doing the electricalaspect and then assisting in the overall build
through some partnerships.
(04:32):
So I look back and I think, if I remembercorrectly, I ran my first million dollar job as
effectively we'll, we'll call it asuperintendent at about 16.
And so, you know, it's, it's the joke that, youknow, you're 25 years old with fifteen years
worth or ten years worth of experience.
That was, that was, that was pretty close forme.
(04:56):
I got a lot of weird looks really early on inmy career for my resume.
And I think I only tried to explain that Istarted at 13 to one company because it was not
received well.
But, no, that's, that really summarizes mybackground.
I really truly didn't make the transition tothe GC world.
We'll say professionally until about 20.
(05:17):
You know, that was my first exposure separatedfrom the family business.
And, you know, it was just a deep immersion ina world that I thought I knew a lot about, but
very rapidly figuring out I knew nothing otherthan, you know, just having a really good
foundation in construction.
And through my career ultimately moved to Texasand spent some time in DFW, which the company
(05:39):
that I was working for then ultimately sent meall across The U S doing fortune 500
construction.
So I've been everywhere from New York to LA andSeattle to Miami doing construction work.
You know, thankfully that that brought me backhome to Oklahoma where, you know, where my
roots started.
And we were able to kick off Stronghold and,and in the place that we really care about and,
(06:05):
you know, have an invested interest in inshaping that industry.
That's wild.
I now I understand on those resumes wherethey're, like, looking for somebody that has
ten years of experience, but it's an entrylevel.
And you're like, oh, yeah.
Well, that's Zach.
He that's Yeah.
That's exactly what they're looking for.
That was me.
You're the unicorn.
You're the unicorn, fortunately andunfortunately.
(06:27):
For sure.
Being raised up in business, gives a differentperspective.
Right?
So even when you don't go and and take overthat business, but you then go off and and run
your own, what did that show you?
Well, you know, what what lessons were youlearning at a very young age, that now can
either be applied or, like, absolutely avoid?
(06:47):
Sure.
You know, I think, you know, with my dad beingfrom, you know, what we would consider the
older generation, you know, a good example ofpreface kind of how I grew up.
My siblings are in their fifties and I'm in mythirties.
So, I grew up a little bit different than someof my age.
I think the key takeaway that I really pickedup was the work ethic.
(07:12):
There was a lot of early mornings, late nights,a lot of not accepting anything other than
perfection.
You know, if, if you're gonna do something, doit right the first time.
And it just, you know, it embedded in me a, youknow, what I would feel is a different work
ethic.
That's, that's the positive side.
No other takeaways is, you know, like a lot ofcompanies in the construction industry today,
(07:37):
and, you know, you look back fifty years andyou see a similar trend.
You have an individual that is great at whatthey do.
They're great at their craft, but that businessacumen is not.
No, not there in comparison to their level ofproficiency in their trade and really seeing
the struggles that, you know, the familybusiness had just in growth.
(07:59):
Don't get me wrong.
My dad had some great success, but, you know,looking towards the end of his career before,
you know, selling that business, that sale waseffectively his retirement.
There was no, you know, there was no built upreserve.
There was no retirement plan.
And so, you know, he's well renowned as, youknow, one of the best electricians in Oklahoma.
(08:20):
But there's no legacy there other than thepeople that he directly worked with that
remember working with him.
And, you know, all that's left today is, youknow, man, I wish that guy was still in the
industry.
There is no legacy outside of that.
So, you know, it's an, it's important for me totake those things as I learned.
And then I took from my dad, and to continuethat on in my own way.
(08:45):
But, Yeah, I think looking at the scalabilityof the business, looking at that long term
forecasting, making sure that we have as goodor a better base in business that we do in our
craft and in our trade.
That is, you know, I think that's probably thebiggest takeaway that I took from growing up in
that we'll call that in encapsulation chamber,that echo chamber of the trades.
(09:10):
That's, that's become a really importantfoundation for stronghold.
And had I started stronghold by myself, I thinkI would've probably recreated that trend, not
even trying.
But you have to, you have to have goodpartners.
You have to have good resources.
You have to have good knowledge bases thatdeviate from your own to be able to really,
(09:31):
truly get a good thing through that.
What do those resources and, actually, we'rethe partners.
So, like, let's talk about how did you cometogether?
Why why does that fit well?
Where do you add value to each other?
Yeah.
And what what resources do you use to level upyour, let's say, business acumen game?
Sure.
So at least for stronghold specifically, I'mlucky enough to have two great partners.
(09:54):
So, you know, like you mentioned, Roy Lewis isalongside, you know, he and I, we were the
original founding group.
Roy comes from a development, you know, reallyan owner side background in construction and
also a municipality perspective.
He worked, you know, his, we call it our pastlives.
He worked C suite executive office for, youknow, a large developer, a large corporation
(10:18):
here in Oklahoma and handling a lot of theirindividual investments, their developments,
and, really managing that construction aspectof monitoring those investments.
Excuse me.
His experience later shifted to themunicipality aspect as the federal programs
manager for city of Oklahoma City.
(10:39):
And managing that money, managing thatdepartment you know, really gives a lot of
city, federal, municipal insight.
That's really assisted us in, you know, a lotof the tribal things that we're doing.
But you know, in addition to that, afterfounding, we picked up Danny Warner
entrepreneur and previous business owner andself employment actually on the restaurant side
(11:00):
of things.
So definitely a little bit different than whathe's doing today.
But more so than that has a twenty year careerin banking and finance and lending.
So thankfully, you know, Roy sits as our CEOfor that kind of long term forecasting, you
know, corporate trajectory forecast.
And then Danny sits as our CFO, which, youknow, I think Danny's involvement has been
(11:23):
really crucial to you know, our growth and inour business.
I think if we had found somebody that has abackground in construction finance, Yep.
This is something that I've realized sinceDanny came on some things even in myself that
I'm willing to accept in budget management orconstruction finance that he's never been
(11:45):
exposed to.
And so he comes into this world with acompletely different perspective in the banking
industry.
Everything is black and white.
It's you either hit this deadline or youdidn't, it's either in this contract or it
isn't.
And there's a lot of things that we ascontractors have just accepted, you know, that
pay up is late or, you know, you know, thisthis subcontractor, you know, he, you know, we
(12:10):
missed his payment deadline three days ago,but, you know, he's I've talked to him.
He's okay.
And Danny really rejects a lot of those thingsand keeps the finance department very black and
white, which has, as not only helped us, butit's also created a known aspect of stronghold
is, you know, our subcontractors and ourpartners really trust that we're down to the
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penny and down to the second on our finances.
So it's, it's a really good resource to haveboth of those guys in those different aspects.
I'm very much the construction guy.
And so our backgrounds really don't overlap.
And I think that's another thing that's beenreally beneficial to our partnership is when we
have a decision that really lends eithertowards construction or corporate structure or
(12:56):
finance.
We have enough respect in that partnership thatwe really hands off to the person that has that
background.
And so there's not a lot of infighting or, youknow, disagreements to letting someone do their
thing.
You know, it's pretty interesting to be able tohave partnerships like that.
It does require a lot of trust.
Does that trust come inherent right in thebeginning?
(13:18):
Absolutely.
Yeah.
Thanks.
And how do you, and how do you build it?
You build it more to be able to make, I mean,we're talking about dollars here for a second.
So the bigger and bigger decisions are and thebigger and bigger the dollars are behind that.
How do you make sure that that trust is kept?
You know, thankfully for us, we all had apreexisting relationship prior to starting the
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business.
You know, we actually, so stronghold actuallyhad a little bit of a different owner group
when we really kicked off, you know, Roy and Iwere we'll call it accessory partners.
And those, you know, that original group reallyvery quickly shifted once we started growing to
just Roy and I and those, you know, thosemembers just kind of bowed out and said, you
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know, this is really all show.
This is your thing.
You just take it.
We don't want any involvement.
So we, we very much leveraged that preexistingrelationship.
We had a level of trust and a level of at leastexposure to each one of our acumen and you
know, what our strong suits were.
And it, I can't say that there hasn't been somerocky times.
(14:25):
We, we have, we call it a venomous discussionsometimes.
But, no, it's, I mean, it's, it's absolute.
You have to have that trust in each other.
You have to have that confidence that eventhough one of us may not see the benefit of a
decision being made, we have to trust thatthey're basing their decision off of twenty
(14:48):
years worth of experience in that specificindustry.
And so that decision is being made for areason.
It's being made with our best interest atheart.
But yeah, absolutely.
You know, as the dollar value ticks up, itbecomes more stressful.
It becomes more involved.
It becomes a longer drawn out process to makethose decisions.
(15:09):
But on the flip side of that, I think thatwe've also refined our decision making
workflow.
We have, you know, we've learned differentaspects about each other, how we operate, how,
you know, what pieces of data do we need to seeto be able to feel confident in that decision?
And so, you know, I think a great example forme going to Danny, if I want to make a large
(15:32):
expense, he's, you know, he's the money guy.
I've got to justify where that makes sense froman operational aspect.
And I've got to put the data that I'm seeing onthe construction side into a format that he can
digest for the finance side.
And so it's just, it's things like that, but,you know, trust is that basis.
And you, you can't operate effectively as ateam, as a leadership team, if there's
(15:57):
distrust.
And we've, you know, we've seen that firsthandand thankfully we've been able to move past
that really rapidly.
But, Justin, I think you had something.
Yeah.
So well, you know, when I think of this, Iobviously, the partners that are internal to
you.
Right?
So, like, that makes sense.
A lot of trust.
However, like, there's also external resources.
So if that's, you know, your trade partners, ifyou use a marketing company, if you use a CPA,
(16:23):
like, things like that, that also need to bethe right fit.
They need to combined need to be able to have,conflict or, you know, a little conflict that
happens, which is good.
Healthy conflict's a good thing.
How do you how do you find those partners?
And, like, what does that look like when you'relooking external to the company in comparison
to the partners that are internal?
(16:45):
Sure.
So we really chase that, healthy conflict, youknow, as you say.
Really on on our our side as the owners, wewant to seek out those individuals that
challenge us.
We want to seek out those individuals that areable to, you know, we can present them a
(17:07):
problem and, you know, they immediately say,you know, that's wrong.
That's wrong.
That's wrong.
You're dumb for doing that.
I love the candid.
Well, you know, at Spot, we're very candid.
It's one
of our core
values.
Sometimes it comes off, I call it a littleasshole y.
But that's just part of the dialect, I think.
(17:27):
Sure.
No.
It's it's.
And I think, you know, we had a recentexperience that we just changed CPAs.
I think this is a really good example of this.
What you're chasing.
We had some really good CPAs that we'd workedwith previously.
Good lawyers, good CPAs, you know, came highlyrecommended.
And, you know, just through that growth youhave to shift companies that you work with just
(17:53):
based on the sheer growth.
Some companies, you know, as you grow, they'rejust more than what they really want to handle
is your account is no longer manageable forthem.
Or, you know, we just need to modify and weneed to make shifts.
So in that, in that path, we've shifted CPAsrecently.
And, you know, we thought that our businessstructure, our tax structure was great.
(18:13):
It was pristine.
We've gone through hours of discussion withlawyers and, you know, our previous CPA and
talking to other business owners.
And we were assured that the structure that wehad was pristine.
There was nothing wrong with it.
We walk into this meeting and I kid you not, itwas less than five minutes that the, you know,
(18:35):
we're explaining our structure, we'reexplaining what we've got going.
And he just very blatantly looks at us andgoes, well, you want to know where you went
wrong?
And stood up and proceeded to start drawing onthe whiteboard and was like, this is wrong.
This is wrong.
This is wrong.
I don't know why somebody recommended this.
This is wrong and just completely destroyed ourbusiness model as far as the structure side.
(18:57):
And, you know, through some differentconnections and we were kind of able to vet
what this guy's experience was and who he'dbeen dealing with.
And he provided immediately a lot of themissing pieces that we'd been striving for in
the past that we were trying to get to, but wedidn't have just that last little bit of
interconnect ability.
And, you know, those are the individuals thatwe chase to challenge us in that, you know,
(19:22):
that one thirty minute meeting completelyshifted our perspective on structure and, you
know, hopefully, you know, has set us up in adirection that ultimately would have caused us
some grief here in the near and long termfuture.
And it's something that at least at our currentposition may may sting a little bit, but that
(19:43):
sting is going to pay tenfold here in the nextfive years.
So, you know, that's where that's where wechase that that healthy criticism, just flat
out criticism.
We we sometimes have to chase whether it'shealthy or not.
But, you know, I think that's very important tosay that that is very much on the ownership
side.
That's our resource side.
(20:03):
We want to be challenged in knowing that ourbusiness is healthy and that we're making good
decisions for the business.
The flip side to that is our subcontractorpartners, our vendors.
You know, we, it's a very different kind ofcriticism in that aspect.
And, you know, those relationships, you know,they have to be healthy.
They have to be respectful.
They have to be mutually beneficial.
(20:23):
And that's one thing that we've really pushedin Stronghold.
A lot of general contractors have this veryauthoritarian relationship with their subs.
You know, it's the, you're going to do what Iwant you to do when I say it.
It's that when I say jump, you say how highkind of mentality.
And we have completely shifted away from it.
(20:44):
You know, obviously there's some instances thatwe, you know, we have to say, you know, guys,
you're going to do this.
Like, this is what you agreed to.
This is a quality thing.
This is a schedule thing.
You're going to cost the owner money.
If you don't do this or you're going to impactproject.
And so sometimes we have to come down, youknow, with a heavy hand, let's say 99% of the
(21:06):
time, you know, because we're selecting goodcontractors to work with in the first place,
because we are building those relationshipsprior to these projects ever kicking off.
It's very few and far between that we have todo that.
And we wouldn't be here today without the, youknow, we call them partnerships.
We're management experts.
(21:26):
We are logistic experts.
We are construction management experts, but weare not trade experts.
We couldn't do these jobs without theseindividuals and their companies.
And so anytime that we walk into a job, it isvery much a partnership.
How can we set you guys up logistically to getin, get out and make the most money possible?
(21:47):
You know, we say pretty regularly, I wouldprefer that the subcontractors that work for
us, want to come back to work for us on ourprojects, because it was the easiest one that
they've done.
We had the easiest staff to work with and theymade the most money working with us.
It's that, you know, how many flies do youcatch with honey versus vinegar?
(22:11):
I would rather be more competitive in my marketbecause people are giving me better pricing
because they enjoy working with us because theymake more money working with us.
And they're going to give me better competitivepricing than my other general contractor
competitors, just because they enjoy workingwith us.
Not because I have an authoritarianrelationship and I'm beating them up on their
(22:33):
pricing.
So, you, you look at who we've been able toestablish as resources, as partners.
And you know, I can't thank those guys enough.
I think, you know, I had previously mentionedto you guys, our relationship with WDS.
Well, WDS, when we met them, they were just anearthwork contractor, a very good earthwork
(22:54):
contractor, mind you.
But we had established a really goodrelationship there.
And ultimately that relationship from aultimately subcontractor was what got us into
alternative delivery?
They called us in there like, Hey, we have thisCentimeters program.
It's a program called CMGC.
(23:14):
We were just awarded this.
We bid this ourselves.
Would you be willing to come in and help usmanage this?
You know, at the time I think they had three orfour employees and, you know, that was, you
know, that relationship with a subcontractor isultimately what got us into the realm that we
sit in today.
And so yeah, I, I could talk for hours aboutthe importance of relationships, but no, it's
(23:41):
it's paramount for us.
So as you were talking, I heard a lot ofdifferent aspects that really relate to
business acumen making decisions.
Right.
Etcetera.
And, so even the decision making processbefore, right.
It requires having some, you know, some sort ofmeasure of business acumen in order to have
(24:05):
great partners, there has to be some level ofacumen as well.
So how do you judge or measure business acumen?
You know, I would say that that's a slidingscale.
You know, obviously for us, we remain in aposition of we only know about this month.
That keeps us in the always learning, alwayschasing mentality, never accepting where we are
(24:29):
at the current moment with our, you know,whether that be our current structure, our
current knowledge base, we're always chasingwhere, you know, somebody somebody out there
has at some point done this better and is morethan likely currently doing it better than what
we're doing it.
And so that's our overall mindset, which thenpushes us into multiple different realms of of
(24:51):
thought.
Yeah.
I think there's a really important deviationbetween companies like the one that I grew up
in, where you have a great trade contractor andthey're absolutely a whiz kid at their craft.
But you take out multiple different factorsthat, you know, that business acumen brings.
If my dad watches this, my dad was not a biz, abad businessman.
(25:15):
I want to make that clear.
But there's, there is a deviation in what Igrew up in.
It was the lack of long term forecast.
It was the lack of financial controls.
It was the lack of, you know, employeeexpansion and top down leadership, expanding
that span of control into leadership to wherewe, as the owners really become irrelevant.
(25:38):
You do a side by side comparison and I'll andI'll use that that family company as as direct
comparison.
Stronghold today is really focused on buildingour leaders, building our staff up to be better
than we are.
Whereas, you know, it was very much a one manshow for the family company that I grew up in.
Now it was the doers and the single point head.
(26:01):
We very much want to build those individuals upto take the mantle from us, essentially to the
point to where we are getting in the way ofthe, the company itself by being involved.
Like let's build them up to the point thatwe're irrelevant.
The long term forecasting really comes intoplay, which, you know, thankfully we, you know,
(26:22):
that's Roy's, one of his strong suits.
You know, you look at well back to yourquestion, the gauge of business acumen, you
know, from the companies that just look attheir next job, and say, okay, well, we made
this percent of profit on this job, thatsystem, you know, every everything has a
(26:42):
system.
What we did on this job worked well because ourprofit margin reflects that.
So let's just repeat that.
Let's just, let's just continue that process orcontinue that train, see how big we can grow
it.
Whereas we are we say that we play money ballin everything that we do.
Everything has a data point.
Everything has a value.
Everything that we do, even though we may have,you know, 15 different data points, so we've
(27:06):
discussed it for fifteen days, we put it on atrial basis.
So it's a let's test this for the next quarter.
Let's see what the real factual results are incomparison to what our projections are.
And then let's take those two and blend thoseinto a long term model.
We say that we make decisions on a fifty andone hundred year basis.
(27:27):
So it's really, you know, most, I believe mostUs businesses look on ten and twenty year
intervals for their forecast.
We, you know, we expand that we expand thatmagnifying glass.
So it says, okay, the decision that we maketoday, what does that look like in fifty years?
What does that look like in a hundred years?
I mean, it really, it changes the way that weview our business decisions in a way that you
(27:52):
are, if you have a problem in the decisionyou're getting ready to make, it's going to
magnify that to an extent that, you know, I'mgoing to be long dead by then.
But if this continues for the next hundredyears of the company, what is that extenuating
circumstance or what is that going to look likereally truly at that point?
So, you know, it's all of those factorscombined.
(28:14):
We're not going to do it as good as the nextgeneral contractor.
I'm sure there's plenty of general contractorsthat have a lot more business acumen.
I know that to be a fact.
Some of our competitors have entire boards of,you know, extremely experienced c suite guys
and, you know, the guys with, you know, fiftyyears of business experience.
Whereas, you know, us and in our company, wejust don't have that wisdom base yet.
(28:38):
We chase that, but we don't have it.
And we realize that I go back to that slidingscale.
We are more efficient than some.
We are significantly less efficient thanothers, and we always just have to stay in a
position of growth and self betterment focusingon those financial controls, focusing on that
long term forecasting and planning, focusing onthat leadership development.
(28:58):
Really, like I said, trying to make ourselvesirrelevant in the company.
Those are all major factors that we focus on.
You know, encapsulating all of that is justcreating a vision, creating something that our
our people, that our clients, that our partnerscan grab on to, that they can take ownership
in, and being very clear and concise about whatthat vision is.
(29:21):
You know, what direction are we headed?
I think a lot of companies just kind of floatin the wind with opportunity.
And that's one thing that we've really basedin, in just having a really strong foundational
base of our direction of our goals, who we arein the market and what we offer.
And I think that's presented, you know,opportunity for people around us to really just
(29:43):
gravitate to that and grab onto that and thensay, yeah.
We agree with this.
We, you know, we support this.
So very much the legacy component.
Right?
One
of the things you mentioned, your dad's companythat when he sold, like, the legacy is, like,
these few people that worked with him thatexist.
What you but it sounds like you're trying tobuild is much larger of a legacy business.
(30:04):
And and I don't wanna get caught up in the ideathat, like, you should think about legacy every
day because that's not the path to success inmy opinion.
But, you do have to put work in to get to thatplace.
Like, that that's that is true.
Right?
So trying to build this legacy business, like,is that for your next generation, your
partner's next generation?
Like, what like, why is that important to you?
(30:27):
I guess.
Sure.
Well, and let's, let's create a deviation onwhat legacy is because you know, in the company
that I grew up in, the idea of legacy was okay.
You know, Zack's going to take this over andyou know, it's going to continue for the, you
know, the next generation.
That was the viewed legacy.
But what's the reality of that legacy.
Okay.
(30:47):
If you don't touch that business for the nextthirty days, it's not going to exist.
There's no controls, there's no planning,there's no support staff, there's no systems or
process that if you're not touching that on anhourly basis, that you don't have a negative
impact in the structure of that company.
(31:09):
So, you know, that is still legacy that isstill legacy building.
But, you know, let's shift that scale to whatwe're looking at.
I keep saying that we want to make ourselvesirrelevant.
We are trying to build out the systems andprocesses to ensure that if we're here, if
we're involved, if we're making daily decisionsor not our vision, our direction for the
(31:33):
company, the daily operations, those are notnecessarily impacted.
Now we collectively, we never want to be theowners that just say, okay, well, we've built
it to this point.
That's our, our, you know, kind of our stoppingpoint and you guys have fun.
I've seen that too many times.
(31:53):
And if that's not done over a very longtimeframe and not done intentionally and
effectively, the wheels fall off really quick.
And so that's when I say that I want to make usirrelevant.
That's not what I mean.
All I mean is that with minimal guidance andsupport with just the reinforcement of what
(32:15):
we've started, that our current people are ableto very easily take that vision and run with it
on a daily basis.
As far as, you know, what happens next forstronghold, as far as legacy, We're not really
sure.
I have a little one.
She's three.
The other partners, they really don't have ageneration that might come behind them, but we
do have employees that their kids have alreadyexpressed an interest in construction.
(32:40):
So what that will say next generation ofstronghold looks like.
We're really not sure.
But we, we know that we want to hand it off tosomeone who that someone might be.
We don't necessarily know, but we're going tocontinue to prepare for that.
So whether that's our staff's children, youknow, whether my child is involved in it or
(33:00):
not, that's going to be her decision.
But we are not building the company for a buildand sell or, you know, build and and shift.
And, you know, we're gonna go sit on a beachand drink my ties.
Like it's, we, we very much want to be present.
We want to be, you know, I think the ideal isI'll give you Danny's.
(33:22):
I'm not sure what my ideal is.
You know, Danny, you know, Danny has said, youknow, I want to be here three days a week, be
involved, you know, Intel I'm 80 years old.
And you know, he's like, I want to work fulltime as long as I absolutely can, but I want to
be able to play golf.
So, you know, that's, you know, that's, it's,it's kind of a sliding scale.
(33:44):
I love to work.
I love what we do.
You know, I think legacy for me, not only afterI'm gone out of the company or after you I've
passed that mantle off to somebody else, this,this company and this opportunity, you know,
(34:06):
being an entrepreneur, it awards time.
Yes, there's a revenue aspect and, you know,you, you wanna, you wanna talk about wealth
building, you wanna talk about those things,but what does that really boil down to?
It really boils down to the affordability oftime.
I mean, with my little one, I want to be ableto go to the dance recitals, to go to the
sports games, to go on the Disney world tripsand be able to experience life with her as a
(34:31):
child where her remembrance of her childhoodand stronghold is that, you know, dad wasn't
always working.
Dad wasn't always phone or on his phone or, youknow, he couldn't go into the backyard and play
because, you know, he's working on his laptopin the evenings.
You know, I want that legacy aspect for mepersonally to be.
(34:53):
Yeah.
You know, I know my, my dad was a businessowner, but I really, I, I didn't recognize it.
He was always present.
He was always there.
We were always going to do stuff, you know,that, that childhood time, you know, I, I hold
that in a really high regard.
And that's so when I think about legacy, youknow, I want her to be able to remember that
and, look at stronghold positively because, youknow, her father was able to take that success
(35:21):
and then transfer that into a time revenue, beable to spend with family.
No.
That makes sense.
Well, if, your daughter's three, she's got tenyears to then she starts working.
I think, I think that's the path that yourfamily runs.
So no, it's
okay.
Hey, so this obviously affects, you know, whatjobs you take and obviously I think this is a
(35:44):
good place to talk about the delivery model.
Right.
So can you talk a little bit about bidding lowbid versus design build progressive design
build cost plus integrated delivery?
How does CNBC really apply to all of that?
Sure.
Yeah.
It, so I say we started stronghold out offrustration.
(36:07):
We, we say that quite a bit, you know, Roy andmyself being in the industry, Oklahoma is very
centered in either low bid or see him at risk.
Like those are really the only two methods yousee.
Excuse me.
You'll catch only catch a private developerthat you know, they want to get fancy and they
(36:27):
want to go design, build.
Like those are, I mean, those are really themethods that you see.
And those are the methods that I grew up in.
And so Roy and I seen this from differentperspectives, you know, Roy being on the owner
side and me being on the performance side, youknow, we had a collective shared experience of
the industry as a whole of this system isbroken.
(36:48):
So that, and that's what I say when we started,it started stronghold out of frustration.
It was the frustration of projects being overbudget before they start.
It was the frustration of projects being overdesigned with no check set.
Nobody to say this is being over designed.
The low bid market, You know, it produces acompetitive nature where, you know, you're
(37:11):
going to have your competitive bid, but thenyou're also going to have $500,000 worth of
change orders on a 2 and a half million dollarjob sitting there waiting, knowing that these
are, you know, you shift away from the biddingfocus to more so look for change orders to know
what your, your revenue capture above hard bidis the day that you signed contract.
(37:35):
You know, that's, you know, we've seen thatmore often than not that, you know, it's really
it's really hard to even know what the initialspend on a project is in low bid, especially in
the public sector.
You look at city state federal DOD.
You look at those municipal projects.
And I think a great example is we bid a smalljob.
(37:55):
It was a 2,000,000.
And I think we missed it by, I don't know, itwas 20%.
It was crazy.
It was the loss or the, the shift that, youknow, that bid that at least the awarded bid to
where we set, it was the cost of the entirestill structure for the building.
(38:15):
It was, it was wild.
But, you know, after that project ran itscourse, we, you know, we found out yeah, that,
you know, that contractor was awarded.
And the day that we signed the contract, theyhit us with $400,000 worth of change orders of
planned mistakes and, you know, things that wedidn't factor in, you know, integrating systems
(38:36):
and, you know, it's just kind of the mentalitythat produces.
So that's, that's really where our startingpoint was.
We said, you know, there has to be somethingbetter.
There has to be a delivery method thatnavigates this, and presents a better
opportunity for these projects.
And that's where we found alternative delivery.
(38:56):
Well, you know, like I mentioned previously,WDS was the contractor that was awarded this
first CMGC program.
And, you know, when it was first mentioned tous, I said, oh, yeah.
Okay.
You know, we're going to be a Centimeters atfirst.
And then, you know, we're going to be a generalcontractor through the performance.
And, you know, we know what this is.
This is, this is okay.
(39:19):
We got into it and we were wildly mistaken ofwhat CMGC is and how it truly operates.
The basis of, you know, whether you're talkingabout CMGC or progressive design build, there
are some, you know, innate differences in thedelivery method itself.
But a lot of those go back to contractualbasis.
(39:40):
Like how is, how is the team structured in thiscontractual basis?
Who is really answering to who?
You have a lot of really similar componentsthat I think these alternative delivery
methods, stronghold is based, you know, a lotof our model on banking, that these methods are
going to be really prevalent prevalent in thenear future.
Collaboration is, is number one.
(40:01):
If you look at any of these methods, CMGCprogressive design, build integrated delivery,
they all have a base in collaboration andthat's from top to bottom.
You are having active conversation with thedesign team.
You know, you are vetting pricing.
You are vetting design through a pre qualifiedsubcontractor base that, you know, previous
(40:22):
methods, you're going to get an owner.
They're going to get to architect.
They're going to design it.
They're going to fall in love with that design.
And then they're going to present it to you asa general contractor.
We're going to go bid it out and then we'regoing to come back to you with a price.
And nine times out of 10, our prices were 75, ahundred, 1 hundred and 50, 2 hundred percent
(40:42):
over the estimated budget that was provided bythe architectural firm.
And so this method completely cuts that out.
We are validating the design.
We are validating the design direction for theremainder of the structure with subcontractors,
providing their input to the design, to whatthey're going to do.
(41:02):
We really say, you know, to our subcontractorsdirect the designers that if this was your
project and it was your spin, if this was inyour backyard, how would you design the system?
Where's that middle ground between not havingthe most expensive product and not having the
cheapest product.
And then the user friendly aspect, like withthe maintenance aspect, These methods go all
(41:26):
the way back to, you know, collaboration at itsbase.
I think the unique structures of separating theteams between the Centimeters team on the
construction side, the DM team encapsulatingthe complete design side, all the engineering,
all the environmental, all the regulatorybodies, and then having the third party with
the ice, to where we have to vet everythingthat we do through ice.
(41:50):
Sorry,
Will.
Ice.
Can you just explain what ice is for the forthose that are uninformed?
Of course.
So the three teams, when I refer to CMDM andice, Centimeters is just management team.
DM is the design manager, which encapsulatesthe full design team.
Ice is the independent cost estimator.
So in any of these programs, which oddlyenough, the company that we worked for, their
(42:13):
company name is ice.
So kind of playing to the acronym.
They are a group regardless of the company thatyou work with, that they specialize in bid
leveling and bid scope estimation.
So through any of these things, whether it'sthe schedule, whether it's the scope, whether
it is the unit price for a piece of material,we go through a multi step process in any of
(42:36):
these jobs.
So we have a scope comparison to make sure thatwe are talking about apples to apples.
We have a quantity comparison to make sure thatwe are aligned on, you know, again, a check set
to the means and methods.
And that we're also looking at the same thingon the plans and then our price comparison, you
know, that encapsulates what we call the OPC.
(42:57):
That method makes us ensure that we have truemarket value for everything that we do.
And then it is a, it's a buffer between the DM,the centimeters and the odor that they have no
skin in the game.
It does not benefit to, for them to say, youknow, oh, this, this price for this structure
is, you know, within market value.
(43:18):
So it provides that third party voice that theinfighting that you might see with some clients
that they don't necessarily agree with yourprice, they don't necessarily agree with your
means and methods.
ICE can sit there from a place of a third partyauthority and say, no, this is the best cost
cost method.
This is the best material.
(43:39):
This is the best schedule format.
You shouldn't deviate from this.
And also on the flip side, if we're overcostedor if we are overschedule or we're not
optimized to a certain efficiency, they'regonna call us out, and they're gonna give a
recommendation to the owner to whether toproceed or not to proceed with this next phase.
So one, it forces us to perform at a very highlevel, across the board.
(44:04):
And it also builds a level of trust with theownership group that, you know, it goes back to
that stigma that, you know, if you're a generalcontractor, oh, you're going to try to screw
me.
You're going to try to hide as much money asyou can.
You're going to try to, you know, takeadvantage of change orders and scope
modifications.
And you're just here to screw me.
(44:25):
Yes.
I'm going to get a product.
Yes.
I'm going to get a building that I love or aproject that I love, but the GCs, you know, the
GCs are just shady.
You know, they're, they're in it for therevenue capture.
I mean, you laugh, but it's it's more oftenthan not that that's that's the true view of
general contractors.
I think another thing that's really importantto alternative delivery in both models, we
don't charge change orders.
(44:47):
So how does that so that was one one thought Ihad.
So how does two things work?
One, change orders.
Like, how do those work?
Right?
Because, like, are you just over overdiscovering or vetting out everything possible
beforehand to say, like, there won't be, and ifthere is, that's on us.
Like, that's our fault.
And then two, second question, like, what aboutthe trade specialty?
(45:08):
So like you need electrical, you need plumbing,you need all these things.
Like, are you going to market to find bidsduring this pre construction process?
Or is it like you know, you're saying like,Hey, we're looking for somebody that's going to
do this at this dollar amount.
Like, are you interested in it?
Because it's a more of a flat cost or flatprice.
(45:29):
Yeah, absolutely.
So, let's talk about the change orders first.
So it's a, it's a split process.
So when we bring in these pre qualifiedsubcontractors, they are really truly a part of
the design.
They are specifying the systems that we areputting in place and they are taking ownership
of that system saying, you know, you need to dothis, this and this for your best optimization
(45:53):
of system and optimization of cost.
And so it builds in this kind of assurance thatthey have full control of that design and they,
they take responsibility for that design.
And so it's very hard for subcontractors inthis method to say, oh, that got missed.
(46:14):
So because a lot of this design aspect iscoming straight from them.
Now, do we have misses?
Absolutely.
Do we, you know, we build in buffers to makesure that that's taken care of.
Of course, we're not going to hang thesesubcontractors out to dry or, you know, put
them out on an island when their their normalplace of operation is not project design.
You know, it's very difficult for them to moreoften than not look at a complete project and
(46:39):
capture everything as we're having good designpartners to balance that conversation.
You know, the design partners having, you know,an active conversation with the trade partner
and they're just bouncing ideas back and forth.
What do you think about this?
What do you think about this?
So you'll with that, that's that extremevetting process that we are not necessarily
injecting ourselves.
We're putting the performing contractor and thedesigner immediately together.
(47:04):
And we're just sitting back and, and, andwatching, which is really entertaining for the
most part, because they have some venomousdiscussions sometimes about how things, how
things should be designed, but that thatenvironment itself and the disagreement from
design to performance vests out a lot of thosethings airs out a lot of those things.
(47:25):
You know, it's funny because some of thesesubcontractors, like they bring their
grievances in from previously, you know,whether it was that architect or not, they're
bringing in, well, this guy screwed this up andthis, our engineer forgot about this.
You know, it's, it's promoting good, gooddesign management in these jobs.
But on the flip side of that, you know, we talkabout vetting out these projects and not
(47:49):
charging change orders.
We have we have a risk fund in every single oneof these projects that is built into the the
guaranteed maximum price, the GMP, or thecontract of these jobs.
So when I say that we don't charge changeorders, it's not that we are not accounting for
unforeseen scope.
We actually have, you know, probably a 200 itemplus list on each project of potential items
(48:17):
that could come up.
I mean, that's coming from every team that'scoming from the subs is coming from the design
side is coming from us.
And the logistics side, we just assign a valueto those in an order of probability of that
taking, you know, occurring.
And then, you know, so if it's a million dollaritem with a 50% probability of taking place,
then we carry $500,000 risk fund for that item.
(48:40):
But as this program progresses, as we move pastthat potential risk, that risk fund is then
recycled and put into additional scope.
That's where, you know, these projects, wefocus on the bare bones of success.
Like what is the true needs of this project?
Like what design level do we have all the needsfor the structure captured or needs for, you
(49:04):
know, whatever project it may be.
Let's capture the needs first.
Let's look at the wants second and the desiresvery last.
And so, you know, as you burn through this riskand hopefully not use those risk items that
then you start transferring that fund into thewants and desires fund.
And that's where the, that's where the projectstarts to get fun because you're not, you're
(49:26):
moving away from a bare bones project and thenyou're setting priorities for, you know, really
what's important to the owner.
And so it prevents that aspect of getting downto the end of the job and the owner saying, you
know, man, I really wish I hadn't spent thatmoney on that specific tile or that specific
millwork.
I wish I would have really allocated it to thisover here.
(49:49):
So pre con has been also nicknamed free conoften.
Yeah.
And what I heard is a lot of free conhappening.
Is that still true?
Not necessarily.
So the way that these are structured, we put inplace a PSA.
Most design is based on, you know, percentageof GMP.
(50:10):
You know, what's the dollar value for theproject?
The design team is going to charge a percentageof whatever that dollar value is.
The entire team, both DM and Centimeters iceQAQ.
We all operate on an hourly basis.
So the entire team at the onset of one of theseprograms, will reset an hourly structure for
each person or each role, and you are directcharging for an hour of performance.
(50:34):
So there is not a spend on that job thatdoesn't directly correlate to advancing that
job or a performance aspect.
Because I think that's another hole in theindustry is, you know, there's a lot of firms
that, you know, okay, we're going to work on a7% basis for this project.
Well, it really took them, you know, well, namethe project, do thirty hours, forty, fifty
(50:59):
hours worth of design.
Where if you work that on an hourly basis, youknow, we're, we're drastically reducing design
costs.
Let me give you a quick example of that.
So I think to better frame it this program thatwe just ran for a local nation we had, ARPA
(51:19):
funds.
And so we had a December 31 deadline to be ableto allocate those funds.
We had four projects that you have to have adesign basis, a means and method basis,
generated scope documents.
So plans and specs.
We have to have a validated budget for thoseplans and specs.
And then we have to have a contract in placewith the nation that they can send a federal
(51:42):
treasury to be able to allocate those funds byDecember 31.
Well, we did effectively $16,000,000 inprojects, in roughly five months, we go across
the four projects and we had approximately a$2,400,000 savings from market, and we're
(52:04):
effectively have double the amount of peopleworking on this program that you would from a
traditional design firm.
So the way that we gauge this and where I saythat savings, just so people can understand, we
worked on the percentage basis.
So we took, you know, average for our marketand said, okay, the average is X percent.
Here is the GMP, the final GMPs for these jobs.
(52:26):
Let's apply that total to it.
And then, you know, after talking to multipledifferent firms, we derived a, essentially a
week per million of performance.
So we said, okay, X million for a specificproject derives a certain percentage value for
what the architect would have charged forarchitect, tool engineer, civil engineer,
(52:51):
environmental team, and design QC.
So we had five departments in this costestimation versus what we actually performed.
We had all of those things plus ice, plus theCentimeters team, and everyone is involved on
our side, plus the subcontractors.
So that's where I say we had double the amountof people working on this.
Some projects even had two architectural firmsworking on the same job.
(53:14):
One was working on the shell.
One was working on the interior.
And then we went back to that weeks permillion.
So we said, okay, this type of structure, thistype of project market is saying X weeks per
million for this specific type.
Ultimately double the amount of people, roughly60% in savings.
So 2,400,000.0 in savings from market.
(53:36):
And our longest project is, you have to look ateach project individually based on its type,
because they had very varying types.
Biggest time savings.
One, we had seventy two weeks on theinfrastructure program.
We had a healthcare facility that had fiftynine weeks ahead of schedule.
(53:57):
We had a municipal recreation project that camein, you know, approximately twenty two weeks
ahead of schedule.
And we had, a childcare facility that came in,you know, it was actually pretty close, but it
still came in approximately ten weeks ahead ofschedule.
And so, you know, this, the idea of free con,there is a lot of free work and there is a lot
(54:22):
of effort that is placed into these that don'tnecessarily have a dollar value to it, but
there was still a large spin that went outacross this team.
We just ensured that for an hour ofperformance, there was an hour of compensation
and there was a direct correlation to if we aregoing to charge, there has to be, we have to be
balancing this ball forward.
(54:43):
There has to be, a good incremental increasefor every hour charge to the program.
What are great examples?
Yeah.
To me.
And again, as I said, I've I've never swung ahang hammer for money other to build stuff for
myself.
Mhmm.
Why would you not do why would the industry notoperate more this way?
(55:06):
It seems it's better for everybody involved.
Sans the cultural components that also wedidn't talk about, but benefits go to that for
just employees and everything that goes inthere.
That to me, it just makes sense.
Like, I, I, I don't understand.
You're
and that's, that's what we go back to.
I mentioned earlier, we w we're trying toaffect that change.
(55:26):
So how can we get this method into moreprojects?
How can we get this into larger organizationsto where, you know, a lot of the smaller
entities can look to these larger organizationsand say, okay, well, they performed CMGC or
progressive design build.
They did it.
It must be successful.
Oklahoma specifically is just so set in ourways of low bid.
(55:47):
We'll call it the good old boys club that, youknow, these projects are just set up in a
specific way because they've been done likethat for the last seventy five years.
I was about to say a hundred years, but, youknow, Oklahoma is
about to have a quarter of your career.
Yeah.
It feels like it.
I tell people it's, I go back to Indiana Jones.
It's it's not the age.
(56:08):
It's the mileage.
That's very fair.
Very fair.
Which, takes us to our last question, Zach.
We we love to ask this question.
It'll be interesting, just because we have agood concept of your age.
So if you could go back twenty years, whatwould you tell yourself?
What advice would you give yourself?
A wee teenager, I believe, a young teenager.
(56:29):
Yeah.
God, a lot of things.
I was I sit in a in a place of a lot ofblessing in my life for where I sit today
because I was a dumb kid.
Oh my gosh.
We made a lot of mistakes, but, you know,ultimately I think it's, probably two things.
You are the sum total of the three people yousurround yourself with.
(56:50):
WDS and I, we, we exchange a mantra it's burnthe ships.
You know, it's, it's a nod to, you know, Cortezlanding in South America that, you know, is
people wanted to run and they burn the ships,but it's not that aspect of forcing people to
do what you want them to do.
It is removing any opportunity for you toaccept failure or to, you know, find an off
(57:16):
ramp, and deviate from what your path is.
And it's not taking no for an answer and it'snot, it's finding innovation and finding
success.
Success.
Not looking for an off ramp.
And you know, I think that's, that's been atleast my personal mantra in this
entrepreneurship.
You know, it's, it's really easy to sidebar andsay, you know, oh, well, this just didn't work
(57:38):
out.
And, you know, I'm just gonna, I'm gonna try tofind an easy way to exit this.
You know, I think that works for a lot ofthings, just not accepting, not accepting
failure or not accepting, you know, the desiredgoal.
And it was just coming just short of thatperfection.
(58:00):
I'll go back to my dad.
My dad said that good is the direct enemy ofperfection.
And so, you know, we say burn the ships andthat just, that's our reminder that, we're not
gonna be looking for an off ramp.
There's there's always an answer to thesolution.
I think that that would have helped me a lot asa teenager.
Very similar minds.
(58:21):
Me and Will were at a conference and ChrisGardner, the author of pursuit of happiness was
there.
One of the things he said that I say all thetime so much so that my friends, will jokingly
make fun of me when I'm doing something very,you know, meaningless, meaningless, like, you
know, setting the table or something.
I said, if you're gonna do something, do itworld class.
And I believe that that's super true.
And, again, I I say it so often that I get it,you know, thrown back in my face in a playful
(58:46):
way, certainly.
Sure.
But yeah.
No.
You love that.
So, I'm gonna throw a bunch of the social andstuff in the show notes.
If somebody wanted to get ahold of you that'slistening, what's the best way for them to do
that?
Yeah.
Probably by email.
It's zach,zach,@stronghold.construction.
There is no dot com.
There's no dot net.
It's just dot construction.
Yep.
That's that's probably best best methodology toto get me.
(59:08):
Cool.
And then, is there anything else you'd like tosay to the people before we say our goodbyes?
Yeah.
No.
Just find your industry, whatever sector of theindustry that you sit in, believe it better
than you found it.
It's it's kind of caveat to say.
But we're at a point in, I think The U S as awhole, there is a kind of a changing of the
guard at the moment.
You know, a lot of the established companies, alot of the established market holders, they're
(59:33):
starting to age out.
And so a lot of that mantle is shifting toyounger entrepreneurs like myself.
And if we don't find the things in our markets,in our locales, in our specific industries that
are broken or need to be better, If we don'tfix those now, they're gonna be broken for
another fifty years.
So, just do what you do, do it well and leaveit better than what you found.
(59:56):
Love it.
Love it.
Love it.
Love it.
This was a ton of fun topics that I truly love,legacy, alternative programs.
I'm all into all those things.
I know Will is as well.
So listeners, I hope you had as good of a timeas we did.
And until next time, adios.
Adios.
Thank you, guys.
Thanks for listening to Building Scale.
To help us reach even more people, please sharethis episode with a friend, colleague, or on
(01:00:20):
social media.
Remember, the three pillars of scaling abusiness are people, process, and technology.
And our mission is to help the AEC industryprotect itself by making technology easy.
So if you think your company's technologypillar could use some improvement, book a call
with us to see how we can help maximize your ITcybersecurity strategy.
(01:00:45):
Just go to buildingscale.net/help.
And until next time
Keep building scale.
Scale.
Sure.
Well, and let's, let's create a deviation onwhat legacy is because you know, in the company
that I grew up in, the idea of legacy was okay.
You know, Zack's going to take this over and,you know, it's going to continue for the, you
know, the next generation.
That was the viewed legacy, but what's thereality of that legacy.
Okay.
If you don't touch that business for the nextthirty days, it's not going to exist.
(00:25):
There's no controls.
There's no planning.
There's no support staff.
There's no systems or process that if you'renot touching that on an hourly basis, that you
don't have a negative impact in in thestructure of that company.
Have you ever wondered how successfularchitecture, engineering, and construction
(00:46):
companies scale their business?
Or have you ever wanted guidance on how to getmore growth, wealth, and freedom from your AEC
company?
Well, then you're in luck.
Hi.
I'm Will Forat.
And I'm Justin Nagel, and we're your podcasthosts.
We interview successful AEC business leaders tolearn how they use people, process, and
(01:06):
technology to scale their businesses.
So sit back and get ready to learn from theindustry's best.
This is
building scale.
Hey listeners, it's will here.
Our mission is to help the AC industry protectitself by making technology easy.
If you've ever listened to our show, then youknow that the three pillars of scaling a
(01:29):
business are people, process, and technology.
So if you suspect technology is your weak link,then book a call with us to see where we can
help maximize your company's IT cybersecuritystrategy.
Just go to buildingscale.net/help.
Today's guest is Zach Simmons, a cofounder ofStronghold Construction, a company built to fix
(01:53):
the systemic issues in the constructionindustry.
With experience on both the general contractingand development sides, Zach saw firsthand the
inefficiencies, budget overruns, and misalignedexpectations that plagued projects.
In February of twenty twenty two, he and RoyLewis founded Stronghold to create a real
change, prioritizing transparency, efficiency,and long term value over a typical low bid
(02:16):
mentality.
Stronghold construction has grown let me makesure I get this number right.
600%.
That's a lot for those who aren'tmathematicians.
Since 2023, bootstrapped through performanceand profit.
The company is veteran and first responderowned with a culture first approach that values
leadership, discipline, and merit basedstructure.
(02:39):
They specialize in alternative deliveryprograms for large scale projects offering
innovative solutions that challenge the statusquo in Oklahoma's construction industry.
And with all that said, Zach, welcome to theshow.
Thanks for having me.
We're excited.
I love the mentality of the alternative,delivery programs.
(03:00):
So, like, that is something that I as close asan insider, I can get to construction without
actually swinging a hammer.
I love this concept, and I think it's,something that should be throughout the whole
industry.
So we're gonna talk a bunch about that.
But before we get into that, let's hear yourorigin story.
How did you get in construction and then, howdid stronghold start?
Yeah.
Absolutely.
Probably like a lot of people in construction,I got into it because the family was in it.
(03:24):
So I'm a second generation builder.
My father started a commercial industrialelectrical company as an electrical
subcontractor in the late seventies.
So it had been pre established for quite sometime by the time that I came around, but, it
was homeschooled.
And so it was do your work and your schoolworkin the morning, do your chores, and then we're
(03:46):
in the truck and headed to a job site of theoffice by seven.
And, you know, I, I think back and, I'mcautious to say, I think I don't break any
child labor laws at like 13, but, you know, itwas, it was really early.
So, you know, just being exposed to that and,the different aspects of the business of
(04:11):
construction.
Yeah.
We really kind of span the gambit, built a lotof churches.
My dad really had a passion for buildingchurches, which obviously we started on the
electrical side, but as we grew and asrelationships grew there was a really defined
crossover between just doing the electricalaspect and then assisting in the overall build
through some partnerships.
(04:32):
So I look back and I think, if I remembercorrectly, I ran my first million dollar job as
effectively we'll, we'll call it asuperintendent at about 16.
And so, you know, it's, it's the joke that, youknow, you're 25 years old with fifteen years
worth or ten years worth of experience.
That was, that was, that was pretty close forme.
(04:56):
I got a lot of weird looks really early on inmy career for my resume.
And I think I only tried to explain that Istarted at 13 to one company because it was not
received well.
But, no, that's, that really summarizes mybackground.
I really truly didn't make the transition tothe GC world.
We'll say professionally until about 20.
(05:17):
You know, that was my first exposure separatedfrom the family business.
And, you know, it was just a deep immersion ina world that I thought I knew a lot about, but
very rapidly figuring out I knew nothing otherthan, you know, just having a really good
foundation in construction.
And through my career ultimately moved to Texasand spent some time in DFW, which the company
(05:39):
that I was working for then ultimately sent meall across The U S doing fortune 500
construction.
So I've been everywhere from New York to LA andSeattle to Miami doing construction work.
You know, thankfully that that brought me backhome to Oklahoma where, you know, where my
roots started.
And we were able to kick off Stronghold and,and in the place that we really care about and,
(06:05):
you know, have an invested interest in inshaping that industry.
That's wild.
I now I understand on those resumes wherethey're, like, looking for somebody that has
ten years of experience, but it's an entrylevel.
And you're like, oh, yeah.
Well, that's Zach.
He that's Yeah.
That's exactly what they're looking for.
That was me.
You're the unicorn.
You're the unicorn, fortunately andunfortunately.
(06:27):
For sure.
Being raised up in business, gives a differentperspective.
Right?
So even when you don't go and and take overthat business, but you then go off and and run
your own, what did that show you?
Well, you know, what what lessons were youlearning at a very young age, that now can
either be applied or, like, absolutely avoid?
(06:47):
Sure.
You know, I think, you know, with my dad beingfrom, you know, what we would consider the
older generation, you know, a good example ofpreface kind of how I grew up.
My siblings are in their fifties and I'm in mythirties.
So, I grew up a little bit different than someof my age.
I think the key takeaway that I really pickedup was the work ethic.
(07:12):
There was a lot of early mornings, late nights,a lot of not accepting anything other than
perfection.
You know, if, if you're gonna do something, doit right the first time.
And it just, you know, it embedded in me a, youknow, what I would feel is a different work
ethic.
That's, that's the positive side.
No other takeaways is, you know, like a lot ofcompanies in the construction industry today,
(07:37):
and, you know, you look back fifty years andyou see a similar trend.
You have an individual that is great at whatthey do.
They're great at their craft, but that businessacumen is not.
No, not there in comparison to their level ofproficiency in their trade and really seeing
the struggles that, you know, the familybusiness had just in growth.
(07:59):
Don't get me wrong.
My dad had some great success, but, you know,looking towards the end of his career before,
you know, selling that business, that sale waseffectively his retirement.
There was no, you know, there was no built upreserve.
There was no retirement plan.
And so, you know, he's well renowned as, youknow, one of the best electricians in Oklahoma.
(08:20):
But there's no legacy there other than thepeople that he directly worked with that
remember working with him.
And, you know, all that's left today is, youknow, man, I wish that guy was still in the
industry.
There is no legacy outside of that.
So, you know, it's an, it's important for me totake those things as I learned.
And then I took from my dad, and to continuethat on in my own way.
(08:45):
But, Yeah, I think looking at the scalabilityof the business, looking at that long term
forecasting, making sure that we have as goodor a better base in business that we do in our
craft and in our trade.
That is, you know, I think that's probably thebiggest takeaway that I took from growing up in
that we'll call that in encapsulation chamber,that echo chamber of the trades.
(09:10):
That's, that's become a really importantfoundation for stronghold.
And had I started stronghold by myself, I thinkI would've probably recreated that trend, not
even trying.
But you have to, you have to have goodpartners.
You have to have good resources.
You have to have good knowledge bases thatdeviate from your own to be able to really,
(09:31):
truly get a good thing through that.
What do those resources and, actually, we'rethe partners.
So, like, let's talk about how did you cometogether?
Why why does that fit well?
Where do you add value to each other?
Yeah.
And what what resources do you use to level upyour, let's say, business acumen game?
Sure.
So at least for stronghold specifically, I'mlucky enough to have two great partners.
(09:54):
So, you know, like you mentioned, Roy Lewis isalongside, you know, he and I, we were the
original founding group.
Roy comes from a development, you know, reallyan owner side background in construction and
also a municipality perspective.
He worked, you know, his, we call it our pastlives.
He worked C suite executive office for, youknow, a large developer, a large corporation
(10:18):
here in Oklahoma and handling a lot of theirindividual investments, their developments,
and, really managing that construction aspectof monitoring those investments.
Excuse me.
His experience later shifted to themunicipality aspect as the federal programs
manager for city of Oklahoma City.
(10:39):
And managing that money, managing thatdepartment you know, really gives a lot of
city, federal, municipal insight.
That's really assisted us in, you know, a lotof the tribal things that we're doing.
But you know, in addition to that, afterfounding, we picked up Danny Warner
entrepreneur and previous business owner andself employment actually on the restaurant side
(11:00):
of things.
So definitely a little bit different than whathe's doing today.
But more so than that has a twenty year careerin banking and finance and lending.
So thankfully, you know, Roy sits as our CEOfor that kind of long term forecasting, you
know, corporate trajectory forecast.
And then Danny sits as our CFO, which, youknow, I think Danny's involvement has been
(11:23):
really crucial to you know, our growth and inour business.
I think if we had found somebody that has abackground in construction finance, Yep.
This is something that I've realized sinceDanny came on some things even in myself that
I'm willing to accept in budget management orconstruction finance that he's never been
(11:45):
exposed to.
And so he comes into this world with acompletely different perspective in the banking
industry.
Everything is black and white.
It's you either hit this deadline or youdidn't, it's either in this contract or it
isn't.
And there's a lot of things that we ascontractors have just accepted, you know, that
pay up is late or, you know, you know, thisthis subcontractor, you know, he, you know, we
(12:10):
missed his payment deadline three days ago,but, you know, he's I've talked to him.
He's okay.
And Danny really rejects a lot of those thingsand keeps the finance department very black and
white, which has, as not only helped us, butit's also created a known aspect of stronghold
is, you know, our subcontractors and ourpartners really trust that we're down to the
(12:34):
penny and down to the second on our finances.
So it's, it's a really good resource to haveboth of those guys in those different aspects.
I'm very much the construction guy.
And so our backgrounds really don't overlap.
And I think that's another thing that's beenreally beneficial to our partnership is when we
have a decision that really lends eithertowards construction or corporate structure or
(12:56):
finance.
We have enough respect in that partnership thatwe really hands off to the person that has that
background.
And so there's not a lot of infighting or, youknow, disagreements to letting someone do their
thing.
You know, it's pretty interesting to be able tohave partnerships like that.
It does require a lot of trust.
Does that trust come inherent right in thebeginning?
(13:18):
Absolutely.
Yeah.
Thanks.
And how do you, and how do you build it?
You build it more to be able to make, I mean,we're talking about dollars here for a second.
So the bigger and bigger decisions are and thebigger and bigger the dollars are behind that.
How do you make sure that that trust is kept?
You know, thankfully for us, we all had apreexisting relationship prior to starting the
(13:41):
business.
You know, we actually, so stronghold actuallyhad a little bit of a different owner group
when we really kicked off, you know, Roy and Iwere we'll call it accessory partners.
And those, you know, that original group reallyvery quickly shifted once we started growing to
just Roy and I and those, you know, thosemembers just kind of bowed out and said, you
(14:05):
know, this is really all show.
This is your thing.
You just take it.
We don't want any involvement.
So we, we very much leveraged that preexistingrelationship.
We had a level of trust and a level of at leastexposure to each one of our acumen and you
know, what our strong suits were.
And it, I can't say that there hasn't been somerocky times.
(14:25):
We, we have, we call it a venomous discussionsometimes.
But, no, it's, I mean, it's, it's absolute.
You have to have that trust in each other.
You have to have that confidence that eventhough one of us may not see the benefit of a
decision being made, we have to trust thatthey're basing their decision off of twenty
(14:48):
years worth of experience in that specificindustry.
And so that decision is being made for areason.
It's being made with our best interest atheart.
But yeah, absolutely.
You know, as the dollar value ticks up, itbecomes more stressful.
It becomes more involved.
It becomes a longer drawn out process to makethose decisions.
(15:09):
But on the flip side of that, I think thatwe've also refined our decision making
workflow.
We have, you know, we've learned differentaspects about each other, how we operate, how,
you know, what pieces of data do we need to seeto be able to feel confident in that decision?
And so, you know, I think a great example forme going to Danny, if I want to make a large
(15:32):
expense, he's, you know, he's the money guy.
I've got to justify where that makes sense froman operational aspect.
And I've got to put the data that I'm seeing onthe construction side into a format that he can
digest for the finance side.
And so it's just, it's things like that, but,you know, trust is that basis.
And you, you can't operate effectively as ateam, as a leadership team, if there's
(15:57):
distrust.
And we've, you know, we've seen that firsthandand thankfully we've been able to move past
that really rapidly.
But, Justin, I think you had something.
Yeah.
So well, you know, when I think of this, Iobviously, the partners that are internal to
you.
Right?
So, like, that makes sense.
A lot of trust.
However, like, there's also external resources.
So if that's, you know, your trade partners, ifyou use a marketing company, if you use a CPA,
(16:23):
like, things like that, that also need to bethe right fit.
They need to combined need to be able to have,conflict or, you know, a little conflict that
happens, which is good.
Healthy conflict's a good thing.
How do you how do you find those partners?
And, like, what does that look like when you'relooking external to the company in comparison
to the partners that are internal?
(16:45):
Sure.
So we really chase that, healthy conflict, youknow, as you say.
Really on on our our side as the owners, wewant to seek out those individuals that
challenge us.
We want to seek out those individuals that areable to, you know, we can present them a
(17:07):
problem and, you know, they immediately say,you know, that's wrong.
That's wrong.
That's wrong.
You're dumb for doing that.
I love the candid.
Well, you know, at Spot, we're very candid.
It's one
of our core
values.
Sometimes it comes off, I call it a littleasshole y.
But that's just part of the dialect, I think.
(17:27):
Sure.
No.
It's it's.
And I think, you know, we had a recentexperience that we just changed CPAs.
I think this is a really good example of this.
What you're chasing.
We had some really good CPAs that we'd workedwith previously.
Good lawyers, good CPAs, you know, came highlyrecommended.
And, you know, just through that growth youhave to shift companies that you work with just
(17:53):
based on the sheer growth.
Some companies, you know, as you grow, they'rejust more than what they really want to handle
is your account is no longer manageable forthem.
Or, you know, we just need to modify and weneed to make shifts.
So in that, in that path, we've shifted CPAsrecently.
And, you know, we thought that our businessstructure, our tax structure was great.
(18:13):
It was pristine.
We've gone through hours of discussion withlawyers and, you know, our previous CPA and
talking to other business owners.
And we were assured that the structure that wehad was pristine.
There was nothing wrong with it.
We walk into this meeting and I kid you not, itwas less than five minutes that the, you know,
(18:35):
we're explaining our structure, we'reexplaining what we've got going.
And he just very blatantly looks at us andgoes, well, you want to know where you went
wrong?
And stood up and proceeded to start drawing onthe whiteboard and was like, this is wrong.
This is wrong.
This is wrong.
I don't know why somebody recommended this.
This is wrong and just completely destroyed ourbusiness model as far as the structure side.
(18:57):
And, you know, through some differentconnections and we were kind of able to vet
what this guy's experience was and who he'dbeen dealing with.
And he provided immediately a lot of themissing pieces that we'd been striving for in
the past that we were trying to get to, but wedidn't have just that last little bit of
interconnect ability.
And, you know, those are the individuals thatwe chase to challenge us in that, you know,
(19:22):
that one thirty minute meeting completelyshifted our perspective on structure and, you
know, hopefully, you know, has set us up in adirection that ultimately would have caused us
some grief here in the near and long termfuture.
And it's something that at least at our currentposition may may sting a little bit, but that
(19:43):
sting is going to pay tenfold here in the nextfive years.
So, you know, that's where that's where wechase that that healthy criticism, just flat
out criticism.
We we sometimes have to chase whether it'shealthy or not.
But, you know, I think that's very important tosay that that is very much on the ownership
side.
That's our resource side.
(20:03):
We want to be challenged in knowing that ourbusiness is healthy and that we're making good
decisions for the business.
The flip side to that is our subcontractorpartners, our vendors.
You know, we, it's a very different kind ofcriticism in that aspect.
And, you know, those relationships, you know,they have to be healthy.
They have to be respectful.
They have to be mutually beneficial.
(20:23):
And that's one thing that we've really pushedin Stronghold.
A lot of general contractors have this veryauthoritarian relationship with their subs.
You know, it's the, you're going to do what Iwant you to do when I say it.
It's that when I say jump, you say how highkind of mentality.
And we have completely shifted away from it.
(20:44):
You know, obviously there's some instances thatwe, you know, we have to say, you know, guys,
you're going to do this.
Like, this is what you agreed to.
This is a quality thing.
This is a schedule thing.
You're going to cost the owner money.
If you don't do this or you're going to impactproject.
And so sometimes we have to come down, youknow, with a heavy hand, let's say 99% of the
(21:06):
time, you know, because we're selecting goodcontractors to work with in the first place,
because we are building those relationshipsprior to these projects ever kicking off.
It's very few and far between that we have todo that.
And we wouldn't be here today without the, youknow, we call them partnerships.
We're management experts.
(21:26):
We are logistic experts.
We are construction management experts, but weare not trade experts.
We couldn't do these jobs without theseindividuals and their companies.
And so anytime that we walk into a job, it isvery much a partnership.
How can we set you guys up logistically to getin, get out and make the most money possible?
(21:47):
You know, we say pretty regularly, I wouldprefer that the subcontractors that work for
us, want to come back to work for us on ourprojects, because it was the easiest one that
they've done.
We had the easiest staff to work with and theymade the most money working with us.
It's that, you know, how many flies do youcatch with honey versus vinegar?
(22:11):
I would rather be more competitive in my marketbecause people are giving me better pricing
because they enjoy working with us because theymake more money working with us.
And they're going to give me better competitivepricing than my other general contractor
competitors, just because they enjoy workingwith us.
Not because I have an authoritarianrelationship and I'm beating them up on their
(22:33):
pricing.
So, you, you look at who we've been able toestablish as resources, as partners.
And you know, I can't thank those guys enough.
I think, you know, I had previously mentionedto you guys, our relationship with WDS.
Well, WDS, when we met them, they were just anearthwork contractor, a very good earthwork
(22:54):
contractor, mind you.
But we had established a really goodrelationship there.
And ultimately that relationship from aultimately subcontractor was what got us into
alternative delivery?
They called us in there like, Hey, we have thisCentimeters program.
It's a program called CMGC.
(23:14):
We were just awarded this.
We bid this ourselves.
Would you be willing to come in and help usmanage this?
You know, at the time I think they had three orfour employees and, you know, that was, you
know, that relationship with a subcontractor isultimately what got us into the realm that we
sit in today.
And so yeah, I, I could talk for hours aboutthe importance of relationships, but no, it's
(23:41):
it's paramount for us.
So as you were talking, I heard a lot ofdifferent aspects that really relate to
business acumen making decisions.
Right.
Etcetera.
And, so even the decision making processbefore, right.
It requires having some, you know, some sort ofmeasure of business acumen in order to have
(24:05):
great partners, there has to be some level ofacumen as well.
So how do you judge or measure business acumen?
You know, I would say that that's a slidingscale.
You know, obviously for us, we remain in aposition of we only know about this month.
That keeps us in the always learning, alwayschasing mentality, never accepting where we are
(24:29):
at the current moment with our, you know,whether that be our current structure, our
current knowledge base, we're always chasingwhere, you know, somebody somebody out there
has at some point done this better and is morethan likely currently doing it better than what
we're doing it.
And so that's our overall mindset, which thenpushes us into multiple different realms of of
(24:51):
thought.
Yeah.
I think there's a really important deviationbetween companies like the one that I grew up
in, where you have a great trade contractor andthey're absolutely a whiz kid at their craft.
But you take out multiple different factorsthat, you know, that business acumen brings.
If my dad watches this, my dad was not a biz, abad businessman.
(25:15):
I want to make that clear.
But there's, there is a deviation in what Igrew up in.
It was the lack of long term forecast.
It was the lack of financial controls.
It was the lack of, you know, employeeexpansion and top down leadership, expanding
that span of control into leadership to wherewe, as the owners really become irrelevant.
(25:38):
You do a side by side comparison and I'll andI'll use that that family company as as direct
comparison.
Stronghold today is really focused on buildingour leaders, building our staff up to be better
than we are.
Whereas, you know, it was very much a one manshow for the family company that I grew up in.
Now it was the doers and the single point head.
(26:01):
We very much want to build those individuals upto take the mantle from us, essentially to the
point to where we are getting in the way ofthe, the company itself by being involved.
Like let's build them up to the point thatwe're irrelevant.
The long term forecasting really comes intoplay, which, you know, thankfully we, you know,
(26:22):
that's Roy's, one of his strong suits.
You know, you look at well back to yourquestion, the gauge of business acumen, you
know, from the companies that just look attheir next job, and say, okay, well, we made
this percent of profit on this job, thatsystem, you know, every everything has a
(26:42):
system.
What we did on this job worked well because ourprofit margin reflects that.
So let's just repeat that.
Let's just, let's just continue that process orcontinue that train, see how big we can grow
it.
Whereas we are we say that we play money ballin everything that we do.
Everything has a data point.
Everything has a value.
Everything that we do, even though we may have,you know, 15 different data points, so we've
(27:06):
discussed it for fifteen days, we put it on atrial basis.
So it's a let's test this for the next quarter.
Let's see what the real factual results are incomparison to what our projections are.
And then let's take those two and blend thoseinto a long term model.
We say that we make decisions on a fifty andone hundred year basis.
(27:27):
So it's really, you know, most, I believe mostUs businesses look on ten and twenty year
intervals for their forecast.
We, you know, we expand that we expand thatmagnifying glass.
So it says, okay, the decision that we maketoday, what does that look like in fifty years?
What does that look like in a hundred years?
I mean, it really, it changes the way that weview our business decisions in a way that you
(27:52):
are, if you have a problem in the decisionyou're getting ready to make, it's going to
magnify that to an extent that, you know, I'mgoing to be long dead by then.
But if this continues for the next hundredyears of the company, what is that extenuating
circumstance or what is that going to look likereally truly at that point?
So, you know, it's all of those factorscombined.
(28:14):
We're not going to do it as good as the nextgeneral contractor.
I'm sure there's plenty of general contractorsthat have a lot more business acumen.
I know that to be a fact.
Some of our competitors have entire boards of,you know, extremely experienced c suite guys
and, you know, the guys with, you know, fiftyyears of business experience.
Whereas, you know, us and in our company, wejust don't have that wisdom base yet.
(28:38):
We chase that, but we don't have it.
And we realize that I go back to that slidingscale.
We are more efficient than some.
We are significantly less efficient thanothers, and we always just have to stay in a
position of growth and self betterment focusingon those financial controls, focusing on that
long term forecasting and planning, focusing onthat leadership development.
(28:58):
Really, like I said, trying to make ourselvesirrelevant in the company.
Those are all major factors that we focus on.
You know, encapsulating all of that is justcreating a vision, creating something that our
our people, that our clients, that our partnerscan grab on to, that they can take ownership
in, and being very clear and concise about whatthat vision is.
(29:21):
You know, what direction are we headed?
I think a lot of companies just kind of floatin the wind with opportunity.
And that's one thing that we've really basedin, in just having a really strong foundational
base of our direction of our goals, who we arein the market and what we offer.
And I think that's presented, you know,opportunity for people around us to really just
(29:43):
gravitate to that and grab onto that and thensay, yeah.
We agree with this.
We, you know, we support this.
So very much the legacy component.
Right?
One
of the things you mentioned, your dad's companythat when he sold, like, the legacy is, like,
these few people that worked with him thatexist.
What you but it sounds like you're trying tobuild is much larger of a legacy business.
(30:04):
And and I don't wanna get caught up in the ideathat, like, you should think about legacy every
day because that's not the path to success inmy opinion.
But, you do have to put work in to get to thatplace.
Like, that that's that is true.
Right?
So trying to build this legacy business, like,is that for your next generation, your
partner's next generation?
Like, what like, why is that important to you?
(30:27):
I guess.
Sure.
Well, and let's, let's create a deviation onwhat legacy is because you know, in the company
that I grew up in, the idea of legacy was okay.
You know, Zack's going to take this over andyou know, it's going to continue for the, you
know, the next generation.
That was the viewed legacy.
But what's the reality of that legacy.
Okay.
(30:47):
If you don't touch that business for the nextthirty days, it's not going to exist.
There's no controls, there's no planning,there's no support staff, there's no systems or
process that if you're not touching that on anhourly basis, that you don't have a negative
impact in the structure of that company.
(31:09):
So, you know, that is still legacy that isstill legacy building.
But, you know, let's shift that scale to whatwe're looking at.
I keep saying that we want to make ourselvesirrelevant.
We are trying to build out the systems andprocesses to ensure that if we're here, if
we're involved, if we're making daily decisionsor not our vision, our direction for the
(31:33):
company, the daily operations, those are notnecessarily impacted.
Now we collectively, we never want to be theowners that just say, okay, well, we've built
it to this point.
That's our, our, you know, kind of our stoppingpoint and you guys have fun.
I've seen that too many times.
(31:53):
And if that's not done over a very longtimeframe and not done intentionally and
effectively, the wheels fall off really quick.
And so that's when I say that I want to make usirrelevant.
That's not what I mean.
All I mean is that with minimal guidance andsupport with just the reinforcement of what
(32:15):
we've started, that our current people are ableto very easily take that vision and run with it
on a daily basis.
As far as, you know, what happens next forstronghold, as far as legacy, We're not really
sure.
I have a little one.
She's three.
The other partners, they really don't have ageneration that might come behind them, but we
do have employees that their kids have alreadyexpressed an interest in construction.
(32:40):
So what that will say next generation ofstronghold looks like.
We're really not sure.
But we, we know that we want to hand it off tosomeone who that someone might be.
We don't necessarily know, but we're going tocontinue to prepare for that.
So whether that's our staff's children, youknow, whether my child is involved in it or
(33:00):
not, that's going to be her decision.
But we are not building the company for a buildand sell or, you know, build and and shift.
And, you know, we're gonna go sit on a beachand drink my ties.
Like it's, we, we very much want to be present.
We want to be, you know, I think the ideal isI'll give you Danny's.
(33:22):
I'm not sure what my ideal is.
You know, Danny, you know, Danny has said, youknow, I want to be here three days a week, be
involved, you know, Intel I'm 80 years old.
And you know, he's like, I want to work fulltime as long as I absolutely can, but I want to
be able to play golf.
So, you know, that's, you know, that's, it's,it's kind of a sliding scale.
(33:44):
I love to work.
I love what we do.
You know, I think legacy for me, not only afterI'm gone out of the company or after you I've
passed that mantle off to somebody else, this,this company and this opportunity, you know,
(34:06):
being an entrepreneur, it awards time.
Yes, there's a revenue aspect and, you know,you, you wanna, you wanna talk about wealth
building, you wanna talk about those things,but what does that really boil down to?
It really boils down to the affordability oftime.
I mean, with my little one, I want to be ableto go to the dance recitals, to go to the
sports games, to go on the Disney world tripsand be able to experience life with her as a
(34:31):
child where her remembrance of her childhoodand stronghold is that, you know, dad wasn't
always working.
Dad wasn't always phone or on his phone or, youknow, he couldn't go into the backyard and play
because, you know, he's working on his laptopin the evenings.
You know, I want that legacy aspect for mepersonally to be.
(34:53):
Yeah.
You know, I know my, my dad was a businessowner, but I really, I, I didn't recognize it.
He was always present.
He was always there.
We were always going to do stuff, you know,that, that childhood time, you know, I, I hold
that in a really high regard.
And that's so when I think about legacy, youknow, I want her to be able to remember that
and, look at stronghold positively because, youknow, her father was able to take that success
(35:21):
and then transfer that into a time revenue, beable to spend with family.
No.
That makes sense.
Well, if, your daughter's three, she's got tenyears to then she starts working.
I think, I think that's the path that yourfamily runs.
So no, it's
okay.
Hey, so this obviously affects, you know, whatjobs you take and obviously I think this is a
(35:44):
good place to talk about the delivery model.
Right.
So can you talk a little bit about bidding lowbid versus design build progressive design
build cost plus integrated delivery?
How does CNBC really apply to all of that?
Sure.
Yeah.
It, so I say we started stronghold out offrustration.
(36:07):
We, we say that quite a bit, you know, Roy andmyself being in the industry, Oklahoma is very
centered in either low bid or see him at risk.
Like those are really the only two methods yousee.
Excuse me.
You'll catch only catch a private developerthat you know, they want to get fancy and they
(36:27):
want to go design, build.
Like those are, I mean, those are really themethods that you see.
And those are the methods that I grew up in.
And so Roy and I seen this from differentperspectives, you know, Roy being on the owner
side and me being on the performance side, youknow, we had a collective shared experience of
the industry as a whole of this system isbroken.
(36:48):
So that, and that's what I say when we started,it started stronghold out of frustration.
It was the frustration of projects being overbudget before they start.
It was the frustration of projects being overdesigned with no check set.
Nobody to say this is being over designed.
The low bid market, You know, it produces acompetitive nature where, you know, you're
(37:11):
going to have your competitive bid, but thenyou're also going to have $500,000 worth of
change orders on a 2 and a half million dollarjob sitting there waiting, knowing that these
are, you know, you shift away from the biddingfocus to more so look for change orders to know
what your, your revenue capture above hard bidis the day that you signed contract.
(37:35):
You know, that's, you know, we've seen thatmore often than not that, you know, it's really
it's really hard to even know what the initialspend on a project is in low bid, especially in
the public sector.
You look at city state federal DOD.
You look at those municipal projects.
And I think a great example is we bid a smalljob.
(37:55):
It was a 2,000,000.
And I think we missed it by, I don't know, itwas 20%.
It was crazy.
It was the loss or the, the shift that, youknow, that bid that at least the awarded bid to
where we set, it was the cost of the entirestill structure for the building.
(38:15):
It was, it was wild.
But, you know, after that project ran itscourse, we, you know, we found out yeah, that,
you know, that contractor was awarded.
And the day that we signed the contract, theyhit us with $400,000 worth of change orders of
planned mistakes and, you know, things that wedidn't factor in, you know, integrating systems
(38:36):
and, you know, it's just kind of the mentalitythat produces.
So that's, that's really where our startingpoint was.
We said, you know, there has to be somethingbetter.
There has to be a delivery method thatnavigates this, and presents a better
opportunity for these projects.
And that's where we found alternative delivery.
(38:56):
Well, you know, like I mentioned previously,WDS was the contractor that was awarded this
first CMGC program.
And, you know, when it was first mentioned tous, I said, oh, yeah.
Okay.
You know, we're going to be a Centimeters atfirst.
And then, you know, we're going to be a generalcontractor through the performance.
And, you know, we know what this is.
This is, this is okay.
(39:19):
We got into it and we were wildly mistaken ofwhat CMGC is and how it truly operates.
The basis of, you know, whether you're talkingabout CMGC or progressive design build, there
are some, you know, innate differences in thedelivery method itself.
But a lot of those go back to contractualbasis.
(39:40):
Like how is, how is the team structured in thiscontractual basis?
Who is really answering to who?
You have a lot of really similar componentsthat I think these alternative delivery
methods, stronghold is based, you know, a lotof our model on banking, that these methods are
going to be really prevalent prevalent in thenear future.
Collaboration is, is number one.
(40:01):
If you look at any of these methods, CMGCprogressive design, build integrated delivery,
they all have a base in collaboration andthat's from top to bottom.
You are having active conversation with thedesign team.
You know, you are vetting pricing.
You are vetting design through a pre qualifiedsubcontractor base that, you know, previous
(40:22):
methods, you're going to get an owner.
They're going to get to architect.
They're going to design it.
They're going to fall in love with that design.
And then they're going to present it to you asa general contractor.
We're going to go bid it out and then we'regoing to come back to you with a price.
And nine times out of 10, our prices were 75, ahundred, 1 hundred and 50, 2 hundred percent
(40:42):
over the estimated budget that was provided bythe architectural firm.
And so this method completely cuts that out.
We are validating the design.
We are validating the design direction for theremainder of the structure with subcontractors,
providing their input to the design, to whatthey're going to do.
(41:02):
We really say, you know, to our subcontractorsdirect the designers that if this was your
project and it was your spin, if this was inyour backyard, how would you design the system?
Where's that middle ground between not havingthe most expensive product and not having the
cheapest product.
And then the user friendly aspect, like withthe maintenance aspect, These methods go all
(41:26):
the way back to, you know, collaboration at itsbase.
I think the unique structures of separating theteams between the Centimeters team on the
construction side, the DM team encapsulatingthe complete design side, all the engineering,
all the environmental, all the regulatorybodies, and then having the third party with
the ice, to where we have to vet everythingthat we do through ice.
(41:50):
Sorry,
Will.
Ice.
Can you just explain what ice is for the forthose that are uninformed?
Of course.
So the three teams, when I refer to CMDM andice, Centimeters is just management team.
DM is the design manager, which encapsulatesthe full design team.
Ice is the independent cost estimator.
So in any of these programs, which oddlyenough, the company that we worked for, their
(42:13):
company name is ice.
So kind of playing to the acronym.
They are a group regardless of the company thatyou work with, that they specialize in bid
leveling and bid scope estimation.
So through any of these things, whether it'sthe schedule, whether it's the scope, whether
it is the unit price for a piece of material,we go through a multi step process in any of
(42:36):
these jobs.
So we have a scope comparison to make sure thatwe are talking about apples to apples.
We have a quantity comparison to make sure thatwe are aligned on, you know, again, a check set
to the means and methods.
And that we're also looking at the same thingon the plans and then our price comparison, you
know, that encapsulates what we call the OPC.
(42:57):
That method makes us ensure that we have truemarket value for everything that we do.
And then it is a, it's a buffer between the DM,the centimeters and the odor that they have no
skin in the game.
It does not benefit to, for them to say, youknow, oh, this, this price for this structure
is, you know, within market value.
(43:18):
So it provides that third party voice that theinfighting that you might see with some clients
that they don't necessarily agree with yourprice, they don't necessarily agree with your
means and methods.
ICE can sit there from a place of a third partyauthority and say, no, this is the best cost
cost method.
This is the best material.
(43:39):
This is the best schedule format.
You shouldn't deviate from this.
And also on the flip side, if we're overcostedor if we are overschedule or we're not
optimized to a certain efficiency, they'regonna call us out, and they're gonna give a
recommendation to the owner to whether toproceed or not to proceed with this next phase.
So one, it forces us to perform at a very highlevel, across the board.
(44:04):
And it also builds a level of trust with theownership group that, you know, it goes back to
that stigma that, you know, if you're a generalcontractor, oh, you're going to try to screw
me.
You're going to try to hide as much money asyou can.
You're going to try to, you know, takeadvantage of change orders and scope
modifications.
And you're just here to screw me.
(44:25):
Yes.
I'm going to get a product.
Yes.
I'm going to get a building that I love or aproject that I love, but the GCs, you know, the
GCs are just shady.
You know, they're, they're in it for therevenue capture.
I mean, you laugh, but it's it's more oftenthan not that that's that's the true view of
general contractors.
I think another thing that's really importantto alternative delivery in both models, we
don't charge change orders.
(44:47):
So how does that so that was one one thought Ihad.
So how does two things work?
One, change orders.
Like, how do those work?
Right?
Because, like, are you just over overdiscovering or vetting out everything possible
beforehand to say, like, there won't be, and ifthere is, that's on us.
Like, that's our fault.
And then two, second question, like, what aboutthe trade specialty?
(45:08):
So like you need electrical, you need plumbing,you need all these things.
Like, are you going to market to find bidsduring this pre construction process?
Or is it like you know, you're saying like,Hey, we're looking for somebody that's going to
do this at this dollar amount.
Like, are you interested in it?
Because it's a more of a flat cost or flatprice.
(45:29):
Yeah, absolutely.
So, let's talk about the change orders first.
So it's a, it's a split process.
So when we bring in these pre qualifiedsubcontractors, they are really truly a part of
the design.
They are specifying the systems that we areputting in place and they are taking ownership
of that system saying, you know, you need to dothis, this and this for your best optimization
(45:53):
of system and optimization of cost.
And so it builds in this kind of assurance thatthey have full control of that design and they,
they take responsibility for that design.
And so it's very hard for subcontractors inthis method to say, oh, that got missed.
(46:14):
So because a lot of this design aspect iscoming straight from them.
Now, do we have misses?
Absolutely.
Do we, you know, we build in buffers to makesure that that's taken care of.
Of course, we're not going to hang thesesubcontractors out to dry or, you know, put
them out on an island when their their normalplace of operation is not project design.
You know, it's very difficult for them to moreoften than not look at a complete project and
(46:39):
capture everything as we're having good designpartners to balance that conversation.
You know, the design partners having, you know,an active conversation with the trade partner
and they're just bouncing ideas back and forth.
What do you think about this?
What do you think about this?
So you'll with that, that's that extremevetting process that we are not necessarily
injecting ourselves.
We're putting the performing contractor and thedesigner immediately together.
(47:04):
And we're just sitting back and, and, andwatching, which is really entertaining for the
most part, because they have some venomousdiscussions sometimes about how things, how
things should be designed, but that thatenvironment itself and the disagreement from
design to performance vests out a lot of thosethings airs out a lot of those things.
(47:25):
You know, it's funny because some of thesesubcontractors, like they bring their
grievances in from previously, you know,whether it was that architect or not, they're
bringing in, well, this guy screwed this up andthis, our engineer forgot about this.
You know, it's, it's promoting good, gooddesign management in these jobs.
But on the flip side of that, you know, we talkabout vetting out these projects and not
(47:49):
charging change orders.
We have we have a risk fund in every single oneof these projects that is built into the the
guaranteed maximum price, the GMP, or thecontract of these jobs.
So when I say that we don't charge changeorders, it's not that we are not accounting for
unforeseen scope.
We actually have, you know, probably a 200 itemplus list on each project of potential items
(48:17):
that could come up.
I mean, that's coming from every team that'scoming from the subs is coming from the design
side is coming from us.
And the logistics side, we just assign a valueto those in an order of probability of that
taking, you know, occurring.
And then, you know, so if it's a million dollaritem with a 50% probability of taking place,
then we carry $500,000 risk fund for that item.
(48:40):
But as this program progresses, as we move pastthat potential risk, that risk fund is then
recycled and put into additional scope.
That's where, you know, these projects, wefocus on the bare bones of success.
Like what is the true needs of this project?
Like what design level do we have all the needsfor the structure captured or needs for, you
(49:04):
know, whatever project it may be.
Let's capture the needs first.
Let's look at the wants second and the desiresvery last.
And so, you know, as you burn through this riskand hopefully not use those risk items that
then you start transferring that fund into thewants and desires fund.
And that's where the, that's where the projectstarts to get fun because you're not, you're
(49:26):
moving away from a bare bones project and thenyou're setting priorities for, you know, really
what's important to the owner.
And so it prevents that aspect of getting downto the end of the job and the owner saying, you
know, man, I really wish I hadn't spent thatmoney on that specific tile or that specific
millwork.
I wish I would have really allocated it to thisover here.
(49:49):
So pre con has been also nicknamed free conoften.
Yeah.
And what I heard is a lot of free conhappening.
Is that still true?
Not necessarily.
So the way that these are structured, we put inplace a PSA.
Most design is based on, you know, percentageof GMP.
(50:10):
You know, what's the dollar value for theproject?
The design team is going to charge a percentageof whatever that dollar value is.
The entire team, both DM and Centimeters iceQAQ.
We all operate on an hourly basis.
So the entire team at the onset of one of theseprograms, will reset an hourly structure for
each person or each role, and you are directcharging for an hour of performance.
(50:34):
So there is not a spend on that job thatdoesn't directly correlate to advancing that
job or a performance aspect.
Because I think that's another hole in theindustry is, you know, there's a lot of firms
that, you know, okay, we're going to work on a7% basis for this project.
Well, it really took them, you know, well, namethe project, do thirty hours, forty, fifty
(50:59):
hours worth of design.
Where if you work that on an hourly basis, youknow, we're, we're drastically reducing design
costs.
Let me give you a quick example of that.
So I think to better frame it this program thatwe just ran for a local nation we had, ARPA
(51:19):
funds.
And so we had a December 31 deadline to be ableto allocate those funds.
We had four projects that you have to have adesign basis, a means and method basis,
generated scope documents.
So plans and specs.
We have to have a validated budget for thoseplans and specs.
And then we have to have a contract in placewith the nation that they can send a federal
(51:42):
treasury to be able to allocate those funds byDecember 31.
Well, we did effectively $16,000,000 inprojects, in roughly five months, we go across
the four projects and we had approximately a$2,400,000 savings from market, and we're
(52:04):
effectively have double the amount of peopleworking on this program that you would from a
traditional design firm.
So the way that we gauge this and where I saythat savings, just so people can understand, we
worked on the percentage basis.
So we took, you know, average for our marketand said, okay, the average is X percent.
Here is the GMP, the final GMPs for these jobs.
(52:26):
Let's apply that total to it.
And then, you know, after talking to multipledifferent firms, we derived a, essentially a
week per million of performance.
So we said, okay, X million for a specificproject derives a certain percentage value for
what the architect would have charged forarchitect, tool engineer, civil engineer,
(52:51):
environmental team, and design QC.
So we had five departments in this costestimation versus what we actually performed.
We had all of those things plus ice, plus theCentimeters team, and everyone is involved on
our side, plus the subcontractors.
So that's where I say we had double the amountof people working on this.
Some projects even had two architectural firmsworking on the same job.
(53:14):
One was working on the shell.
One was working on the interior.
And then we went back to that weeks permillion.
So we said, okay, this type of structure, thistype of project market is saying X weeks per
million for this specific type.
Ultimately double the amount of people, roughly60% in savings.
So 2,400,000.0 in savings from market.
(53:36):
And our longest project is, you have to look ateach project individually based on its type,
because they had very varying types.
Biggest time savings.
One, we had seventy two weeks on theinfrastructure program.
We had a healthcare facility that had fiftynine weeks ahead of schedule.
(53:57):
We had a municipal recreation project that camein, you know, approximately twenty two weeks
ahead of schedule.
And we had, a childcare facility that came in,you know, it was actually pretty close, but it
still came in approximately ten weeks ahead ofschedule.
And so, you know, this, the idea of free con,there is a lot of free work and there is a lot
(54:22):
of effort that is placed into these that don'tnecessarily have a dollar value to it, but
there was still a large spin that went outacross this team.
We just ensured that for an hour ofperformance, there was an hour of compensation
and there was a direct correlation to if we aregoing to charge, there has to be, we have to be
balancing this ball forward.
(54:43):
There has to be, a good incremental increasefor every hour charge to the program.
What are great examples?
Yeah.
To me.
And again, as I said, I've I've never swung ahang hammer for money other to build stuff for
myself.
Mhmm.
Why would you not do why would the industry notoperate more this way?
(55:06):
It seems it's better for everybody involved.
Sans the cultural components that also wedidn't talk about, but benefits go to that for
just employees and everything that goes inthere.
That to me, it just makes sense.
Like, I, I, I don't understand.
You're
and that's, that's what we go back to.
I mentioned earlier, we w we're trying toaffect that change.
(55:26):
So how can we get this method into moreprojects?
How can we get this into larger organizationsto where, you know, a lot of the smaller
entities can look to these larger organizationsand say, okay, well, they performed CMGC or
progressive design build.
They did it.
It must be successful.
Oklahoma specifically is just so set in ourways of low bid.
(55:47):
We'll call it the good old boys club that, youknow, these projects are just set up in a
specific way because they've been done likethat for the last seventy five years.
I was about to say a hundred years, but, youknow, Oklahoma is
about to have a quarter of your career.
Yeah.
It feels like it.
I tell people it's, I go back to Indiana Jones.
It's it's not the age.
(56:08):
It's the mileage.
That's very fair.
Very fair.
Which, takes us to our last question, Zach.
We we love to ask this question.
It'll be interesting, just because we have agood concept of your age.
So if you could go back twenty years, whatwould you tell yourself?
What advice would you give yourself?
A wee teenager, I believe, a young teenager.
(56:29):
Yeah.
God, a lot of things.
I was I sit in a in a place of a lot ofblessing in my life for where I sit today
because I was a dumb kid.
Oh my gosh.
We made a lot of mistakes, but, you know,ultimately I think it's, probably two things.
You are the sum total of the three people yousurround yourself with.
(56:50):
WDS and I, we, we exchange a mantra it's burnthe ships.
You know, it's, it's a nod to, you know, Cortezlanding in South America that, you know, is
people wanted to run and they burn the ships,but it's not that aspect of forcing people to
do what you want them to do.
It is removing any opportunity for you toaccept failure or to, you know, find an off
(57:16):
ramp, and deviate from what your path is.
And it's not taking no for an answer and it'snot, it's finding innovation and finding
success.
Success.
Not looking for an off ramp.
And you know, I think that's, that's been atleast my personal mantra in this
entrepreneurship.
You know, it's, it's really easy to sidebar andsay, you know, oh, well, this just didn't work
(57:38):
out.
And, you know, I'm just gonna, I'm gonna try tofind an easy way to exit this.
You know, I think that works for a lot ofthings, just not accepting, not accepting
failure or not accepting, you know, the desiredgoal.
And it was just coming just short of thatperfection.
(58:00):
I'll go back to my dad.
My dad said that good is the direct enemy ofperfection.
And so, you know, we say burn the ships andthat just, that's our reminder that, we're not
gonna be looking for an off ramp.
There's there's always an answer to thesolution.
I think that that would have helped me a lot asa teenager.
Very similar minds.
(58:21):
Me and Will were at a conference and ChrisGardner, the author of pursuit of happiness was
there.
One of the things he said that I say all thetime so much so that my friends, will jokingly
make fun of me when I'm doing something very,you know, meaningless, meaningless, like, you
know, setting the table or something.
I said, if you're gonna do something, do itworld class.
And I believe that that's super true.
And, again, I I say it so often that I get it,you know, thrown back in my face in a playful
(58:46):
way, certainly.
Sure.
But yeah.
No.
You love that.
So, I'm gonna throw a bunch of the social andstuff in the show notes.
If somebody wanted to get ahold of you that'slistening, what's the best way for them to do
that?
Yeah.
Probably by email.
It's zach,zach,@stronghold.construction.
There is no dot com.
There's no dot net.
It's just dot construction.
Yep.
That's that's probably best best methodology toto get me.
(59:08):
Cool.
And then, is there anything else you'd like tosay to the people before we say our goodbyes?
Yeah.
No.
Just find your industry, whatever sector of theindustry that you sit in, believe it better
than you found it.
It's it's kind of caveat to say.
But we're at a point in, I think The U S as awhole, there is a kind of a changing of the
guard at the moment.
You know, a lot of the established companies, alot of the established market holders, they're
(59:33):
starting to age out.
And so a lot of that mantle is shifting toyounger entrepreneurs like myself.
And if we don't find the things in our markets,in our locales, in our specific industries that
are broken or need to be better, If we don'tfix those now, they're gonna be broken for
another fifty years.
So, just do what you do, do it well and leaveit better than what you found.
(59:56):
Love it.
Love it.
Love it.
Love it.
This was a ton of fun topics that I truly love,legacy, alternative programs.
I'm all into all those things.
I know Will is as well.
So listeners, I hope you had as good of a timeas we did.
And until next time, adios.
Adios.
Thank you, guys.
Thanks for listening to Building Scale.
To help us reach even more people, please sharethis episode with a friend, colleague, or on
(01:00:20):
social media.
Remember, the three pillars of scaling abusiness are people, process, and technology.
And our mission is to help the AEC industryprotect itself by making technology easy.
So if you think your company's technologypillar could use some improvement, book a call
with us to see how we can help maximize your ITcybersecurity strategy.
(01:00:45):
Just go to buildingscale.net/help.
And until next time
Keep building scale.
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