New York’s Kandey Company seeks out the difficult jobs — and has steadily grown because of it.
When site and utility contractor Kandey Company took on a directional drilling job in Lancaster, New York, last November, the challenges were known from the start. It wasn’t the largest of projects — 1,800 feet of drilling to install 4-inch HDPE force main — but the drilling was largely through bedrock. Kandey Company purchased new equipment through Pow-r Mole that it had never utilized in order to tackle the job. After two months the project was completed successfully — and profitably.
That ability to take on challenging work that other companies shy away from has been an important part of Kandey’s growth, says owner Joe Kandefer.
“We look for difficult projects where there’s going to be a low amount of bidders,” he says. “That’s been our strategy for about the last 20 years. We’re not looking to increase revenues by just adding workload. We’re looking for certain jobs that we can make a good profit on.”
A GRADUAL PROGRESSION
Kandefer began his career as a plumbing contractor. As the complexity and size of jobs that he took on increased, Kandefer found himself acquiring more equipment. Soon a focus on commercial jobs turned into larger municipal projects. In 1984, he and his wife, Marie, formally incorporated as Kandey Company. Municipal work remained the focus as the business gradually grew.
“We just transitioned into larger projects as the years went by,” Kandefer says. “Our bonding increased and our abilities increased as far as more equipment and the experience level of the people in the field.”
Today, the company has a core group of about 20 employees, which grows as the workload requires it. Other employees are hired seasonally out of the local operators and laborers unions. Kandey Company’s work covers about a 100-mile radius around its home base of West Seneca, New York. It’s a smaller area than what the company once covered.
“In years past we used to go quite a bit farther, but we learned over the years that it’s tough to manage jobs that are farther away from our home office,” Kandefer says. “We’ve done work for just about every municipality in our area.”
BRING ON THE CHALLENGES
That job management is key because of the types of jobs Kandey Company seeks out. Part of the growth strategy, Kandefer says, is to go after unusual or challenging jobs where there will be less competition from other contractors during the bidding process.
“A few years ago, we put up five wind turbines for the New York State Thruway Authority. It was a different type of job and we felt the competition wouldn’t be as tight,” Kandefer says.
“Those are the jobs we look for. This is a risky business, and with a risk, there should be an award. So we look for the jobs that will have less competition and that we can make a decent dollar on.”
It means fewer projects overall than what some contractors might take on, but that’s what allows the company to practice proper oversight and ensure that even a challenging job remains profitable, he says.
“With a limited amount of projects, we can manage them properly. If they’re managed properly, we can hit the goals in our estimate as far as the labor and the production because there’s nothing we’ve missed,” Kandefer says. “It’s not about the quantity of revenues for us. We’re not looking at doubling our revenues over the year. We’re looking at staying steady with what we can manage and make a decent markup on the projects.”
Kandefer estimates that the company does about 80 jobs annually, but that’s heavily dependent on the size and scope of the projects.
“They can range anywhere from a $50,000 project to $20 million,” he says. “We’ve got some projects going on right now that are in their second year. We have one we’re just finishing up that’s been over two years, and another one that’s not going to be done until mid-2017.”
To take on challenging work, Kandey carefully analyzes all the possible methods in advance, and feedback from throughout the company is welcomed.
“It’s not just do it my way, or do it no way,” Kandefer says. “Every project is thought out, and we discuss internally all the means and methods that are possible for the project. We come up with a plan and stick to it.”
And if need be, Kandey is willing to purchase new equipment specifically for a project. It helps if it’s equipment that can be utilized over the long term on other jobs, Kandefer says, but the company will still often make the investment in a one-time-use situation.
“It all depends on the type of work we have and the best way to get it done,” he says. “Sometimes there’s a piece of equipment we’ll buy just to use on one project, and then we try to sell it.”
DRILLING IN LANCASTER
A directional drilling project Kandey completed in November and December of last year is a good snapshot of the type of work the company regularly seeks out: There was a challenging component (inconsistent rock conditions) that likely deterred other contractors, yet Kandey found a way to overcome those challenges and complete it both successfully and profitably for the company.
The job called for drilling through 1,800 feet of bedrock to install 4-inch HDPE force main for a new government-funded senior housing facility in Lancaster. To accomplish that, Kandey Company first purchased new equipment built by StraightLine Professional Drilling Solutions and distributed through Pow-r Mole.
“Most rock hammers are designed for vertical drilling, and guys will try to adapt them for horizontal drilling but they just don’t work the same. There are only a handful of manufacturers that make a horizontal rock hammer, StraightLine being one,” Kandefer says. “We went with them because they’re connected to Pow-r Mole (headquartered in Lancaster), so we knew we’d get excellent service and support. With Pow-r Mole we had people they put right on site to work with us and support the product they’re selling.”
That extra support was helpful as Kandey Company needed the equipment not only to complete the Lancaster job successfully, but also future projects under similar rock conditions. Although it wasn’t new technology to the market, it was new to Kandey’s workers and they had to learn along the way.
“That’s why we ended up buying the equipment and taking this job — just to get through the learning curve, because we have other projects that we are still waiting on permits for that are going to require the same kind of equipment,” Kandefer says.
Kandey Company tried to factor in that learning curve when it bid for the job. With production on untested equipment being an unknown, Kandefer says the job was priced so that it would still likely turn a profit despite any unanticipated hiccups.
“If you build enough into it and you’re able to learn something from the project, it’s a win/win situation. You learn something and the job comes out profitable. That’s my theory,” he says. “And if we bid a job, figure it this way, don’t get it, and somebody else gets it, so be it. Let that person learn the hard way.”
On the Lancaster job, a Kandey Company crew spent about a month drilling. It took another month before the site was completely restored. From what production should be under such rock conditions to what adjustments have to be made to the drilling method when those conditions change, Kandefer says his crew learned a lot that can be carried over to future jobs.
“It was something we shied away from before — drilling rock with our directional drill — because the rock in our area is very hard and abrasive,” Kandefer says. “There are not too many guys that will do it in this area because of that. This equipment opens up some jobs for us that we wouldn’t have even bothered bidding before.”
Going forward, Kandey Company plans to continue seeking out the difficult work, or at least the jobs that other contractors are less equipped to handle. The company’s biggest growth area at the moment doesn’t even involve much digging — wastewater treatment plant work.
“It seems like there’s more money being appropriated for those types of infrastructure improvements in our area and there aren’t too many contractors that have the knowledge of those systems like we do,” Kandefer says. “We’re adding new storage for sewage, replacing existing treatment plant equipment, building new pump stations.”
Since Kandey is so reliant on the knowledge and experience of its administrative team and crew out in the field — some have been with the company since the 1980s — another focus is keeping a steady stream of youth coming in as older employees retire. That way mixed demographics are maintained and younger employees can learn from those with more experience, Kandefer says. That extends all the way to the ownership.
“I have a son-in-law in the business and I have a daughter who just started in the business to work on the administrative end,” he says. “Sooner or later — within 10 years — I would hope that they have a good grasp on it so I can sort of start getting away.”
Even then, taking on challenging work will likely still be Kandey’s calling card. Kandefer says that business strategy doesn’t necessarily have to be a risky proposition.
“Every day there are challenges,” he says. “You just have to be smart about it when you run into them, take the time to assess the situation, figure out the best means and methods to take care of it, and keep moving.”
Winning the bid
Municipalities have rules to follow when hiring private contractors to take on public works projects, such as going through a formal bidding process when work reaches a certain price threshold. That accounts for about 90 percent of Kandey Company’s workload, so to remain sustainable it’s important for the company to come out on top in the bidding process as much as possible.
One method Kandey employs is purposely seeking out challenging work that will attract few bidders, increasing the company’s chance of winning the job. But along with that, there are also other ways the company keeps a steady amount of work headed its way. For example, Kandey makes sure it does a thorough job on the front end estimating the cost of a project, so it can submit an accurate bid that will get the project done properly yet cost-effectively.
“You build a job on paper,” says owner Joe Kandefer. “Every task has a cost, and you just add everything up. We make sure the estimate is done properly. That’s how you ensure you don’t make any mistakes on the job site.”
And after a job, Kandey follows up to make sure the customer was satisfied with the work and the price charged.
“It’s important to stay in touch with them,” Kandefer says. “And for the person who is in charge, we’ll buy lunch for their crew or something. Just little things like that to keep our name on their tongues.”
Building that relationship and developing a track record of successful jobs can help because some municipal work is not a one-time project. For example, Kandey holds several service contracts with the Erie County Water Authority. One is a two-year contract that has to go through the bidding process every time it expires, but Kandey has been able to lock it down for more than 20 years now.
And not all municipal work has to be put out to bid. If it’s under a specific price, a municipality can avoid a formal bidding process and give the work to any contractor. Kandefer says his company has many customers who will regularly call on Kandey for small projects, particularly hydroexcavation and sewer inspection or cleaning jobs — an area the company has been trying to grow in recent years.
“That’s the most recent large investment we’ve made into a service,” Kandefer says. “Even a lot of that is put out to bid, but we are also starting to get a lot of repeat customers who will call us in for small projects — as long as it’s under a certain dollar amount, they can give us the work without going to bid. So we are gradually building that relationship up with different municipalities.”