Working to fill an urgent need for construction of residential properties in the Bakken region.
With as many as 300 employees and subcontractors’ employees working throughout the region on any given day, Bakken Contracting, a partnership between two experienced North Dakota companies, is building dwellings to support the oil rush and other industries attracted by related revitalization.
“Bakken Contracting is more than just a builder,” Operations Vice President Brett Rossell says. “As an owner and operator of businesses and properties throughout the region, our experience affects various elements of the energy sector ? we see ourselves as a partner with clients. We work with our clients to find the best solutions that fit their goals and market realities. A lot of outside investors don’t have that same boots-on-the-ground kind of experience. Because of this unique experience, we see ourselves as more of a strategic partner, in addition to a general contractor.”
Approximately three years ago, leaders at Arista Development and RHR Construction forged the company in response to a strong demand for highly qualified residential contractors, which today has a total current construction volume of more than $115 million and growing.
Founders first recognized the need for housing when Arista Development undertook Timber Trails Apartments in Williston, N.D. – one of the first new apartment projects in the region, says Jeff Schaumann, Bakken Contracting's vice president of development. Around 2008, Arista was developing a John Deere equipment dealership for one of its partners. When operators began recruiting employees, they made a discovery: It was nearly impossible to find housing for prospective employees.
“Our first response was to begin buying homes for our employees to live in," Schaumann says. "When we couldn’t meet the need with homes, we decided as a real estate business to build apartments ? first, for our own employees and, secondly, to help fill the needs of other companies in the same situation. Because of our experience, we were able to identify very early on some of the broader needs of the market.”
After RHR built apartments for Arista, company leaders recognized an opportunity to build on both firms' strengths and thrive in a remote region that needed an experienced general contractor with specific knowledge of the region and market.
“What we learned through the process of building with RHR and other builders was that western North Dakota was a very challenging environment to build in," Schaumann says. "RHR did such a fantastic job for Arista on the Timber Trails project that we immediately began discussing how we might work together to leverage the strengths of both companies. Since that founding, we’ve been able to position ourselves as the premier builder in western North Dakota.”
Both co-founders are long-standing North Dakota companies with experience building in a climate that can turn big-city developers away. Over the past two years, Bakken Contracting has built in excess of 1,000 units, both as merchant-build projects and for third parties, such as 330 units underway for Kohlberg Kravis & Roberts in Williston.
Bakken Contracting has been able to distinguish itself by its extensive network of exceptional subcontractors, as well as its ability to house workers, Schaumann adds.
“What we’ve found is that the qualified labor pool ? whether it’s a sheetrocker or roofer or plumber ? is limited due to a severe labor shortage,” he says. “As owners of real estate in the region, we are able to provide housing to our employees and sub-contractors. In addition, because of our volume, company strength and proven history, we have been able to establish strong relationships with subcontractors, which allows us to excel in the environment.”
The company has an advantage over national builders that can compete well in markets such as Denver or Atlanta, not only because it can supply and house qualified workers, but because the climate is familiar to those companies it chooses to work with, Rossell says.
“I think we do a better job than some of our competition in terms of qualifying the subcontractors who come to the area because, having worked in the area for some time, we’re able to tell them up front what they need to prepare for and expect,” he says. “If it’s going to be 20 degrees below zero for three months this winter, for instance, a lot of people don’t expect that.”
According to the company, the western North Dakota experience is very unique and offers very real challenges to entities that have not built in the area before. Challenges such as the building permit process, making sure workers are not hired away by the oil industry and availability of materials are just some of the issues Bakken deals with. The Fargo, N.D.-based company now has projects underway or completed throughout the Bakken region in North Dakota: Dickinson in the southern end, Watford City and Williston in the central areas and Minot in the eastern extent of the Bakken Shale formation. The company is building a track record for successfully performing projects on time and on budget.
“Schedule and budget are the two largest investment risks in building residential products in the market that we can control for our clients,” Schaumann says. “We’ve consistently shown, in over a dozen residential projects, that we are able to do what we say we will do.”
Along with direct growth in the oil industry, Schaumann says changes such as a federal standard on natural gas flaring that will require miles and miles of new pipes or a state directive to invest in new roads and public improvements are examples of ways more jobs will be created.
“Everyone wants to talk about the number of rigs and barrels per day, but there are other energy sector drivers to this market,” he says. “We believe that, while oil is the impetus for all of this, there are additional sources of housing demand. While oil is great, that’s just becoming part of the picture now.”
Rossell says he expects that housing demand to continue into the foreseeable future. Projections for 2014 show Bakken Contracting alone will experience $180 million in new construction volume.
“I think there’s a long way to go to provide housing for people out here,” he says. “As more people show up, more businesses open in the region, and those employees will need a place to live. Growth draws growth.”