Case Studies

A&D Companies Inc.

Sustainable Design and Construction

Andrew R. Otero started A&D Fire Sprinklers Inc. in 1988 to offer innovative one-stop service for any and all fire sprinkler systems, as well as many special hazard needs. The Santee, Calif., business (based near San Diego) started with only two employees: Otero and his brother-in-law. They worked out of Otero’s house completing small sprinkler contracts, but quickly earned a reputation for quality and timeliness.

After buying out his brother-in-law’s share in 1992, Otero used his experience and contacts – including work with consultation, CAD design and 3-D coordination, installation, maintenance and inspection – to diversify with a general contracting company, A&D General Contracting Inc. In total these separate but related businesses, which operate under the umbrella of A&D Companies Inc. (ADC), now employ as many as 70 people.

Both ADC components – which operate separately, with the sprinkler company even bidding on work for the general contractor – have enjoyed constant steady growth, which Otero chalks up to a forward-thinking, proactive approach and borrowing proven concepts. “I look at the best companies in the business, companies I want to emulate,” says Otero, still the companies’ president. “These businesses have yearly revenues beyond $300 million. I evaluate what makes them successful and adapt these models for a company of our size with fewer resources.”

With annual revenue of $25 million, ADC has found success through Otero’s research and growth philosophy. “To work with the best, we must be the best,” is the key phrase in the company’s operations. Working for both private and public companies, ADC self-performs fire sprinklers, concrete, metal studs and drywall, plumbing, carpentry (rough and finished) and minor painting, and works with pre-qualified subcontractors for the rest.

ADC excels not only in quality service, but also in safety and innovation. The company has developed what Otero calls “a culture of safety,” and has vowed to hire only employees who share ADC’s commitment to a strict wellness and accountability program. With its focus on delivering a quality product informed through involving a client in imperative design stages, the company is a leader in LEED Platinum projects and has led the way on military contracts implementing sustainable building practices.

First in the Field

With its reputation for performing at the very highest level, ADC completed the first- and second-ever LEED Platinum-certified design-build projects for the Navy. The company has been selected repeatedly for the military’s Multiple Award Construction Contracts (MACCs), which are worth $750 million between projects that are between $7 million to $15 million each based on the contracted company’s past performance and overall capability as a general contractor.

Every four to five years, the government selects the top five to eight contractors in their size bracket, based on past performance, experience, management plan and technological criteria. These companies submit an application for these contracts, and if selected, as ADC has been, a company is invited to bid on any of the department’s design-build projects in the bracket.

ADC invests a good piece of capital in these bid proposals, which include preliminary plans, schematics and a technical write-up, because contractors are selected not on price alone, but also on a standard of best value trade-off.

“They select the contractor who is giving them the most value for the price,” Otero explains. “That’s how we win a lot of the projects we get, including Luke Air Force Base and the Recruit Marksmanship training facility at Camp Pendleton.”

The repeat military projects have been a big step up for ADC, whose selection for these contracts is well deserved. ADC receives government specifications, takes tours of facilities and puts a personal stake in establishing sets of plans that really assure satisfaction. Otero adds that ADC has gone a few steps beyond Platinum LEED in each of these military contracts. The Luke Air Force Base project was the largest ADC had ever completed, totaling well over $12 million, and it was delivered with zero change orders.

“It was a great milestone for us,” says Otero. “A&D General Contracting Inc. received a Star Safety award for having no safety incidents, as well as an Outstanding Evaluation for overall contractual performance.”

Sustaining Growth

The design-build government work has meant ADC’s general contracting business has seen few obstacles during the recent recession, although Otero admits his fire sprinkler company has taken some hits, even on ADC projects. “On the Luke Air Force Base, my fire sprinkler company couldn’t compete price-wise,” says Otero. “So we subbed the work to a local contractor. After a few bad years, however, things seem to be turning around.

“We have some very good return clients,” continues Otero. “They retain us because they like what we do. We have a good reputation, we’re very dependable and our customers know that we’re going to take care of them.”

ADC’s reputation for excellent products and services keeps customers coming back over and over. Often, Otero finds he doesn’t even always have to send out a bid and ADC has been awarded sole-source projects in the past, whereby a project is negotiated without involving other bidders. This has helped in an overly competitive climate in the marketplace.

During the early days of the recession, competing contractors started dropping prices to rock bottom, if only to secure work and cover overhead costs. The problem with this, Otero explains, is that these price drops force other companies to drop prices to keep up. As the businesses continually attempt to underbid each other, they start to get into trouble. “It’s easy to get sucked in,” say Otero. “It always happens at the beginning of bad times. Everybody underbids until they figure out that they can’t afford to operate like that. It’s either that you make a change and raise your prices back up or you go out of business.”

Instead of trying to force doors open haphazardly, however, ADC wisely sticks to its strengths and looks for open doors. Otero expects 2012 to be a good year for the sprinkler business, and says that the company met minimum revenue targets in May. “We’re working on a good, profitable year,” he says.

Throughout all operations, however, customers and safety come before profits at ADC. In order to continually achieve client satisfaction, ADC is always striving to implement and adapt to the dynamics of change in education, tools and technology. All employees at ADC are required to complete ongoing training. And, whether or not a project specifically requires LEED certification, A&D Companies Inc. leverages sustainable building practices and materials on every project. Additionally, the company has implemented a recycling program that operates on every jobsite. An extensive array of projects and exacting standards of practice make A&D Fire Sprinklers Inc. and A&D General Contracting Inc. versatile choices for contracting needs in the companies’ region.

Published on: March 4, 2013


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