Total 2004 Revenue Drops To $52 Billion
By Tom Nicholson

Public and private owners use of integrated project delivery continued to proliferate in 2004 despite legislative barriers that remain in several holdout states and a general sluggishness in some key markets. Although 2004 total revenue for the Top 250 U.S. Design-Builders shows a slight drop from the previous year, down to just over $52.5 billion from $53.6 billion in 2003, an indication of design-build’s staying power is the broad-based revenue increases many smaller firms posted.

While industry giants Bechtel, Fluor and Jacobs continue to hold sway at the top of the list with total international and domestic revenue of about $8.3 billion, $5.4 billion and $4 billion, respectively, smaller firms like Garney Holding Co. made its debut in this survey with revenue of $14.8 million. Smaller firms are grabbing more business and posted average revenue of $14 million in 2004, up from $12 million in 2003.

"More smaller firms are getting into design-build probably because more owners are learning about it and hearing the success stories of their peers," says Mel Spangler, a vice president at Garney, which specializes in municipal water and wastewater projects. Spangler says his 550-employee company did some big municipal water jobs, such as a $20-million water treatment project in Oletha, Kan., and an $8-million pipeline project in Longmount, Colo., that boosted the firms total design-build revenue. Spangler says that even with a hot market for design-build in the water sector, there is still room to grow. "Most owners prefer CM-at-risk because they want control of the design done before they hire a contractor," he says.

Another small firm, 155-employee Ajax Building Corp., has found a niche in Florida’s education market, reporting $15 million in design-build work last year. "It used to be only highway projects, but it doesn’t have to be a $100-million job to use design-build," says Ajax Vice President Jay Smith. He points to a Jacksonville middle school conversion the firm completed in 2004 and a current project to build a structures lab at the University of Florida as examples of small-scale projects where integrated delivery was preferred. These owners "were very interested in design-build because of speed and the single point of contact—they want to know who to call," Smith says.

Also zeroing in on the education market is Barnhart Inc., which posted a 48% jump in design-build revenue in 2004 to $71.5 million. "What I’ve seen is that universities more and more don’t want to use hard bids," says CEO Douglass E. Barnhart. "Education is probably one of the hottest markets."

In the transportation sector, cuts in state and municipal funds have road-blocked work for some highway constructors. "A lot of our design-build work comes through the public sector and those opportunities are much less now," says Jeff Hoopes, executive vice president at Swinerton Inc. "There is such a deep federal deficit that it is affecting state funds." Swinerton’s design-build revenue dropped from $357 million in 2003 to $292 million last year.

Creative financing has helped some firms keep work going. For portions of the Interstate 35 Trans-Texas Corridor project, Earth Tech teamed up in a public-private partnership with the Texas Dept. of Transportation and Cintra Zachry, LP, a private consortium, to plan, design, construct, maintain, operate and collect tolls on the corridor. The team will finance the estimated $145.2 billion to $183.5 billion project entirely with private investment. Earth Tech also scored big in the environmental, water and facilities markets. "The facilities market is growing, particularly with military construction," says Bill Webb, Earth Tech executive vice president. "Also, in environmental remediation design-build is becoming more commonplace."

Global infrastructure, water and power continue to be fertile markets. Black and Veatch is capitalizing on a recovering power market. "There was a decline in the power market after Enron and that is where the majority of our design-build work is," says Kim Mastalio, president of strategic sales and marketing. "But we see it coming back big time." B&V last year designed and built a 700-MW coal-fired powerplant in Omaha and now is teamed with a Turkish contractor to design-build a powerplant in Jordan.

Earth Tech racked up $417 million in international design-build work in 2004 with projects like a $27-million wastewater treatment plant in Chihuahua, Mexico, and a $65-million rebuild of an Iraqi military base in An Numinyah, Iraq.

But constraints remain. "There are still a lot of barriers to design-build," says Wes Morgan, vice president of marketing at HBE Corp. "In some states you’re still required to go through a more traditional, linear [delivery] process." Mastalio says progress has been made with new laws in Texas that lift some design-build constraints and legislation in California and Massachusetts that opened K-12 education and road projects to integrated delivery. "I think there is more design-build to come," Mastalio says.

Click below to view Top 250 Design-Build list for 2005:

1-62, 63-125, 126-188, 189-250

Click below to view Top 250 Design-Build list 2004:

1-75, 76-100, 151-225, 226-250