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July 07 Businessexcellence 83 retail/commercial—working for the “big box” retailers and developers, including Wal-Mart, Lowe’s and Home Depot, which provides about half of Terracon’s revenue; the remaining markets are government, transportation, industrial, financial, telecom, and energy (traditional and renewable alternatives). CEO David Gaboury says the firm’s core competency “on an engineering scale, is looking at small to mid-size project assignments and Terracon Consultants The tendency in a service industry such as engineering consulting is to follow the behavior and movement of clients, which means adjusting or changing according to the client’s situation. If done properly, success follows; that’s what Terracon has discovered. Established in 1965 in a small office in Cedar Rapids, IA, today the firm has its head office just outside Kansas City, MO, with some 3,000 employees in nearly 100 offices across the country. In 2006 it was engaged in about 35,000 projects in the US, resulting in revenue exceeding $250 million. Terracon is 100 percent employee owned; a minority ownership (about 40 percent) is held by the Employee Stock Ownership Program (a retirement plan) and the rest is held broadly among more than 400 employees. Serving a wide variety of private and public sector clients, Terracon’s specialty is “earth engineering” and related environmental and construction materials aspects. Its biggest market at present is

Businessexcellence July 07 00 coming up with practical, responsive, costeffective results across all of our service lines, to help clients successfully design and construct, or assess, a diversity of projects—from single sites, to situations where clients are considering buying or re-financing a portfolio of facilities, perhaps a national hotel chain. Or a telecom client wants to erect a series of cell-phone towers across several states. Because of our geographic spread throughout the country, we can go out and do these multi-site projects simultaneously, which makes it beneficial for this kind of client to deal with just one larger firm, such as ours.” The service lines he’s referring to are geotechnical, environmental, construction materials (engineering and testing), and facilities. Geotechnical is engineering related to underground or earth structures, from foundations to dams to tunnels and slopes. “We explore sites with drill rigs, perform various engineering tests on the material, and recommend how to design the foundations in relation to the subsurface conditions of a site,” he says. Environmental work is also largely related to sites. “If you’re planning to develop a site, from pre-purchase to development, you need to look at conditions for environmental contamination and related conditions overall; there may be hazardous materials onsite, soil, groundwater contamination or perhaps wetlands issues.” In some US cities, for example, contaminated greenfields and brownfields located in or near desirable downtown areas need proper assessments. Construction materials (engineering & testing), “relates to services we provide once a facility’s construction is underway—we go to a site to inspect and test materials so they meet the specifications they’re intended for, for quality reasons. We start below the ground, examine the soil conditions as to compaction, then the concrete, with strength tests, then the steel and welding, make sure that the materials used are as specified and the construction practices are sound.” Geotechnical & environmental each represent an equal volume of work (about 28 percent) and are handled by advanced, degreed engineers and environmental scientists; Construction materials (engineering & testing) represents about 40 percent, and is handled by non-degreed technicians under the supervision of degreed engineers. The firm has invested heavily in IT, transferring all previous manual files and processes to digital, with a proprietary companywide system that tracks every project and delivers test results and reports to clients via email, or posts them to a portal that clients can access. “Facilities is a newer service line that we’re getting into,” he explains. “When clients want to purchase a property, they ask for property due diligence, and we provide an assessment to ensure they understand the overall condition of the property and the remaining life of its building components, such as roof or mechanical systems. The report we write is used to negotiate prices and other aspects of the transaction.” Terracon’s National Client Program supports the firm’s clients who have national needs, such as large retail and financial clients. As the big box retailers, for example, expand around the country, they tend to hire local firms; one in particular has historically used more than 100 small firms throughout the US for its construction materials (engineering & testing). Working with so many firms makes matters complicated for the retailer, which is now dealing with a handful of larger firms with branch offices, and possibly a further reduction. “That, along with other market factors, is driving consolidation of the engineering consulting industry,” says Gaboury, “so we’ve been growing internally as well as by acquiring several regional 84 “We’re technical people, but we’re in the people business as much as anything, so we have to attract, retain, and quicken the development of our people”