Q&A: How AECOM's construction president tackles challenges, uses tech for success
Over the many years of its storied history, AECOM has delivered increasingly massive projects and has grown tremendously both through acquisitions and internal expansion. One acquisition — the 2010 purchase of Tishman Construction — brought with it Jay Badame. After graduating from Pennsylvania State University, Badame joined Tishman in 1985 and steadily rose through the ranks. Today he is president of building construction, AECOM.
AECOM has 90,000 employees around the world, and Badame's group, which encompasses AECOM Hunt and AECOM Tishman, has about 3,000 people in the U.S. Badame recently shared with Construction Dive a few highlights of his journey, along with some of his views on construction market and details on the challenges he faces as the industry continues evolving.
This interview has been shortened and condensed.
Q: A good number of AECOM’s projects are considered massive. What is the process for tackling megaprojects such as Hudson Yards, One Vanderbilt in New York City and stadiums?
JAY BADAME: This is a relationship business. I've been in the business for 30 years and our patriarch was Dan Tishman, so just by virtue of his name we were able to be highly considered for the vertical construction work at Hudson Yards and also One Vanderbilt. They're highly competitive yet highly negotiated deals where absolute leadership from the developer demands the absolute leadership of the construction entity. People want to be able to pick up the phone and know they're dealing with those on the top levels of our company. I've been happy to be the person who Dan Tishman and AECOM have appointed as the president of building construction in the U.S.
As to the stadium work, AECOM purchased Hunt shortly after it purchased Tishman. Hunt was the premier builder of stadiums in the U.S. and when the Los Angeles Rams project came about I spoke to my counterpart at Turner Construction and we agreed to put together a joint venture. Between the two firms, they had built 80% of the stadiums that are comparable to what the Rams were building so, even though it was a very intense selection process, it was really competitively won. It came to the point where the Rams understood the value of combining the resources of both the AECOM Hunt talent and the Turner Construction talent. It's been a very successful JV for that megaproject.
Q: How do you determine when a JV is worth considering versus just taking on a project yourself?
BADAME: Joint ventures usually are one plus one equals three. If Hunt or Tishman or an AECOM entity does not have the ability to win a project within their own space just because of local presence, size of the job, available personnel, balance sheet, etc., it does make sense for two firms to get together who otherwise could not have won the project independently, thus getting no share of the pie, to combine resources so that each firm does get a smaller piece of the pie. Otherwise neither firm would have [gotten the project], had they pursued it alone.
Q: How has technology impacted how you do business?
BADAME: We have created a virtual reality department and it really came from the World Trade Center that we have been involved in since Sept. 11, 2001. By virtue of the amount of real estate in that sacred 16-acre parcel in lower Manhattan, it became overwhelming for things to be done on paper; they had to go to virtual so that we could see everything. We have adopted it corporately to where we use it on all of our projects.
It's not just virtual reality. It's not just BIM. It's not just clash detection. It is building the building with the architect from the early stages such that our subcontractors who were bidding the projects with us, to us and for us have an absolute understanding of what the building is. It takes a lot of the guesswork out of the bidding process and it's been a vital tool at Hudson Yards, as it was at the World Trade Center rebuild, as it is on One Vanderbilt and as it is on all of our major projects we're doing across the country.
Q: What are some challenges you're facing and how are you working to overcome them?
BADAME: Certainly in New York City the challenge is whether people do work union or nonunion. We have historically been a union contractor, but by virtue of our clients we have had to move to an open shop position, which is a combination of best values. So the union and nonunion compete and the best value ultimately wins.
Because the unemployment rate is low — below 4% — we are all starved for talent, particularly in the areas of MEP [mechanical, electrical and plumbing], project managers and superintendents. There's a feeding frenzy of companies when that level of talent becomes available. The good news is we are seeing double-digit growth. We have about $4.5 billion of new wins so we have to always keep the good talent. We have to incentivize our talent and we do that by allowing them to participate in the upside of projects where they're really partners with us. They're not just employees. They don't just get a paycheck. They profit on the upside if a project goes extremely well.
Q: What's next for the building construction business?
BADAME: I think the commercial business in the U.S. is strong. I think the condo market is relatively flat. I believe aviation and infrastructure are starving for work product. I believe healthcare is relatively flat or slow. I see residential affordable housing on the upswing, not just in New York, but across the country because it's an absolute need. I see hardening to protect us from storm surges and from disasters.
We have to do things better. We have to have better master plans. But as with everything, it takes time and money. It takes leadership. We are in an area [New York City] that would've had two new tunnels complete by 2019 and because of political obstructions things didn't work out well. This area in the northeast is starved for those types of projects that absolutely should be done before the price tag becomes too prohibitive and to the point where things have to be done. They are [projects that] should be done as opposed to [projects] that have to be done.
Q: What have been biggest changes in the industry throughout your career?
BADAME: People come into the business and don't necessarily want to stay in the business forever. They like to come in for a few years, get experience and go and try to do other things. I am probably a product of old-school mentality [from a time when] people came in happy, climbed up the ladder and don't miss any rung on the ladder. I think a lot of the folks today want to step on the bottom rung and then skip a few steps, but that never works out well. They always have to come back and retrace what they should've done in the past.
I have been with this company since 1985 and I certainly want to retire with this company. But I'm not sure that that sentiment is the same for all newcomers; [some] millennials coming into the field would rather come and leave and go elsewhere and come back.
We need a solid base because in our business we sell people. We have to sell people to start a project and to end a project so it doesn't bode well for us or our clients when people on both sides do not stay through the end. That's a challenge and that's why I started having our employees as partners so that they profit financially on the successful jobs. It gives them a reason to stay.
Q: How do you define success?
BADAME: For me personally success is to win work, to manage work, to execute work, to incentivize employees and have owners call us and recommend us for the next project. That's always the success. Getting the next job. Having repeat clients. Having a dedicated staff of employees who are loyal and want to stay for the duration of their careers. If I don't have any of those then I cannot succeed.
Follow Laurie Cowin on Twitter