Sterling Construction Company, Inc.

Building┬áAmerica from the ground up┬áKeith Regan learns how Sterling Construction CompanyÔÇÖs approach enables it to win jobs through competitive bids but remain viable through efficiencies gained from experience. Sterling Construction Company, Inc. got its start half a continent away, in Michigan, where a pair of brothers, Richard and Jim Manning, founded it in 1955. Drawn to Texas in the late 1970s by the booming economy, the firm originally focused on utility construction, but during the last two decades it has added paving and highway construction capabilities. The result is one of the stateÔÇÖs largest and most competitive builders of roads and related infrastructure, a firm that doesnÔÇÖt shy away from the competitive bidding process but instead uses a unique internal structure to give it the best chance to win jobs while remaining profitable. Today, JimÔÇÖs brother Patrick Manning and Joseph Harper lead the company. Approximately 68 percent of SterlingÔÇÖs work now consists of highway construction and improvement work in Texas and Nevada, with the rest coming from local infrastructure work in Texas, says vice president Brian Manning. The firmÔÇÖs capabilities include paving, concrete placement, and concrete and pavement recycling, as well as pipeline installation, excavation and construction work on water and wastewater pipeline projects.Sterling operates through Texas Sterling Construction Co. (Texas Sterling) in Texas and through Road and Highway Builders LLC in Nevada. Sterling has offices in Houston, San Antonio and Dallas, Texas, and Reno and Las Vegas, Nevada. Regular clients include the Texas Department of Transportation (TxDOT), the Nevada Department of Transportation (NDOT), and the Cities of Houston and San Antonio.┬á While some companies might avoid the competitive, public bidding process for such a large portion of its work because of the pressure to submit low-cost bids so frequently, Sterling embraces the approach. ÔÇ£One of the things thatÔÇÖs unique about us and our approach is that all our project managers are also involved in formulating and submitting bids,ÔÇØ Manning says. ÔÇ£TheyÔÇÖre out in the field, overseeing projects every day, so they have a good handle on what the price trends are and what the bids are coming in at on similar projects. This means weÔÇÖre able to put out competitive bids on every project we target. We believe weÔÇÖre good at knowing what things are going to cost us and whatÔÇÖs going on in the marketplace. Between accurate pricing on bids and efficiency, we believe we can be effective in the public construction space.ÔÇØCommodity prices have risen in recent years, but Sterling has been able to lock in prices on asphalt, concrete and other materials using purchase orders that are filled as soon as a job is awarded in order to avoid cost escalations.Among other contracts, Texas Sterling is currently in the midst of a major project for TxDOT on US Highway 59 that extends work the firm has done in the past. The expansion is meant to foster economic development in the region northeast of Houston. Overseen by project manager Greg Garrison on behalf of the firm, the $58.6 million project involves widening a 4.8-mile section of US Highway 59 from four lanes to eight lanes, widening several frontage roads from two lanes to three lanes, and installing related storm sewer and signal improvements. Also known as the Eastex Freeway, the highway connects the city to fast-growing suburbs and has opened new areas to development, says Manning. The project is one on which TxDOT has authorized the use of concrete and pavement recycling and reclamation, a technology that Texas Sterling has invested heavily in through the purchase of capital equipment. RAP (recycled asphalt pavement) has gained favor as a more green approach to highway reconstruction and avoids sending worn-out roadway to landfills or using it as fill, notes Manning.┬áÔÇ£We saw that this was a technology that was gaining steam, and as the agencies began to embrace it, we made some significant equipment investments to give us that capability.ÔÇØ Keeping projects on schedule is another way that Texas Sterling remains competitive. For example, the Eastex project includes significant early-completion incentives. The firm can earn as much as $37,500 per day for up to 20 days for completing work early. Although the total payout is capped for the overall work, the financial incentives provide significant motivation for the firm to keep work on schedule, with TxDOT, in turn, eager to have the new highway capacity added to the region, where traffic tie-ups are impeding development and growth. However, the need for expanded highway capacity also adds challenges to the construction process. In particular, building overpasses without disrupting traffic poses a logistical dilemma, one solved by compressing work on each of two such projects into 70-day periods, with a 30-day resting period between the two projects. This approach was worked out between the firm and TxDOT, which works closely with contractors on project planning and logistics. Manning is hopeful that the stimulus bill signed by President Obama in February will help provide a boost to infrastructure work in the Lone Star State. In fact, the firm is preparing to bid on several projects that appear to be on the fast track as ÔÇ£shovel-readyÔÇØ work, which the bill is aimed at jump-starting. Still, even if billions of new dollars find their way to Texas, a significant amount of unfunded work will remain on the drawing board, he adds. Based on the American Society of Civil Engineers Texas Report Card, the highways in Texas grade out at a D, but transportation officials can only fund about 40 percent of the work needed to improve that standing.┬á ÔÇ£As a country, we have a lot of infrastructure work that has been ignored, deferred or just not funded over the years,ÔÇØ says Manning. ÔÇ£A more comprehensive transportation plan is whatÔÇÖs really needed to tackle the infrastructure backlog. The current US Transportation Bill needs to be reauthorized in September 2009 to further stimulate the economy.ÔÇØIn January 2009, TxDOTÔÇÖs 2030 Committee submitted its draft report of the transportation needs of Texas. The report states that Texas needs to spend approximately $313 billion (in 2008 dollars) over the 22-year period from 2009 through 2030 to improve congestion and safety and to maintain economic competitiveness on its highways and roads.Manning concludes, ÔÇ£Based on TxDOTÔÇÖs current budget, the recently enacted stimulus bill and what the Texas legislature needs to do to meet the challenges described by the 2030 Committee, we anticipate that Sterling will have a strong opportunity to help build American from the ground up.ÔÇØ ÔÇô Editorial research by Joe Louis┬á