How AECOM is positioning itself to lead the next generation of infrastructure
AECOM is among the biggest players in the AEC space. In the past year it has made a strategic acquisition with Shimmick Construction, has launched a federal contracting division and is preparing itself to be a leader in infrastructure, in part by announcing an initiative to hire 3,000 workers throughout a six-month timeframe.
Its success can be attributed to its diverse portfolio and saturation through many markets, including commercial, infrastructure, power plants, stadiums, government and more. But its the people behind the company who are at the core of its accomplishments. One such company leader is 30-year AECOM veteran Dan McQuade, president of the company's construction services business.
McQuade recently spoke with Construction Dive about AECOM's project load, how it hopes to maintain its positive trajectory and the direction it's headed next.
This interview has been shortened and condensed.
MCQUADE: We are absolutely positioning ourselves to be a leader in the next generation of infrastructure. We're the largest transportation engineer in the world.
I think no matter what happens in Washington, DC, there's going to be an increased amount of infrastructure projects and more design-build. Our country's infrastructure is aging. I can't comment about the timing of federal legislation, but I’m convinced there will be more infrastructure work.
The company has recently come into a couple of notable acquisitions. Where construction services are concerned, how does AECOM decide which deals are going to pay off?
MCQUADE: Acquisitions are always a strategy; it's not like something becomes available and we make an offer. We look at the company, at our project strategy and where we think we don't have the right resources.
In the western U.S., we have great capacity, great clients, and a lot of infrastructure and transportation projects. We needed the right construction expertise [there] so we acquired Shimmick Construction. We’re focusing on the West Coast for the next six months or so and then we'll start thinking about geographic expansion.
Last month, we announced a capital allocation policy focusing on near-term debt reduction and stock buybacks. We're continuing to look at targets and acquisitions, but with the capital allocation policy now. We'll continue to make acquisitions, but they'll be niche acquisitions in the next year or so.
The company's Q3 reports note that construction was a leader in revenue growth during the period. What kinds of projects or services have stood out in that category?
MCQUADE: The things really driving revenue are mega-projects. We have at least a dozen projects over $1 billion right now. That's just mind boggling.
Some are upwards of $2 billion and approaching $3 billion. That's what really drives the revenue for the construction business: One Vanderbilt and Hudson Yards, new stadiums. We have a skill set for really big, complicated projects.
In what markets are you seeing the strongest growth?
MCQUADE: We have projects across the country and we're seeing a lot of growth and opportunity in California, Florida, New England, Texas and the Gulf Coast. I think it's a combination of areas with particularly strong economies and places where we have strong capabilities where those match up best. Those are also big population centers.
The company's Construction Services unit added a federal contracting division this year. Why was now the time to do that?
MCQUADE: AECOM has a very large business outside of construction that designs, operates and maintains federal facilities. We do very little federal construction currently, but felt we could leverage relationships and existing contacts, particularly as the federal government moves toward design-build.
On the construction side, what would make for a smooth transition from 2017 to 2018?
MCQUADE: We have had tremendous growth over the past few years. I think we have an advantage with the size and notoriety of the projects we have. I'm in Los Angeles now where we're building the new Rams stadium. We’re also commissioning a power plant and building a bridge in Long Beach.
We have really smart, ambitious people in our business, especially younger people who want to work on those projects — they're top talent. Our ability to win those [big] projects helps us personnel-wise as much as anything because they're magnets for top people.
That's how I got into this 30-something years ago. I was working in New York for a small contractor and used to walk by the JP Morgan headquarters on Wall Street and thought, 'That's what I wanted to be doing.' It felt like the big leagues. That was true 30-something years ago and it's true today for AECOM.
In 2018, we're looking at technology more to support and control projects. We're on a growth curve, we just have to make sure we keep delivering the quality our clients expect.
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