Engineering News-Record Thursday revealed its 2018 list of the Top 400 U.S.-based contractors, and there were few surprises. The ranking, based on 2017 gross construction revenue, saw Bechtel once again occupy the top spot, and Fluor Corp. and Turner Corp. repeating their No. 2 and No. 3 showings, respectively. It was the 20th consecutive year that Bechtel has been No. 1.
There were, however, some minor shifts within the top 10. AECOM, Kiewit, Skanska and PCL Construction, all with strong civil divisions as well as commercial operations, each moved up one place in the ranking to Nos. 4, 5, 6 and 7, respectively.
CB&I (Chicago Bridge & Iron), an oil and gas construction-heavy firm based in The Woodlands, Texas, had the most dramatic top-10 shift, falling from No. 4 in 2017 to No. 9. Fresh off a merger valued at between $4 billion and $6 billion with global engineering and construction firm McDermott International, CB&I reported a near-$2 billion decrease in gross revenue from 2016 to 2017 in its full-year and fourth-quarter earnings report in February and a similar value drop in backlog for the same period. However, the company also reported a 17% uptick in award activity from 2016 to 2017, pointing to a stronger energy-related construction market.
The oil and gas pipeline sector can be volatile, and, according to IBISWorld, the opening of U.S. crude oil to the export market has created a strong demand for pipeline infrastructure. This, along with new natural gas discoveries, could be one of the reasons that Strike, also based in The Woodlands and a leader in pipeline construction, leaped from No. 109 on last year's ENR list to No. 53 this year.
Overall, the Top 400 contractors generated almost $374 billion in contracting revenue during 2017, an increase of more than 2% from 2016 and a list record. The news was even better specifically for domestic-project revenue, which rose almost 5% between 2016 and 2017, although that was about half of the increases seen in 2016 and 2015. (ENR's list does not include company profits or other data.)
Executives of Top 400 weigh in on trends
As part of the ENR presentation announcing this year's Top 400, industry experts weighed in on the state of the U.S. construction market. The skilled labor shortage remains a major concern, with the resulting drop in productivity driving up project costs, according to the speakers.
To combat the tight market, some companies are developing their own labor forces and are self-performing the work once exclusively the territory of subcontractors. Jeffrey Hoopes, CEO of Swinerton, No. 19 on the 2018 list, said his company is beefing up its labor capabilities and that better control of its workforce would allow for productivity gains and more attractive pricing.
Also during the presentation, Dan McQuade, group president of AECOM's construction services, said the company is looking at management and other administrative candidates with degrees in fields other than construction. AECOM's lineup of billion-dollar high-profile projects – like its joint venture with Turner Construction for the $4 billion Rams stadium in Los Angeles – have aided in its recruiting efforts as well, McQuade said.
On a down note, smaller local contractors could see their growth potential dwindle in the large-project market. Hoopes said the trend toward $1 billion-plus projects eliminates all but a few giant construction firms that are capable of an undertaking that size. The move toward public-private partnerships (P3s), he said, which involves financing and other complex administrative aspects, in addition to construction, has also narrowed the competitive field to a handful of firms.
However, the experts projected continued growth in the U.S. construction industry as long as the overall economy continues to expand.