By Bob Drake
Founded in 1887, Stockholm, Sweden-based project development and construction firm Skanska AB primarily serves markets in the Nordic region, Europe, and North America. In North America, Skanska USA reported total revenue of $7.1 billion in 2015 — one third of the company’s global revenue. With about 11,000 employees across the country, including civil and structural engineers, Skanska USA has completed projects in almost all 50 states, Washington, D.C., and Puerto Rico.
Richard Cavallaro, president and CEO of Skanska USA and one of nine members of Skanska AB’s senior executive team responsible for Skanska’s global operations, joined the company 20 years ago as a senior estimator. He has more than 30 years of experience in the construction industry and is credited with leading Skanska USA’s footprint expansion beyond the Northeast, Southeast, and Southwest to the Pacific Northwest and Northern California.
In the following Q&A, Cavallaro offers his perspective on the company’s growth, its extensive capabilities, and industry trends.
Civil + Structural Engineer (C+S): Briefly, what is Skanska’s history in the United States?
Cavallaro: Skanska USA has been headquartered in New York since 1971, but our work in the U.S. goes back more than 100 years. Through strategic acquisition and our own organic growth, we’ve grown to be one of the nation’s leading construction and development firms. We have a history of building incredible and iconic projects in each of our markets, from the World Trade Center Oculus and Transportation Hub in New York to the EXPO Light Rail Line in Los Angeles. Across the country, we build bridges and tunnels, highways and airports, hospitals, data centers, schools, hotels, and commercial buildings. Everything has an important role to play and a community it serves. It’s why we like to say we “Build What Matters.”
C+S: What are some of the significant events and projects that have impacted Skanska’s growth and success in the U.S. market?
Cavallaro: We think that how we build is just as important as what we build. Everything we create has a lasting impact on the community it serves. So in that way, every project defines us and leads to our growth.
The passage of public-private partnership (P3) legislation in multiple states has opened new opportunities for us to invest our capital and our ability to help bring much-needed infrastructure to cash-strapped municipalities. We’re currently working on three P3 projects in the U.S. — including our biggest project ever, the redevelopment of LaGuardia Airport’s Terminal B.
We’ve also taken a proactive stance on green building, bringing it into every aspect of our business. Sustainable building is a movement that is growing fast and we are growing with it, including taking an active role on new green standards like Envision, Well, and Net Zero building.
When I think of projects that define us, I think of the Elizabeth River Tunnels in Virginia, another P3 that is redefining how people get to and from work and around their communities. And although it was a while ago, our redevelopment of Boston Logan Airport was the first aviation project in the country to be LEED certified — that sparked a movement in that sector to make airports greener.
I also think of projects like MetLife Stadium in New Jersey, where the football Giants and Jets play, which allowed the NFL to host the first-ever outdoor cold-weather Super Bowl. At Methodist Hospital in San Antonio, we have been at work on various projects there for nearly a decade and are currently completing a children’s hospital that will have an immeasurable impact on families.
A more recent development is the launch of our commercial development business six years ago. Since then, we’ve built some of the most sought-after offices in the country because tenants and investors know how well-made and efficient they are and redefining what a work environment can be.
This is all a testament to what we believe is the right way to build and develop: safely, ethically, and sustainably, leaving behind a project that will benefit communities for years to come. It defines who we are as a company.
C+S: How is Skanska USA organized and managed — i.e., geography, service line, or other — and how do you share expertise and workload across the organization — even across the world?
Cavallaro: We integrate and leverage the strengths of our two construction units (Building and Civil) and our two development units (Commercial and Infrastructure) in the U.S. to pursue projects at which we know we can succeed and will deliver maximum value to our customers and clients. Along with our innovation, design, estimating, and financing capabilities, we can build just about anything out there — and it’s the depth and breadth of that talent we tap into that allows us to be so successful.
Our Senior Leadership Team includes leaders from our Sustainability, Ethics, Safety, and Environmental areas who support our business to ensure consistency and high level of performance across the U.S. That supports our vision of making sure how we build is as important as what we build.
Geographically, we have more than 30 offices across the country with nearly 11,000 employees — including four cities (Boston; Washington, D.C.; Houston; and Seattle) where we do commercial development. We’re always looking for great people to help us expand our capabilities and push the envelope of what is possible.
C+S: Skanska is perhaps known primarily as a construction firm, but what is the extent of the company’s in-house civil and structural engineering capability and how do you see that capability changing? What factors are driving any changes (or no changes)?
Cavallaro: We have some of the most talented engineers in the business working for Skanska, engineering construction solutions to extremely complicated projects. My current favorite is the Bayonne Bridge, which we are building for the Port Authority of New York and New Jersey. The original bridge was built in 1928, and the roadway is too low to the water to get the taller “super cargo” ships underneath. We are building a roadway above the original, over live traffic, and then we will tear down the lower roadway. We’ve had to address things like the slope of the approaches and the grade of the roadway and still get everything raised up to the right height. It’s a marvel of engineering that — to my knowledge — has never been done before. I think it’s that kind of envelope-pushing that our people do best and we will continue to do well into the future.
We’re also seeing the rise of alternative delivery methods across our business — design-build, lean, integrated project delivery, etc. The common theme among them all is collaboration and understanding of the total delivery process. As a result, engineers on our staff play an ever-increasing role in projects, helping to not only do the traditional construction tasks that have come with their roles, but also being key players in helping to generate innovative construction approaches and designs to ensure successful projects for our customers.
In the Midwest, we have an in-house 200+ person engineering group, PCI Skanska, that provides electrical, mechanical, and structural engineering services to clients primarily in the power, manufacturing, and industrial sectors.
C+S: What overarching trends are you seeing in building and infrastructure design and construction in the United States?
Cavallaro: Two things have captured my attention in our industry as a whole, and that’s safety and innovation.
Some people think safety is costly or that injuries are a fact of life on a job site. That’s just not true. The safest projects run without interruption, are delivered on time, on budget, and are top notch. Safety also takes planning, and when you plan well you can execute well. We work safely or we don’t work at all. And every one of our employees is empowered to stop work on a job site if they notice something unsafe. We believe deeply — and it’s my number one concern — that we send every worker home every night the same way they came in that morning. We want the world to not think of our industry as inherently dangerous. To truly get there, we want owners to demand injury- and incident-free work.
What excites me about our industry is innovation, which is driving so much of what we do as a company right now. It’s the first time in my career that I can point to technology as leading the way to better and more efficient projects. Whether we’re using Building Information Modeling (BIM) to design a complicated structure or specialized apps to monitor noise and dust levels, technology and innovation are making what we do so exciting and more cost efficient.
We’re partnering with outside companies to push the needle on innovation, too. For example, we have a collaboration with Autodesk to develop new BIM technologies for our job sites. We are testing things like Real Time Location Sensors (RTLS) that give us data on everything from how workers are moving around a site to whether someone has a health emergency. It’s quite amazing and I’m excited to see where it all takes us.
At one of our commercial real estate developments in Seattle, we also partnered with Microsoft HoloLens to create the first-ever, virtual leasing center. The HoloLens experience allows prospective office tenants to take a holographic tour of the space, literally bringing it to life so they can see how their new office would look.
C+S: What do you see happening in the United States regarding public-private partnerships (P3s) and how is Skanska involved?
Cavallaro: Clearly, the United States is in need of a massive investment to rebuild our crumbling infrastructure — our roads, bridges, tunnels, and more. In its “Report Card for America’s Infrastructure” in 2013, the American Society of Civil Engineers (ASCE) gave the nation a cumulative GPA of “D+” for infrastructure and estimated that the total price tag for the necessary investment to fix the problem was $3.6 trillion; $1.8 trillion was needed in surface transportation projects by 2020 just to maintain a state of good repair. That’s an unacceptable state of affairs and it comes with a huge price tag to fix the problem.
While there’s little public money to pay for these projects — and no one wants their taxes raised — there is plenty of private money on the sidelines waiting to be invested through P3s. P3s deliver cost certainty, schedule certainty, and shift financial risk away from the taxpayer. While it can’t solve the problem alone, we see it as a terrific win for everyone.
We are encouraged by the White House’s recent effort to increase private-sector participation in public infrastructure projects through the signing of the new transportation bill, which includes more than $207 billion for transportation projects, and Build America (www.transportation.gov/buildamerica), a government-wide initiative to increase collaborative infrastructure investment and economic growth. Thirty-three states and the District of Columbia have enacted laws enabling P3s for transportation infrastructure. This should encourage more activity at the local level, where plans to deal with roads and bridges in need of repair or upgrade have been on hold.
Skanska has completed more than 30 P3 projects around the world in the last 20 years. We currently have three P3 projects currently underway in the United States:
The I-4 Ultimate project involves rebuilding and widening 21 miles of Interstate 4 and is the biggest construction project under development in Central Florida today, as well as one of the biggest civil construction projects taking place in the United States. At $2.3 billion, it’s a six-year project that will transform the region, improve the local economy, and enhance livability for everyone.
The Elizabeth River Tunnels (ERT) project is a $2.1 billion design-build project that we are financing, and will operate and maintain, including a new two-lane tunnel adjacent to the existing Midtown Tunnel, maintenance and safety improvements, and extending the MLK Freeway to provide a direct, high-speed connection between U.S. 58 and the Midtown Tunnel and I-264 and the Downtown Tunnel.
As part of LaGuardia Gateway Partners, we are the construction partner on the redevelopment of New York City’s LaGuardia Airport Terminal B, which is a $4 billion project to finance, design, construct, operate, and maintain the terminal. It also includes associated infrastructure work, a central entrance hall, and a lease agreement valid through 2050. It is Skanska’s largest project ever.
C+S: What are the “Centers of Excellence” and how do they impact Skanska’s business and expertise?
Cavallaro: Because Skanska has particular strengths in the health care, aviation, education, commercial, mission critical, life sciences, and power and energy markets, we have created Centers of Excellence (COE) in these sectors.
Building successfully — a win for all stakeholders — takes specific knowledge beyond just knowing how to put a building up. Knowing the ins and outs of specific environments like hospitals, airports, data centers, and energy plants is critical. Our COEs bring a deep level of expertise to these projects and provide specific knowledge that is paired with our local teams’ regional expertise, creating a combination that will ensure a successful project.
Each Center of Excellence and its leadership is brought into key pursuits as early as possible — including at the bid or proposal stage — to make sure we’re conveying recommendations and ideas that can make their project better. We help the customer maximize their budget and design and make sure the project serves its audience well for many years to come. It’s been highly successful and we’ve won a lot of work with the COEs’ guidance and wisdom.
C+S: Within the last few years, how has technology impacted your operations, service offerings, and staffing?
Cavallaro: As I mentioned earlier, the innovation that’s happening in our industry is so exciting. And it’s more than just things like laser scanners or drones that are driving the discovery; it’s also innovation in our processes, like project delivery methods. We’re turning to LEAN construction more and more — which is a process of how a team can work together to envision and create a project — that seeks to eliminate waste, accelerate the timeline, and produce projects that exceed expectations.
We’ve also developed our own apps, like our InSite Monitor, which keeps tabs on dust, noise, and vibration on a project site. We’ve used it successfully at Chris Evert Hospital in Florida to help minimize the impact of construction on hospital patients.
C+S: Briefly, what was your path to your current position as president and CEO at Skanska?
Cavallaro: I’m a born and bred New Yorker and have lived here all my life. I have a bachelor’s degree in mechanical engineering from City College of New York and have spent my entire career in the construction industry — more than 30 years. I joined Skanska in 1996 as a senior estimator, and rose up through the Civil division before being named president and CEO of that division in 2009. I became president and CEO of our U.S. operations in 2015.
C+S: Is there anything else you would like readers to know about Skanska USA?
Cavallaro: It’s an exciting time for the construction industry and I am happy to see it continuing to evolve to look more and more like the customers and communities for whom we build. We have a commitment to diversity and inclusion in our company because we believe varying experiences and viewpoints make us stronger and more innovative.
We are also proud to continue to bring in top talent from other industries like finance, tech, and manufacturing to help us better understand our customers and bring them more diverse and innovative solutions.
We have our challenges, like any industry, but we also have incredible opportunities to have a positive impact on our world and what we leave behind for future generations.
Headquarters: New York
Size: Approximately 11,000 employees in more than 30 U.S. offices
Primary services: Construction management, design-build, program management, pre-construction, pharmaceutical validation, public-private partnerships, financial services, commercial development