Highland says that one area that has helped boost the firm into the No. 1 position has been increased opportunities in water and wastewater construction.

McCarthy recently completed a technologically advanced water-purification facility in Oxnard that will be LEED certified. It also has started work on the initial expansion of the groundwater replenishment system for the Orange County Water District.

Highland adds that by diversifying into new markets, "We can leverage our unique self-performance capabilities and are well-positioned for growth as the economy prepares its recovery."

McCarthy's experience in public-sector projects, particularly health care and education, also immersed the company in the world of California regulations. "These types of projects require specific entities to regulate construction from design review all the way through project closeout," says Highland.

"These entities struggle with California budget shortfalls every day, which impacts their ability to efficiently administer projects," he adds.

As public projects continue to struggle with funding, residential construction—one casualty of the Great Recession—is making a comeback in the Golden State.

For example, two of the top 10 contractors broke ground in 2011 on major apartment complexes in San Francisco. No. 6 Swinerton, with designer Handel Architects, is working on the 754-unit, $165-million 10th and Market project.

No. 9 Webcor, with Christiani Johnson Architects, is working on the 326-unit, $64-million 333 Harrison St. complex.