“If you've got to splurge a little bit, splurge on the lobby,” said Alan Benjamin, founder and president of Benjamin West, a purchasing firm specializing in hospitality furniture, fixtures and equipment and operating supplies and equipment. When it comes to interior furnishings, Benjamin should know: his firm spends a significant amount of money for his hospitality clients—an average of $1.5 million a day. The company does more than 300 projects a year, often with budgets climbing well into the tens of millions.
“We view ourselves as an accounting firm that does procurement on the front side,” Benjamin said, noting that in the firm’s business model, they act as a true fiduciary agent. “We don't buy, mark up and resell anything; we're not a wholesaler of furnishings.” Essentially, Benjamin said the company acts like an attorney or investment advisor for the owner. Benjamin has had a lifetime to perfect his business approach, having started in the industry at age eight in the family hotel linen business in Chicago, started by his grandfather in 1931. In 1998, he started his own firm in Boulder, Co.
His firm has worked across all major brands and with nearly every type of product type and asset class, completing work in 40 countries and six territories from offices in Boulder; Chicago; Dallas; Washington, D.C.; and London. He has a global team of just over 100 people that includes procurement and accounting professionals, with specialist teams focused on exclusive markets across North America, Europe, Asia, and Latin America that work with 50-60 different design firms.
“We're completely agnostic in terms of the ‘stars’ or tier quality level of the hotel, but we will focus a lot on the ownership type and what the capex needs are of that project,” Benjamin explained, adding that he is very involved in understanding the business from the owners’ perspective—from whose money is at stake and whose capital is being spent. “It’s a business, not a hobby; you have to have a return. I'm here to help them implement their capex.” It’s his firm’s job, he said, to determine what the best value is for that project at that time. Benjamin West gets very involved in the technical details to ensure owners are getting the most for their investment.
Details Matter
“Almost a fourth of our staff does nothing but accounting,” Benjamin shared. “We have more than 300 separate bank accounts. Funds are never commingled; even for the same owner, we can be doing [many] projects at once, but every single account is unique. The building assets coded to the general ledger are unique. Depreciation, personal property, fixed assets, historic tax credits, cash flow forecast—all unique.” Further, the firm reads all the fine print, to whether a vendor is registered in the state (which affects tax accrual) and ultimately to reach the culmination of the project at the best price. “You don't [want to] get to the end of the project and have a $200,000 sales/use tax surprise,” he cautioned. “The accounting, cash flow forecast and transparency of everything we do is key.”
To assist with that transparency, Benjamin West invested in creating Revolutionary Purchasing Management (RPM™), proprietary purchasing software in a password-protected system that provides clients with live, 24/7 access to their specific active projects. The software gives insight into “all key project status details, from committed capital, capital needed to complete the project, budget by area, and full vendor, approvals, and expediting info,” said Sarah Churchill, director of business development.
“My role is to make sure we have the right resources to manage for the long term, to listen to what our client's needs are. They're constantly changing, they're evolving,” Benjamin said. Clients are generally trying to do more with less in their office, he added, so his goal is to define and execute on what more Benjamin West can do to be an asset and an advocate for their clients throughout the entire process.
Clicking with Clients
After decades in the industry, Alan Benjamin has some battle-tested words of procurement advice for owners:
- Hire the best team you can, not necessarily the cheapest team with a low cost on the spreadsheet.
- Hire the procurement team the same day you hire the design team. Hiring both at the same time is much more collaborative and efficient. Most design firms will want the procurement firm on early because it prevents them from having to redesign. Hiring both simultaneously saves time and aggravation, and potentially your budget.
- Hire a designer with a budget already set. Get everyone on the same page on the budget and the schedule at the start of the project.
- Consider a designer’s ability to do the documentation. Issuing biddable specs for the purchasing agent and buildable specs for the general contractor is critical.
- Have a tight differentiation document/responsibilities matrix. Make sure all gaps and overlaps are covered so there are no holes.