2008 Contractor of the Year

Turner-ing Corner On Complexity

by Craig Barner

It was a dicey assignment, and Turner Construction Co. was being considered for it.

In the early 2000s the University of Chicago was planning a new home for its highly touted Graduate School of Business, an academic program that has produced six Nobel laureates, more than any other similar curriculum in the world.

An element of the programming worried Michael Szkatulski, senior managing director of Chicago-based Mesirow Financial Real Estate, the owner’s representative.

“University officials programmed great architecture, and they wanted the building to be designed by someone who is a notable architect,” he says. “They expected that the quality of the architecture would be as good as anything built in the country.

“Those are great ambitions.”

A problem of upscale architecture of the type being considered is that it creates huge financial risk, says Szkatulski, who is an architect by training and formerly by practice. Upper-end projects at major universities have come in at double or more than double the original cost estimate.

Projects with blown budgets are criticized but more tolerated on the East Coast, where pockets are deep, than they are in the Midwest, where financial discipline is underlined.

“This is a Midwest organization that expected cost performance to be in-line with budgets,” Szkatulski adds.

More important, the U. of C. needed to stretch its dollars because it has embarked on a massive building program. The school is expected to set an institutional record for construction volume of more than 3 million gross sq ft by the end of the decade.

Turner was up against “three or four of the top construction managers” in the industry for the plum assignment, and all the candidates showed “tremendous” portfolios. Szkatulski says.

He says that during interviews, one of the questions was, “‘Firm-wide you got the experience. Now, how are you going to translate that experience in Chicago with this team?’”

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A key design element that could have made the budget run red was a six-story-tall, glass-enclosed winter garden with structural support provided by four, 40-ft-tall steel columns that fan out at the top to form funnels like tulips. The design of the columns was so precise that there was “no tolerance” for error in the steel erection.

Proforma answers were given by the candidates except Turner, Szkatulski says.

The firm said it would bring onsite for months experienced project managers who had worked on several different projects here and abroad with immense skylights.

“They reached into their national and international experience and built their team by bringing that experience into the job,” he says. “That was impressive.”

Turner was awarded the project, and the $125 million Charles M. Harper Center (formerly, Hyde Park Center) opened on time in 2004.

More important: The project was delivered within budget, Szkatulski says. New York-based Rafael Viňoly Architects PC was the designer.

Construction and Complexity

The story is more than a satisfying sketch about a contractor that met a key project goal on a difficult assignment. It demonstrates how important it has become for contractors to meet complex and intricate goals.

Owners are pushing for structures that deliver increasingly complex services and greater longevity in quick turnaround times. Architects are designing ever more intricate buildings with atypical geometries and materials. Society is asking for difficult-to-engineer sustainable projects that impact the environment minimally. And, employees are demanding relevance and satisfaction in their jobs.

“We are very focused on clients with complex building programs,” says Stephen Fort, Turner’s vice president and general manager in Chicago.

It is partly because of Turner’s ability to meet complex business and technical demands that Midwest Construction is naming the firm its 2008 Contractor of the Year, the publication’s fifth.

“There are several projects they’ve been involved in over the years that have had structural intricacies to them that have led to their success,” adds Robert Cox, professor and head of the department of Building Construction Management of the College of Technology at Purdue University in West Lafayette, Ind.

Some recent examples:

• Forward-Looking Engineering: The $30 million Ford Motor Co. Engineering Design Center, a LEED-certified academic facility in 2006 on Northwestern University’s Evanston campus, features several advanced sustainable features, including a raised-floor, air-distribution system. Fifteen air columns, or voids, supply air, and only minimal duct is used.
• Foundational Expertise: About 950 grouted-steel tiebacks were installed through three below-grade levels as part of the earth-retention system of the $165 million Robert H. Lurie Medical Research Center at Northwestern’s Chicago campus in 2005. Earth retention was needed to make the structure’s foundation secure and avoid causing damage through shifts in the ground to adjacent structures in the building-dense Streeterville neighborhood.
• Planning Savvy: The $600 million reconstruction of Soldier Field in 2002 would have normally taken 26 to 28 months but was done in 20 months so the Chicago Bears did not spend more than one season away from their traditional home.

“We had $38 million-a-month bills on that project,” adds Mark Simonides, vice president and operations manager.

Turner’s financial performance in the Midwest has been admirable.

In 2007, the company had $783 million in billings in the four states where Midwest Construction circulates, up 1.5% from 2007’s $772 million.

Though the increase seems mediocre, the rise is noteworthy given the near-recessionary business environment. In the Chicago area alone, starts have been projected by McGraw-Hill Construction, publisher of Midwest Construction, to have fallen 10% in 2007, to $19.5 billion from $21.7 billion in 2006.

The executive team in Chicago includes five at the vice president level, with Fort leading the group and Rick Blair as manager of business development. There are 208 employees. In Indianapolis, Michael Kaiman heads a group of three at the vice president level.

First Project in 1920s

Chicago has played a long role in the history of the New York-based Turner and a key part in its expansion.

“The company decided it wanted to move west, and Chicago was the hub for that growth,” Fort says.

Turner’s first project in Chicago was a warehouse and garage for the Great Atlantic & Pacific Tea Co. in 1924 22 years after the firm’s founding in New York. It has completed approximately 550 projects since then.

Three projects established Turner as a key player in Chicago’s construction scene the 82-story Aon Center (formerly, Standard Oil Building) in 1973; United Airlines’ Terminal One at O’Hare International Airport in 1988; and the reconstruction of Soldier Field for which the firm was part of a joint venture with Southfield, Mich.-based Barton Malow Co. and Wheeling, Ill.-based Kenny Construction Co.

“People ask me why I have been here 25 years,” says Simonides, who oversaw the latter two. “First, it’s the people, and second, it’s the complexity of the projects.”

Turner had its first project in Indianapolis in 1928 for the U.S. Gypsum Co., but did not establish an office there until 1995.

The company also has offices in six other Midwest cities, including Detroit and Cleveland. Nationwide, Turner has 46 offices in 25 states. Internationally, parent company Hochtief AG of Essen, Germany, has offices around the world.

The firm focuses on several markets in Illinois and Indiana, including higher education (at least 14 major projects since 2000); K-12 education (9), health care (8), institutional-public assembly (8) and commercial (6). It started the Special Projects Division to tackle small and interior projects, with Vice President Mark Iammarino heading the group and Dan Cronin as operations manager.

“If you’re not focused on what markets you are going to serve and not clear in you’re strategy, you try to be everything to every one,” Fort adds.

Turner has established a reputation for reliability among owners, says Boyd Black, director of project management services for the Office of Capital Programs at the University of Illinois at Chicago. Confidence was generated among department heads in the school’s College of Medicine when the $145 million College of Medicine Research Building was under way in 2005 due in part to honesty.

“Fairly early on, the department heads didn’t feel it was necessary for them to attend or have a rep attend regular meetings because there was a confidence of the project being done in a professional manner and of needs being met,” Black says. “If they (Turner) didn’t have an answer, they didn’t try to bluff their way through. They’d say, ‘We don’t have the answer, and we’ll get it for you.’”

The kudo is significant in part in part because the U. of I. has the biggest medical school nationwide in terms of enrollment and is mindful of its reputation.

Relevance, Training and 40-Year Careers

Fort says Turner’s success in the Midwest is due partly because of its focus on employees. (See the sidebar stories contained in this feature.)

“When new employees come on board, one of my chief responsibilities is to sit down with them and tell them that this is the first day of the next 40 years of their life,” Fort adds. “That seems overwhelming to them, but that’s what we are trying to create here.”

Turner had 88% staff retention in Chicago in 2007, he says.

The number is slightly above average, says Jeff Robinson, president of Saline, Mich.-based PAS Inc., a construction consulting firm. The average in August 2007 for companies similar in size to Turner was 85.6%.

Outside on-the-job training, the company does a number of things to ensure continuing education. Staff participates in half- to whole-day courses usually taught by other Turner staff at a center in the western suburbs, corporate training or the Internet-based Turner University training. The company also offers tuition reimbursement.

SIDEBAR 1

A Green Turner

Turner Construction Co. is pursuing several sustainable initiatives in Chicago.

Leading the effort is Project Executive Dan Harmon, who gained a lot of experience by overseeing the Ford Motor Co. Engineering Design Center project, a LEED-silver-certified facility on the campus of Northwestern University in Evanston.

He is sitting on the board of directors of the local chapter of the U.S. Green Building Council. The company is also participating in Mayor Richard Daley’s Green Business Advisory Committee.

Green building is increasing in Chicago where permits are expedited for qualifying sustainable buildings, says Bill McCaffrey, director of public affairs for the Chicago Department of Building.

Only 19 green permits were issued in the city in 2005 when the program was initiated, he says. In 2007, 142 green permits were issued.

Turner was a sponsor of the Green Building Council’s national convention in Chicago in November, Harmon says. The company also sponsored conferences nationwide held in four different cities in 2006 after making a commitment to green building at the Clinton Global Initiative Meeting in 2005.

The company is taking a look at its carbon emissions on the jobsite and through its daily operations. For instance, Harmon says employees who get a company car as part of their benefit package can elect one of two hybrid cars, a Ford Escape or Toyota Prius.

Ten project managers are LEED certified in Illinois and three in Indiana. Turner has 10 green projects overall in Illinois and two in Indiana, representing $494 million and $327 million in dollar volume, respectively.

Two LEED-certified projects in Chicago were fairly substantial, the 40-story 1 S. Dearborn tower (silver) in 2006 and Exelon Corp.’s headquarters (platinum) in 2007.

“Turner’s impact worldwide is phenomenal,” says Robert Cox, professor and head of the department of Building Construction Management of the College of Technology at Purdue University in West Lafayette, Ind. “If they take this LEED culture in their company, I can see it having a wide-reaching impact.”

The LEED waves are already spreading. Harmon says the company is requiring its major subcontractors to have one person on staff who is LEED certified or completes a class in sustainable building offered by Turner.

“We can’t be successful unless our subs our successful,” he says.

SIDEBAR 2

Turner’s Community

The year 1968 was a watershed year in American cities, especially Chicago, in part due to tragedy.

A 28-block stretch of West Madison Street burned for days as rioting and looting consumed the area in the wake of the assassination of the Rev. Martin Luther King Jr. Forty years later, the West Side is still struggling to recover.

The same year Hilton Smith, senior vice president of community affairs in Turner’s Cleveland office, started a program, the Turner School of Construction Management, to train historically underrepresented groups to grow and succeed in construction through mentoring.

Locally, Turner is partnering with the city of Chicago and other firms to develop capacity among historically underrepresented groups through the Turner School, says Stephen Fort, vice president and general manager. Participants learn about planning, safety, accounting, estimating, financing, marketing, contract law and bonding during the nine-week course taught by Turner staff or outside sources.

Since starting the program in 1988, more than 1,000 people have been graduated, Fort says.

“We follow up with those firms participating in the program,” he says. “We put together a mentor-protege program to make sure they’re progressing after that school.”

The company has awarded contracts to businesses owned by historically underrepresented groups as joint-venture partners or subcontractors. Since 2000, the Illinois and Indiana offices have awarded nearly $750 million to minority- or women-business-enterprise companies.

Turner pulled out of two suits the former Builders Association of Greater Chicago now, the Builders Association filed in 1996 against two set-aside programs, one by Cook County and the other by the city of Chicago, to remedy discrimination against minority-and women-owned businesses in the construction industry, Fort says.

“It was not consistent with where we were,” Fort adds. (Cook County’s set-aside program was struck down in the U.S. District Court for the Northern District of Illinois by District Judge John Grady in November 2000, and his decision was upheld in the U.S. Court of Appeals for the Seventh Circuit by Appellate Judge Richard Posner in July 2001; Chicago’s was maintained in the U.S. District Court with modifications ordered by District Judge James Moran in December 2003.)

Another key program in Chicago is the Turner Charity Foundation established in 2000. It has raised more than $1.4 million for distribution to more than 50 philanthropies.

“That has been an enjoyable experience to watch our staff take ownership of that and grow it,” Fort says.

Finally, Turner participates in Youth Force 2020, a program with city schools to increase awareness of opportunities in construction, and the ACE Mentor program, a national program with the same emphasis.

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