Weathering the Storms

This case study takes a look at how JETT Construction handled a cascade of repair project requests in the wake of Florida's hurricane beatings in 2005.

June 30, 2006

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The Financials
Snapshot
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Location is what drew Russell Lambert and his wife to buy their house in 1997, and location is what destroyed it. Perched on 6-foot pilings, the Pensacola, Fla., townhouse took in great views of Escambia Bay, but on Sept. 16, 2004, it took in some of the bay itself when Hurricane Ivan crashed through, packing winds so powerful that 25-foot waves from the bay barreled into the first floor of the house. "The lower floor was completely gone," Lambert says.

JETT Construction beefed up the framing to support the new sunroom and adjacent elevator tower. The back stairs were designed to share a landing with the neighbors.

With much of Pensacola devastated by Ivan and with two earlier 2004 hurricanes keeping many contractors busy elsewhere in Florida, it was hard to find someone available to repair the house. Lambert eventually landed a company that was going to work on other damaged houses in the complex, but he discovered that the contractor who showed up at the door on the tail of a storm may not have been the best one to do the job. After months of frustration — and another hurricane — Lambert brought in JETT Construction to pick up the pieces.

Contractor quandary

Lambert had first hired JETT in 1992 to repair fire damage to a rental property, drawing the Pensacola company's name from the preferred contractor list provided by his insurance company, USAA. "They did good work," says Lambert. Six months before Ivan, JETT completed a second job for Lambert, repairing damage from a broken pipe in his house.

Naturally he called JETT after Ivan. "I trusted them," he says. But others beat him to it. "I was inundated with prior clients asking us to help with repairs," says co-owner Jeff Jackson. "I told Mr. Lambert it would be quite a while before we could help him."

In addition to the hurricane repair, Lambert planned to convert a second-floor porch to a sunroom, install an elevator and finish a bottom floor studio and bath. The first contractor started the house, then went on vacation in summer 2005 without installing the sunroom windows or adequately boarding up the openings. When Hurricane Dennis hit in July 2005, water again poured in. "We lost the top two floors and the chimney," Lambert says.

Hurricane Ivan gutted the ground floor of the Lamberts' house and Hurricane Dennis drenched the walls and ceilings of the upper floors.

In desperation he called JETT again. "We've seen that scenario dozens of times," says Jackson. "Homeowners get help after a storm and it goes sour. Because I knew him so well I agreed to meet with him and see if I could help him out." By rearranging other jobs, he was able to fit Lambert's project into JETT's schedule.

The company started on the house in August 2005. Two weeks later, Katrina slammed the coast west of Pensacola, drawing JETT's subcontractors from the area. Suddenly the company, which subs all its work, had far fewer crews. But after calling around for two weeks, Jackson rounded up a group. JETT was back in action on the Lambert house by October 2005 and completed the job in February.

Hurricane cleanup

Hurricane Ivan had "pretty much blown out the bottom floor," says Jackson. "It was a shell." All the contents were gone, and the water had pushed a car 100 yards out of the garage. Interior breakaway walls performed as designed, detaching to allow the flood waters to flow through, which limited resistance and structural damage. JETT framed new walls, installed drywall, enclosed a storeroom to create a studio and finished the bathroom.

Above the breakaway walls, the Mexican-tile-covered second floor sank 34 inch. JETT shored up and re-leveled it, salvaging all the tiles. They "held up very well," says Jackson, because they had been laid over cement board.

Though the second floor had to be jacked up and re-leveled after the storm, all the Mexican tiles remained intact. The sunroom overlooking Escambia Bay replaces a porch. Ivan knocked out sections of the I-10 bridge a quarter mile away.

Hurricane Dennis ripped off sections of siding and shingles. Water had poured through these areas as well as the window openings, saturating the walls. "Three-quarters of the house had to be gutted after the second storm because the insulation was wet," says Lambert. JETT replaced all the insulation, drywall and carpeting in the second and third floors; reinsulated the attic; repaired the siding and roof; and rebuilt the chimney.

"We added a lot of framing in back," says JETT co-owner Kyle Biles. Some of the framing supports the new sunroom JETT completed, and some shores up the elevator shaft JETT built. (Because the house sits on pilings, the shaft had no concrete slab.) During construction the shaft developed "a water intrusion issue," says Jackson. "We beefed up the flashing and closed the seams" to seal the shaft, he says.

The ground under the concrete front steps had been washed out, so JETT re-leveled it. The wood stairs at the back of the house were also gone, so JETT built new stairs and decks, coordinating efforts with the new contractor working next door to tie in the back staircases for the two homes.

The Lamberts' house looked so good after the insurance repair - with new siding, roofing, entry columns, trim, and re-leveled, brick-paved concrete steps - that it attracted a buyer a month after completion.

"Trim was a big part of this house," says Biles. On the exterior, "we rebuilt the columns and installed custom trim around the front door." On the interior, the trim presented match-making issues. "Mr. Lambert found a photograph in a magazine showing how he wanted the trim in the sunroom," says Biles. "We took the photo to several suppliers to find a manufacturer" who made that trim. Unable to locate the exact trim, JETT ordered similar trim and "our trim guy made a few adjustments. It's very close."

Other parts of the house "had wide, ornate baseboard and trim that we had to match up" when damaged sections were replaced, says Biles. JETT found the same molding at a local supplier, but that solved only half the problem; the existing trim was stain grade and had been stained years earlier. "Stain changes color after a couple of years on a wall," says Biles. "We had to stain [the new trim] three or four times and blend stains" to match the older pieces.

Stress control

All things considered, the Lambert project was pretty low-stress. Jackson and Biles accepted the job because the odds were good that it would be. "We were juggling 20 jobs" in the wake of Ivan, says Biles, "but it could have been 100 jobs. We weren't going to take more than we could handle."

Biles and Jackson have become very selective about what insurance projects to take on. JETT has five selection criteria:

  1. History. "Our prior customers always come first," says Biles.
  2. Worthiness. "The job needs to be good size," says Jackson.
  3. Location. It needs to be no more than 20 miles from JETT's headquarters.
  4. Efficiency. Jobs referred by neighbors, i.e. jobs that can be bundled with others for efficient production, are good choices.
  5. Communication. "Because many insurance companies can be difficult to deal with, we prefer to work directly with customers" on estimates and payments, says Biles.
  • JETT used this criteria in all 20 Ivan jobs. USAA settled directly with Lambert after Ivan and Dennis, and a finance company held most of the money, releasing it at his request in three draws.

    Lambert has had enough of insurance repair stress, too. A month after JETT completed the work on his house, he sold it and moved to Texas. He left hurricane territory and its worries behind, but kept the water view. "I have water in the backyard," he says. "My pool."

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    The Financials

    With 17 years of insurance repair and remodeling experience bolstered by co-owner Kyle Biles's decade of previous work as an insurance adjuster, it's no surprise that JETT prepared an estimate on the Lambert project that was close to the mark.

    The estimate had a cost cushion to cover materials and labor price jumps after a natural disaster didn't. A management fee was factored into the estimate that covered coordinating the work of the electrician, plumber and HVAC contractor the property owner hired directly. The extra framing to support the sunroom and elevator shaft was included in the estimate for improvements outside the scope of the insurance repair.

    What JETT could not anticipate was Hurricane Katrina. After the colossal storm roared through the South in late August 2005, the labor pool in JETT's northwest Florida region dried up. "We had to pay extra to get people in," says co-owner Jeff Jackson. To complete the finish and trim carpentry on the Lambert project, JETT turned to the multitalented tradesman whom Lambert had hired for the plumbing and electrical work — creating a $3,000 expense that reduced JETT's gross profit by 5 percent. "It could have been a heck of a lot worse because of Hurricane Katrina," says Biles.

    The decline in JETT's annual volume since 2004 is actually a healthy sign. "In the past we did a lot of smaller insurance jobs — 300 jobs a year"— and few remodeling projects, says Jackson. "We felt we were not making enough money [to compensate for] the hassle that we went through." Jackson and Biles decided to scale back and to shift the balance of projects, and now they do about 120 jobs a year: 60 percent of them large remodeling projects and 40 percent large insurance repair projects. "Profits have gone way up and headaches way down," says Jackson.

    Budget History
    Initial estimate: $68,660
    Credits: $5,774
    (plumbing, electrical, light fixture) Final price of job: $62,886
    Cost to produce: $37,622
    Gross profit: $25,264
    Budgeted gross profit: 45%
    Actual gross profit: 40%


    Jeffrey Jackson

    Kyle Biles

    Snapshot

    Remodelers: Jeffery Jackson and Kyle Biles, JETT Construction
    Location: Pensacola, Fla.
    Type of company: Remodeling contractor and insurance repair specialist
    Staff: 2 office, 0 field
    Years in business: 17

    Sales history:

    2002 $2.1 million
    2003 $2.2 million
    2004 $2.5 million
    2005 $2.1 million
    2006 (projected) $2 million

    Annual jobs: 120
    Workweek: 50 hours
    Software: QuickBooks Premier: Contractor Edition; Intuit Customer Manager; Microsoft Office; AutoCad; Xactimate
    Contact: 850-478-JETT (5388), www.jettllc.com


    Products List

    Doors: Jeld-Wen, Annona. Drywall: USG. Fireplace system: Monessen Hearth Systems. Locksets: Kwikset. Siding: Norandex/Reynolds. Interior trim: Woodgrain Millwork. Insulation: Owens Corning. Roofing: Owens Corning.

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