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6 Steps to Setting Up a Construction Company for Success
Using powerhouse Sundt Construction as a cautionary tale, here’s how to make sure your company can stay the course.
3 Min Read
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The best construction business book I've ever read is “Level Headed: Inside the Walls of One of the Greatest Turnaround Stories of the 21st Century,” by Sundt Construction executives Doug Pruitt and Richard Condit. It chronicles the rise, growth, prosperity and near collapse of North Carolina-based Sundt Construction—and is a valuable tool for learning how to protect your company from a similar fate.
Sundt started in about 1890 and grew slowly at first. As time went on, they took on more and bigger projects, but they really took off, like many construction companies, during World War II. They were selected to build Alamogordo, New Mexico, where the Manhattan Project took place. They were also chosen to build Vandenberg Air Force Base in California, the first underground ballistic missile silo base in the world. Later, they even had a hand in putting a man on the moon because they built the Cape Canaveral Apollo 11 launchpad in Florida.
In 1992, H. Wilson Sundt, the company’s CEO, walked into the office of Doug Pruitt and said, "My brother Bob is retiring. You're the new president of the company," and he turned around and walked out. Pruitt must have thought, “What does that even mean? Do I have a job description?"
Well, there was none of that—no job description, no organizational chart and no structure or guidance whatsoever. Pruitt and Condit wrote, "We had a belief that we were too good of a company to get in trouble with all that history …”
Sundt was a great company, but Level Headed is a cautionary of how a great company can go bad pretty darn quickly. 1992 turned out to be the most unprofitable year in their history; it was quite a blow to everyone.
With Sundt as a cautionary tale, here are six actions you can take to keep your construction company from reaching the same fate:
Avoid internal silos. Sundt’s heavy civil division had nothing in common with the building division, which had nothing in common with the utility division. The divisions and various locations ran independently with little to no supporting infrastructure.
Establish succession planning before it’s needed. There was no succession planning at Sundt—not only at the top, but throughout the organization. The talented people who built Vandenberg and Cape Canaveral left, and the next people in line stepped into those roles, but it didn't mean they were as prepared or qualified as those they replaced.
Encourage consistent policies and procedures. Different offices and divisions at Sundt had different policies. The biggest thing was a lack of discipline and consistency across the board. Processes were different in different divisions and in different locations.
Challenge the status quo. One of Sundt’s core company values was innovation, but they had drifted away from that. They got into a rut thinking that their processes were working, and as such they stopped trying to innovate.
Be selective about your work. Sundt would take on almost any type of job. As a result, they often found themselves dealing with disputes because they had chosen jobs that were an ill fit, executed poorly and gotten into trouble with owners and trade partners.
Encourage transparency. Sundt’s tendency to silo resources and departments contributed to confusion and a lack of transparency at all levels of the business.
To remedy the issues at Sundt, Pruitt and Condit scheduled a strategic planning retreat. The top 50 people attended an offsite retreat over a period of days, during which they made some tough decisions that began to create necessary change in the organization. Since 2004, Sundt has continued to rigorously work on their business. Today, they're profitable, can attract talent and remain a sizable and respected company.
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