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July 2013
Design + Build: A Better Approach
By Zenda Douglas

     To say that Ken Andujar has a natural affinity for building is an understatement.

     “When I was nine years old, I used to go into the woods and build two-story forts. I’ve always been able to use my hands in ways that I didn’t need to learn from other people,” says Andujar, owner of Andujar Construction, Inc. “Construction just made sense to me from day one.”

     Andujar has taken his talent and put it together with a “Never say no” mantra to build a multi-million dollar commercial construction business that has successfully weathered the economic storms that have impacted the building industry over the past several years.

 

Designing a Business

     Based in Charlotte, Andujar Construction is a full-service design+build commercial contracting company offering services ranging from feasibility studies, design adaptation analysis, extensive value engineering through the complete building experience.

     The company is licensed to work in North Carolina, South Carolina, Virginia, Georgia, Tennessee and Arkansas, and will soon be licensed in Alabama. Since 1994, it has focused primarily on office, medical, restaurant and retail buildings, although Andujar emphasizes that he doesn’t like to be pigeon-holed into one niche.

     “We’ve done hundreds of office builds and upfits—all types. I love to do base building work and also to build out the interiors. A building is a building is a building—sticks, bricks, concrete, electrical and mechanical, whether the sign on the outside is medical or retail.”

     Examples of completed works include Colony Professional Center, The Arbors, Baxter Place, multiple Auto Bell locations, over 15 daycare facilities and over 200,000 square feet of retail space.

     The company manages each phase of a building project so that there is one point of contact and one point of accountability, according to Andujar: “We aim for a higher level of project delivery by having a unified professional team in charge of all phases of development.”

     “The typical method of an owner hiring an architect to design a project according to the owner’s wish list is flawed,” maintains Andujar. “This approach can cause budget overruns and take valuable time redesigning the project around cost cuts.”

     Instead, Andujar starts with a budget and then prepares a preliminary design in-house. “When the owner and the budget are in sync, then we contract with an architect,” says Andujar. “People should go in asking what they can get for a certain amount of money versus requesting a design of what they want without knowing the cost.”

     Andujar explains that the average person won’t know the huge variance in cost of materials or that paint is cheaper than wall-coverings; carpet less expensive than hardwood floors and has a secondary value in absorbing sound. Bricks can cost $200 per thousand or $500 per thousand.

     “Most people think that things are cheaper than they are,” explains Andujar. “In a commercial setting, the most expensive aspects are the exterior elevations: cast stone, brick or EFIS (exterior finishing insulation system or stucco). There are many ways to build: wood, light gauge steel, structural steel or structural concrete. Everything is done on an economy of scale.”

     Andujar is also critical of the competitive “bid and build” system that is prevalent. “When owners are trying to get a quality project but are always using low-bid contractors and sub-contractors, well, that is a flawed approach and is a risky choice for the owners,” says Andujar.

     “It’s far better to use a design+build contractor who will use sub-contractors with whom they work regularly and have long-term relationships.”

     Often, the low-bid contractors and subcontractors can submit a low bid because they have little overhead but they may not have the financial fortitude to complete projects or may have difficulty meeting warranty expectations, according to Andujar. “The design+build approach allows us to pursue design quality while controlling costs and schedules.”

     Ken Andujar is the sole owner of Andujar Construction but is joined by his brother Anthony who serves as senior project manager and helps to run the business. Fifteen other employees make up the staff which includes a controller, estimators, field superintendents, project managers and office staff. Many of these employees have been with the company for 20 years or more.

 

Building a Business

     Andujar was raised in Bergen County, New Jersey, just outside of New York City. He graduated from Kutztown University in Pennsylvania with a degree in business administration, but soon after found himself working for a master carpenter.

     “I always put myself in environments where building was taking place—where I could work with my hands,” he says.

     In 1985, he moved to Charlotte after visiting his mother who had moved here previously. “I loved it from the start,” says Andujar. “It was lots quieter and less congested. I was young and it was easy to meet and get to know people. Within months I felt like I had lived here all my life.”

     His first job in Charlotte was as a mason laborer and was short-lived. He then worked with a pool and deck builder, gaining experience. Andujar wanted more and, in 1989, he started his own business called Woodtech Builders.

     “It was the end of the savings and loan crisis, banks were shutting down, rates were high but I didn’t know any better. I had been doing consumer building (under $30,000) so I was operating under the radar, with no license needed.” His former boss became his first client as he built decks and swimming pools.

     Then, this client asked him to build a garage. “I never said no to anything,” remembers Andujar. “I built that garage and then built 75 more.”

     This work led to home remodels and then building entire houses through the early 1990s. “I did all the carpentry and masonry myself,” says Andujar, adding, “I’m primarily self-taught.”

     In 1994, Andujar was asked to build an office building, so he obtained his unlimited general contractor license and highway license at the same time. With this accomplished, he started doing commercial work and has never returned to residential work.

     He quickly learned two things: There was a real need among owners for general contractors to manage their building projects from design through construction; and it is unwise to attempt to self-perform the construction work.

     “Basically, a contractor should be a middle man to sub out work,” says Andujar. “It’s a simple philosophy: You can’t ever have enough work or enough people to have that balance where you can make money out of it [self-performing]. It’s better to use other people’s resources for skilled labor.”

     Andujar continues, “Every year got better and better. A commercial broker in Charlotte gave me an opportunity to build several small office buildings over in Crown Pointe. That launched my commercial career.”

     Andujar Construction earned $4.5 million in 2004; $30 million by 2006.

 

Maintaining the Business

     Relatively unscathed by the recession in 2008, 2009 and 2010, Andujar felt its impact towards the end of 2011 and 2012 when work really slowed down and margins dropped.

     “Up to that point we were sustained by projects in the pipeline and development work,” says Andujar. “After that, we weathered it by cutting back on overhead.”

     Andujar reports that 2013 has been much better and that the industry is hiring again. “We haven’t hired in years but are beginning to now.” With earnings above target, Andujar estimates revenue this year at around $15 million.

     But he worries that the improved economic picture won’t last long.

     “Estimates are that there will be a recession in 2016, worse than we’ve ever had. Everyday I hear about the next recession due to the U.S. spending and printing money we don’t have,” says Andujar. “Anytime things get to an elevated peak like the .coms and the housing market, they have to come crashing down. The trigger will be when we can’t borrow money anymore; when our national credit rating is downgraded.”

     Andujar’s plan to survive includes maintaining great relationships, banking as much cash as possible, and engaging in a diversity of work, for instance, service industries. “When people can’t buy new, they will maintain what they have.”

     “People have a misunderstanding of contractors—think contractors are in it to make a lot of change orders and a lot of money. The truth is that construction is not a very lucrative business—but if you do it right, you can make a fair profit,” says Andujar. Contractor earnings are based on a percentage of building costs plus management fees. In other industries, a fair profit is 25 to 40 percent. In construction, it is 5 percent, according to Andujar.

     Andujar Construction is LEED certified and has completed several green projects in the Charlotte region. “The good aspect of LEED is the energy envelope that you have to design in—much more efficient—and the methods of disposal for waste and recyclable material,” says Andujar.

     “A downside is that often you are required to use methods and materials that you would use anyway but they cost more than they should because suppliers take advantage of the fact that they are required and charge more, driving up building costs. Many people in the private sector (as opposed to public or institutional building) do not see the value of it,” says Andujar.

     Charlotte is business friendly and has a good business environment but the building industry is cliquish, according to Andujar. “Even though I’ve been doing it for 20 years, it’s still who you know. Some people know me and will work with me without thinking about it. With others that don’t know me, I have to prove myself everyday.”

     Andujar finds Mecklenburg County to be one of the more difficult building environments. “It’s difficult to get permits, but you can’t fault the municipality because growth is so rapid and so huge, they have to be careful and avoid mistakes.”

 

Giving Back

     Committed to helping children who are underprivileged, orphans, dealing with cancer or the incarceration of parents, Andujar supports several organizations that provide care or services to these groups.

     He has been a board member with the Scott Hannon Memorial Foundation for the past five years. Hannon was a fraternity brother to Andujar’s brother and did a lot of work with youth charities before he died in an automobile accident 22 years ago. Established to further Hannon’s work, the organization now hosts a golf tournament each year. The tournament raised $250,000 last year and has raised $1.7 million since inception of the tournament and other charitable giving.

     The Foundation has partnered with Clemson University’s Youth Learning Institute and The Cliffs in Greenville, S.C.; the latter has donated 18 acres for the development of the Scott Hannon Camp in the foothills outside of Greenville. Two dormitory cabins have been constructed and work on the activities center has begun. The beautiful camp with its 100-foot waterfall welcomes children from all over North and South Carolina.

     Andujar lives in Charlotte with his wife of 22 years and their twin sons, age 11. With a four-handicap, Andujar considers himself to be a pretty good golfer and spends a fair amount of time at the Carmel Country Club. He and his family also enjoy being in the Charleston area where he likes to fish off-shore.

     Work and pleasure unite when he is in his woodshop in the back of his office. “This is the way I stay hands on,” says Andujar who has built all of his kids’ beds along with other furniture and helps friends with their projects. “Once I stopped doing residential building, it became more difficult to be hands on with work projects; with commercial, it’s impossible to both self-perform and manage projects.”

     Nevertheless, with his never-say-no philosophy, it would be hard to predict what Andujar may get his hands on.

 

 

Photo: Fenix Fotography www.fenixfoto.com

Zenda Douglas is a Greater Charlotte Biz freelance writer.
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