2005 Contractor of the Year
A Future with McHugh

by Craig Barner

Want to understand the past and future of construction in Chicago?
Look at James McHugh Construction Co.

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Consider first the history of the South Side firm credited with a number of building innovations.

In the 1960s, McHugh faced the task of constructing architect Bertrand Goldberg's corncob-shaped Marina City residential towers at 300 N. State St., said James P. McHugh, chairman and grandson of the founder.

Rather than steel, reinforced concrete was used to form the structures due in part to the petal shapes of the dwelling units. The complex curves led to the first use in the United States of fiberglass forms.

"It was suggested we try fiberglass forms with special shapes by [architect] I. M. Pei," McHugh said. Pei was doing work in the city at the same time Marina was under construction.

The 60-story Marina City towers were so sizable that they were believed to be the tallest concrete structures in the world. To lift the substantial concrete quantities, a climbing crane, a technology already in use in Europe, was employed for the first time in the United States.

Ironically, the bold decision to use the technology to raise concrete efficiently to an elevation of 590 ft. originated from a routine event.

"A salesman came around and told us what he had," McHugh said. "So we said, 'OK, let's try it.'"

Today, the Marina towers are instantly recognizable Chicago icons.

Also today, McHugh is contributing to the city's future.

The firm's impact on the area's skyline in recent decades is major, including the Presidential Towers residential development, Water Tower Place retail emporium and Lyric Opera renovation.

The company's reputation is solid due in part to its managers in the field and executive team. McHugh has nurtured expertise in areas that include high-rise construction, K-12 school construction and others to land projects that are noteworthy in scope and design. And, the company's financial performance is sound.

For these and other reasons, Midwest Construction has selected McHugh for its Contractor of the Year honor, the second ever.

McHugh plans to keep moving forward, said Bruce Lake, president.

"We need to do other things to stay in the forefront of Chicago construction," he said. Design-build and infrastructure construction may be areas of increasing concentration.

Immigrant Roots

Like a lot of successful companies, McHugh is a business whose humble roots found fertile soil on Chicago's South Side.

James D. McHugh, a bricklayer from County Mayo, Ireland, founded the company in 1897, just four years after Chicago's reputation as a world-class city was cemented with the World's Columbian Exposition. By the 1920s the firm was offering general contracting services and was noted for its masonry work.

Today, the company's influence on Chicago and beyond is strong. In 2004, McHugh finished No. X in the Midwest with revenues of $289 million, a decline from 2003's No. 7 finish of $320 million in revenues.

"Those numbers might grow and they might go down a little," said Michael Meagher, senior vice president. "Being the biggest is not important to us. It's being the best in class."

Nationally, McHugh recently saw a rise in its status. In its May 2004 ranking, the most recent, Engineering News-Record, sister of Midwest Construction, listed the company as the No. 121 construction firm nationwide, a jump from the No. 158 position the previous year.

Margaret Ahrweiler, public relations director, said McHugh completed 11 projects in the Chicago area in 2004. They included the finishes on Millennium Park, the three-building Residences on Lake Shore Park condominium development on Lake Shore Drive and the renovation of two of the Illinois Tollway's over-the-road oases.

In January, the firm had 15 active projects, she said.

McHugh has the one location but has done work in Cleveland, St. Louis, Washington, D.C., and other cities. The company employs between 800 and 1,000 people.

It is likely that the bricklayer's chest would have puffed out in pride to know that fourth-generation McHughs are at work in the company. Jim and Patty McHugh, the children of James P., serve as the company's executive vice presidents.

The McHugh Method

McHugh's business strategy helps explain its triumphs.

The company's project managers have developed a reputation for quick project turnover and savvy.

The new academic wing and renovation of the existing 85-year-old building at York Community High School in west suburban Elmhurst was finished six months earlier than planned, an achievement at any cost but especially on a project with an $85 million price tag.

Daniel Krebsbach, vice president of Mount Prospect-based Advance Mechanical Systems Inc., praised McHugh's field personnel for their attention to the clock.

"They tend to move a job along rapidly," he said. "If it doesn't go smoothly and quickly but is allowed to just linger, we always lose money. They push a job, and that's good for us."

Operational autonomy is given to field managers, Lake said. They are not required to call the headquarters for permission for overtime, for discussion of an unorthodox solution to a construction challenge or similar matters.

"We try to select people who want authority to be the boss, and we give them that authority," James P. McHugh said.

"If [the project manager] has to go to the company to make sure he's got the OK for something, a good man resents that. They look for ways to get away from that kind of a company."

Continuing education is provided via numerous methods.

Estimating is the first step for many new employees so they can understand budgeting a project. Field staff attends monthly safety training.

Seminars on specialty topics are held, such as the recent session with Odenton, Md.-based Hayward Baker on foundation systems. Thirty people went to the recent World of Concrete show in Las Vegas to learn about improved machinery, techniques and products, and others went to a previous concrete show in Munich.

The knowledge strategy is having its effect. McHugh is a beacon of construction know-how in a metropolitan area brimming with quality project mangers.

As part of the $51 million Little Village High School on the southwest side of Chicago, Tom Smith, project manager, did meticulous calculations on the placement of 800 steel members that form a solar calendar erected as part of the project. Tom Conroy, also a project manager, accommodated the

Chicago Transit Authority's concerns about the safety and integrity of its below-grade and elevated mass transit lines near the $100 million State Place residential project.

And, Project Manager Joel Kuna mapped out the spider web of utility feeds beneath the $84 million Lancaster condominium project to ensure uninterrupted service to nearby buildings that depend on these services.

James Jenkins, an associate professor in the Department of Building Construction Management at Purdue University, ranks field personnel as a more important factor in a contractor's reputation than executive staff.

"They (owners) are concerned with who's doing the construction," he said.

"You can have a great office, but if things aren't getting done on the jobsite, then nothing is going to get done on the project."

Pulsing with Professionalism

Field managers hone their capacities, and this dedication to performance spills up into McHugh's executive ranks. Meagher, for instance, worked in estimating and project management for years before rising to the managerial level.

"He had to talk construction to people who were selling product so he knew construction," James P. McHugh said.

Some executives have 20 years with the firm in an era when the revolving door is the No. 1 sign of employee dissatisfaction.

The fine details are emphasized in executive performance. Patty McHugh and Meagher led the effort to train executives in communication effectiveness, deportment and dress.

"It was about 15 years ago when we became aware that there is more to construction than going out into a field and throwing stuff up, though that's a huge part of it," Lake said. "We really wanted to increase our professionalism and image. We realize clients reacted to that."

Lake, a veteran of many mud-splattered construction sites, counts himself as a successful graduate of the McHugh school of management.

"There are a lot of people like me who have an engineering background and who know everything about technology," he said. "But I lacked skills in communications. One thing that has helped my growth a lot is learning how to communicate, learning how to create first impressions and learning how to form teams."

Training has allowed McHugh to develop expertise in a number of project types, which include high-rise residential and hotel, K-12 schools and infrastructure.

A stronghold is residential construction, where attention to client demands, time management and logistical ingenuity are important. The company has recently finished the 56- and 37-story Grand Plaza apartment towers, the 52-level Park Millennium and 34-story 1111 S. Wabash Ave. condominiums.
McHugh has the contracts for the $84 million Lancaster and the $144 million Regatta, two towers under way in the $2 billion Lakeshore East development that could bring 5,000 new residential units to the Loop.

Making downtown appealing for living is a positive, said King Harris, senior executive for Chicago Metropolis 2020, a nonprofit founded by the Commercial Club of Chicago, a civic organization dedicated to strengthening the economic vitality and quality of life in the six-county region. Tax income bulks up the tax base, and the reduced mismatch between where people live and work keeps down traffic congestion.

"If you study American cities, downtown living is not a negative but a positive," Harris said. "A lot of central cities are losing population."

Additional units are needed because the city's population is projected to grow 13 percent, from 2.90 million people in 2000 to 3.26 million in 2030. The metropolitan population is also expected to surge, from 8.1 million in 2000 to 10.0 million by 2030.

Affordable housing is also a primary focus of planning organizations, Harris said. McHugh, reportedly the first in Chicago to form a joint venture with a minority contractor, is constructing 19 three-story buildings in the Roosevelt Square project on the city's southwest side, the site of the Chicago Housing Authority's former ABLA homes.

McHugh partnerships have been forged with Minority Business Enterprise/Women Business Enterprise firms that include Riteway Construction Co., II in One Contractors and Reyes. It recently set up a mentor-protege program with Raines, an African-American female-owned firm.

William Sokolis, president of Romeoville-based Kole Construction Co., a carpentry contractor, applauded McHugh for its bid ethics and contract administration.

"They don't go behind your back and try to shop the price down," he said.

Pushing Forward