Coming into the Sacramento, Calif., market from Las Vegas to take over a $200 million project expanding the Thunder Valley Casino and building an adjacent hotel and parking garage, The PENTA Building Group had to make friends fast among the subcontracting community. “We came in bidding against four other contractors,” Senior Project Manager Yvette Ochoa points out.
The project to construct a 14-story hotel and parking garage and add 100,000 square feet to the adjacent casino was started by another contractor when the economy was strong but was suspended by the owner – the United Auburn Tribe – when the economy slowed.
“It was during the time when the economy was going really well, and then at the downturn, the owner decided they could do better,” Ochoa explains. “They stopped so they could take advantage of the fact that all the material costs were going down, and they thought they could get a better rate.”
The original contractor rebid completion of the project along with the other contractors, but The PENTA Building Group won it after several presentations, even though PENTA is headquartered in Las Vegas. “They got great prices, so they took advantage after they started the job,” she says of the tribe. “Material costs went down, everything went down.”
Ochoa found many aspects of the project – which was started in April 2009 and completed in July 2010 – went well and were not particularly challenging. “Tying into an existing facility or working adjacent to an existing area is not something that’s too challenging,” Ochoa insists. “A lot of remodeling work wasn’t a real big challenge for us.”
The biggest challenge PENTA encountered was the weather. Although Ochoa admits her company is used to dealing with high winds, the rain that accompanied the gusts was new. She says the fact that the site was surrounded by open land made it difficult to enclose the building during these storms.
“There were no other buildings around – with the wind having nothing else blocking it – and with the heavy rain they get out there, it caused the wind to blow the rain sideways,” Ochoa remembers. “We weren’t prepared for that. In Las Vegas, it doesn’t rain as much as one-and-a-half inches in a year. Here, you would get that inch-and-a-half in two hours.”
A requirement of the project that Ochoa thinks was unusual was watching out for bird nests. “There is a bird – a swallow – that the tribe had previously built a home for, and these birds come around the first four to five months of the year – hundreds of them – and we had to set up a program where we would watch for the birds to nest on the project,” Ochoa recalls. “They would come and nest in those four to five months and have babies to create more birds. It was a really unusual piece of the scope.
“Because if they started to build a nest on the project, we would have to watch out to prevent them,” she continues. “We would sort of wash the area if we saw them try to start creating a nest to keep them off the project.” The concern was that if a nest were started in the building, it would inadvertently be destroyed during construction. The goal was to keep the birds in the house that had been built for them on the site, which the construction workers called the Taj Mahal.
New Contractor in Town
Being new to the Sacramento market – Lincoln, Calif., is approximately 20 minutes northeast of Sacramento – was another challenge, Ochoa emphasizes. “We were new in town – we hadn’t done work in that area at all – and we had to learn to develop new relationships with those construction companies and the local community,” she recalls. “But after learning to work as a team, we worked well together. It just took a little bit of time to get to know each other. It was a successful job.”
Among the companies rebidding the project, PENTA was the only one that had not worked in the area before. “The only reason we were invited to bid the job was we had a relationship with the construction manager, and they called us and asked if we wanted to interview for the job,” she recalls.
The hotel and parking garage are concrete construction. The one-story casino with a high ceiling is concrete and steel. The exteriors of the buildings are mainly curtain wall and exterior insulation finish systems in the tribal colors.
Among PENTA’s market segments are hotel, casino and timeshare resorts, tribal gaming and other tribal projects, convention and meeting facilities, restaurants, retail, education, parking structures, office buildings, public building projects and tenant improvements. PENTA also has extensive experience in the remodeling, renovation and expansion of existing operating facilities. To date, The PENTA Building Group has completed more than 400 projects in 15 states, with a combined value of nearly $3.5 billion. It has a direct labor force that varies between 75 and 450 hourly employees.
The company’s niche market is hospitality and gaming projects, most of which are performed in Nevada and California. It has several tribal projects ongoing in Oregon, Idaho, Arizona and Oklahoma. As a full-service general contractor, construction manager and concrete subcontractor, PENTA provides numerous services including preconstruction, construction management at risk and design/build services. PENTA typically self-performs its own concrete work, demolition and production carpentry on its projects.
Founded in May 2000 by Jeff Ehret, Ken Alber and Blake Anderson, The PENTA Building Group aims to deliver a personal approach to its clients, never compromising on integrity and respecting its people. The company’s operating philosophy is to build a consistent and efficient organization while preserving its core values. This provides a foundation for well-managed expansion and challenging opportunities for employee growth.
The Construction Market
The PENTA Building Group describes its progression in the industry since its founding as meteoric as it rode the construction boom to $700 million in revenues in 2009 with a base of 175 salaried employees and more than 500 tradesmen. In late 2008, one project after another was put on hold as the company’s revenues shrunk to $270 million in 2010.
“As a result, we were forced to quickly react to economic factors and downsize our company accordingly,” Senior Vice President Preconstruction Ken Alber remembers. “Since 2008, we have retained our business plan to become more diversified. We are not in a growth mode yet. However, we have stabilized from a downsizing mode over the last two and a half years and see some opportunities on the horizon as the capital markets seem to be thawing and sources of funding for projects are surfacing.”
He sees the construction market in Las Vegas as continuing to be depressed. “However, we are beginning to see signs of optimism as major gaming companies are beginning to invest capital dollars into renovations and additions to their existing properties,” Alber reports. “There is also a lot of activity with investors looking at depressed properties to rebrand and open.
“In southern California, healthcare and education are drivers, while there seems to be plenty of activity on smaller projects in general,” he continues. “Indian gaming in the western regions is still active, as small and medium-sized projects are moving forward. No specific sectors are flourishing, as we are spreading our wings in multiple areas and generating our revenues in small amounts on multiple fronts.”
During the same construction boom that drove PENTA’s revenues to record highs, the company was affected adversely by soaring material, equipment and labor prices. “Escalating pricing from 2003 to 2008 choked off the feasibility of construction projects, resulting in significantly declining revenues for our firm,” Alber insists. “Something had to give. The recession resulted in a painful but necessary correction. Once the recession ends, I expect to see a much slower growth mode than we experienced during the last decade, with more reasonable pricing factors influencing the cost of construction projects.”
The safety of its employees has remained paramount despite the fluctuations of the construction market. “No matter how large the company has grown, PENTA has never lost sight of its mission to look out for the well-being of the people responsible for its success – its employees,” Alber insists.
The company continues to win awards for its safety programs, including the 2010 “Building a Safer Nevada Award” from the Associated General Contractors’ Las Vegas Chapter, and the 2010 “Excellence in Safety Award” from the Construction Employer’s Association in California. In 2009, PENTA also won a “Best Places to Work” award from In Business Las Vegas.
PENTA currently has approximately 90 salaried employees and offices in Las Vegas and Reno, Nev.; Palm Desert and Los Angeles, Calif.; and Scottsdale, Ariz. “It has not been extremely difficult to find qualified labor in Nevada, simply because so many construction professionals lost their jobs when the economy crashed and all the major projects were completed or put on hold,” Alber points out. “Our best business decision has been to be financially conservative and responsible – reinvesting in the business when times were good – and producing a strong balance sheet with no debt. This has enabled us to weather the economic storm while preserving our strong bonding capabilities.”
The Thunder Valley project was divided into four main areas for the 60 subcontractors who ended up working on the project. “It created more work for us, but it provided a better cost package for the owner,” Ochoa maintains. “In the end, it was very cost-effective. It was more competitively bid and gave more opportunity for the local subcontractors that were there. If they didn’t get the hotel, they had the opportunity to get the casino. All around, it was very positive.”
Most of the subcontractors on the Thunder Valley project had not worked with PENTA. “Of the 60, there were less than a half dozen that we had some type of relationship with in our resume,” Ochoa remembers. “But all the other ones were new subcontractors we had never worked with. Of the 60, I’ll bet 55 were local. We’ve got a lot of good relationships in that area now. I know that if we were still interested in working in that area, we wouldn’t have a hard time finding a team to work with us.”
The local subcontractors brought many advantages, such as knowing the area and having strong team efforts. “Being from the local area, they had the best prices,” she points out. “We couldn’t bring anyone in from the outside. They understood the climate and worked with us on some of those challenges, and also understood the local requirements for permitting and regulations.” PENTA’s key partners included J.W. McClenahan Co., Steel West Inc. and Hobson Mechanical.