Stability In Maintenance: Quality Control, Tecza Environmental Group

Ted Tecza admits that design/build work is his passion, “but maintenance is a very important part of the company too,” insisted the president of Elgin, Ill.-based Tecza Environmental Group.

Throughout the past five years, the company focused on a dramatic push to grow its maintenance division, one that once resembled a business stepchild, representing only 20 percent of the service mix. Today, maintenance generates 45 percent of that blend and is showing signs of soon becoming the company’s largest service offering at 60 percent of total sales.

Tecza drives this service offering reversal because he learned firsthand how a poor economy can impact a design/build-focused business.

“When the economy turns down, design/build is a high-risk business to be in because the clients disappear,” Tecza said. “Maintenance, on the other hand, is very consistent. Plus, the cash flow is wonderful. Construction checks are big, but they tend to hit every 38 to 45 days, whereas maintenance checks are small but they come in regularly and end up covering our overhead on a weekly basis.”

By pulling in its service area reigns and structurally changing the inner workings of its maintenance service system, Tecza Environmental Group is building a solid wall of protection against future economic hardship.

THE MILLION-DOLLAR BRICK WALL. When the economy took a down swing in the late 1980s and early 1990s, Tecza Environmental Group’s maintenance work leveled out while the design/build work dropped off more significantly. The company wasn’t growing maintenance as aggressively as it is today - 18 to 20 percent annually, but it was still striving to hit the $1 million mark with this service.

“We ran into that million-dollar brick wall a couple of times,” explained Ed Reier, Tecza’s vice president of maintenance. “When we were close or when it looked like we were going to surpass it, our customer attrition jumped up and we lost a lot of work,” he remarked. “We thought we lost focus of customer service - we knew something wasn’t quite right.”

Three years ago, the maintenance division initiated a structural change that helped alleviate this problem. At that point, Tecza employed 10 crews with two supervisors directing the day-to-day operations of four or five crews each. Two customer service representatives and one sales manager, who were not involved in the day-to-day operation of the crews, handled all sales responsibilities and dealt with clients while a maintenance manager was in charge of the crews and supervisors.

“The more levels of management we had, the more communication between them suffered,” Reier said, relating this back to the aforementioned service challenges. “Our laborers weren’t being managed properly.”

Additionally, the company was supporting a greater overhead structure by employing various levels of maintenance management, and “it wasn’t allowing us to grow like we wanted to,” Reier said.

To alleviate this problem, Tecza Environmental Group implemented a new management structure for its maintenance division and created a three-man account manager team. Today, account managers, similar to the supervisors in the previous model, are involved in day-to-day crew operation by aiding in scheduling, training and communicating with foremen on a regular basis. But account managers also take care of customer service by building client relationships, selling them additional work and handling contract renewals. And Reier, as head of maintenance, has assumed the responsibility of new maintenance sales.

“Reworking our maintenance structure was the key change that helped us get over that $1 million hump,” Reier said, pointing out that this year the company will generate $1.5 million in maintenance and projects $1.75 million in revenue for 2001. “With three account managers, we hope to manage about $2 million in maintenance work, about $630,000 or $650,000 (50 to 55 clients) per account manager. Each account manager then will also sell $200,000 to $400,000 of enhancement work or add-on services to his or her current customers.

“We feel a productive account manager can handle $900,000 to $1 million worth of work and still have time to hold the clients’ hands and be there for service. Right now, we have the capacity to sell more work before we need to hire a fourth account manager.”

THE MAINTENANCE CLIENT. Eighty-five percent of Tecza Environmental Group’s maintenance work is within 20 miles of the office, and 60 percent of these accounts are within five to 10 miles of the office.

But pulling in service area boundaries to achieve this more contained client base presented a challenge when the company slimmed down its service routes 10 years ago. Reier had to tell any clients who lived more than one hour away and paid for maintenance services that took less than four hours to complete that the company could no longer afford to maintain their properties.

“But this helped us focus and concentrate on prospecting and cold-calling right here in our own backyard,” Reier said, pointing out that the remaining 15 percent of maintenance clients are comprised of accounts large enough to occupy a crew or crews for an entire day. “We base this qualification on job hours, not job size. The property may be only 2 acres of turf but require four hours of detail work. Most of our design/build customers pull us in this direction. But we will not travel more than one hour unless the job hours are worth the drive.”

A hefty percentage of Tecza’s maintenance client base is comprised of multi-family structures, which the company considers residential work (Tecza’s maintenance work is 71 percent residential and 29 percent commercial and institutional). Since so many residential clients request service for Thursdays and Fridays, the company is making a concentrated effort to increase its commercial maintenance work in order to even out the projects filling the Mondays and Tuesdays on its weekly schedule.

Reier plans on developing future commercial maintenance opportunities by building more relationships with property managers, associations and building management companies. “If you build relationships with property managers and exceed their needs, their jobs become easier,” Reier said. “Most property managers care for more than one property. They don’t want to deal with 10 different companies and 10 different account managers.

“I contact each property manager I deal with every fall to ask them about other properties they manage that are going out to bid this year and whether or not they are having problems with the current landscape contractors they’re using,” Reier continued, pointing out that he tries to proactively present property managers with solutions before problems occur. “We do the same thing when a property manager resigns by visiting with the board of directors or the property manager’s boss to try and establish deeper relationships. We suggest other building or property managers we know who they can contact to possibly fill the vacancy. This seems to work well - we’ve survived many property managers on one site.”

FROM CONTACT TO CONTRACT. The first and most important step in Tecza’s maintenance sales process is determining the needs of its clients. “If people call in looking for just a mow-and-go company, we suggest other contractors they can talk to,” Reier said. “We have found our niche client, one who is quality-conscious and understands safe, reliable equipment, uniformed and trained workers and someone to talk to if problems occur - this all costs money and all goes into our pricing. If we can explain that to a customer and educate them up front, we can save each other a lot of time.“

Most of the maintenance contracts Tecza Environmental Group’s clients sign are two-year agreements. The company offers clients an incentive to sign these contracts, even though Reier said he hasn’t had a problem convincing clients to do so. “If they sign a two-year agreement they are locked into a low or same-as-the-first-year price increase the second year,” Reier said. “For instance, if we have to raise prices 3 percent the first year, we will guarantee a lower or equal percent, such as 2.5 or 3 percent, rather than a higher one, for the second year.”

To encourage three-year contract agreements, Tecza offers clients who sign a three-year deal instead of a two-year maintenance contract a commitment to not raise the price for the third year.

“We try to convey the idea of a long-term relationship and hope our clients feel the same way,” Reier said. “With longer agreements like this we also don’t have to go out and renew all of our contracts every year. Rarely does a client object to signing up for a two-year agreement, but this is a client who appreciates quality and isn’t always looking for a low price. In other words, the client isn’t going out to bid every year.”

Tecza Environmental Group steers clear of low-bid maintenance work, such as municipalities seeking contractors to cut the grass, medians and right-of-ways, Reier said. “Most of our clients are willing to pay 10 to 20 percent more to have Tecza do the work.”

CREWS CONTROL. Tecza Environmental Group typically sends out two- to six-man crews to maintain the jobs it sells. Currently, the company has one two-man crew, one six-man crew, three four- to five-man crews and six three-man crews, Reier said.

Crew size is coordinated with equipment requirements. For instance, the six-man crew will drive a truck with an extended crew cab to hold six people and a 24-foot-long trailer. This crew is typically sent to multi-family complexes and will be there the whole day.

The two-man crew, on the other hand, has a truck without a crew cab but with an 18-foot-long trailer. “They are typically sent to single-family residences and spend one hour minimum on each property,” Reier explained.

Tecza’s average crew, which consists of three men, is at one or two sites daily, each taking about half a day to maintain. A site that warrants a three-man crew may be a smaller multi-family complex with 20 units instead of the 350-unit properties the company also maintains.

“We’ve experimented with different crew sizes quite a bit and have found that for our market and our customers, we have to have varied crew sizes,” Reier explained. “When you’ve got big trucks and little trucks and crews to match, scheduling then becomes the key to your productivity.”

To ensure that this system is effective, Reier pairs the same foremen with the same account managers daily. Maintenance accounts are divided into three regions: north, central and south. All the jobs in the northern region are given to one account manager and four or five crews. “This cuts down on travel costs and increases productivity,” Reier remarked. “This way the account manager only has to keep constant contact with four or five foremen as opposed to 14 or 15 foremen over the course of all of his jobs that day or week, improving communication.”