Minneapolis-based Kraus-Anderson Construction is a respected commercial contractor. It works on over 300 projects per year, making it amongst the largest locally owned and operated construction companies in Minnesota.
Kraus-Anderson Construction works closely with all parties involved in a construction project. In the opinion of Rich Jacobson, its senior vice president, this collaborative approach is what sets it apart.
With $1 billion in sales, 2015 was Kraus-Anderson’s most successful year on record, and, going into 2016, the contractor has the biggest inventory of planned projects in its history. There are many upcoming projects to construct, including significant projects in healthcare and education. Work also includes a mix of corporate R&D facilities and multi-family housing in the form of rental apartments in the Twin Cities and Rochester.
The company faces the common challenges of operating in the state of Minnesota: the difficulties associated with finding and retaining a skilled workforce. “We are struggling with finding the right people to put this work in place, not overloading our current staff and also managing this growth so we don’t take on more than we can handle,” Rich said.
How does Kraus-Anderson manage to balance its biggest demand ever with the issues in finding the right skilled labor? “We don’t turn work down, we strategically pursue projects,” said Rich. “We don’t chase work just to chase it. It has to fit in our schedule, and we have to possess the correct staff. We are not out there blanketing the market.” He says that the company is careful in choosing the work it wants to do.
Many of the owners and staff grew up in Minnesota, and it remains their home base. Kraus-Anderson is, however, focused on the upper Midwest, from eastern Wisconsin to Montana and everywhere in between. “We feel real comfortable working in North and South Dakota, Minnesota, Wisconsin and Iowa, so that is our focus for new business, but, we are also not afraid to travel nationwide with clients that we are familiar with,” Rich said.
Some of those clients include outdoor sporting goods store Cabela’s, a client since 1997. There are also nationwide contracts with Lowe’s and strategic partnerships with construction management company Structure Tone and business communications provider Parallel Technologies.
Kraus-Anderson has worked with HealthPartners since 2009 on the renovation and additions to Regions Hospital. This work has included an expansion of the emergency centre’s trauma centre and urgent care facility and the addition of a new surgery. Kraus-Anderson is also constructing a state of the art neuroscience centre for HealthPartners, which is due to be completed next year and will be the largest free-standing centre in the Upper Midwest.
The firm also builds many educational facilities. A notable example is light-filled Alexandria High School. Completed in 2014, the school’s spacious, modern and flexible layout is a template for a new type of learning institution. Kraus-Anderson is very proud of that work.
In the future, there are elementary and secondary school projects in twenty-seven different districts throughout the Midwest and Minnesota with an expected $1 billion of work over the next few years. There are also upcoming projects in western Wisconsin and North Dakota. “We are just happy to have the workload and the clients that we do,” Rich said.
Established in 1897, the company has been led by the Engelsma family since 1937. Kraus-Anderson was one of the charter members of the Associated General Contractors of Minnesota (AGC) and has been part of the organization for over eighty years. “It’s always been an important part of our business. They are big advocates for us and for the contracting community. They make sure we are aware of what’s going on with the state and federal level legislatively,” said Rich. Rich is also the co-chair of the AGC legislative committee.
The AGC benefits Kraus-Anderson as it facilitates partnerships with sub-contractors and suppliers. It also helps with safety and Occupational Safety and Health Administration matters. Rich rates the AGC’s work very highly and believes that it has proven to be collaborative, accessible and visible in the community.
“The biggest benefit is that they are gathering knowledge from all of our contracting partners and competitors, so it is like a clearing house that we can drill down to a situation or solution very quickly. They know construction; they know our challenges and successes. It’s easy to get answers and find solutions to issues,” Rich said.
Ninety-six percent of the projects that Kraus-Anderson manages are done in a collaborative format employing many elements of integrated project delivery (IPD). The collaborative approach of IPD creates more informed decision-making in the early stages of a project, allowing for more direct sharing of data, increasing productivity and eliminating much of the waste.
Many components of the process are commonplace, but, as Rich explains, the IPD process is not widely used in Minnesota in its entirety, so Kraus-Anderson uses a less formal structure. The method is built into the culture of Kraus-Anderson with strong owners, partners, architects, sub-contractors and, obviously, general contractors.
“We all need each other, so it’s in everyone’s best interests to work together for a positive result,” Rich said. “I think that IPD will eventually become the norm in the industry. It has to and will become more formalized.”
The formalization is inevitable because of the way the industry is now funded. IPDs are used in some fashion on every major project, regardless of what type or the location. It is the wave of the future, and Kraus-Anderson is in an advantageous position as the process already fits into its business model and goal of building enduring relationships and strong communities.
The goal is to have the owner and architect on board early in the project for them to become an integral part of the decision-making process and to achieve a successful completion of the project. This is also part of the selling and marketing strategy aimed at new clients. Most understand the advantages of the process, but there is a small contingent that still prefers the design-bid-build method.
Kraus-Anderson’s sustainable design and practices are green. “Green buildings are just good business practices,” Rich said. “Not all of our practices are LEED or high-level sustainability, but all of them have some component of green best practices, whether it’s recycling of demolished buildings, recycling of materials from a landfill or if it’s internally, with the recycling of our paper and composting. It’s the way we do things and dependent on the level that is requested by the owner or architect.”
The University of Minnesota’s Itasca Biological Station and Duluth International Airport Terminal are excellent examples of green building by Kraus-Anderson. The biological station is “dedicated to research and teaching on how ecosystems work, with an eye to cultivating an appreciation of their value and preservation for future generations” and includes a cutting-edge, zero-energy-footprint laboratory. The Duluth Airport’s green construction, of which Kraus-Anderson is the construction manager, will save the airport authority tens of thousands of dollars in utility costs. “It’s really a shot in the arm for Duluth in their economy and quality of life,” Rich said.
To support thought leadership in sustainability and other leading-edge initiatives, KA provides continuing education curriculum through Kraus-Anderson University, and the American Institute of Architects has approved KAU as an education provider. KAU offers technical and leadership training to Kraus-Anderson employees and clients.
All of the company’s project managers and job superintendents have at least basic training in sustainability. All field and project managers and employees are trained to find opportunities for sustainable practices and to enhance those as much as possible.
This is shaping up to be another stellar year for Kraus-Anderson, with its scheduled list of projects being the largest it has ever been. “We are looking forward to those projects moving forward,” said Rich. The company’s school, housing and healthcare projects will certainly keep it busy over the next twelve months. “We are also looking for new opportunities with increased collaboration between our development groups and construction teams throughout the Midwest.”
In partnership with Florida developer Elion Partners, Kraus-Anderson is working on a hundred-acre mixed-use development called CityPlace in Woodbury. In addition, Kraus-Anderson is breaking ground on new headquarters in April, and the 100,000 square foot facility in downtown Minneapolis will bring the realty developers and construction teams under one roof.
“We don’t want to just build the buildings; we want to be a part of the communities we serve from the day we break ground and for years to come. That’s really important to us,” Rich said.