Guy Lawrence / ENR

Construction and program management has never been so big as it is now. As projects get bigger, more complex, more demanding and the talent pool among owners dwindles, the need for professional construction-management skills has become intense.

For ENR’s Top 100 Construction Management/Program Management Firms, 2007 was a watershed year. The Top 100 generated $12.07 billion in revenue from fee-based construction and program-management work, up an amazing 38.4% from 2006’s totals.

The 2008 Top 100: Overview Design-Build Firms  |  Rankings CM-for-Fee Firms |  Rankings CM-at-Risk Firms  |  Rankings Top 40 Program Managers Complete Report

“It’s a case of baby boomers retiring from owners’ management teams and not being replaced, and those who are left are not used to handling huge projects,” says Blake Peck, COO of McDonough Bolyard Peck. “With the talent shortage out there, it’s tough to recruit project managers, particularly in the public sector.” This has left owners with little alternative but to outsource much of their project and program-management needs, he says.

Firms doing CM and PM on a fee basis are trying to read the economic tea leaves. For many, there is good news and bad news. “Residential is very bad, but government work is strong,” says Mansour Aliabadi, CEO of Vanir Construction Management. He says voters continue to approve school bond issues. “We are having three waves of bond issues this year in California alone,” he notes.

The mergers and acquisitions trend is alive and well among CM firms, just as it is with designers and contractors. One of the most active acquiring firms is Hill International. To help expand its international presence, Hill recently acquired John Shreeves Holdings, London, U.K., and Gerens Management Group, Barcelona, Spain.

But Hill is not through. “There’s a lot more CM/PM firms out there available,” says David Richter, Hill’s CEO. “We could close on as many as five or six this year.” He says acquisitions have helped Hill avoid personnel shortages. “When you acquire a firm, you can pick up 100 top people at once, rather than hiring them one at a time,” he says, adding that Hill will continue to concentrate on CM and PM. “We can attract people and clients because they know that PM is our focus, and not just a side business.”

The federal market increasingly is looking to program managers to help coordinate massive programs. One sector is the U.S. Dept. of Defense’s Base Realignment and Closure program. Peck says his firm is providing program-management services for BRAC on several programs, including the Walter Reed Medical Center project in Bethesda, Md., and assisting on the BRAC program at Fort Belvoir, Va. “These are all $1-billion programs,” he notes.

Vanir increasingly is getting involved in the health-care and infrastructure markets, Aliabadi says. For example, Vanir was selected as program manager on plans by Alameda County, Calif., to replace Highland Hospital in Oakland. The firm also is program manager for the California Dept. of Corrections’ $2.7-billion plan to add 16,000 beds to its system.

For some PM and CM firms, integrated project delivery may indirectly turn out to be a boom market. “When you have the owner, designer and contractor all signed up to a single contract, the owner is going to have to be responsible for many of the decisions made,” says Peck. “So if you, as an owner, don’t have the in-house expertise to make those decisions, you better hire someone who does to help with those decisions.”