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Kiewit
Owners continue to seek greater efficiency, less risk and tighter schedules. This is driving more of them than ever before to explore such project delivery methods as construction management-at-risk (CMAR), design-build and integrated project delivery. As a result, these project delivery methods are growing rapidly and are quickly replacing the traditional design-bid-build method as the go-to means of executing projects.

The growth in alternative project delivery can be seen in the this year’s rankings of ENR’s Top 100 Construction Management-at-Risk Firms and Top 100 Design-Build Firms. The Top 100 CMAR firms had a combined revenue of $143.05 billion in 2018, up 8.2% from the $132.24 billion reported in 2017.

What is more interesting in the Top 100 CMAR, revenue numbers for domestic projects rose 9.6%, to $133.30 billion, in 2018 over 2017 figures. This more than makes up for the 8.5% drop in revenue from international CMAR projects, which fell to $9.75 billion in 2018 from $10.66 billion in 2017.

The design-build list provides a similar contrast between domestic and international project delivery. Overall, the Top 100 design-build firms had a total revenue of $107.66 billion in 2018, up 4.3% from 2017. However, revenue from domestic design-build projects grew a more healthy 5.9%, rising to $85.20 billion, in 2018. On the other hand, international design-build revenue dropped 1.5% in 2018, thanks in part to a fall-off in huge engineering-procurement-construction projects in the international mining, power and petroleum markets.

To put the strong growth in design-build and CMAR in a broader context, domestic design-build revenue has grown 69.6% from 2010, when the construction recession ended, to 2018. This rise comes despite a dramatic drop in big-ticket engineer-procure-construction projects in the oil-and-gas, power and mining sectors. In the same time period, domestic CMAR revenue has grown 108.4%.

What used to be considered alternative forms of project delivery “are becoming increasingly commonplace­—to the point that they’re not really alternative anymore,” says Scott Roux, senior vice president of Michael Baker International. “We are pursuing this work aggressively yet thoughtfully, and anticipate it comprising a larger percentage of our overall portfolio going forward.”

CMAR Is Surging
The market for CMAR has better than doubled in the past eight years for many reasons, as owners seek teamwork and earlier involvement in the design process than is typical in the traditional design-bid-build process. Many owners also have returned to CMAR after some bad experiences during the industry recession of 2008-10, when owners thought they could get cut-rate pricing using design-bid-build.

“During the downturn, many owners thought they would get the best price from design-bid-build, but that didn’t always work out that well,” says Dennis Cornick, executive vice president of Gilbane Building Co. So CMAR is returning to be the go-to project delivery method in the buildings sector.

CMAR also is making major strides in the public infrastructure market, particularly in the water and wastewater sector. For example, Clark Construction Group’s subsidiary Atkinson Construction is helping the City of Atlanta bolster its clean water system with the Atlanta Water Supply, Bellwood Quarry Tunnels and Shaft project, says Chip Hastie, executive vice president of Clark. Atkinson’s Underground Division has been working on the CMAR project over the last three years, constructing a water tunnel.

Design-Build Is Trending
Design-build also is rapidly expanding as the project delivery method of choice for many market sectors. “Design-build is hot and trending,” says Lisa Washington, CEO of the Design-Build Institute of America, Washington, D.C.

Washington points to two studies from last year that show both the growth and effectiveness of design-build. In June 2018, a joint study by DBIA and Raleigh, N.C.-based industry consultant FMI Corp. found that design-build is expected to grow 18% from 2018 to 2021 and will make up 44% of the nonresidential market by 2021.

The DBIA-FMI study was followed in November by a study of project-delivery performance by the Construction Industry Institute, an Austin, Texas-based industry research organization, and the Pankow Foundation, a McLean, Va.-based research grou
Las Vegas Convention and Visitors Authority
On Wednesday, the Las Vegas Convention and Visitors Authority (LVCVA) board is scheduled to vote on whether to approve a negotiated $48.7 million design-build contract with The Boring Co. to build a dual-tunnel people mover system at the Las Vegas Convention Center campus, but two board members, according to the Las Vegas Sun, are advocating for a different approach proposed by another bidder.

The Boring Co. beat out Austrian company Doppelmayr Garaventa Group in the Request for Proposals process, but board members Michele Fiore and Las Vegas Mayor Carolyn Goodman are encouraging other members to take a second look at Doppelmayr's bid, which would see the construction of a more traditional, above-ground system. Doppelmayr's original proposal was $215 million, but Goodman told the board that the company could perform the work for $85 million.

Goodman maintains that using the proven, 125-year-old Doppelmayr is a better bet than giving The Boring Co., which is three years old, a chance at its first significant project. Goodman has invited Doppelmayr to make a presentation at the May 22 meeting.

Steven Hill, board CEO and president, told the Sun that The Boring Co. won the project because of its low cost, the fact that it can be built while the $1.4 billion convention center renovation progresses above ground and that it can be expanded underground to other areas of the city in the future. In addition, as a condition of The Boring Co.'s contract, the company has agreed to reimburse the LVCVA in full via a payment recovery bond if the project does not receive a certificate of occupancy.

Back in June 2018, The Boring Co. also won the contract to build an express twin-tunnel transit system from downtown Chicago to O’Hare International Airport, promising a 12-minute trip courtesy of electric vehicles that would travel at speeds of at least 100 miles per hour.

But the city and The Boring Co. still haven't reached an agreement on the costs of the project nor on a schedule. In addition, while former Chicago Mayor Rahm Emanuel was a big supporter of the project, new Mayor Lori Lightfoot reportedly has been hesitant to endorse the new express system and has remarked that she doubts that the project could be 100% privately funded as promised.

In March, Musk made an informal announcement on his Twitter account that The Boring Co. was getting ready to unveil a new boring machine dubbed the Line-Storm. Followers of Musk's business ventures have been waiting since 2017 for the Line-Storm's official unveiling, but so far, it remains a mystery. ​
flickr user pelican
Regarding the design-build contract, the city expects to issue a Request for Qualifications within the next few months and then a Request for Proposals sometime in the middle of the year. The winner, which will be chosen on a best-value basis, will provide preconstruction services, full design, construction and construction administration duties for 250,000 square feet of vertical construction and an overhaul of 120,000 square feet of the existing lobby.

Officials from Trammell Crow told Construction Dive in December that the alleged misconduct was the result of unauthorized actions of one employee, and Mortenson Construction said it had received “inappropriate” communications from a representative of Trammell Crow but denied there was any bid-rigging at play.

Large companies often set out rules and best practices for their employees to follow, but ultimately, those intent on gaming the system can likely find a way around policies that are intended to prevent illicit behavior.

For instance, former Turner Construction Co. and Bloomberg construction executives were charged last year with bribery and bid-rigging in relation to a renovation project at a Bloomberg building in Manhattan, even though both companies had controls in place they thought would prevent such behavior.

This is one of the reasons owners hire third-party construction project monitors. These individuals — or team of individuals, depending on the project size — act as an extra set of eyes and ears for the owner as they ensure that contractors have the right systems in place to prevent and detect fraudulent activity. Monitors then audit the project periodically for compliance with established controls.

Sometimes public agencies will require a contractor to take on a monitor. In these cases, the contractor usually has breached the agency's procurement rules in some way and hiring a monitor is a condition of either continuing work on a specific project or bidding on new work.
Clark Construction
Clark-Parsons not only demolished and rebuilt the underpass, but handled contentious environmental and community challenges, kept trains running throughout construction and finished ahead of schedule.

When one of the continent’s largest rail providers learned more than a decade ago that it would need to rebuild a century-old tunnel through dense Washington, D.C., to sustain the fluidity of a vital national rail network, it wasn’t sure how it could do it.

Luckily for owner CSX Transportation, a progressive design-build master stepped up to the challenge. And recently, the project came to its conclusion successfully and ahead of milestone target dates.

Headaches on the Virginia Avenue Tunnel project abounded from the start. First, the section in need of replacement was over 120 years old. Eleven city blocks of townhomes, parks, businesses, government offices and community centers ran along the length of the tunnel overhead, and seven cross streets and a massive interstate exchange lay adjacent. Intricate systems of public utility lines hid above and below.

The National Environmental Policy Act review process loomed over the entire project at every step.

And above all, it was crucial that the line stay operational during construction.

No project too big for progressive design-build
CSX had successfully delivered similar projects as part of its $850 million public- and privately-funded National Gateway Initiative, a program involving raising the heights of 61 bridges and tunnels through the Mid-Atlantic and Midwest to clear 21 feet of vertical clearance for taller, double-stack intermodal containers.

But at costs of between $150,000 and $15 million or so, prior projects were piddly in comparison, explained Brandon Knapp, a CSX project manager, at the 2018 Design-Build Conference & Expo in New Orleans last November.

Progressive design-build had seen CSX through those challenges, but could the nascent delivery method handle such a large, sensitive job like the Virginia Avenue Tunnel replacement?

This project, which Knapp called the cornerstone of the initiative, was in the $250 million to $300 million range. The tunnel didn't just need to be cleared from vertical obstruction. The single-track, often bottleneck-inducing passage needed to be widened to accommodate two trains as well.

“We had to have a construction method that allowed us to continue to run trains but also to complete this project in a timely fashion,” Knapp explained. “We knew it was going to be a contentious NEPA process and that we had to be able to construct within the limits of work that were assigned to the project. It required constructability from the beginning.”

The tunnel was originally built in the 1870s and only upgraded in the 1930s, he reminded attendees, showing black-and-white photos of a small underpass with dirt floors and wooden frames. “We also needed a team that had experience working with materials of the age and condition used in the existing tunnel.”
E.M. Duggan Inc.
Long ago, project roles were well defined. Architects and engineers designed, contractors built, and owners wrote the checks. Over many decades, however, the lines defining those roles have blurred, with contractors increasingly handling or overseeing elements of design.

And it’s a trend that’s accelerating. More than 43% of contractors are gearing up to perform design work in-house, a 5% increase from 2018, with another 25% considering such a move in the near future, according to the “2019 AGC/FMI Risk Management Survey” from Associated General Contractors of America and FMI Corp.

While closely integrated design and construction organizations have long been routine in certain sectors, energy and industrial process work among them, the findings of the AGC/FMI survey reflect an environment increasingly influenced by time, technology and, of course, money. Compressed schedules are now the norm, say many industry leaders, in part because of more design-build. Off-site prefabrication also is a factor, with both GCs and specialty contractors taking advantage of production efficiencies to save on manpower and materials.

Adapting to this restructured landscape has not been universally smooth. Participants in the last two AGC/FMI risk surveys have complained of incomplete design documents, inadequate risk allocation in design-build, insurance and liability concerns, and issues coordinating with design teams.

Individual contractors’ approaches for expanding in-house design capabilities run the gamut from adding a handful of specialists as liaisons to developing full in-house design services, either organically or via acquisition (see graph 1). For example, Joseph Poliafico, Flatiron Construction’s vice president of safety and insurance, says his company has made a concerted effort to promote earlier and better communication with its design partners by using in-house staff to “look over their shoulder” as a design evolves. “It’s the reality of the market now,” he adds.

At the other end of the spectrum, Kiewit is among major firms that has significantly expanded in-house design capabilities, as the contractor seeks to apply the integrated design practices of its power business to other markets. Dan Lumma, president of Kiewit’s engineering group, says broader in-house engineering capabilities allow the company greater flexibility in adapting to specific problems in projects, especially those with complex requirements.

“We know that it’s impractical for us to do 100% of design and construction for every project in every market,” Lumma says. “In some, we will do it all and sign off as engineer-of-record. In others, we will work with design partners who understand and share our integrated approach.”

Key questions emerge: Is the need for in-house design indicative of growing pains that accompany any industry-wide evolution? Or, are there more deep-seated problems to be addressed? The answer, as many industry leaders point out, depends on the source.

Incomplete Design Documents Adding in-house design capabilities to augment and finalize design documents might seem, at first glance, a logical move, especially to support best practices in design-build. After all, initial designs are expected to evolve gradually through collaboration among the project team.

Twelve months ago, however, 92% of participants in AGC/FMI’s 2018 risk study reported that design documents were less complete than in the past.

Their concerns are not limited to specific project delivery systems.

“We’re seeing this across the board,” says AGC General Counsel Michael Kennedy. “Contractors are having to connect more dots on their own to keep projects moving.”
Building Enclosure
It was supposed to usher in the next generation of high-performance projects—where silos would be destroyed, building information modeling (BIM) would be harnessed, and both risk and reward would be shared across all major stakeholders.

Integrated Project Delivery (IPD) has been touted for its many potential attributes. As a collaborative project delivery method, IPD utilizes the talents and insights of all project participants through all phases of design and construction. It fosters early goal definitions, collaborative innovation and decision-making, shared risk and reward, and (in theory) positions project teams to have greater success toward realizing high-performance outcomes.

IPD Basics

One can find plenty of resources exclaiming IPD's philosophical underpinnings. For instance, see Integrated Project Delivery: A Guide published by the American Institute of Architects (AIA) in 2007.

In fact, the AIA has done an outstanding job of defining specific structures between Owner, Architect, and Contractor with regard to IPD. Through AIA Contract Documents, one can preview any AIA model contract for IPD free of charge. In general, the AIA has defined three "levels" of integrated project delivery:
  • Transitional Forms (e.g., Documents A195–2008, A295–2008, and B195-2008) are modeled after common/traditional construction manager agreements and offer a comfortable first step into integrated project delivery.
  • The Multi-Party Agreement (Document C191-2009) is a single agreement that the parties (i.e. Owner, Architect, Contractor, plus any additional Parties) can use to design and construct a project utilizing integrated project delivery.
  • The Single Purpose Entity (SPE) creates a limited liability company (LLC) for the purposes of planning, designing and constructing a project. The SPE can be comprised of Owner/Architect/Contractor (per Document C195-2008) OR Architect/Contractor (per Document C196-2008) in which case, the A/C SPE would need to enter into a contract with the Owner). The SPE allows for sharing of risk and reward in a fully integrated collaborative process.
If the case is compelling, then where are all of the IPD projects?

However, for all of the model contract documents; for all of the guides and other publications that highlight the potential benefits of IPD, one may struggle to find a resource of considerable substance with regard to the execution of IPD on actual projects. Perhaps this is because structured IPD agreements have not taken to the market quite as much as we would care to admit. According to the AIA Firm Survey Report 2018, basic design services continue to dominate as the top source of firm revenue at 64.5 percent; while IPD-related services were reported at 2.6 percent. This data may under-report IPD utility as architects could provide "basic design services" within an IPD Multi-Party Agreement or SPE, for instance; in which case such work may not be reported as IPD-specific services. Nevertheless, IPD has not exactly taken the market by storm over the past decade.
On the eve of the NAHB International Builders’ Show in Las Vegas, the design-build and technology firm Katerra announced a broad series of products aimed at improving the quality and lowering the cost and delivery time of design and construction projects.

The Silicon Valley company’s new offerings will be launched throughout 2019. They include a building platform tool that allows for design and mass customization, manufacturing, and construction of market-rate, garden-style and affordable multifamily housing. Also in this panoply of goods and services are Apollo, a software platform that manages design, cost, material, and schedule data for the lifecycle of any building type; structural and panel systems made from cross-laminated timber (CLT) that can be flat-packed for shipping and field assembly; proprietary energy and HVAC systems known as KES and KTAC, respectively; a bathroom kit designed for rapid field assembly; windows; and two series of interior fixtures and finishes, KOVA and KOVA Select, which include lighting, plumbing fixtures, flooring, and tile.

Katerra will also open two new high-tech manufacturing facilities in 2019—one in Spokane, WA that will make CLT, and another in Tracy, CA that will produce building components such as utility walls, cabinets, and truss assemblies. The company plans to establish similar facilities on the east coast in future years, though it declined to discuss specifics. “Down the line, for cost efficiency, we aim to have 80 percent of our projects located within 500 miles of one of our factories,” says Trevor Schick, president of Katerra Materials and a former manufacturing executive at Hewlett-Packard.

By adding a portfolio of products to its existing design-build services, Katerra is doubling down on its ambition to become a fully integrated one-stop shop for buildings—the Amazon of design and construction, if you will. With more than 5,000 employees worldwide, “the company has taken a collaborative and inclusive approach to working with builders, architects, and others to inform its strategy,” says Craig Curtis, president of Katerra Architecture, who was previously a partner at The Miller Hull Partnership.

The firm’s investment in CLT is a bet that mass timber, more commonly used in Europe and Canada, will gain broader acceptance in the U.S. due to its durability and smaller environmental footprint relative to steel and concrete. Recent proposals to update U.S. building codes for mass timber structures have paved the way for approval of timber-framed buildings up to 18 stories tall, far higher than its current limit of five stories. That being said, Katerra’s new multifamily housing building tool can be used for both timber- and lightweight steel-framed structures, giving it broader application in today’s U.S. market.

Curtis wouldn’t name the number of architects Katerra currently employs on a full-time or contractual basis, but points to its acquisitions and partnerships to indicate the importance of architecture to the company’s mission. Since 2017, Katerra has acquired Nystrom Olson Architecture in Spokane as well as Michael Green Architecture of Vancouver and the multi-based office of Lord Aeck Sargent. The Texas architects Lake|Flato and Boston-based Leers Weinzapfel Associates are listed as collaborators. “Right now we can’t be in all markets at all times, so having strong relationships with firms that offer expertise in needed areas will be crucial to our long-term success,” he says.

Over time, Katerra plans to roll out platforms similar to its multifamily tool for all types of buildings, enabling designs based on kits of parts that are tailored to the needs of the client, program, site, and climate. Curtis says its system offers architects “the best of both worlds, enabling designers to spend time on the details that matter rather than reinventing the wheel with every project.”

Clayco
Clayco has hired two digital and innovation executives: Matthew Porter as chief innovation officer and Simona Rollinson as chief information officer. Porter will oversee all aspects of technology at Clayco, continuing to drive the company’s message and implementation of innovation forward in the design-build industry, while Rollinson will be responsible for overseeing all elements of the information technology function.

“We are pleased to have Matthew and Simona joining our team,” said Robert G. Clark, chairman and CEO of Clayco. “Their skills and past experiences in the ever-changing technology landscape will help Clayco expand our capabilities to deliver the best approach in the industry.”

Porter will oversee traditional IT entities such as service and storage and search for new ways to integrate IT into Clayco’s day-to-day operations through new technologies such as virtual construction and augmented reality. With more than 20 years of experience in the technology industry, he most recently served as Clayco’s interim chief information officer while leading the effort to hire a permanent CIO. Seeing Porter’s experience and unique perspective he brought to advance the company, Clayco created the role of chief innovation officer for him.

“I am overwhelmingly excited to join Clayco. There is a staggering amount of opportunity to amplify Clayco’s core business through technology and disrupt the industry,” said Porter. “One of the best ways to expand a business is by bringing IT and future industry plans together, and I look forward to working with Clayco to create a new standard in the field.”

One of Porter’s key goals as he begins in his new role is to break down silos across the construction landscape. Particularly, he hopes to make data accessible throughout the construction process to ensure that the best tools are available to the marketplace, creating a seamless process from the moment planning begins to the moment the keys are handed over to a building’s owner.

Rollinson will spend much of her time working with Porter, planning to outline a strategic roadmap in the technology space, and identify new opportunities that will allow Clayco to develop innovative initiatives. She comes to Clayco with more than 20 years of experience as a technology professional. Following 17 years in the private sector at a software company, she spent four years in the public sector before joining Clayco.

“Throughout my career, I have enjoyed working with sectors that are approaching a time of disruption, and I believe Clayco is ready to lead the charge in the construction sector,” said Rollinson. “There is so much opportunity to advance within the industry, and I look forward to creating new opportunities with Clayco.”

As Rollinson begins her tenure at Clayco she is planning to outline a strategic roadmap in the technology space and establish an IT investment council, as well as identify new opportunities that will allow Clayco to develop innovative initiatives that change the field.
Clayco
Design-builder Clayco, which was founded in St. Louis, has acquired Chicago design firm Lamar Johnson Collaborative (LJC).

LJC will become a branded business group within Clayco’s architecture and design practice. LJC President and CEO Lamar Johnson will serve in the leadership team of Clayco’s design business in an as-yet-unnamed role.

“While we’ve had an architectural practice that had over a hundred people in it, we really felt like we wanted to expand our design-build presence,” says Bob Clark, chairman and CEO of Clayco. “We decided to move our national headquarters to Chicago in 2013. Lamar is extremely well-respected both as a leader and design expert in the Chicago market.”

Clayco has been acquiring other companies to expand its design and construction business since moving to Chicago. Clayco acquired Bates Architecture last year and merged it with its in-house Forum design studio to create BatesForum. Clayco reported more than $2 billion in revenue in 2017 and topped ENR Midwest’s 2018 Top Contractors list.

“Lamar’s background and history in the business is, I think, iconic,” Clark says. “So we felt that having someone like Lamar actually as part of the overall leadership team in the organization, but also helping us specifically with the strategy in our architecture and engineering group, was a huge step in the right direction.”

The acquisition increases Clayco’s architecture and design professional staff to 225 in Chicago, St. Louis, San Francisco, Springfield, Mo., and Rogers, Ark. Terms of the deal were not disclosed. Clark says the company’s collaboration with Johnson and LJC on previous projects was a factor in making the acquisition.

“I think that’s one of the compelling reasons that we joined forces, is that it just seems to both of us that there’s so much inefficiency in the regular process, the normal [design-bid-build] process of architects doing their work,” Johnson says. “That whole system is, if it’s not broken, it’s not working very well, at the very least. This gives us an opportunity to refine that.”

LJC is both an architecture and interior designer. Former Gensler Chicago principal and managing principal Johnson launched the firm in 2017. LJC quickly built a reputation as both a disrupter and an innovator in the Chicago architecture community.

“We wanted the best and brightest that were available, and I was fort