Published In December 2000
Is Mike McPhee missing the forest for the trees? With major jobs as his Connecticut company’s forte—including work on Mohegans, a major-league casino—the president of Farmington, Conn.-based McPhee Limited spends a good deal of time in a conversation with a visitor focusing on two small company operations. McPhee Limited (www.mcpheeusa.com) can have 200 or more electricians performing new construction work at any one time. But McPhee is especially proud of the 12-person Advanced Technical Service Group (ATS) and the 25-odd folks at McPhee Utility Power & Signal (MUPS). “At one point, with all of the projects we were involved in, it seemed that potential customers had the wrong idea about our company,” he explained. “A lot of people started believing that McPhee was just a big contractor, the kind that’s only interested in big jobs. And, it’s a fact—we did lose some focus on smaller customers when we began growing so quickly. “We decided that we had to change that. If we let that perception persist, it would stifle the company’s growth in the long term. That’s why we started our service division [the Advanced Technical Services (ATS)] two years ago—to get out there and continue to work and build relationships with a diverse group of customers.” As it turns out, McPhee’s vision encompasses both the big forest and each of its individual trees. Satisfying customers McPhee Electric, in a joint venture with Native Sons, a Native American contractor, was recently named as the “electrical trades manager” at the Mohegan Sun Casino. This project, built on an Indian reservation in Uncasville, Conn., is one of the largest construction opportunities in the Northeast. McPhee was awarded this contract through a negotiated effort with Perini Building Company, Inc., the general contractor. The project entails constructing a new 800,000-square-feet casino, an arena, a 38-floor hotel and all the parking facilities, utilities, and infrastructure necessary to accommodate an expansion of this magnitude. Slated to be completely operational in the spring of 2002, the electrical contract alone has an estimated value in excess of $80 million. As the electrical trades manager, McPhee will coordinate all activities associated with division 16, including security and teledata. The construction process begins with McPhee providing an budget to complete a given scope of work. A firm price then negotiated and McPhee then has the option of undertaking the task directly, or assigning it to subcontractors who have been pre-qualified to address the work. “This format, keeps the work flow at a manageable rate while providing the best value to the owner. Cooperative agreements and the spirit of teamwork have proven to be the most effective mode of keeping this project on schedule,” McPhee said. While negotiating large work is unusual, it happens more often than once in a blue moon for McPhee Electric. On the Providence (R.I.) Place Mall project for example, McPhee ventured out of its normal service area to accept a challenging job. With 3.25 million square feet (1.3 million square feet of retail space) and 150 stores, this $175 million project was the largest retail construction start in the United States in 1997. “Originally, Morse Diesel, the general contractor on the project, called us and asked for some budget pricing for this job,” said Mike McPhee. “Although initially we weren’t interested in the project, we agreed to provide our services for budgeting. During this process we were able to point out several areas where costs could be reduced. This helped MDI to win the project, giving us an opportunity to participate for the duration.” About the company Ted McPhee—the now-retired father of five children (including Mike and Marcus, who currently serves as vice president)—was a plant engineer. He left that line of work to join a general contractor. When the GC spun off electrical and mechanical operations in 1974, Ted bought the electrical concern. Over time, he built McPhee Electric to the point where, in 1988, it was large and profitable...enough so to attract the attention of the headline consolidator of the ’80s, JWP. Soon after, however, with JWP’s dissolution, Ted McPhee got a chance to buy his company back, and grabbed it, in November 1992. As the successor to that repurchased company, McPhee Electric Ltd.’s sales grew in the 1990s from the $20-million range to the $40-million area. The company is a member of the high-prestige, 33-contractor Federated peer group (www.fec.org). It’s also a franchisee of the high-profile, maintenance-oriented TEGG group. What hasn’t changed over the years, with the switchback in ownership and the transition to a new generation, is the philosophy instilled by Ted McPhee. “The overall approach is that we want to develop loyalty—relationships of value with our customers, our employees, and our vendors. We want to have honest, long-term relationships with all of these stakeholders.” The company’s philosophy is evidently in practice in many areas, such as purchasing, which Marcus McPhee handles. On a recent large job, he noted, “we had a group of vendors come to us regarding the project. I didn’t go out and shop the job; instead I indicated the pricing levels where I needed to be and they were met.” According to Mike McPhee, this philosophy is a tradition with the firm, and something he and his family insist will be preserved all the way through. This includes, he says, not necessarily pursuing every nickel and haggling over every penny on every change order. The name of the game is not making every last dime on every job, but to make a dime or two on a lot of jobs. We do not make ultimatums, pushing the client to the wall whenever the opportunity presents itself. “I guess one criticism of our approach is that we can make a mistake. Or, perhaps, partner with someone who may not be interested in developing a long-term relationship. This situation can be detrimental,” said Mike McPhee. “However, most of the time I find that our construction clients are problem solvers that tackle tough issues every day. We want to support these people, making their experience with McPhee Electric a positive one.” Looking ahead MUPS (McPhee Utility Power and Signal), a company division started more than five years ago, has been the focus of a major transition. McPhee purchased another local contractor—a line specialist—and then, over a few years, turned the operation into something a bit different. While the acquired company’s specialty was medium-voltage power distribution, MUPS now does a great deal of cellular communication tower construction. “We view this industry as an emerging market with tremendous growth potential,” McPhee said. “To address this opportunity, we had to reevaluate the entire core focus of this operation.” “This transition required extensive investments in training, tooling, and equipment. We were moving toward a new set of clients, focused on cutting-edge technology and schedules to match.” More recently (within the past two years), McPhee started the ATS group. “We created this division, first and foremost to supplement all of our company’s other functions. Individuals working in this group are offered in-depth formal training in the operation of various instrumentation associated with the electrical industry,” McPhee said. “The formation of the ATS allows us to increase our efficiency overall by reassigning ancillary tasks like commissioning, programming, inspection, and calibration. All of which are addressed by ATS regardless of when and where. “This strategy, applied to a new construction project, allows us to stay focused on the construction process. It’s our goal to keep with-and even push-the project schedule.” How it fits together There’s a lot more to McPhee Electric: a voice/data operation with $2 million in activity, a CAD operation that offers design assistance to customers, and so on. The operations can be seen as disparate: the same company that tackles a casino job worth tens of millions of dollars has a dozen people doing maintenance. But these elements do tie together, according to Mike McPhee. “There is ample opportunity to address the needs of clients of all types and sizes. The key is consistency: treat every client as if they are your most important one, because they are!” “We were involved on a project where the design was being performed concurrently with the construction. Change order proposals were an hourly occurrence and the schedule was not negotiable. While other contractors left the owner with no choice but to accept or reject these proposals, we made it our responsibility to create options for our client in every proposal. Doing so facilitated discussions that shortened the decision-making process, allowing us to avoid the confrontations many of the other trades faced. As a result, we were able to close out our contract before anyone else. “Here’s the bottom line for me: When someone has to make a decision on which electrical contractor to choose, regardless of the task at hand, I want everybody around the table saying, ‘McPhee does an excellent job.’ I want our reputation to precede us at every level, and at every table.” Service Work Expands McPhee Horizons At the McPhee Advanced Technical Services Group, there are 12 to 15 employees—and one heck of a lot going on. Small projects can be tackled with significant maintenance experience. Value can be delivered to customers large and small. One example: A power quality analysis we performed for an engineering firm. The firm’s client was experiencing unexplainable failures with computer equipment throughout the building. “Our technicians identified levels of Harmonic distortion that were intolerable for these systems. In the course of the analysis we also documented deficiencies within the systems, some of which were serious safety issues,” explained Bob O’Meara of ATS. We produced five three-inch binders for the engineering firm; with all of the data they needed to address these power quality issues. The safety issues were a bonus to the firm. “There’s a benefit for McPhee in this, beyond the fee,” O’Meara claimed. “We provided exactly what this engineering firm needed because we took the time to listen and understand their needs. Hopefully, we opened the door to long relationship based on our performance. “It’s part of what Mike preaches,” said O’Meara. “It’s not about giving people just what they ask for—it’s about applying our strengths to provide them with what they need. It is our goal to create value in everything we do.” “We provide electrical analysis and preventive maintenance programs to a variety of commercial and industrial concerns including the insurance companies that underwrite these buildings operations. Because the electrical system is a vital part of a facilities operation (now, more than ever) we work together to enhance the reliability and longevity of these systems. Because we use only licensed electricians to perform our services, we are often able to address minor repairs during the evaluation. This practice provides not only a “heads up” to a potential failure, but an immediate solution as well. One major boost to the ATS operation was McPhee’s recent affiliation with TEGG, the national maintenance franchise (www.tegg.com). When the company became a TEGG contractor, it produced “work with a lot of property managers, many of whom have financial backgrounds,” said Mike McPhee. “They need their buildings to be operational. We provide them with a service they can trust. We’ll not only identify deficiencies in the system but we’ll evaluate the facilities from the perspective of an electrical specialist and make suggestions to improve the safety, reliability and efficiency of that property. “Our theory is really simple: We’re going to provide these extras to you. You’ll tell someone else. Not only that, but when you need to make changes or enhancements to the property, you’ll call an authority—you’ll call McPhee Electric Ltd.” —J.S. SALIMANDO is a Vienna, Va.-based freelance writer. He can be contacted via e-mail at email@example.com.