August 15, 1996

GROWTH CHANGING LYNNWOOD CONTRACTOR

BY LUCY BODILLY
Special to the Journal

When Eric Tessem started his own construction company, he worked on bids during the day. At night, in order to make ends meet, he hung doors.

After 15 years in business, and revenues at about $20 million, Tessem doesn't have to hang doors any more. But he still puts in 12-hour days, six days per week at Lynnwood-based Construction Associates.

"Now most of my work centers around meeting with clients and pre- construction services," Tessem said. He finds the work

In fact, his company is gaining a reputation for working through those little details that can nag a project into the red. At Murphy's Corner, a strip mall in Mill Creek, the company built the entire center without knowing what grocery store would be the anchor tenant.

"At first it was Olson's, then it was Food Maxx, then it was QFC. Finally, Safeway decided to move into the space," Tessem said. "We already had the building facade up. Safeway was very flexible about the interior." The project for Gramor Development was completed about nine months ago.

Originally retail and restaurant space was the company's bread and butter. "We learned a lot from those projects," Tessem said. The firm still concentrates on them, but has moved on to other types of construction.

One of Tessem's early clients was Restaurants Unlimited, which at one time owned Red Robin Restaurants. When one of the owners wanted to create his signature restaurant, Palisade in Magnolia, it picked Construction Associates for the job. The 12,000-square-foot restaurant contains recirculating salt water ponds, three-level bridges and a piano bar.

The project was riddled with owner-initiated change orders. "The architects would look at the buildings and decide they wanted something else. When the pumps that recirculated the salt water were too loud, we changed them," Tessem said. But instead of being frustrating, the changes were understandable. The owner was so personally involved with the project, he came out and hand painted the rock work so it would be exactly as he wanted it.

The move into more complicated projects boosted revenues from $7 million in 1994 to $15 million in 1995. Revenues of $21 million are projected for 1996.

"We haven't grown at a rocket pace, but this is the range we would like to stay in," Tessem said.

In order to grow, Tessem made some investments that more traditional construction companies may see as risky. He made a commitment to a marketing department and he revised the company computer system to allow better interface between the field and the accounting department.

With growth, he has seen other changes come to the company. "There is so much more to the business than there used to be," he said. With 60 employees, most of whom are in the field, it now takes 1 1/2 people just to manage the company's L&I rating.

Its latest project is another move in the direction of growth. The company just started work a three building, 418,000-square-foot warehouse/manufacturing facility in Redmond for Underwood Johnson Group. The tenant will be Genie Manufacturing, which makes scissor lifts.

The $12 million project is scheduled to be completed in about 125 days. Built on a former gravel pit owned by Cadman Gravel, the site was filled in when mining operations stopped. Construction of the largest building will be tackled first. At the same time, the site for Building A will be preloaded because of poor soil conditions.

The first 215,000-square-foot building is due for completion in October. A 40,000-square-foot building will be finished in December and a 160,000-square-foot building is set for completion in February. To meet the tough pace, Tessem plans to work with well qualified subcontractors, and add extra shifts.

"On this job, we won't necessarily be looking at the cheapest bid, rather the most reliable company," Tessem said. Subcontractors, especially Aero Construction which is doing the site work critical to meeting the deadline, have long standing relationships with the company.

The other key is to limit changes as much as possible and to receive commitments from suppliers as early as possible.