The Donohoe family has been involved in real estate and related businesses since 1884. Working from Washington, DC since its inception, the Donohoe Construction Company has grown with America, striving to be the best at what it does. Family-owned and operated, Donohoe is one of the leading general contractors exclusively serving the Washington metropolitan area. Business in Focus spoke with President Steve Donohoe.
From its beginning in real estate, the company expanded to add the construction division in 1955. Donohoe Construction Company came about to satisfy the request of an existing client to build an office and warehouse space. Donohoe bought a piece of property, hired an architect and was underway. That success prompted Donohoe to serve other clients in the same way. Today, the fifth generation of family members is working in the business, and there are five operating divisions.
“We can find a piece of property, get it permitted and titled, build the building, lease the building and manage it as it goes forward. We have a division that takes care of building engineering to keep it running properly, and we can retrofit it as time needs,” explains Steve. In recent times, Donohoe has even been tearing down buildings that it originally built to start the process all over again.
The company’s primary focus is repetitive unit construction; apartment buildings, hotels and senior living make up ninety percent of its work. Fortunately, there is a lot of real estate investment in the District of Columbia, and the market is busy in all of those areas. Donohoe is capable of taking full advantage of this.
I asked Steve about how Donohoe deals with the constant expansion and contraction of business as it is affected by economic cycles. The answer is in the company’s flexibility. Its scheduling chart for hourly people and management personnel is covered in crossed out sections. Plans always change. There are projects that are on the books for years – that should start up within a month, but never do. Then there are some projects that “fall out of the sky,” and a contractor is needed immediately.
A testament to the work accomplished by Donohoe can be seen by its inclusion in Engineering News Record’s (ENR) list of the top four hundred contractors nationwide. Donohoe has been recognized for the past thirty-four years, which is no small feat.
“It’s blocking and tackling – trying to do the basic stuff and do it right. We spend time trying to evaluate the things that we are good at and those areas where we may make mistakes. We communicate that institutional knowledge to all our people, so we can all try to be better and avoid the pitfalls that are out there,” explains Steve.
Its five divisions can serve all fields of the real estate process. A construction client that then needs someone to maintain the building can look to Donohoe for this. Donohoe has built over seventy hotels, so it is only natural that one of its divisions is in hotel management. Clients can be assisted in planning their hotel’s operation, or Donohoe’s facilities management group can maintain the building after it is constructed.
“From a construction standpoint, only about fifteen to twenty percent of the work done is internally building for Donohoe. The balance of it is for third party clients. So, we have a little bit of self-generated work, but the same process applies to in-house work,” says Steve. If Donohoe buys a piece of property, develops and maintains it for itself, the profits can be put into another project to generating more money, and the cycle continues.
Having the diverse capabilities of a one-stop-shop has certainly helped to win some new clients, but it guarantees nothing. Every client has different needs and wants. Some want an experienced team; others look for a long-term track record, and there are clients who want the lowest cost. It really depends on the individual client.
With more work, there is the potential for more problems, and the lack of skilled labor is always an issue. Steve tells me that there is no easy answer to the skilled labor shortage.
“We are trying to gauge our subcontractors hiring practices. Are they using people on their payroll that have been with them for a while? Or are they getting piece-work? That’s part of our industry, and with piece workers, that requires a lot of extra supervision to ensure that the work is accomplished in a fashion that we can be proud of,” says Steve.
Donohoe extensively studies labor force needs at the beginning of a project to determine if any additional supervision and oversight are needed. It has also expanded its quality control team and program to perform far more frequent inspections because the workforce is not as experienced as it once was. There are many new people coming in who do not necessarily have the necessary expertise, and that results in costly over-management, with double and triple checks of the work.
Donohoe knows that the best opportunity to retain great employees is to nurture them and train from within. Talent – particularly supervision and project management talent – is very much in high demand. The company shows its people that if they can meet certain milestones, they can be given more responsibility and a higher compensation.
“We are always looking to figure out how we can challenge folks to move up with a career path that will enable them to stay with us. Outside agencies are calling every day offering people more money or something different to lure them away. We are trying to be very protective of our employees. Giving them the training makes them better for themselves and helps to take care of their families. Our employees are treated as if they are family members,” explains Steve.
“We are actually fairly conservative as far as contractors go. We do not try to take on work where we don’t have existing proven personnel that can run it. Our business relies heavily on referrals and repeat business. Doing a bad job for a client – as the old adage goes – it takes ten good jobs to make up for one bad job, reputation wise. We are very careful and do not have huge swings in personnel,” says Steve.
Donohoe has been adding people over the last couple of years, but it was done very carefully, so new hires complement existing employees. The need is for people who understand the company’s systems and how business is done here. The company spends more time training and promoting from within.
Training becomes an essential ingredient to the success of any construction company. Donohoe works with a local foundation that trains high school students in the construction trades by supporting their apprenticeship programs.
“We bring in interns every summer and during the holidays from people that are pursuing construction management or engineering degrees. We give them a little bit of exposure on what we are doing. It helps us with recruiting. We also have a full-time training committee that works with our existing folks in both people skills and technical training,” says Steve. Donohoe takes its interns to job sites to see the operation at work, and so they understand the industry. They have access to a peer mentor who will answer questions and give advice.
The goals of the company have been for some time to maintain a high level of client satisfaction and promote growth opportunities for employees. The Washington real estate community is quite close-knit and tight. Repeat business and client referrals are a huge part of the business plan. Steve believes that the way to accomplish the positive reputation needed for this is to honor commitments and provide a quality product.
None of Donohoe’s success could happen without good suppliers and subcontractors, and some of its relationships go back fifty years. The company has a history of working with local partners who get the job done while Donohoe organizes the job site and makes it run efficiently for them. The supplier or subcontractor is then able to complete the work quickly and successfully, and their continued competitive pricing is used, in turn, to win more work and keep the relationship going, proving beneficial to all parties involved.