Business/Economy

Shop Talk: KPB Architects’ strategy on chasing the right projects in a downturn

This is an installment of Shop Talk, an occasional series of interviews with business owners in Alaska, focusing on the state economy and how it is affecting them.

You've probably noticed KPB Architects' design work around Anchorage. Williwaw, Rustic Goat and Cabela's are just a few of the firm's projects. KPB, which has 17 employees and has been in business for 35 years, also has ongoing contracts with the federal government, Providence Alaska Medical Center and Cook Inlet Housing Authority.

In KPB Architects' sleek office space at Fifth Avenue and L Street, co-owner Mike Prozeralik and marketing director Kate Hostetler talked to the Anchorage Daily News about how Alaska's recession has been affecting their industry.

Can you talk a bit about what sort of impact you're seeing from this economic downturn on your company? What has it meant for you?

Prozeralik: With the contracts that we have … we've still continued to do work, design work. We're fortunate to have those. And it's really helped us with certain things, keeping people busy. Unlike some of my competitors — they've either laid people off, they've downsized. We had a firm, I think, this year that actually closed their doors. But then I'm seeing small little startups. … Competition hasn't died. It's just changed. For us, we've actually brought on staff.

I think with a lot of the public sector work, obviously, the state's not funding a lot of those projects. So that market has dwindled. I wouldn't say it's dried up. There's still stuff that is going on. … (Businesses) are just waiting for the state to make a decision, do a few things, and then I think the floodgates will open up.

I imagine it's tougher to get contracts in a time like this. How do you manage to compete?

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Prozeralik: There's (requests for proposals) that come out, and then we're putting together our qualification package and submitting those. We're finding that before, where there might have been six or eight (others to compete with) — I mean, we just submitted one yesterday — 14 firms. Small business firms. It was a military project, but there were 14 submittals. Unheard of. Usually, half a dozen.

There's firms out there that are looking for work and some of them, I think, are now expanding into markets where they typically or traditionally had not worked in. It's part of the economy here. You have to be diverse. With 35 years of being here, we have a strong history in all markets. We're just kind of picking and choosing now what we want to chase. We can't go after everything, don't really necessarily need to go after everything. Just need to find the right clients and the right projects.

It sounds like maybe in some ways you're being more selective, but it also doesn't seem like a time when you could afford to do that. So how have you been adapting to this economic climate?

Prozeralik: Well, one of the things, how we adapted — we hired a director of marketing.

Hostetler: We're really formulating and concentrating on more of a strategy. Because there is some overhead cost with chasing proposals. But with that comes the strategy.

What is that strategy?

Hostetler: Basically, picking the opportunities we want to propose on, really finding those projects that mesh with our culture and with our business plan.

Prozeralik: We've done a number of (Alaska Native corporation) projects. A lot of the local ANC organizations, they have a little bit of residual cash, they have some money, they have a need. … We sit down and look at, strategically, OK, who's the competition, what sets us apart. … That helps us formulate either a "go" or "no go." This all takes time, costs money, basically overhead to bring that work in.

Hostetler: Performing a cost-benefit analysis.

Looking to the future, what are some of your biggest concerns?

Prozeralik: One of the reasons why we decided after seven years of not having somebody in marketing/business development that it was time, is because I can see two, three, four years down the road, the F-35 thing starting to drop off, other things starting to drop off. So I need to start looking now, start developing relationships with other clients that we can start backfilling over time. Developing relationships, and then in a couple years, I think everybody has an expectation, the state's going to get itself out of this (budget deficit), things are going to start to change. There's going to be either new lines of revenue coming into the state, new opportunities. We just want to be ready for those to happen.

This interview has been edited and condensed for clarity and brevity.

Annie Zak

Annie Zak was a business reporter for the ADN between 2015 and 2019.

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