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9/18/2002
01:32 PM
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Construction & Engineering:
Builders Get Back To Basics

Construction companies focus on boosting revenue in a slow economy

Last year, construction companies turned their attention inward, focusing on IT projects that let them finish jobs faster and more efficiently. This year, big engineering and building companies are looking outward and building new relationships with customers to boost revenue. At the same time, the industry, which has weathered the economic storm better than many others, is revisiting IT strategies with an eye toward saving money.

Parsons Corp. signed a deal potentially worth $1.3 billion to upgrade national air-traffic control structures, runways, and navigation systems after last September's terrorist attacks. The Federal Aviation Administration, which awarded the contract, will be one of the first customers of Parsons' new project office, with about 60 staff members who sell the company's homegrown project-management software to clients. ChevronTexaco Corp. and Verizon Communications Inc. are also customers.

Parsons also is saving money by paring the list of vendors it buys from and cutting better deals with its best suppliers. CIO John Thomas says Parsons saved $1.5 million this year through a new vendor-management program that aims to renegotiate contracts with IT vendors and centralize more IT buying. "People were overbuying licenses, not sharing licenses, and overpaying," Thomas says.

The IT department at Gilbane Co., a $2.6 billion-a-year subsidiary of Gilbane Inc., is also extending its construction-management expertise to find fresh revenue in a low-margin business. A new consulting unit will likely break even this year and generate about $2 million in sales by helping customers, including Pfizer Inc. and the American Red Cross, manage software, IT assets, and high-tech vendor relations.

Bechtel Group Inc., the $13.4 billion-a-year engineering and construction company, earlier this year canceled a contract with EDS, which had managed Bechtel's PCs, departmental servers, and part of its WAN since 1995. CIO Geir Ramleth, a company veteran who took over the top IT job in June, says Bechtel now can be more agile at getting IT up and running at its worldwide job sites. EDS was good at managing infrastructure in Bechtel's permanent offices, Ramleth says, but not at field sites, which Bechtel managed itself. "When you do 50-50, you end up getting a very costly overlap," he says. It's this back-to-basics approach to IT that suits lean times.

INDUSTRY LEADERS
RankCompanyRevenue in millionsIncome (loss)
in millions
IT
employees
24Parsons Corp.$2,500386
33Centex Homes$7,748$382101
62Beazer Homes USA Inc.$1,805$7551
75Gilbane Co.$2,60054
210Bechtel Group Inc.$13,4001,680
228Beers Skanska Inc.$15,603$21,400
271Louisiana-Pacific Corp.$1,657($172)95
291Clayton Homes Inc.$1,199$12442
293Pulte Homes Inc.$5,381$301210
298Toll Brothers Inc.$2,230$21463
326Lennar Corp. $6,029 $418 130
363McCarthy Building Cos. Inc. $1,300 $10 16
379Aecom Technology Corp. $1,500 -- 245
406Day & Zimmerman Group Inc. -- -- 130
412Emcor Group Inc. $3,420 $50 155
415Shaw Group Inc. $1,539 $61 135
446Foster Wheeler Ltd. $3,315 ($309) 350
456Standard Pacific Corp. $1,375 -- 22
462Granite Construction Inc. $1,548 $51 70
468Barton Malow $1,251 $7 21
471Mortenson Co. $1,100 -- 28
486DPR Construction Inc. $1,800 -- 31
487Lafarge North America $3,323 $234 250
488BE&K Inc. -- -- 5,000
496D.R. Horton Inc. $4,456 $407 80
Financial data is from public sources and company supplied.
Revenue is for latest fiscal year.
Employee data is from InformationWeek 500 qualifying survey.

IN A NUTSHELL
INSIDE COMPANIES
Average portion of revenue spent on IT
2%
Companies providing customized solutions to customers
30%
Companies seeking IT patents, trademarks, or copyrights
29%
HOW COMPANIES DIVIDE THEIR I.T. BUDGETS
Hardware purchases
19%
Services or outsourcing
9%
Research and development
5%
Salaries and benefits
37%
Applications
18%
Everything else
12%
INDUSTRY FINANCIALS
Average year-over-year revenue change
7.5%
Average year-over-year net income change
4.1%
DATA: InformationWeek research
See year-over-year shifts in business-technology practices for this industry. Compare and contrast this year's data with last year's.

Return to the 2002 InformationWeek 500 homepage

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