April 14, 2021

Real Innovation vs Click Bait - Mark III Construction

Real construction innovation can be hard to see in the vast amount of marketing and market noise. Construction innovation is real. 
Dan Carlton, President, Partner, and Makayla Oei, Project Executive, at Mark III Construction, Inc. shared what they are d...

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Real construction innovation can be hard to see in the vast amount of marketing and market noise. Construction innovation is real. 

Dan Carlton, President, Partner, and Makayla Oei, Project Executive, at Mark III Construction, Inc. shared what they are doing with building owners to standardize, integrate and innovate. Their process goes beyond conventional prefab and kitting. They integrate the full scope for mechanical, electrical, low voltage, plumbing, piping, and framing into manufactured MEP wall panels.


Case Study & Video Links


Tour Requests



Follow Mark III Construction on social media:

LinkedIn - https://www.linkedin.com/company/mark-iii-construction-inc./ 

Facebook - https://www.facebook.com/markthreeconstruction 

Instagram - https://www.instagram.com/markthreeconstruction/ 

YouTube - https://www.youtube.com/channel/UCh5lH9l8DDsdpswaGpz5Dcg

Connect with Dan Carlton, President, Partner


Connect with Makayla Oei, Project Executive




Today’s episode is sponsored by Construction Accelerator. Construction Accelerator is an online learning system for teams and individuals that offers short, in-depth videos on numerous Lean topics for Builders and Designers to discuss and implement, just like on this podcast. This is tangible knowledge at your fingertips in the field, in the office, or at home. Support your Lean learning at your own pace. Learn more at http://trycanow.com/ 


Today's episode is also sponsored by the Lean Construction Institute (LCI). This non-profit organization operates as a catalyst to transform the industry through Lean project delivery using an operating system centered on a common language, fundamental principles, and basic practices. Learn more at https://www.leanconstruction.org


The EBFC Show Intro Music: California by MusicbyAden https://soundcloud.com/musicbyaden  

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Free Download / Stream: https://bit.ly/al-california 

Music promoted by Audio Library https://youtu.be/oZ3vUFdPAjI 



Dan Carlton  0:00  
One more question for you. But I'm not going to ask it

Felipe Engineer  0:05  
Ask it! 

Dan Carlton  0:06  
Oh, uh...

Felipe Engineer  0:06  
Dan, I'm gonna die tonight not knowing what the question is.

Dan Carlton  0:08  
It's not well, is innovation, truly innovation if it's not improving the outcome? And then you can ask the question like, well, what's the outcome? Is that? Is it for construction? Is it better productivity? Is it a better better experience by the patient? Is it more productive doctors but is innovating because I bring this up. There's so many things that are touted in construction innovation today, that I think are shiny objects that are in some ways getting in the way of changing or bettering the the outcome at the end of the day. And I sometimes see robot like, it's fun to go watch for a minute, but it's kind of like that bad YouTube video that like the clickbait where it's cool to watch for a minute, but is innovation, truly innovation? Or should it be recognized if it's not improving the process? So something to think about?

Welcome to the EBFC show, the easier better for construction podcast. I'm your host Felipe Engineer-Manriquez. This show is all about the business of construction. Today's episode is sponsored by Construction Accelerator.

The design and construction industries come up with and build great things. But we also build in waste in how we do those things, in our interactions, in our contracts in our logistics. So what does this do for our bottom line, or our next project, the best firms maximize their value by removing that waste, and only doing what's essential to the work what makes them money. Construction accelerator will train you to see the waste and give your teams the lean tools and experience to remove it immediately. All online. Construction accelerator is made up of three to nine minute videos that can be watched again and again, in the field, at the office, and at home. All broken down by topic. You need to learn pole planning. We have videos on the process, how to set up a room and how to kick off a team need to set up a target value delivery project, we discuss all the aspects of TVD especially cost. Or maybe you just need to brush up on five as well. We have videos on that as well. You can download and print reference materials to use on site to immediately translate watching into doing subscribe today at tri ca now.com. Let's build an industry not just a project.

Felipe Engineer  1:17  
Today's show is also sponsored by the Lean Construction Institute. LCI is working to lead the building industry and transforming its practices and culture. Its vision is to create a healthy and thriving industry that delivers outstanding project outcomes every time for everyone. Check the show notes for more information.

Now to the show. 

Dan Carlton  1:28  
Part of why we're here is I found your this show and some of what you've just messaged about to be interesting. So if we have time at the end, I'd love to fire a couple questions.

Felipe Engineer  1:32  
Yeah, absolutely. Let's turn it bots fair play. I love talking about myself down so don't even don't even hesitate to ask him either.

Dan Carlton  1:37  
I'll leave it for the last five minutes. 

Felipe Engineer  1:39  
Oh, that's not enough time.

Makayla Oei  2:15  
Yeah, I was gonna say.

Felipe Engineer  3:14  
Right? Makayla feels it, she feels like Felipe can talk all the time.

Makayla Oei  3:18  
I on the other end. I don't like talking about myself that much. So...

Felipe Engineer  3:23  
That's a wall and you help me help me dig in on her to get her expose super.

Makayla Oei  3:30  

Dan Carlton  3:31  
She's doing well. One thing I'll say before we get going is my Kayla, like she said has a second presentation today. When I first started working with Mikayla she was in a shell I will say she was these this something like this. She would have not slept for two three days before she'd be a wreck coming into it and just seeing her grow into we're talking about this morning of being so good at presenting comfortable with it and I mckaela I'm proud of you for Thank you. 

Makayla Oei  3:59  
Yeah, I blacked out. I think the first couple times are walked off of a stage feeling like my legs were overcooked noodles, but I'm sitting and we should be good to go. I think.

Felipe Engineer  4:10  
That is awesome. That's gonna stay in. That's a good little kudos for Mikayla. I thought you Makayla I thought what you're saying you blacked out that you're gonna black out right now because Dan was giving you a compliment but I'm glad to see you.

Makayla Oei  4:23  
Oh, no, no, no.

Felipe Engineer  4:24  
So we can start with you Dan, since you're on stage right for me.

Dan Carlton  4:27  
I really have  been in construction my entire life I since 16. before I was even out of high school, I wasn't ready to go to college. My parents I think, probably thought maybe I should go to the military. I had some, I guess a little reckless streak in me that had to be flushed out. So I got out of high school I went into the trades. I got to work more as a blue collar worker. I was a labor certified welder. I joined the union and ended up working my first four years building projects with my hands, which was, it was a cool start to my career I ended up, I had a bad accident welding accident that I had a 55 gallon drum blow up and it actually laid me up for almost six months, I ended up in the hospital. And it was the best thing that ever happened to me in the sense that it was a transition point of I wasn't ready to go to high school or to college when I got out of high school. But after being out of work, I decided I was going to go back and get my CME degree and went back to Sac State, got a degree, I continued to work as a welder and in the field while I went to the fact state. But it was kind of that pivot point, if that accident wouldn't have happened. I don't know if I would, I'd probably still be working in the field, which would be awesome, too. But it really gave me a chance to give thought to, I thought I could have a greater impact, I thought I could do something different and more from the office side. So that's where I started a little background on the company. We're a company of about 350 employees, we're based out of Sacramento, been in business for 45 years. What I'm most proud of and talk about it as frequently as possible is our mission statement that is leading the evolution of construction. And it's why we're excited to be here and talking to you today of we're out trying to change the world change our industry for the better. And I've got a team that's behind that I love having Michaela here because she's another one that she loves to speak into the microphone about how we're changing the industry and trying to get people to join us. And come on this mission with us. Our mission of leading the evolution of construction was actually in the downturn of 2009 2010. And when I would say leading the evolution of construction, people would look at me like I was in left field like what the hell are you talking about? Like we need to go like, need to find a job like we need to make sure we're making money. It's taking time, the most exciting part of my day, my job is getting to see people wanting to come along and actually leading and driving our mission on their own. So last thing I'll say is we're a MEP contractor. We're a specialty contractor. That's really our roots. 45 years later, we're we've been multi trade, we're still multi trade, that multiple trade delivery and taking it to the manufacturing side of how can we build better projects off site but I live here in Sacramento and waited a little bit longer than most to get married. I just got married a year or two ago. And congratulations. Yeah, that's exciting and that my wife has the best wife in the world. She I'm glad that I waited and found the right partner, but we just had our second daughter and those two girls keep me busy. So Makayla I'll hand off to you.

Makayla Oei  7:45  
So I never thought I was gonna work in construction. I also I was working in the mortgage industry. It was just a job, ended up having a ruptured appendix and also was in the hospital for a little over a week and went on disability for two months and needed a job. And I grew up out in Ranger Marietta, which is kind of a suburb of Sacramento. And there was a gentleman that lived out there that owned a local mechanical outfit here in Sacramento and I went to work in a job site trailer making copies answering phones, but uh, I spent about eight or nine years at that company and learned an absolute ton. I'm very grateful for everything that they taught me, and then made the move to mark three, about six years ago. Yeah, I never thought I was gonna be in construction. I went to school on a golf scholarship and stayed in school as long as they paid me to golf kind of bounced around from major to major, wanted to be a photographer. My parents continuously told me to get a real job. Yeah, that's kind of how I ended up here.

Felipe Engineer  9:42  
I could tell you know, the both of you have, you know, a common passion for doing things better and challenging the status quo, which is what the show is all about. It's all about, you know, how we engage in industry. So I'm super glad to have both of your perspectives which are different and unique, and I like That, that you kind of fell into it, you know, maybe not so much you then you kind of got blown up into it.

Dan Carlton  10:09  
It was a forced, forced entry it was, uhh.

Felipe Engineer  10:12  
It's not always like a clear path. It's definitely in the United States, we don't encourage kids to go into the trades or to go to school, you know, to go into construction, even though about one out of seven people are working in the construction industry supply chains. It's a lot. So there's a lot of people out there that are call this a career and make a living out of it, and should be proud. And I like that you guys are making things better. What is the geography that Mark ||| covers?

Dan Carlton  10:37  
We're we're California based. So we we've done work in Texas, we've been working Colorado, Nevada, but the lion's share of our work. And I think really the focus for our next 10 years is all California based thing as far as industries. We were doing a lot of e commerce work with Amazon and a few other players. But the lion's share of our work is in the medical industry. And that's where really as we talk later about project mountain and what we're doing to change the industry, we've found that the best partners, in our opinion for driving change in the industry are in that medical arena. They're some of the people that I think have the most buy in to not just changing one project but the future the next 10 years of projects, our focus a lot of e commerce, large warehouse work, some industrial work, why and share medical, the team I would always say we're people ask about culture as they come in to interview with Mark three. And I say we're we're a young team. And that's not in a number of years or experience. But when you come into our office, you'll you'll feel that we have a fresh energy to us. A lot of buzz in the office, we're not a quiet office. They're a noisy group, maybe COVID has changed that a little bit. But it's starting to it's funny starting to come back. I mean, just the last few weeks as people are starting to come back in the office. There's a buzz that's back in this office that's invigorating that it gets people fired up.

Makayla Oei  12:02  
Just on the note of you saying the buzz in the air, I think about we Dan and I have a check in every every week on Tuesdays and about two weeks ago, because some of us are working remotely. We've been Dan and I have been in the office for over six or seven months now. But disconnect between people, I can put my finger on it. And just the last week we've had a meeting two weeks ago, and I was like I just feel like something's off. And then last week, we were transitioning more people back into the office. And I just had more pep in my step. like seeing the people that we work with a lot of them are friends and not just people I spend more time with them than I do with my family a lot of the time. So it's nice to have people back. And it's it is an exciting workplace. I'm from coming where I where I worked previously couldn't be more different and how like the culture of just people that enthusiastic about what they're doing. And there is just an energy I would say inside this building that gets people excited.

Felipe Engineer  12:57  
Oh, that's great. Speaking about the building, where is the the primary location for project mountain for those of you that don't know prefabrication and modularization kitting is something that's been in the construction industry for over 100 years. And it just hasn't taken root and really no more traction. So Dan, you mentioned that you're focusing more with healthcare providers, I think they are as a market customer segment most interested in this type of stuff. Where does the magic happen? Our approach is really standardize design manufacture.

Dan Carlton  13:32  
And I say that because you nailed it, prefab modular been around for for ages, and they haven't taken hold. And one of the drivers for that, in my opinion is that it's it's focused on the outcome, not the process. And I think industrialized construction, I think standardize design, manufacture focus more more around the process. And the outcome can be a lot of things. It can be better construction, it can be better, kidding, or what we call MSKs it can be modular. But I so often hear people talk about prefab and it's, it's where I started when I was welding at the very beginning, I worked in a prefab shop. And I think that's something I'm trying to get people away from.

Felipe Engineer  14:15  
Part of the things that I do for my day job is I travel to projects all over the United States and sometimes even get snaked out abroad. And people are not really not aware because it's not every it's not every job. So a lot of people don't know I think awareness is really low on this option. So if you're if you're bringing something new now give us let's expand that definition a little bit more for people that that may be think they know what prefab is or don't know what it is at all, you know versus your approach and let's let's bring that your vocabulary into the into the conversation with the industry.

Dan Carlton  14:48  
I think of prefab as a way for the contractor to maximize profit. That's really how it came to be maybe increase schedule for a faster delivery, but it's not necessarily Trying to give everybody all stakeholders involved a better process that translates not just to a better project delivery. But again to the next 10 projects, how do we grow and improve for the bigger picture so prefab to me is, it's great. And if I was just going to be a contractor and wanted to maximize profits, prefab is a great option to take work off site right to find a way to build it cheaper and faster. For my own benefit. It's usually contractor centric, it's not it doesn't involve all stakeholders to make, like I said, standardize design. manufacture, which is is our approach to delivering projects, we have to have the architects buy in, we have to have the owner completely bought in, we have to have the engineers bought in, we have to have the not just the owner, but the actual people that are going to use the facility when we're done. I mean, it takes a lot of front end work to make that happen. And it takes looking at more than just one project. It takes looking like for a Sutter Health that takes looking at their how are they going to deliver their next 1010 projects? And what can we truly standardize not across one project, but across their their companies? 

Felipe Engineer  16:11  
I've been around the industry for over 20 years. And and it's it's always been there, but it's been there in such a small number of people. And is you're talking about bringing people in even those end users into that conversation about what can we standardize? That's something that's different. I think that's worth elaborating.

Makayla Oei  16:31  
No, I agree, I think that what we're trying to do is incorporate all of those parties, and not just focus on the gain of us independently, we're looking at how can we collaborate with the whole from the end user to the first person that starts doing conceptual design, and then take that, you know, obviously, it'll be delivered on a project, but not just that project, all the projects. And then to touch on where the magic happens really quick, our office is here, in kind of almost bordering South Sacramento, and we did have a couple of pre fabrication shops, when I first started here on this site. And we've since built a full what we're doing manufacturing facility about a mile down the road, where we took all the trades that we deliver. And if we decided, like if we're going to maximize what we can do, we can't have half the guys working on one side and half the guys working on the other side, because it just wasn't it wasn't efficient. So we put a consultant into place that, you know, a lean consultant that showed us the best ways to have changeover in case we had to you know, ramp up in one trade and they had to move things out of the way. There's work cell setup, it's designed to have the all five trades that we're offering in one building, and it's been it's been awesome. It's It's It's exciting people when we take people in there for a tour, you can see like people that do get it, their face kind of lights up. And we usually wait for questions at the end. But there's people that are like chomping at the bit every time we stopped. They're like, what's that? How do we do this work? What and it's, it's exciting to see other people get excited. And it's actually the people that you see him walk up and I will think they're not gonna be excited. This is gonna be a dud. And by the end of it, they're like, that was awesome. How can we work we got to find a project to work together on so that's where the magic happens.

Felipe Engineer  18:18  
All right, so Sacramento, the man is the new Magic Kingdom.

Makayla Oei  18:24  
It's almost the happiest place on earth.

Felipe Engineer  18:26  
Very cool. So you mentioned you got five trades under one roof. What are those trades again. 

Makayla Oei  18:30  
So we have a piping area and mechanical piping, we have a plumbing area, we have a duct area where we're fabricating our own rectangular duct work. We have an electrical area and then we've also added a metal stud framing table line. So we have an air line where we build our framed openings. That framed openings slides down and I call it roller skates, which is that probably the most technical term but it looks like a roller blades. So it comes down that it gets into the the exciting part of the table where we have it expands and contracts. You put your track and your studs in there. It's got screw dollies that slide up and down the sides and applies a screw from top and the bottom that slides off. It's then received a couple feet away to where we put in our electrical and wall assemblies are plumbing and wall assemblies, any low voltage, anything that's going to be living in that wall. And it's just a we were sending those out as Ms. K's on a cart previously. But we kind of took a step back on a project a couple projects that we had a couple years ago and we thought why don't we instead of sending it on a cart, send it in a wall panel like this is let's take that piece of scope away from the framer coordinate what the opening is slapping in there and cool. We have some case studies that we did a standard exam room that we built. We did a traditional Ms. Kay with it on carts, and it took two guys 10 days to build that and by increasing the manufacturing element and doing those wall panels we were able to able to save three and a half days off of a 10 day schedule. It's cool and it's exciting to watch one of the buildings I just finished. I do have some time lapse footage of it that I'm starting to put in into loops and to see just the panels Come in and then it just kind of domino effect through the building. It's it's pretty cool to watch in fast forward and actually standing there just watching it happen like, you know, every four minutes they're putting in another wall across a floor.

Felipe Engineer  20:13  
I think you know, for people listening that aren't scheduling every day on jobs like that 10 day example what you what you lay down there's that's actually pretty impressive itself. What's the typical stick built for something with a similar size? How long does that take?

Makayla Oei  20:28  
Let me give you a little bit more background on what that was we took a typical Sutter exam room is what we base it on a whole virtual piece. We then designed kits that included all the material cut to length pre packaged, kidded all the tools needed the instructions. Think of an Ikea like if you're putting together a lack shelf, but less Allen wrenches and more exciting tools.

Felipe Engineer  20:50  
Like a shelf floating around this studio.

Makayla Oei  20:52  
I'm sure there's one close proximity to me as well. But yeah, we took these kids and we had two non trade specific mechanics assigned to the project. And they received just in time deliveries each day with their day's worth of work that took them 10 days. And that's from metal stud framing all the way through paint and everything finished in the room, what it takes a typical exam room to be built on a site. I don't know if we can compare apples to apples.

Felipe Engineer  21:20  
How big is the floor with how many exam rooms total?

Makayla Oei  21:23  
The one that I'm referring to was our project mountain. So we built one room at a time. And we built four rooms total here building that we're doing, that we just finished in real life, roughly a 9000 square foot floor. And I believe the second floor has call it 20 ish exam rooms on it. And we were able to set that floor panels. It also has offices, some restrooms, cleans, clean med storage and whatnot. But we were able to set a whole floor of panels our first swing at it in four days.

Felipe Engineer  21:57  
Well, I mean, for all the people listening, and Dan, that's super impressive. I mean, you guys don't even realize how impressive it is because you're you're too close to it. But you're knocking the socks off of pretty much any stick build attempt, the four rooms alone for operating rooms could be months long before from the time that people start with layout to final painting. And you're doing it in less than a week best in class, I would say.

Makayla Oei  22:21  
Those walls when we set them in that four days they weren't finished to paint through that that was just setting the framing.

Felipe Engineer  22:26  
It's still, it's...

Makayla Oei  22:28  
But I will add on doing some we do have people on our team that are traditional framers and have looked at me like I'm a fish riding a bicycle, when I've showed them the framing table or things like that, like I could beat that there's no way that you have to get to be faster than me. And when we did the first day of walls on site, I drove away from the site just pumped because we set what the area that I wanted in a day we met, we met the goal that I wanted. And I drove away talking to a co worker saying now all I want is that one guy to call me and say I'm listening. He called me later on that afternoon because he had lent us a couple guys to help install and said show I heard it went really well out there today. And I was like, No, you're right. It did. And so getting those people, because I always I always say like you can tell people things constantly like and in meetings in here will tell people things but buy in is where it's at. and getting the people that aren't the early adopters, the ones that are the naysayers to kind of stop and raise an eyebrow ago. All right. All listen now is something that gets me excited because I'm on the forefront of how we're what we're doing and what we're changing. In, in what we're in Mark three, I would say, um, change is scary. And people kind of look at me like sometimes they don't make eye contact because like, well, you're she comes she's gonna ask us to change something. So what I when I get people that kind of turn in like say, Yeah, what let's let that think about let's talk about it. That's what makes me excited is getting those people to believe in what we're doing and why it's beneficial.

Felipe Engineer  24:00  
Yeah, I love that. What do you want to add to that, Dan?

Dan Carlton  24:02  
It's been a long journey. I've been with Mark three for 14 years now mission of leading the evolution of construction for 10 of those years, or almost 10 years. Now, like I said, the first time I said we're going to have a mission statement that isn't around quality and making money but driving change in our industry and making this industry better than we found it there was just like Michaela said there was people that looked at me like a fish riding a bicycle or whatever the hell you want to call it. They were not bought in. And so 1010 years ago, our team saying What the hell are you talking about five years ago, setting out with a team and taking on an r&d initiative that was off site. So not trying to do it on a construction project, where time or schedule and money always get in the way of r&d, in my opinion. So five years ago, we said we're going to do this off site and on our own, we're going to fund it ourselves. We're going to let the project speak for itself. Does it make sense when we're done? Did we learn something and did it make the process better and There was a lot of naysayers a lot of people on the sidelines still. And every year, we get more alignment with our team. And our customers that this works the Sutter MLB project, we beat the framing schedule by I think it's 73%. I mean, 73%, and we save money. On the first iteration, we weren't supposed to save money on the first iteration, there's still too much that you have to learn too much that might might have to happen one time and break to improve on the next project and start saving money, we save 10% off of budget or more than 10% on our first iteration. So you all of a sudden have the people who are on the sidelines, that are the most old school traditional, don't want to change type. Individuals saying, put me in coach, I want to be part of this. That's what I think today. I know, we jumped from our manufacturing facility to really where we're at and what we're delivering today. But that's what's exciting. That's what's fueling our organization today, the proof and Michaela is the one who's really she's she's the boots on the ground. She's the one that delivered project mountain to our second r&d project, she delivered the UC Davis medical clinic, which was our first or the partnership with bolts where we manufactured MEP panels and the overhead systems. She's run the Thomas projects, and it's cool to see her get jazzed. But she's getting jazz because the people are starting I mean, our team is starting to buy in and wanting to get involved. So that's that's why I'm excited about it.

Felipe Engineer  26:34  
Kudos to you. Like a lot of people don't realize that in the design and construction industry. in general. There's almost no money spent on research and development construction companies in the US on net revenue spend somewhere less than 1% of their profit towards r&d, which is like teeny tiny little number, like you mentioned, you know, some of the margins that general contractors have now again, you know, General Contractors don't take offense, but most of their margins are like two cents on the dollar, you know, sometimes five cents on the dollar specialty trades or, you know, companies itself perform like some of the trades you mentioned can be north of 10%. It's a tight margin commodity type of environment. So you're really bucking the trend, to go do this research project off site just to learn, like you're investing and learning that is something that's very unique. I've never heard that story before, where somebody is an organization decided to invest, you know, big dollars on building something that won't be used for just the sake of learning. 

Dan Carlton  27:32  
I'll throw Bolt's name out, there is a company that's trying to innovate. And they're investing I think, internally when I went and told our CFO that I wanted to go spend four to $5 million, and build a manufacturing facility and spend a large chunk of money on an r&d project that we weren't gonna get paid for, we're going to tear it down when we're done. He again looked at me like what would you say, go home, go home, take a shower, put your clothes back on, come back. When you're awake, we're going to talk but he came from a large, a billion dollar a year contractor. He's like, we don't do this. We like we're go work the system to make the money and not that he he's still with me. And he's He's right behind me and what we're doing today. But it does take saying we're not going to maximize profits this year. We're not going to maximize profits maybe over the next five years. And we're not truly in this to make money. One thing that I say is when I'm done, I had about 30 years left in my career is that I am going to leave this industry better than I found it, I don't know how much money I'm going to make, I might make a lot I might make a little. But I'm going to leave this industry better than I found it. And we are going to change the process. I've seen it I've built projects with my own hands. I've seen the broken processes and the disconnect between all parties involved in a construction project. And we have to make this better and just in the last 12 to 24 months of things and projects where owners are seeing value in what we're doing that we're saving them money that we do have a better process. It's nice because they say it's it's lonely at the top a lot of times you make a decision like this to go invest a large chunk of money, or at least for we're a smaller company, but it's it's a large chunk of money for me out of out of my own pocket to go do this. It's lonely at the top. And so it's nice to see and feel the people starting to come along and join us owners coming along or employees coming along and starting to instead of having Dan drive it, having our team drive it so it's an exciting time.

Felipe Engineer  29:38  
It was really exciting. So industrial manufacturing is what we want to call it Dan was that the right phrasing?

Dan Carlton  29:43  
Rell me to go kick rocks and maybe twist my arm to go the other way but industrialized construction Mark three it's standardized design manufacture is if you do that, you're going to end up with the ability to prefabricate Something do full volumetric modular, which is our current r&d initiative or delivered typical. What we think of is stick frame construction better. I mean, if you, if you nail that process on the front end, it gives you a lot of options once you go to build, but it all happens way ahead of time before potentially a project has even been identified. You're looking within an organization, what can we standardize across the organization for all project industrialized construction. So I think that's if I was going to pick like a common something that in the last few years, I found a group that's trying to change our industry. It's a it's icy or industrials, industrialized construction. And they're looking at the process. So I think I can relate to that group. And it's a term I use, it's a group that's not focused on the outcome, or prefab or modular or stick build. There, it's a group focused on the process of how we get there, and how we improve before we ever get to the actual construction phase of the project. So industrialized construction is is a group I can relate to, as far as what we call it, Mark three, it's our approaches standardized, get with an organization figure out everything that can be standardized. And that's standardized with options. It doesn't have to be just a one size fits all. But standardization, you can then go into design, a lot of times people try to design for standardization, which I believe is that that's more of a project centric approach, you standardize throughout the organization, you then design or put in all the filler that can't be standardized and bring the standard units or assemblies together. And then you manufacture, manufacturer manufacturing being the final stage and just like for UC Davis med clinic, or natomas. With Sutter Health, probably the easiest part was the actual manufacturing and construction, a lot more of the headaches and work went into the the front end standardization.

Felipe Engineer  32:05  
You got me in some unchartered territory, Dan, this is a new way of thinking about this. The listeners are going to really like that and get excited about this. How do people react during the process?

Makayla Oei  32:13  
It's such an evolutionary process. I don't know that everybody still gets it that we worked with on a project that we just did. The GC was trying it because the owner was involved. And I would say that Sutter brought us into that. And the GC did it because the owner wanted to do it. And I don't know that they would do it on future projects or whatnot. But they were they were along for the ride. We went through design, and we standardized to the best of our ability, but even going through it at the beginning, we were like okay, they think we thought we can standardize the synchronous interval assembly. And we had set our walkthrough and they I went and visited three different projects and found three different exam settings in three different gooseneck paddled faucets at every single one. So getting every all the players still like worst, it's still we're not we're not 100% there yet. We're still working on that in that first square of standardizing so that made us manufacturing for this project. It I mean, it all fell together because we did standard we got what our standard was, but I don't know that they're in a spot where they are definitely ready for standardized. So get is the the main piece. I mean, it's it's the first piece for a reason. And I always I use the analogy of you got to get the right foot out of the batter's box, or you're going to you know, if you get the wrong foot out of the first the first step, you're screwed, like you're just like Domino effects down the path. So that part is still working. We're still working on standardized piece for then design and manufacturing. 

Felipe Engineer  33:44  
There is a lot of variation one of Sutter's competitors Kaiser is my primary care and they're trying to standardize as well and it's a struggle because you know where you are in the geography and this the time of year the things are built in availability just because you know, those three things that you mentioned might not have been intentional, there might have been changes in code or evolution manufacturing that that required three different things.

Makayla Oei  34:05  
Yeah, and this seems like people think oh, it's a wall hung sink like it doesn't really matter. Well it changes the spread of the supply in the wall. So it does it trickle down is that same thing of getting the right foot out if we're going to use this sink and we have this and it's not here like that makes a difference.

Felipe Engineer  34:21  
Now once something goes in, because you guys mentioned project mount one project mount to you know, for people that aren't as close to it as you are, what do you share like I understand project mount one is that first research investment Dan that you convinced your CFO after you went home shower changed and won't splash cold water in your face and got him to give you some cash and you tore it down since it sounds like so sad to build something and just tear it down. And then what's what's project mountain two? 

Dan Carlton  34:48  
Project mountain one was it was actually an overhead racking assembly a large overhead racking assembly with mechanical electrical, plumbing, all trades built Two ways. So we built it stick frame in one side of our warehouse. And we built it from a manufacturer to assembly, which was basically set in place in about three hours on the other side. Oh, yeah, comparative analysis of the, how the two came together, we actually brought an OSH pod inspector in to inspect both both assemblies and actually write us up for violations. But that was project mountain one was an overhead assembly, and how well we can build it or manufacture it versus stick build. And we learned a lot from that. The second iteration was the partnering with Sutter Health partnering with them to deliver four part exam room and trying to get better with each iteration of the exam room. The first two were were brought in is kits are what we call Ms. KS, which are standardized kits with instructions on how to install them. The second two rooms were manufactured. So we manufactured the walls, and basically set them in place, then we're ready to sheet rock and start finishing them out. And it was just a goal of thing incrementally or from room to room how much we could get better that ended up parlaying into the natomas project with Sutter Health and just getting to learn more about Sutter Health wants to standardize there. I love Sutter Health because they lead from the front. And they don't just say that they want to change the industry there. I truly believe they're invested in it and will change it for for the better. And so they told us, not only do we want to standardize we already have. And we said well, we'll show us like, let's see, this is this is great, like this is what we want to do. And so they showed us plans, and then Michaela went out and watched three different facilities. And then we talked to the architect on the project. And we're like, you guys aren't standardize everything. Everything is different like you guys, you might want to and it's also not constructible. These are nice architectural files that are, I mean, these are nice lines. But this isn't we can't send this to our manufacturing shop, it's not spooled. There's no directions on how this has to be built. So until it's cost loaded, can be manufactured code compliance has connection details of how it's going to tie into the rest of the facility. It's not this isn't a standard standardizing this project took us closer for a standard Sutter exam room, we have the recipe, we never have to recreate the recipe, we might have to tweak the recipe, add a little bit more water, crack an extra egg, we might have to change it if it's a code issue. First floor versus second floor versus third floor. But for their standard exam room, it might be a left swing or right swing a sliding door. There's there's some options within that. But we have now with Sutter nailed down the recipe and can tell you the cost, how long it will take us to manufacture, how long it will take us to deliver and install for a standard exam room. And that's that for us was that's a window, it might only be one standard exam room. But that makes up 50% of a typical imobie. And on the next one, we're going to do an exam room plus, and we we might have built that on the last one. But we don't we haven't really nailed down that recipe. So every iteration we're going to develop more more staff.

Makayla Oei  38:19  
Just to add on top of that. It's amazing like looking at the plans that I've seen from the two facilities that I've reviewed by just standardizing the exam room. And then if you take on the unisex toilets, like if you do staff and patient toilet, and if you do an office space from calculating it, it's about 73% 75% of the usable space. If you eliminate the waiting rooms, and you eliminate the hallways and corridors about and you standardize those three different spaces, you can take that file, and then duplicate it from site to site, if you have the standard established.

Felipe Engineer  38:53  
Wow, that's high reliability. So I mean for them for Capital Planning, because I think a lot of the large health code builders like Sutter, they're like on some 10 years, sometimes longer forecasting windows for some of their master planning. So with your help, and what you guys are delivering how long things really take, they're always having these repeat design things and a lot of that's just coming right off, like right off. And the same for the construction part. It's got to be changing, you know, their their future approach. And getting that I think you're introducing the ability to scale for the first time, which I have not heard before a lot of new things you're Dan, you are like on the cutting edge.

Dan Carlton  39:32  
I don't know that we're changing the world today. We've made like I say the last if you will get 10 years ago, it was extremely painful and not a lot of buy in five years ago, people were starting to at least take on faith that maybe let's do it for Dan. It's nice that it's finally starting to get some love and recognition from our internal team and some of the owners working for so that's the exciting part.

Felipe Engineer  39:54  
But we got a long ways to go. You know, when I came into the industry two decades ago, we had a much much, much less Your workforce. And then today we've had a dwindling workforce. And it's not a glamorous like people aren't like knocking our doors down to come work in our companies, because it's construction. And there are other other industries. I mean, we're competing with all the Silicon Valley here on the west coast. And then people on the East Coast are competing with, you know, the financial markets. And in the southern areas, you've got other larger manufacturing.

Dan Carlton  40:23  
The difficulties in finding craft labor, I've been, we're actually in Michigan right now, I guess that's where I'll take you as we're what we're looking at Michigan, to find young 18 to 22 year old people that are leaving high school, not wanting to go to college and want to find something that they can really grab on to that's a great paying, and long lasting career. And so we're having to look out of state, which we feel like we've mined California, and we're getting outbid, it's I think, and especially in California, it's not seen as being glamorous, and it's looked down upon to be going to the trade and our schools are not supporting it. The the trade programs that our schools are faltering are Oregon, to really lead people down that road. So I guess, the fact that we're looking at Michigan, it's a sad state of affairs. And I hope that we can change that. And that's, I think it really starts in the high schools and the perception of this career, it's something you can hang your hat on that it's going to be there, it's not not going anywhere, it might change the form of how we're delivering projects, but it's going to be there. It's a good paying job. And it's respectable work, you are improving people's lives and what you're doing when you're out building, projects, medical, industrial, everything we're doing is making people's lives better. And I wish more people thought that way. As we talked to our employees, there's a lot of concern when you go tell your team, that we're eliminating the craft position within our company, we're trying to start manufacturing projects, and we want to install them with mechanics, non trade specific mechanics that are doing multiple trades. The first thing the guys says to you is you're taking my job, like what would you say? That sounds horrible. I'm a craftsman. And you're talking about getting away from craft labor, the number one thing that I want to ensure for myself, my company, and the team is that we're relevant in the future. And to be relevant in the future, in an industry that has to change, we have to be dynamic, and the future doesn't mean the Craftsman is gone. The Craftsman is now what we call our trade specialists. They're the ones coming up with the next idea of how we're going to manufacture better, faster, cheaper, how we're going to come up with that that next great product that we're going to build our manufacturing facility, I'm not going to do that it's going to be today. That's where the best for as we talked about prefab the best prefab ideas, or how we're going to do a lot of the virtual modeling for a project. It happens in most companies with ex tradesmen like they're the ones that are the brilliant guys behind the scenes, coming up with how we're going to route this how we're going to make it better. That's something that we have to continue to communicate because we do get the feedback. As we talk about changing the way we deliver projects of Am I still is a craftsman, am I still relevant in the future? And the answer is hell yes. But it's in a better paying role. And you're actually out in front is, is one of our key players coming up with that next product or idea of what we're going to manufacture to make our projects better. Mak, what what are your thoughts?

Makayla Oei  43:31  
Yeah, I agree. It's changing the, I guess the perspective, it's something else. So that moves even from craft labor, like, up through the design portion, like people were like, if you're standardizing this, and then we're like, you're taking away the design aspect upstream, or eliminating certain parts of it. And it's like, Yeah, but by doing that, you're gonna have more bandwidth to do more projects, more efficient you can become, the more you can do. 

Felipe Engineer  43:55  
I like that approach. And I want to make sure that you guys get anything that we missed to give it enough time to talk about. And we'll go to Makayla first because you're you got the big smile.

Makayla Oei  44:04  
We've produced a case study, what our findings were basically what we did, what our findings were, what we learned, how we screwed up how we could get better. So we'll be producing one of those based on the senator MLB that we're wrapping up. We're in the commissioning process right now. So we will be sending it out to you'll probably get a copy, I'm pretty sure we'll send it to owners that we're trying to talk to different trade partners that we're trying to talk to you as well as putting it out on LinkedIn on our website, it'll probably be incorporated into a blog, post social media, etc. So it's exciting. I have all my metrics that I gathered through the project. And I'm now you know, piecing those out to make it user friendly, I guess because right now it's like, you know, a bit what you can't see my office is the excessive amount of whiteboards and things pinned to my wall of how my mind works. So I'm putting all my data in a user friendly Les format so that we can write that case study and it'll be out next month. I'm just excited. I'm excited for Dan to ask you a couple questions. I mean, we were you said beginning that you were like, you like to talk about yourself. So I'm like buckling up and ready to listen to what we got!

Felipe Engineer  45:16  
Makayla definitely we'll put links to their case study in the show notes. So people listening and, and want to see this will get it right. Like, just look down people in the description. It'll be in the show notes. So you can pick it up, click on those hyperlinks and see exactly into Kayla's mind.

Makayla Oei  45:31  
Oh, yeah. That's a video buckle up for two, I guess.

Dan Carlton  45:35  
Yeah. Part of why I was excited to come talk with you is first I heard your name at LCI. When you were named. Was it Chairman's Award? That was the Chairman's Award 2019. It's

Felipe Engineer  45:46  
It's right behind me. I got the here. Let me let me grab it.

Dan Carlton  45:52  
Oh, I heard heard the name but didn't know the person like this conversation is fun. I saw your guys's first podcast and I loved what you were talking about. We're of the same mindset of we have to change the industry, there's got to be a better way. There's 40 to 50% waste in each one of these projects that drives me nuts to drive up to a project and see all this waste. What are we doing to change it? It kind of knocks both of our companies and it's about general contractors and subcontractors. And the simple question is, are we the number one cause of the problem of waste because our my company and potentially yours is from a contracting standpoint, the system is set up not to drive innovation, change, collaboration, continuous improvement, the GC controls the chaos, and they're they become good at that. But they don't if the chaos went away, their role would be not eliminated, but it would their power would shrink in some way, shape or form. And the subcontractors to come in there sometimes make more chaos, and then sometimes come and solve that problem after we've kind of created not taking project knowledge from from one project to the next and looking for for continuous improvement. We approach every project like a new project every time and we don't fix a lot of the problems, the same problem that my stepdad who started the company experience 40 years ago are still happening in construction, and subcontract. My company is responsible for that in some way, shape, or form.

Felipe Engineer  47:20  
So my question to you is, do you think that we're part of the problem, we are definitely part of the problem. But the owner shares a role in this. This is my personal belief, Dan. And I think that everybody who's in the construction industry has some responsibility. And how we do things we are not victims to the systems we play in, we are active participants, and some people more understand that better than others. You know, so for those of us that do, and we set the vision for how things can be, we're extra responsible, I don't even think about subcontractors in that way anymore. I think of them as trade partners, you know, for me to do what we do, every day on leading a project, I've got to get, you know, 60 different entities to act for mutual benefit. So that that is my role. And in order to do that I have to serve those 60 entities so that a they want to help full, they want to be helpful. And I've never, I've actually never come across because I have that approach. Never come across a trade partner that was like actively working against the project just hasn't happened. For me. I've heard stories about it. But I think that my approach is a little bit different. And how I see it. And I also am aware that in the United States, there have been multiple owners that have built large healthcare construction, the closest one that I remember in my lifetime was in Irvine, Irvine, California, Hogue health, right in Irvine, across the street from the kaisers Irvine Medical Center, built a like a multi, I think it's almost 10 storeys tall, I haven't remember the count. And one of the plumbing contractor was on that job. It was on a job that I was on a couple towns away, and they're like, we're building this whole thing fleabay and there's no GC, like the owner is doing the thing without a GC and I was like, Oh my God, my days are numbered. So I'm thinking, Okay, we've already got owners experimenting with no general contractor. So I know it's possible. And the job was a success. It even won awards, and no general contractor. Now I heard, there was a lot of like, you know, challenges with that. And there was there was a learning curve, definitely for the owner. Now that in that job, the owner didn't do the second job without GC, they went back to hiring a GC again. But that's a that's what I would call a weak signal. That's a warning shot that, you know, if we don't adapt and take more responsibility for how we're doing things, we're gonna eliminate ourselves. And we eliminate ourselves in the market because we're not adding value or frustrating clients. So we got to be careful with that. And the same is true with trade partners. If we don't really partner together and put the project ahead And I like your approach, like, you might make money you might not, I would argue that you will always make money with that approach. As a consequence, it's just gonna happen. I've seen the same thing happen when you serve other people and put others needs ahead of your own, you'll get taken care of. It's like one of those magical things that I can't explain why it's true. But I know it to be true based on 1000s of experiences. So I think that we, as an industry that have the whoever's frustrated listening to this, you're like, I think it could be better, or you have an intuition, or you just had like a string of bad days, you have the potential to make it better, all you got to do is find some like minded people that think that we can improve. And we we partner together, and we do make it better. But I think that, you know, we downplay, the owner sets the tone for how we deliver projects to a much greater extent that people don't even realize. So like all of us in the marketplace, there are only so many owners, right, there are way more, there are way more trade partners, anybody else. And then and then the next biggest group of general contractors. And then the next biggest group is the design community. And then the teeniest tiniest group are the owners. And you'll find as you talk to more owners that they don't collaborate, among other owners. And what they all do is they propagate the same thing that like you said, like your stepfather, or their, their parents did, or people that brought them up, they're just maintaining the same thing in the industry. And they're not transforming it, because nothing in their organization rewards changing, just like the same struggle McHale is facing, when she's engaging with people saying, like, we want to transition, you broaden your skills, and, you know, shift you to a mechanic versus a super specialized silo. The same thing is true, we see this, I mean, if you just look at people that make up owners groups, you typically see people that and most owners groups, Dan have a high turnover rate, they can't keep their project managers. And that says something too, about, you know what kind of organization they are that people don't want to fight to stay working. They're like, I look at a company. So I'll look outside, just to. And you don't really realize this until you look outside. So let's look at Toyota who's like, super into, they don't even call it lean, but just the Toyota Production System, which a lot of stuff that we borrow comes from the turnover rate at Toyota worldwide across the entire planet. And they're operating on all continents except for Antarctica. Their turnover rates less than 1%, well, less than 1%. And then the people that retire, I follow a bunch of retired Toyota people on LinkedIn, because they are like a fountain. They're like a firehose of information. Just they can't turn it off. their experiences a total are so profound, so radically different, so beneficial to society, that they're out there retired, giving information away for free, showing people how to do it, because they know there is a better way, there are better ways. And there. And it's more like when you think about yourself as a person, it just feels right. Like everything about making a better experience, you know, for your people, for your customer. It just feels right and benefiting people around you. There's an intuition about that, that we often forget about when we get too busy focused on outcomes. And I loved earlier on like i was i was like high fiving you from across the street, you couldn't see me, Dan, because you were in the zone. But you were talking about you wanted to focus more on the process. And this was me like, high fiving, you in my mind, I was waiting for the right time to jump up and slap that camera. But a lot of people get hyper focused on the results, but we might be focused on the wrong results. And a lot of the metrics we're looking at in the industry, like the very things that clients are overly hyper focused on sometimes are not things that they should even pay attention to. It's just noise. It's not what they want. And they downplay you can even see that and how you know, the clients that we interact with? How do they talk about their stakeholders? How do they talk about their end users that will tell you a lot about how they're engaging with their larger community who they're really developing. And if you're if you're talking to a healthcare client, so you're out there healthcare owners, and your project managers don't think about the patient. If the patient doesn't come up in every conversation during your construction project, including design, you're probably missing something. It should be page patient centric. And just like we do in schools, this is where like the school higher education does a little bit better, I think than health care, is it in the schools, they're always talking about the kids, or the students. I hear this all the time, we're doing some work with one of the community colleges here in the area. And just the two phone calls that I've talked to one of their administrators. They've mentioned the students every single time and to that's 100% hit rate. I can A year, you know, on a healthcare job and never hear the patient mentioned, you know, as we look across, you know, I'm talking about from the client from the client, right. So that type of stuff, like the client really sets the environment to a greater extent and like, you know, people like yourselves, like you mckaela, you're really bucking that trend. And you're, you're pushing back and you're, you're doing something that's different. And I think it's worthwhile for anybody to explore that more, we can't expect we can expect as an industry that the owners are just going to know, we got to bring them along, and have those shared awareness moments, those, they need contrasting experiences, so that they can see that there are other things possible. They don't have to keep doing things the same way. And just one short little story, we talked to a client in Dallas, Texas, and they, they had heard about, they'd gone to some lean construction events, and they're like, we would love to do that stuff, that lean stuff. That's how they were calling it that leads. But we can't, we can't do it because our contract doesn't allow it. We can't do it because of this. We can't do it because of that. And I was like, No, you can't do it, because you don't want to do it. I was like all you have to do like even in your request for proposal process. I was like, Are your lawyer stopping you from asking questions and your RFP? And they're like, Well, no. I was like, What if you just asked the general contractors? How do they collaborate? How do they? What are the things that you want to do that lien stuff that you like? And just ask an open ended question, and then just see what responses you get? And then you score it, how you score it? And then there you go, now you at least have some more information. And they're like, I didn't realize it was that easy? I'm like, yeah, you need to change. But don't worry, we'll help you. 

Dan Carlton  56:36  
Well, it's been a great conversation I love Like I was saying earlier, I think you nailed it with the general contractor to subcontractor relationship, and how how we find people we want to work with and how we're going to change this industry is finding like minded partners, and that also goes subcontractor, to the general contractor. But really, it's general contractor, and subcontractor with the owner, I think that's where IPD, where some of the magic happens with IPD is, is getting everybody kind of on the same page. And at the end of the day, the owner is the ship and the captain, right? I mean, we get to be we get to be crew in some cargo and have a lot to do on the ship to make sure that it motors running. And I think that we we have our jobs, but the owner is the ship and the captain and they're going to set direction for where we're going in so many ways.

Felipe Engineer  57:30  
You guys have made a great show, I think there's gonna be a lot of inspiration that we're going to sprinkle into the industry. today. There's a lot of listeners all over, all over the listen to the show for those types of things like what is really innovation, what is really changing how we build. So I want to thank both of you from the bottom of my heart for coming on and sharing what you're doing to change how we build worldwide. And you know, all those kids in Michigan that are looking at jobs in California, the weather is amazing. I can't say enough, like I grew up in Chicago, and we've lived in California for over 11 years. And I think that's going to be the case for probably decades more to come. So it's everything that you see on Hollywood and more. It's awesome.

Dan Carlton  58:15  
I'll put you down as one of our references. Your show, I've loved it. I love the from the first one to today. I love what you're doing. I appreciate your commitment to making our industry better. I appreciate you doing it. And I'm going to enjoy watching it from here forward. So you have a great day and we appreciate your time. Thank you. Awesome. Thank you.

Makayla Oei  58:35  
Thank you very much.

Felipe Engineer  58:37  
Thank you Makayla. Bye, y'all.

Makayla Oei  58:38  
Bye. Thank you.

Felipe Engineer  58:40  
Very Special thanks to my guest. I'm Felipe Engineer-Manriqurez. The EBFC show is created by Felipe and produced by passion to build easier and better. Thanks for listening. Stay safe everybody. Let's go build!