Pierce Flanigan | Crain's Baltimore

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Pierce Flanigan


P. Flanigan & Sons is one of Baltimore’s oldest family-owned construction and transportation infrastructure companies. It was founded in 1885 to serve the infrastructure needs of Baltimore City as it grew and modernized. Constructing and maintaining infrastructure, including roadways, airports, seaports and recreational facilities, remains the company’s focus today. P. Flanigan & Sons recently acquired Stancills, Inc., an 83-year-old, family-owned and operated specialty aggregate company based in Perryville, Md. Stancills specializes in green roofing.

The Mistake:

The mistake involves the concept of evaluating risk.

I took over the company when I was 30 years old after my father passed away unexpectedly. I was dealing with the pressure of taking over a business while the national economy was tanking, so it was pretty intimidating to read any newspaper. The local construction economy was also struggling, so states and municipalities were putting out fewer jobs, and the residential home building industry kind of stopped. There were a lot more companies competing for a lot less work.

My motivation was to keep things going and make sure that we had plenty of work. I would pretty aggressively pursue jobs, and in doing so took on some jobs that, looking back, were pretty risky, and I didn’t have that risk priced into the project.

Construction is all about risk management—there’s any number of things that can go wrong on a construction project, and it’s our job to manage those risks. But there are things that aren’t in our control, and there are jobs that have more risk than other jobs. That should be reflected in the price that we put on those jobs.

There was a job we did for Baltimore/Washington International Thurgood Marshall Airport, where we redid the intersection of the two main runways. It seems like a small area when you’re landing in a plane, but it’s the size of multiple football fields. There was runway lighting and geometric changes to the configuration of the runway, so the airport had to shut down for the weekend. We had to do all that work in a very compressed time period.

A week before the project started, our asphalt plant lost electricity for over 12 hours, which has never happened in my 20 years of being in this business. That made me realize that something’s happening and we have no control over it. Fortunately we had two asphalt plants ready to go, and we had two complete extra sets of construction equipment for the job, but even with all that it was a very risky job.

The job went well, and if the job were to be bid again tomorrow I’d want the job, but looking back there was so much that could have gone wrong. I should have been a little less eager to take on the project. I took risk and was fairly lucky, but I lost some sleep and I was nervous about it.

Construction is all about risk management.

The Lesson:

The takeaway is when you’re putting together a bid, conduct a risk assessment. What we do now is a fairly formalized risk assessment where we try to put a value and a probability on anything that could negatively affect the job, just so we’re clear about it as we make our proposal.

When you’re making a proposal, it pays to do that risk assessment. In my industry, risk areas would be what is the probability that you don’t meet the schedule the customer wants? What’s the probability that it takes a whole lot more resources than you expected? What’s the probability that a subcontractor doesn’t perform? Is there something about the job with higher specifications, and what if those specifications aren’t met and you have to redo some work?

I just try to be disciplined when it’s time to submit that bid and make sure that we’ve gone over and thought through things that may be unlikely, but represent a serious risk. Sometimes the result of the assessment would cause us to pass on a project. Taking on a lot of risk needs to affect the price, because we need to be compensated for that risk. But on the other end, if a project is low risk, we can be pretty aggressive on pricing.

P. Flanigan & Sons is on Twitter at @PFlaniganUpdate.

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