Contracting firms, propelled by red hot markets in California’s major cities, continued to see revenue climb in 2014. The 86 respondents to ENR California’s annual survey of contractors reported $27.4 billion in revenue, a gain of 5.4% over the previous year. In two years, contractor revenue has jumped more than 22%.

Related Link:

Top Contractors Ranking Main Chart
(subscription required)

“We’re in the middle of a record year for securing new work, and have been able to be far more selective with the projects we pursue than in recent years,” says Jack Sample, California buildings district manager at PCL Construction Enterprises, which topped $1 billion in revenue during 2014.

Seven other firms reported more than $1 billion in revenue last year, double the amount in 2013. Swinerton Inc. spent its second year atop the ranking, bringing in more than $1.5 billion on projects such as the $350-million Trinity Plaza in San Francisco. Webcor Builders, last year’s ENR California Contractor of the Year, propelled its revenue skyward by nearly 40% in 2014.

Firms Diversify

Contractors on both the civil and building sides have benefited from the current boom. “In the past five years, our work throughout California has become increasingly diverse— the most it’s ever been in the nearly 100 years we have been building infrastructure in the state,” says Mike Aparicio, executive vice president at Skanska USA Civil, a division of Skanska USA Inc. The firm has seen revenue from projects in the state nearly triple in just two years thanks to multiple transit projects such as the $791-million Westside Subway Purple Line Extension. Revenue from the transportation sector as a whole rose 11% in 2014.

Water supply projects helped fuel growth among contractors as well. The sector grew by 35% during 2014. In the coming years, Aparicio sees even more investment flowing to the sector “as the drought has underscored another area that must be addressed for California to thrive for generations to come.”

Residential construction exploded in downtown Los Angeles and other urban centers. Multifamily revenue spiked more than 110% in the past two years alone. “We see this multifamily trend continuing at least through 2017,” says Steve Pellegren, executive vice president at Bernards. “Similarly, hospitality projects abound in Southern California.”

While opportunities expand, contractors keep a wary eye on potential pitfalls. “We have to be vigilant with regard to the subtrades and their ability to handle the ever increasing workload,” Sample says. “A subcontractor’s financial health, experience and availability of work crews is important in this active construction climate.”

Recruiters must also work harder to fill permanent positions with employees that mesh well with a contractor’s culture and values. “We are putting a lot of focus on retaining and recruiting top talent and maintaining a great workplace to ensure that we stay ahead of our clients’ needs,” says Richard Walker, chief operating officer with XL Construction.

Despite the healthy slate of projects, contractors such as DPR Construction still look for ways to “work more collaboratively and make a bigger impact on driving the efficiency of project delivery,” says Jody Quinton, the firm’s Bay Area regional manager. “Integrated team approaches are proving to have a positive effect on the industry and helping teams provide more predictable outcomes to customers.”