XL Construction estimates that an impressive 90% of its 2019 business stems from customers who come back to the firm with bigger and more complicated projects.
“Our clients have gotten to know our people and trusted us with larger and larger projects,” says Eric Raff, chief executive, and one of two XL founding partners. “It has been a big factor in our growth.”
XL saw record revenue last year, bringing in $671 million, a 39% jump year over year. In addition to its solid track record with ongoing clients, the Milpitas, Calif.-based contractor credits its success to its workforce, which continues a 12-year safety run of 6.5 million man-hours with no lost-time injuries and zero lost workdays. Those are among the reasons ENR California selected XL as the region’s 2020 Contractor of the Year.
The firm, with 380 employees and 250 craft workers spread across five California offices, also has expanded its business beyond a focus on life science and health care into office buildings, education and civic work. In October, XL will open its new Oakland headquarters.
A case in point for XL’s many repeat clients is Google Inc. XL started working with Google four years ago to build and operate the company’s R+D facility, with a focus on best practices and construction materials. XL has 17 architects, engineers and superintendents working in the facility, which invites materials manufacturers from around the world to discuss the future, says David Beck, XL’s co-founder with Raff and the head of Google’s R+D lab.
The Google-XL partnership has led to building two mass timber projects. “We have taken the mass timber dialogue from the R+D lab and put it in place on a real office building,” Beck says. XL also designed a steel-framed office building with the same specs for comparative analysis and seeks to learn more as construction starts. With 70% of the timber already fabricated and on site, Google’s five-story, 185,000-sq-ft building will begin construction this summer. Beck says the biggest challenge has been working with local agencies on permitting, fire regulations and seismic coding for mass timber structures. This is the first mass timber building for Google and the largest one in California, and it led to planning for a second, larger mass timber structure for Google.
“XL Construction has been a thoughtful and diligent innovations partner, including being the builder for Google’s first mass timber office project in the South Bay,” says Michelle Kaufmann, Google architect-in-residence and the firm’s head of R+D for the built environment. “We have been working with XL Construction on this new construction methodology as a way to dramatically reduce carbon and waste while creating an extraordinary user experience.”
The partnership reflects Google’s trust in XL to handle projects that are larger and more technically complex, says Richard Walker, XL president. Not only has the collaboration played a key role in improving XL’s technical knowledge, but with ongoing bigger contracts and new styles for XL projects, the work serves to demonstrate XL’s expertise to prospective clients.
A Growing Portfolio
Meanwhile, XL’s health care portfolio continues to grow. In November, the contractor completed the $96.4-million El Camino Hospital’s Taube Pavilion and Scrivner Center for Mental Health & Addiction Services in Mountain View, Calif. The 52,000-sq-ft facility, which is targeting LEED Gold, has 36 beds and is wedged into a tight footprint, with only 5 ft between it and an existing building. “If you can imagine trying to build a facility like that on an operating hospital, it presented quite a bit of challenges,” says Alan Laurlund, who oversees XL’s health care group and Sacramento operations.
He adds that XL created the Taube building with a welcoming feel to help an expected 1,400 people move through the facility annually, a point of pride among XL employees. “For me, and a lot of us in the company, if I ended my career today, I’d be good,” he says.
XL’s Walker says that attitude fits with the contractor’s mission: “We build to improve lives.”
“At the end of the day it boils down to our people—the commitment the people have to each other, the growth of the individuals within the company—and working with our clients and trade partners,” he says. “The combination of having a great culture and really strong people has been really consistent, both from a technical and cultural standpoint.”
XL’s success has produced more technically challenging projects as well, says John Boneso, XL’s head of the science and tech business unit, who points to design-build contracts where collaboration and communication is key. XL has found a sweet spot in working within or near existing facilities where coordination proves paramount, he says.
But XL’s growth, while buoyed by Google, comes from more than megaprojects. It stems from a diversified portfolio carefully crafted across several market segments and varying project sizes. The firm’s smaller projects include the County of Santa Clara’s 37,000-sq-ft Animal Services Center, which includes a community center and park and is set to finish in 2021, and an upcoming navigation center to help San Mateo County’s homeless population. Walker says these projects give younger employees a chance to gain leadership and technical skills sooner than if only large projects were on the docket. It also ensures the company can work on projects that help the community, something that employees have told leadership they value.
“It is fulfilling for them and good for our company to grow in soft skills rather than just technical skills,” Walker says. “We don’t want to lose track of that just because of the big projects.”
XL also serves as one of Kaiser’s preferred contractors in Northern California, with projects from downtown San Francisco to Modesto and Berkeley, Calif.
“I do think of it as a relationship,” says John Ransom, vice president of construction acquisition for Kaiser. “It is not them treating us as a good client, it is their honest partnership and relationship we appreciate with XL.”
Phil Clevenger, Kaiser executive director of construction acquisition in Northern California, says XL develops an attentive culture from top to bottom, one that is responsive and easy to work with. Clevenger says the collaboration between Kaiser and XL shines during preconstruction. He appreciates XL’s accurate estimates, transparency and familiarity with Kaiser’s needs. “Throughout, they have become reliable and predictable, and that is really important,” he says. “They are very open and transparent. Together our projects are successful.”
Martin Sharpless, a former project director for client AstraZeneca, worked on a soup-to-nuts tenant fit with XL that transformed a typical 100,000-sq-ft office building into offices, laboratories and lab support spaces. AstraZeneca originally considered XL based on the contractor’s safety record. Sharpless says XL made major decisions rapidly, with cost and impact considerations, especially early in the design phase. The original contract more than doubled, but the work was still done within the same time frame. “It was a fairly major feat,” Sharpless says. “XL leaned in with us pretty efficiently. Up against national and international firms, they blew them out of the water. I’m not surprised they are in the position they are in.”
Walker says opportunities still exist for new projects in the pandemic-changed world, but project types will shift as everyone from health care providers to office users change what they want according to their short-term and long-term needs.
“When you look at the construction industry, we have great competitors,” Walker says. “It is not enough to be strong builders, you have to be that, but it is how a team approaches things and goes about working with a client. You need to have really great people focused on other people, not just themselves. That is what we have worked hard at, what we are focused on and what differentiates us.”