Navigating Construction Challenges and Successes: Insights from 3F Construction’s Mike Obloy

We are eagerly anticipating our upcoming Mid-Market Summit on Thursday, June 6. In preparation, we had a conversation with Dinner sponsor Mike Obloy of 3F Construction to discuss some pressing topics in the construction industry.

Kiser Group: What are some of the biggest challenges facing the construction industry right now, and how is 3F Construction adapting to those challenges?

Mike: The construction industry is currently facing several significant challenges, including rising material costs, labor shortages, and inflationary pressures. One of the most pressing issues is the increase in costs for both materials and subcontractor labor, which has accelerated sharply in recent years.

3F Construction is addressing these challenges through several strategic approaches:

1. Material Procurement and Direct Labor: Historically, 3F Construction has distinguished itself by reducing costs through efficient material procurement and direct labor strategies. The company continuously seeks ways to improve these processes to mitigate rising costs.
2. Cost-Effective Solutions: In response to inflationary pressures, 3F Construction is identifying more cost-effective solutions that are not commonly used in our primary market. For instance, we are working with alternatives such as package heating and cooling systems (HPAC), which have proven more economical in other regions with similar extreme temperature variations.
3. Innovative Practices and Value Engineering: By leveraging our team’s experience in developing, leasing, and managing multifamily projects across the country, 3F applies a developer’s mentality to construction projects. This includes value engineering, optimizing layouts, and streamlining processes to enhance efficiency and reduce costs without compromising quality.
4. Early Contractor Engagement: 3F emphasizes the importance of early contractor involvement during the design and due diligence phases of a project. This early engagement allows us to provide valuable feedback, identify potential issues, and offer cost-saving recommendations before significant financial commitments are made.
5. Adaptation to Market Trends: 3F is also adapting to market trends by focusing on the construction of smaller, more efficient units to help keep rental prices manageable despite rising construction costs. This trend towards efficiency is a direct response to the need for affordability in the face of increasing costs.

By employing these strategies, 3F Construction not only addresses current industry challenges but also positions itself as a proactive and innovative leader in the construction sector.

Kiser Group: What are some of the most common mistakes that investors make when selecting a builder or contractor, and how can they avoid those mistakes?

Mike: There are several common mistakes that investors often make when selecting a builder or contractor. These mistakes can significantly impact the success of their projects. Here are some key pitfalls and advice on how to avoid them:

1. Engaging Contractors Too Late: One of the most frequent mistakes is involving contractors too late in the process. Investors often wait until key decisions about the project have been made before bringing in a contractor. This can lead to significant issues, as early engagement allows for constructive feedback, value-engineering solutions, and identification of potential problems before they become costly. To avoid this, investors should engage contractors during the design and due diligence phases to benefit from their expertise early on.
2. Focusing Solely on Initial Cost: Investors sometimes choose contractors based primarily on the lowest bid. While cost is an important factor, it shouldn’t be the sole criterion. Low bids can often mean corners will be cut or unexpected costs will emerge later. It’s crucial to consider the contractor’s reputation, quality of work, and ability to deliver on time and within budget. Evaluating past projects and seeking references can provide a better picture of a contractor’s reliability and quality.
3. Lack of Detailed Contracts: Entering into agreements without detailed contracts that outline the scope of work, timelines, costs, and responsibilities can lead to misunderstandings and disputes. A comprehensive contract protects both the investor and the contractor by clearly defining expectations and deliverables. Ensuring that all terms are well-documented and agreed upon before starting the project is essential.
4. Not Considering the Contractor’s Experience with Similar Projects: Selecting a contractor without considering their experience with similar types of projects can lead to issues. Different projects have unique challenges, and a contractor experienced in the specific type of work required is more likely to anticipate and manage these effectively. Investors should look for contractors who have a proven track record with projects similar to theirs.
5. Overlooking the Importance of Communication: Poor communication can derail even the best-planned projects. Investors should ensure that the contractor they choose values transparent and regular communication. Regular updates and open lines of communication help to quickly address any issues that arise and keep the project on track.

By being mindful of these common mistakes and taking proactive steps to address them, investors can significantly enhance the likelihood of a successful and smooth construction project. Engaging contractors early, focusing on value rather than just cost, ensuring detailed contracts, selecting experienced contractors, and prioritizing communication are all key strategies for avoiding these pitfalls.

Kiser Group: Can you share examples of successful projects completed by 3F Construction, and what made those projects stand out?

Mike: At 3F Construction, we pride ourselves on our diverse portfolio of successful projects. Here are a few recent project completions:

1. 2173 W. Wilson: This project involved the transformation of a Lincoln Square apartment building from seven units into eight modern apartments. The renovation included contemporary living spaces with open kitchen layouts, hardwood flooring, porcelain tile bathrooms, and custom cabinetry with quartz countertops. The modern, functional design significantly enhanced the property’s appeal and livability.
2. 847 W. Monroe Penthouse 5: This project was a meticulous remodel of a 3,000-square-foot penthouse in Chicago’s West Loop. The comprehensive renovation included reconfiguring the kitchen, bar, and public areas to create an expansive, open layout. The master suite was redesigned to include a custom closet, built-in vanity, and an upgraded master bathroom with modern amenities. This project’s attention to detail and integration of luxurious, functional spaces made it particularly notable.
3. River City: As part of the largest condo-to-apartment deconversion in Chicago’s history, 3F Construction renovated 448 residential units over three years. The units were upgraded with modern kitchens and bathrooms, custom closets, new flooring, and in-unit washers and dryers. This large-scale project demonstrated our ability to manage extensive and complex renovations while allowing for ownership to maintain occupancy and cash flow.
4. 850 Lake Shore Drive: Located in Chicago’s historic Gold Coast, this project involved remodeling the resident amenities of a historic lakefront building. The renovation modernized the property while preserving its 1920s charm, blending contemporary upgrades with classic elegance.
5. Century Tower: This landmark building in Chicago’s Loop underwent a renovation that updated luxury apartments with modern finishes such as quartz countertops, plank flooring, custom cabinetry, and in-unit laundry. The historic building’s character was maintained while providing high-end, contemporary living spaces.
6. Mayan Lagoon: Situated in Rogers Park, this project transformed a severely dilapidated property into a modern apartment community. The renovation included high-quality finishes like porcelain tile, wide-plank laminate flooring, and custom cabinetry. This project highlighted our ability to revitalize properties and introduce high-end finishes at a competitive cost.

These projects stand out not only for their quality and design but also for our ability to manage and execute complex renovations efficiently. Each project reflects our commitment to excellence and our capability to meet diverse client needs. For more details, you can visit our project portfolio.

Kiser Group: What sets 3F Construction apart from other general contractors/builders?

Mike: 3F Construction sets itself apart through its commitment to quality, innovation, and client satisfaction. Here are the key aspects that set us apart:

1. Comprehensive Services: We offer a full range of services, from pre-construction to construction management and general contracting. This ensures a seamless project experience and better coordination at every stage.
2. Value-Add Renovations: We specialize in enhancing existing properties to increase their market value. Our focus on high-quality finishes and efficient design transforms outdated spaces into modern, appealing ones.
3. Client-Centric Approach: We maintain open communication and engage clients in key decisions, ensuring the final outcome aligns with their vision.
4. Experienced Team: Our skilled professionals bring extensive industry experience, allowing us to handle complex projects and deliver high-quality results consistently.

These factors collectively enable us to deliver exceptional projects that meet and exceed our clients’ expectations. For more information, visit our website.