CH2M HILL, Halcrow Combine Forces
By Jim Rush
Human history passed a milestone last decade when, for the first time ever, more people began living in cities than in rural areas. This urbanization, along with population growth in general, means more infrastructure will be needed for drinking water, sanitation, transportation and other services that form the backbone of modern civilization. According to the United Nations, this trend is likely to continue. By 2050, 70 percent of the world’s population is expected to live in urban areas.
Additionally, existing infrastructure in developed areas will need replacement. In fact, in many instances infrastructure has exceeded its design life and is operating on borrowed time. This convergence of need is leading to projects around the world being designed and built to help maintain and improve our way of life from an environmental, economic and social perspective.
In response to these challenges and to expand on a global scale, the engineering firms of CH2M HILL and Halcrow have joined forces. By teaming up, these companies offer their multitude of services to clients on an even broader scale. The partnership was finalized in November 2011 when CH2M HILL, based in Denver, acquired London-based Halcrow for approximately $200 million. The deal was first announced in September.
Individually, the companies were capable, multi-disciplinary firms operating around the world. In fact, CH2M HILL ranked fourth on Engineering News-Record’s list of Top 500 Design Firms while Halcrow checked in at No. 112. Together, the company boasts 30,000 staff with approximately $7 billion in revenue.
While growth is an important part of business, company officials say the merger is more about smart growth. The companies have complementary professional services and geographies they serve without much overlap or duplicative offerings.
“With the addition of Halcrow, we now have projects and staff in the geographies where we wish to grow,” said Bob Bailey, president of CH2M HILL’s Water Business Group. “We know clients are looking for global companies that can act locally. Our Halcrow acquisition adds 80 offices worldwide, 6,000 employees and a strong presence in the Middle East, Latin America, India and Australia, all of which are key geographies for us. In the geotechnical and tunneling support sector, our staff level has increased several fold as a result of the acquisition. Additionally, with Halcrow we can win projects that neither Halcrow nor CH2M HILL could have won on their own.”
Tracing Their Roots
Both CH2M HILL and Halcrow have long roots in the civil engineering business. CH2M HILL was founded in 1946 by three former Oregon State College classmates — Holly Cornell, James Howland and T. Burke Hayes — and their former professor, Fred Merryfield. The partnership of Cornell, Howland, Hayes, and Merryfield became known as CH2M, and blossomed in the burgeoning post-war economy.
The firm flourished and grew to 310 staff with revenues of $6.2 million by 1969, and in 1971, CH2M merged with Clair A. Hill & Associates to become CH2M HILL. By the end of the 1970s, CH2M HILL grew to 1,800 employees and $95 million in revenue and began branching out of North America, landing a project in Saudi Arabia.
The 1980s saw the company delving into the field of treatment plant operations contracting with the formation of the Operations Management International (OMI) division. By the mid-1990s, the company reached 6,000 employees and nearly $1 billion in revenue, and by 2011 had 23,000 employees and more than $6 billion in revenue.
Halcrow’s roots in civil engineering can be traced back even further, to 1868 when Thomas Meik established a consulting practice focusing on docks, harbors and railways. Upon Meik’s retirement in 1888, the company was passed along to his sons, Patrick and Charles, and the company was known as Thomas Meik and Sons and later P.W. and C.S. Meik.
In 1921, William Halcrow joined the firm, which became known as C.S. Meik and Halcrow in 1923, and then W.T. Halcrow and Partners in 1941. William Halcrow went on to become one of the most renowned civil engineers of his time and was knighted in recognition of his services to the United Kingdom, work that included consulting on air raid shelters in London during World War II and breakwaters for temporary harbors used in the D-Day invasion of France.
After Halcrow’s knighthood the company became Sir William Halcrow and Partners, ultimately becoming known as Halcrow Group Ltd. in 1997. The company began operating outside the United Kingdom beginning in the 1890s and by 2007, international projects accounted for about half of the company’s workload.
Both companies have been active recently in the worldwide tunnel market. CH2M HILL signature international projects include the Thames Tideway and Crossrail projects in London, STEP in Abu Dhabi, Singapore DTSS and Ashghal’s IDRIS program. In the United States, projects include Lake Mead Intakes Nos. 2 and 3, Brightwater Conveyance System and Sound Transit’s University Link in Seattle.
Some of Halcrow’s signature projects include segment design for the Arrowhead Tunnels in California; the Gillay Tunnel in the United Arab Emirates – the longest road tunnel in the Middle East and first bored rock tunnel in the UAE; and the Gold Coast Desalination Project in Australia, which includes a 1.5-km intake tunnel to help ensure sustainable drinking water supplies.
CH2M HILL is no stranger to mergers and acquisitions. In fact, the company has completed more than 15 strategic acquisitions since 2000. However, the Halcrow acquisition is not only CH2M HILL’s largest move in terms of staff involved, but it is also the first with a company whose headquarters are outside the United States.
The two firms had familiarity working together as part of the massive Crossrail project in London that will improve transportation infrastructure from east-to-west. The project spans 118 km overall and includes 21 km of twin-bore tunnels under central London. As part of a joint venture, Halcrow is serving as project delivery partner overseeing designs of tunnel and rail work. CH2M HILL is also involved on the $22 billion project, serving as program partner for Crossrail.
Additionally, the two are involved on the Thames Tideway Tunnel, also being built in London. CH2M HILL is serving as program manager for the $6 billion CSO abatement project, with Halcrow serving as a subconsultant.
The familiarity formed by working together along with similar goals and philosophies makes the merger an ideal fit. “The companies are quite complementary and we share a lot of the same values,” said Martin Knights, Global Tunneling Director for Halcrow. “Both companies are dedicated to safety and service and both companies are employee-owned, which has a great impact on the culture of the company.”
Halcrow has a wealth of tunneling expertise in soft ground and transportation projects, while CH2M HILL has historically been more involved in the water sector. Halcrow’s experience working as a contractor’s designer also meshes well with CH2M HILL’s experience as a program manager and owner’s consultant.
“The number of resources that we can call on to deliver projects on time and on budget has greatly increased with the addition of Halcrow,” said Steven Hunt, Global Tunneling Technology Lead at CH2M HILL. “Halcrow’s technical experience – particularly in precast concrete segment design and sprayed concrete linings – enhances CH2M HILL’s capabilities. That, along with significant large-diameter bored tunnel experience, should expand our participation options, particularly here in North America.”
As for the integration process itself, combining a company with 30,000 total employees can be quite a challenge. But, Knights says, the process is moving in a positive direction. “Much has been done already – the Halcrow team and CH2M HILL tunnellers know each other very well. We are working well together to align systems and processes, build up a common data base of all tunneling staff in both organizations, continuing information sharing for best practices between respective senior staff, ensure our costing structures for bids are competitive all of which will firmly establish Halcrow’s tunneling and earth sciences group into CH2M HILL’s organizational structure. Our focus remains excellent client service, obsession with health and safety, world-class technical expertise and quality project delivery on all our projects — this will never change.”
Added Bailey: “We have developed a comprehensive transition and value assurance approach that is being managed by leaders from both CH2M HILL and Halcrow. Our transition process is founded on the core CH2M HILL values of client service, health and safety, respect, ethics and quality – all values shared by Halcrow. The transition process was started in September 2011 and will be complete in 2012.”
Infrastructure projects will always be needed to support our growing population and upgrade and replace existing structures, however, the means of doing the work are in transition. In the United States, we are seeing more of a shift toward design-build, public-private partnerships (PPPs) and other innovative alternative means of project delivery. These alternative methods require companies that have a broad range of capabilities and experience to successfully complete.
“CH2M HILL has been the owner’s engineer on major tunnel design-build projects such as Lake Mead Intake No. 3, Singapore DTSS, Abu Dhabi STEP and London Thames Tideway,” Bailey said. “Our Halcrow group has been the engineer on major design-build tunnels. The combined strength of both firms provides us capability to deliver design-build projects as program manager, owner’s engineer or design-builder. CH2M HILL has considerable experience with PPP arrangements and we are working with clients across North America to deliver projects. Alternative delivery is expected to continue to be an attractive option to some clients.”
With the combined resources of CH2M HILL and Halcrow, the firm looks to build on its more than 200 years of combined experience and help clients design and build sustainable infrastructure across the globe.
“The breadth and depth of global scope and scale realized by bringing these two industry leaders together enables CH2M HILL to offer existing and prospective clients and partners greater local expertise and experience along with a broader range of services worldwide,” Bailey said. “The combination of CH2M HILL and Halcrow will result in a compatible, dynamic, client- and partner-focused culture in line with our mutual values of respect and delivery excellence.”
Jim Rush is editor of TBM.