AECOM-URS Merger Creates Construction Services Dynamo

Building Big

Given that AECOM was founded in 1990, one might suspect the multinational construction, design-engineering and management-support services firm is a relatively newbie in a tunneling market that spans centuries. However, not only can the company trace roots back nearly 100 years, but it also touches a range of markets that include energy, transportation and water.

Officially, the company was founded when Richard G. Newman and a handful of Ashland Inc. employees merged five Ashland entities to form an independent firm under the name AECOM 25 years ago. Since then, AECOM has expanded through internal growth as well as acquisition of more than 40 companies. Most notably, AECOM acquired URS Corp. in 2014, creating a combined company with nearly 100,000 employees operating in more than 150 countries and more than $19 billion in combined revenue.
Today, AECOM is a publicly traded company that is ranked No. 1 on Engineering News-Record’s 2014 Top 500 Design Firms list. Additionally, the firm is ranked No. 1 on Trenchless Technology’s 2014 Top 50 Trenchless Engineers ranking.

The AECOM-URS merger achieved financial close in October 2014, with integrated operations beginning in January 2015. The fact that each company had approximately 50,000 employees makes this one of the largest construction firm mergers ever.

“There has never been an integration like this in our industry,” said Steven Kramer, vice president and director of tunneling for the Americas. “There are no similar examples from outside the industry that you might look to for ideas.”

While the integration is an ongoing process, the merger immediately creates an organization that has a broad network of expertise spread across a wide geographic footprint. The merger does much more than create an engineering and construction behemoth, officials say, as AECOM and URS bring very complementary assets to the table.

For example, AECOM had an established worldwide network while URS was more of a domestic company. URS had a stronger presence in the oil and gas, industrial and government sectors than AECOM.

The complementary nature is true among the legacy construction companies now under the AECOM flag. Washington Group (URS), Tishman (AECOM) and Hunt Construction (AECOM) offer diverse building capabilities. Washington is well known for its heavy construction, Tishman for buildings, and Hunt for stadiums.

Add to that AECOM’s financial and operations and maintenance arms, and you have a full service provider – a trait that sets the new AECOM apart from the crowd. “We set the vision to be the premier delivery firm and a full-cycle service provider – not just design and not just infrastructure, but also construction, finance and O&M – that is the differentiator for us,” Kramer said.

Tony Bouchard, executive vice president and leader of AECOM’s water business in the Americas, concurs. “Our ability to provide fully integrated delivery services in the infrastructure markets around the world is what sets us apart. Not all of our clients require all of those services, and we will continue to provide whichever services they may need, but the trend across the globe is for integrated delivery. It is what clients are asking for.”

Tunnel Business Opportunities

With the combined resources of AECOM and URS, the new AECOM boasts a powerhouse of tunnel practitioners, as well as geotechnical engineers, to meet any tunneling challenge. “Our global tunneling group has more than 200 tunnel engineers with strong capability in all types of tunneling technology including TBM, NATM, cut-and-cover, immersed tube and microtunneling,” said Verya Nasri, vice president and global tunnel lead for AECOM.

“The AECOM global tunnel team has engineered two of the largest transportation tunnels in the world with TBM diameters of more than 50 feet – Chongming and Bund in Shanghai, both of which are in operation. Our global tunnel team is currently the owner engineer for the world’s largest undersea tunnel with the TBM diameter of 58 feet – TMCLK in Hong Kong.

“In the United States, our team has led the design and construction support of Second Avenue Subway Phase I tunnels as well as large and shallow caverns, which were completed on time and on budget. We also designed and managed the construction of the Deep Rock Tunnel Connector in Indianapolis, which was more than 50,000 feet and broke daily, weekly and monthly production world records.”

AECOM’s expanded reach both geographically and in specific market sectors allows the company to bring highly technical tunnel solutions to broad range of clients. “Tunnels cut across multiple business line – transportation, water, environment, energy, and even to some extent the buildings market,” Kramer said. “Our ability to provide tunnels to all of our key markets and be a service provider is an important part of the overall strategy. While one firm may say they operate primarily in transportation, it is hard for them to jump over to water, for example.

“AECOM brings a combination of client knowledge and technical knowledge of tunnels, which includes ventilation, fire/life safety, underground stations, hard-rock design, liner design, sequential excavation and more. We are able to bring in our expertise and align that with the local client manager who can help the tunnel team solve the problem.”

One of the keys to being successful in the tunneling market today is continuing to innovate. “We are pushing the envelope constantly,” Kramer added. “We are operating in a broader range of geology and completing tunnels with larger diameters. To compete, you have to be able to bring innovation to complex, real-world problems, and we are able to accomplish that through our lessons learned. We are able to draw on the specialized expertise of our people who have done it before; they are not learning on the job.”

The market in North America appears to be stable for the time being. There is a great deal of demand across the transportation and water sectors across the United States and Canada.

“There may not be another big wave of tunnel projects like we saw in New York recently, but I see consistency and good flow of opportunities in the near future, especially in the water and rail sectors,” Kramer said. “ There is tremendous need for high-speed rail and regular passenger rail projects, especially in California and along the Northeast corridor . There is also need in freight rail to enlarge or construct new tunnels to allow for double-stacked containers, in addition to the well-documented needs in the water/wastewater market.”

Added Bouchard: “The water/wastewater market may not see phenomenal growth rates in the United States, but there is still a need, particularly from a CSO standpoint. Interestingly, we are seeing similar solutions being implemented internationally as part of a holistic solution. For example, we are working in a joint venture in Singapore for the construction of deep tunnels, and we have completed work on deep tunnels in China.

One potential area of growth is in the use of public-private partnerships (P3). In some P3 deliveries, the private-sector partner brings money to the table to help fund the construction of the project. In North America, there are few P3 examples – all of which are on the transportation side. And while growth in the transportation sector for P3 projects is expected, a market may exist on the water side too.

“We haven’t historically seen a lot of private money in the municipal water/wastewater sector, but we are beginning to see some opportunities discussed.” Bouchard said. “We view that as an emerging market in the water space for AECOM.”

Eye to the Future

Going forward, the firm will operate under the AECOM brand. For the immediate future, the process of integration is the top priority. “Right now we are evolving the integrated practice and streamlining the process of working as a collaborative team,” Kramer said.

With the team assembled, the key is providing technical solutions for the clients. “Inside the organization, people are very positive because of our ability to provide significantly more technical capabilities to solve our clients’ needs,” Bouchard said. “We are all getting to know our new peers and working together very well. Our clients see value in the proposition and it is now our responsibility to deliver.”

Marketplaces

One of the key factors in the AECOM-URS merger is the ability for the company to operate across various market sectors. Here is a quick look at the markets that AECOM services:

• Buildings & Places: For public and private clients developing buildings and places (e.g., public realm, mixed-used developments, campuses, resorts, new communities, urban extensions and redevelopments), AECOM offers complete services from planning and design, to financing, to construction. AECOM believes in engaging a broad range of disciplines along with client and stakeholders at the beginning of the project for a collaborative process that unlocks the most potential for the investment. AECOM creates buildings that excel at their unique missions, inspire users, complement their contexts, achieve high levels of environmental performance and maximize lifecycle cost-effectiveness. AECOM creates vibrant and well-connected places that support communities, economies and natural systems

• Civil & Infrastructure: AECOM provides public and private clients with services for every phase of transportation and water projects, from planning and project development, through design and construction, to operations and maintenance. AECOM also specializes in construction management, program management, public-private partnership advisory, alternative delivery, and strategic financing and funding strategies for complex infrastructure improvement projects and programs. Building on a century of experience, AECOM continues to serve in various roles on the majority of the world’s mega-infrastructure projects and programs for transportation and water. AECOM is recognized by Engineering News-Record as the world’s leading design and program management firm and the author of innovation and best practices.

• Industrial: AECOM helps clients across the industrial spectrum maintain a competitive edge throughout the real estate cycle. AECOM’s services include construction, project management, cost consulting, planning and consulting, architecture, engineering, procurement, energy, water and environmental management. AECOM also offers commissioning, start-up, operations and maintenance and the full range of facility management and plant services. Through its integrated, flexible offer, AECOM undertakes projects at all scales and levels of complexity. AECOM provides a range of delivery models to suit each client, including agency, at-risk, engineering-procurement-construction management, engineering-procurement-construction; design-build; design-bid-build; and fast-track. Clients trust AECOM to handle their most valuable hard assets and help streamline their processes to meet business objectives.

• National Governments: AECOM delivers a wide range of solutions for national government clients to address critical infrastructure resiliency, international development, contingency operations, emerging markets, climate adaptation and environmental issues. AECOM addresses asset management requirements for facilities and civil infrastructure through lifecycle planning, design, construction, security, operations, maintenance and logistics. In addition to governments, AECOM clients include multinational and multilateral organizations such as the World Bank, MCC, NATO and the United Nations. AECOM’s multidisciplinary professionals understand the social, political and economic realities of the contexts in which they work. AECOM delivers practical solutions that draw on global experience to meet local needs.

• Oil, Gas & Chemical: For the world’s largest private and public integrated oil, gas and chemical companies, AECOM provides design, construction and production services across the upstream, midstream and downstream supply chain to address new sources of supply and feedstocks, and more efficient production and delivery. AECOM’s capabilities include work in remote and environmentally sensitive areas, and it provides a range of assessments, risk evaluations and remediation services. With the global resources to respond and work anywhere in the world, AECOM professionals use proven and innovative methods and best management practices gleaned from experience on thousands of projects worldwide to improve performance and add business value.

• Power: AECOM designs, builds, retrofits and maintains virtually every type of power plant as well as transmission and distribution systems. Focused on producing the cleanest and most efficient solutions, AECOM’s experts continue to set new standards in this dynamic industry. AECOM’s areas of expertise include clean and renewable energy, energy efficiency, emissions control and carbon management, as well as decommissioning and closure services. With decades of experience worldwide, AECOM provides integrated energy services, including planning and permitting, design, procurement, project management and construction. AECOM helps clients answer today’s power needs with a view to tomorrow’s world.

AECOM in the USA

AECOM has been affiliated with many tunnel projects over the years in the United States and beyond. Here, we take a look at two recent notable projects on which the firm was involved.

Second Avenue Subway
Location: New York, N.Y.
In an effort to relieve excessive crowding currently prevalent on the Lexington Avenue subway, the New York Metropolitan Transportation Authority’s (MTA’s) Capital Construction division commissioned AECOM as the prime engineering and design consultant for the new Second Avenue Subway project, the first major expansion of the subway system in more than 50 years.
Underground for their entire 8.5-mile length, the Second Avenue Subway’s twin tunnels run between Harlem in the north and Hanover Square in the south. AECOM’s experts designed 16 new station entrances to take advantage of natural light and increase tunnel ventilation. They incorporated alternative energy sources such as an aluminum third rail engineered for greater energy efficiency.

The team also used construction techniques such as tunnel boring machines (TBM), cut-and-cover, and mining on the project’s first phase, which stretches between 96th Street and connects with the existing 63rd Street line, including stations at 96th, 86th, and 72nd streets. Work for each station, the TBM tunnels and the systems were prepared using multiple contracts.
The $4.45 billion first phase is approximately 80 percent complete and is slated to open in December 2016.
Client: MTA Capital Construction
Partner: ARUP

Deep Rock Tunnel Connector
Location: Indianapolis, Ind.
In an effort to improve water quality for the City of Indianapolis, Indiana, Citizens Energy Group looked to build a combined sewer overflow (CSO) collection system at multiple locations. The project will run approximately 25 miles long and remove combined sewage from eight local rivers and streams.

The first phase of the project is the Deep Rock Tunnel Connector (DRTC), a 7.6-mile, 18-ft diameter tunnel located 280 feet below the surface in a rock cavern. Three CSOs will capture sewage from the city’s largest overflow points and then transport it to a below ground Deep Rock Tunnel Connector Pump Station (DRTC PS), from where it will then be pumped to a wastewater treatment plant. The project is estimated to be completed in 2017.

AECOM provided design for the main tunnel of DRTC and DRTC PS. The tunnel design was completed using a TBM that broke multiple world records. The next phase will involve the construction of an 18-ft diameter, cast-in-place concrete liner.
Client: Citizens Energy Group
Contractor: Shea-Kiewit JV