Case Studies

Chesapeake Bay Contractors Inc.

Solid finances ground a utility contractor

At four years old, Graham Garrenton knew he would one day join his family’s utility contracting company, Chesapeake Bay Contractors Inc. (CBC).

“I was hopeless even then,” he says. “I had been around this business my whole life, and always wanted to ride the equipment and be out in the field.”

Based in Virginia Beach, Virginia, CBC was founded by Garrenton’s step-father, Bill Shelhorse, and his grandfather, Robert Wise, in 1978. The company had only six employees and provided underground utility and site development services, such as drainage and earthwork, for convenience stores and gas stations throughout the area.

Chesapeake Bay Contractors Inc.

In those early years, Shelhorse, who leading up to the founding of his company had spent his career as a construction superintendent in Virginia, was a force, leveraging his relationships to get CBC off the ground. “I’m pretty sure Bill didn’t even take a paycheck for the first year,” says Garrenton. In the end, the hustle paid off.

By 1993, CBC had over 100 employees, and a 14-year-old Garrenton was one of them, a laborer. The company provided the same services, but expanded into municipal new construction for Virginia Beach and other cities in the Chesapeake Bay area.

In the late 90s, when Virginia Beach rebuilt the city’s ocean boardwalk, CBC installed enormous 120-inch storm drains large enough to fit a full-size Chevrolet Suburban. With the firm’s help, the new boardwalk was finished on time despite challenges including worksites that flooded with the incoming tide.

“We enjoy taking on those specialty projects because they’re not cookie-cutter or run-of-the-mill, and we have the flexibility to get it done right,” says Garrenton, now vice president.

Savvy savers

Throughout the company’s growth, CBC’s founders have always maintained the same strict financial discipline.

“It’s really become almost second nature to us,” he says. “Basically, we take any opportunity to be more efficient.”

One such opportunity is paying suppliers in the first 20 days. By doing so, CBC saves an extra 5 percent on its purchases. The company is also careful to manage its workforce, making sure it has no superfluous staff.

But at the end of the day, Garrenton says one of the biggest money savers is not purchasing the latest, flashy equipment just for the sake of having it.

“We enjoy taking on those specialty projects because they’re not cookie-cutter or run-of-the-mill, and we have the flexibility to get it done right.”

“Instead, we evaluate if we actually need it or not, and that’s turned into one of our biggest assets. Because unlike other contractors that may struggle with their cash flow, all we have to do is make a call to increase or decrease our volume.”

For instance, when CBC needs to upgrade equipment or quickly access funds for a project, the company calls its risk management and consulting firm, Towne Insurance.

“We’ve been a customer of theirs forever and ever, and they’ve always maintained a small-town relationship with us. This means we never have to worry about not being able to bid on something because they can get us our bonds right away,” Garrenton says.

So it might not be surprising that CBC has never been in debt, which Garrenton says came in handy as the construction industry took a nosedive in 2008.

Chesapeake Bay Contractors Inc.

Regulations strike again

As the Recession hit, and construction companies across the country folded, CBC was able to ride out the storm because CBC didn’t owe a cent.

“We could pretty much run on neutral, matching our workforce and overhead with the amount of work we were getting. And then as it picked up, we were able to get more equipment and get back in the game,” Garrenton says.

lthough CBC came out the other side relatively unscathed, it returned to a much more regulated construction industry.

Chesapeake Bay Contractors Inc.

Suddenly, inspectors were arriving unannounced at job sites, testing for things they never paid attention to before, like erosion and sediment control. Or they would demand paperwork the company had never even heard of.

“These changes have been gradually creeping through [the industry] since the mid-2000s, but a flurry came up around the Recession and it’s been full on ever since,” Garrenton says. “And the trouble is a lot of times it isn’t the regulations themselves, it’s how they are enforced that has changed overnight.”

To keep up, CBC has to be nimble on the job, and stay informed of exactly what is changing. It has even hired new people to handle the vast amounts of environmental and inspection paperwork the industry now requires.

“We’ve learned to maximize our ability to deal with these changes as efficiently as possible,” Garrenton says. “But in a way, the experience provides a level of comfort to our customers because they know that we have the ability to weather anything and take advantage of any opportunity that arises.”

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