Case Study: Almost Ready: Contractors, Money and Member Expectations

wheatsville_groundbreakingKeeping everyone abreast of the progress of the expansion project was just one of the challenges for Dan Gillotte, General Manager of the Wheatsville Co-op in Austin, Texas as he prepared for the start of construction. The co-op had announced the new plans for the store a year before the actual building had begun. One way he handled this situation was by posting detailed updates on the co-op’s website including the actual drawings of the expansion and photos of the current store and the changes that will take place. Members and others could see this tangible evidence that progress was indeed being made.

There are many tasks to accomplish as a co-op prepares for leasehold improvements or new construction. Both the financing and the physical design aspects of the project must be simultaneously addressed to get past the final decision point and, hopefully, on to the day of starting construction. No matter how well you plan, finding the financing and the right people to design and build your new store can be very taxing. Wheatsville had the perfect contractor in mind, but when their bid came back much higher than expected, the co-op put the project out to bid. This was an unexpected event that made the process longer than expected.

Not surprisingly, cost was a constant issue for Wheatsville. They thought they could do a relatively inexpensive renovation/expansion, but as they looked more closely at all of the issues with their 50-year-old building, they decided to undertake a “complete infrastructure overhaul.” Of course, as the project planning lasted longer than expected, the rising costs of construction and materials (like copper) added more financial pressure. This became a real learning opportunity for Gillotte.

He had been extremely cost-conscious to the point of “squeezing pennies” to get the best deal for his store. It is a difficult balancing act to invest the time to make sure you are spending the co-op’s money in the most efficient way possible while knowing that it is ultimately pushing back the start of construction. As Gillotte looks back, he feels that one of the most important things he learned was “not pushing so hard to lower the price at the expense of adding delays to the project. Cost containment is important in the planning and implementation of a project, but time is a cost as well.”

Most co-ops take a two-prong approach to finance their growing business by getting funds from members and financial institutions. As is often the case when members are asked to respond to a significant challenge at the co-op, the owners (members) at Wheatsville came through with flying colors. They were able to raise $715,000 from selling “investor shares” which, according to Gillotte, “are like preferred shares and are unique to Texas.” NCB, the national cooperative financial institution, also provided financing for the project.

Even with the many challenges and delays, the Wheatsville Co-op successfully completed all of the financial and design details and began the construction phase of their expansion project in late April 2008. All of the work to prepare for the renovated store will be worth it as members, customers and staff will be able to shop and work in a larger and more open and inviting co-op.

FavoriteLoadingAdd to favorites
By |May 30th, 2008|Categories: Case Studies, Solutions|Tags: |

Leave A Comment