A Better Way to Build: A History of the Pankow Companies

Chapter 4: Pankow on the Mainland, 1972–1984

163 Afterhejoinedthefirmasaprojectsponsorin1972,DeanStephanrarelysaw Charlie Pankow. Indeed, it seemed to him as if the company ran itself: “We weremaybelikeaplatoonintheMarines.Wewereaverysmallgroup,verytight knit,allworkingforeachotherandcoveringeachother’sback,andwereallydidn’t have a colonel around telling us what to do. That’s very much the way it was. . . . Hands off. He let you achieve your maximum. He did not artificially constrain you. And it worked.”1 To be sure, on paper, the organization did not work. For instance,superintendentsstillreportedtotheoperationsmanager,evenafterthe companycreatedtheprojectsponsorasthepersonwithresponsibilityforowner relations,contractmanagement,andothertasksrelatedtotheexecutionofanengagement .Andwithnoorganizationcharttodefinelinesofauthority,bothprojectsponsorandoperationsmanagerweredirectlyresponsibletoCharliePankow . The organization worked in practice, however, as an accretion of project teams, because Charlie Pankow, George Hutton, and Russ Osterman were able to identifyself -motivatedandresourcefulindividualswhocouldworkcooperativelyand effectivelyinsmallgroups,andletthemgetonwiththetasksofbuilding.Evenas itgrewinthe1970s,CPIdifferedfromtheKiewitbuildingdivisionmainlyinthe number of project teams that were operating at any given time. After a decade in business, Charlie Pankow was leading his company based on the same principles and in the same style as he had headed his building division . It was around this time that some people inside CPI began to refer to the company’s culture and how it conducted business as the “Pankow Way.” Unlike Chapter 4 Pankow on the Mainland, 1972–1984 CHAPTER 4 164 Bill Hewett and David Packard, or Lockheed’s “Kelly” Johnson, Charlie Pankow never put his organizational values into writing. But everyone who had followed Pankow out of Kiewit knew what their leader expected of them and what they expected of one another. And, much like George Hutton was doing in Hawaii, it would be the responsibility of those based in Altadena and San Francisco—the two California offices—to ensure that a new generation of engineers and construction managers—many of them university graduates—learned ways of doing business that had become second nature to them. ThomasD.Verti,whoroseupthroughtherankstobecomeseniorvicepresident , has outlined what the Pankow Way meant to engineers, foremen, and superintendentsinthefield ,managersandsupportstaffintheoffice,andexecutive managers (fig. 48). The client service focus of the Pankow Way is unmistakable. CharliePankow’sbusinessmodel,includingnegotiated,lump-sumcontractsand thepromiseofnocontractor-initiatedchangeorders;theinvolvementofthecontractor as part of the building team under design-build; and techniques of concrete construction automation, were means to the end of meeting the expectations of owners, who often had projects languishing on the drawing board when they contacted the Pankow firm. ThedemandforCPItorecruitanewgenerationofprofessionalstaffandinculcate it in the Pankow Way came from Winmar Company, a client that took PankowprojectteamsacrossAmericabuildingofficetowersandshoppingcenters. Winmar: Lifeblood of the Mainland Business In the wake of the sharp 1974–1975 recession, Don Nash, a senior bond underwriter at Travelers Indemnity, reviewed the state of the surety market. Conditions were terrible, owing to the failure, default, and cash deficiencies of many of the firm’s contractor clients. Executive managers of the latter were quick to point to adverse external conditions—inflation, high interest rates, labor productivity—as the cause of their problems. Nash concluded, however, that the root cause of his clients’ demise or debilitation lay in “management’s inability to cope with the conditional factors caused by the economy.” That is, “construction management did not have the wherewithal—the financial, organizational, or managerial talent to effectively respond.” These firms “were accidents looking for a place to happen.” At the same time, other contractors were surviving, even thriving, during the recession, because their managers controlledtheiroperationsthroughgoal-orientedperformancemeasurement. Russ Osterman included Nash’s speech in the binder distributed to Pankow’s PANKOW ON THE MAINLAND, 1972–1984 165 To executives and upper managers, the Pankow Way meant: Aligning all of our incentives with the Owner’s goals Being willing to assume responsibility for design and construction for the Owner’s overall benefit Ensuring that we performed, so that we would build a long-term relationship with the Owner Acting as a Master Builder, not just as a contractor Preaching to staff that we were not looking to profit from change orders; change orders should only come from Owner-initiated changes in scope That we were responsible for guiding and managing the design process for the Owner’s overall benefit of time and money That we would never “nickel and dime” the Owner, because we wanted the Owner to succeed That we would prove through our performance that we were the Owner’s agent and partner, and so we would keep the Owner’s goals and expectations at the forefront That our success depended directly on our helping the Owner to succeed That we would be fair, but not naïve, in all of our dealings with the Owner, subcontractors, agents, and workers That our success and profit would be...