Scattered Clouds 47° Good Afternoon
Scattered Clouds 47° Good Afternoon

Construction companies vie for Tappan Zee contract

Traffic flows on the Tappan Zee Bridge from

Traffic flows on the Tappan Zee Bridge from Rockland to Westchester County, in the background, over the Hudson River. (March 13, 2012) Photo Credit: Rory Glaeseman

The three construction consortiums vying for the $5.9 billion contract to build a new Tappan Zee Bridge are so evenly matched the competition is too close to call, experts say -- just another dice game for the high rollers in the bridge-building end of the construction business.

With an entry fee of $2.5 million -- that's the cost of submitting a bid for the Tappan Zee project -- and millions more to draw up complex plans, only the biggest and richest engineering and construction companies in the world could even think about competing, experts say.

The winning bidder will be selected in coming weeks by the State Thruway Authority, based on input from a panel of engineers, architects and designers that Gov. Andrew Cuomo named two weeks ago. The dollar amounts of the bids will be just one factor in deciding the winner, state officials say. Also to be considered is a company's past performance on similar projects and its ability to stick to the budget.

"I really think it's impossible to handicap because this is not going to be a process where the low bidder gets it," said Richard Paget, an analyst with Imperial Capital in New York City. "It appears to be a pet project for Cuomo, and he's going to make sure it's done right."

Each consortium has a team member with deep experience in the New York market, a factor likely to be critical as competing bids are compared, Paget says.

"New York is a very unique construction market," Paget says. He expects that the competing groups will need to demonstrate understanding of how unions work in the New York area and how materials can be delivered to the project.

Saagar Parikh, a construction industry analyst with Keybanc Capital Markets in New York City, calls the competition a toss-up.

"They all have strong brands and they all have a strong front-end team to do the engineering," Parikh says of the competing consortiums. "It comes down to how they will differentiate themselves."


Industry experts say there are only about 20 construction companies in the world capable of playing leading roles on the Tappan Zee Bridge project. With dozens of projects being bid across the country and around the world every year -- and so few capable players available -- the companies tend to combine into new consortiums with each new project, becoming rivals one day, partners the next.

Take Skanska USA Civil Northeast -- that's one company, based in New York -- and Kiewit Infrastructure, a company with operations throughout the U.S.

Together with Weeks Marine, based in New Jersey, Skanska and Kiewit constitute one of the three consortiums going after the Tappan Zee contract. Simultaneously, however, Skanska and Kiewit are competing -- as members of different consortiums -- to build a replacement for the Goethals Bridge, which connects New Jersey to Staten Island.

"They all know each other; they all have worked together," says Avram Fisher, an independent analyst who has covered the engineering and construction industry for eight years; Fisher once covered the industry for BMO Capital Markets.

He explains that, familiar as the participants may be, the competition for major contracts is intense.

"It costs 2, 3, 4 million (dollars) to put together these bids," Fisher says. "These guys want to win."

Here's the breakdown on the competing consortiums and some of their recent work:

• Kiewit-Skanska-Weeks Joint Venture (Kiewit Infrastructure Co., Skanska USA Civil Northeast Inc. and Weeks Marine Inc.): Skanska is on the short list to build an extension of Washington's Metrorail to Dulles Airport in Virginia. Kiewit has built the Sea-to-Sky Highway for the Vancouver Olympics in 2010. And Weeks Marine is on the short list to build the Knik Arm Bridge Crossing in Anchorage, Alaska. Weeks has worked on highway bypasses along FDR Drive in Manhattan as well.

• Tappan Zee Bridge Partners (Bechtel Infrastructure Corp. and Tutor Perini Corp.): Bechtel is the largest construction and engineering company in the world. It built San Francisco's Bay Area Rapid Transit System. Its partner, Tutor Perini, has a track record of building across the globe, with deep experience in the New York area. Tutor Perini has worked on deck replacements for the current Tappan Zee Bridge, major improvements to the Richmond-San Rafael Bridge in San Francisco and elements of the Hudson Yards project in New York City.

• Tappan Zee Constructors (Fluor Enterprises Inc., American Bridge Co., Granite Construction Northeast Inc. and Traylor Bros. Inc.): Fluor is also on the short list for the Washington Metrorail project. Its partner in that bid is Tutor Perini. American Bridge is about to complete construction on the Chincoteague Bridge in Virginia, connecting route 175 to Chincoteague Island. Traylor is in the running to build a replacement for Goethals Bridge. Granite has worked on the rebuilding of the World Trade Center, as well as the Hathaway Bridge over St. Andrews Bay in Florida.


In discussing their chances of landing the Tappan Zee contract, the companies emphasize previous successes with their Tappan Zee partners.

"We feel very good about our competitive position, because of our experience with our partner, American Bridge, on the San Francisco Bay Bridge," Fluor CEO David Seaton told analysts earlier this year. "And I think when you look at the execution of the Bay Bridge, it's gone extremely well. So I think we've got a good opportunity to repeat that with a trusted partner."

Although the Bay Bridge project has been successful, American Bridge did catch heat from steelworker unions for bringing in prefabricated steel from China, a lesson analysts say the company is not likely to repeat.

"I'm sure they won't make that mistake again," Paget says.

The Tappan Zee Project will be made with U.S.-produced steel, state officials have said.

Ron Tutor, the colorful and sometimes controversial CEO of Tutor Perini (in 2010, Tutor led a group of investors who purchased the Miramax motion picture unit from the Walt Disney Co.) jokes that problems with unions are to be avoided at all costs. Asked about rumors that he'd be using nonunion labor on the Hudson Yards project during a May conference call with analysts, Tutor first denies the rumors, then explains why the company would never do such a thing.

"I haven't got a death wish," Tutor says, to laughter.


In 1992, Tutor butted heads with Tom Bradley, the late mayor of Los Angeles, during construction of a subway line. Bradley accused Tutor of winning the contract by coming in with a low bid and then jacking up costs while construction was under way. The scrape with Bradley contributed to a reputation that Tutor's company to this day.

"Ron Tutor is the greatest change-order artist I've ever seen," Bradley is reported to have said.

Tutor Perini has litigated change-order issues in a number of states, including Massachusetts, where it built underground lanes for Boston's Big Dig tunnel project. Still, the company's executive vice president, Jack Frost, bristles at questions that relate to a comment made 20 years ago.

"God bless his soul, I don't know what Tom Bradley was referring to," says Frost, a 28-year company veteran. "I can tell you this. We've never not finished a project. Every company has its bumps and bruises. You can't control what people say about you. I don't want to live on that comment."

In the May conference call, Tutor addressed the change-order issue head-on. A change order is a design change that occurs after a bid has been accepted and a contract awarded at an agreed-upon price. It is normal, in the construction industry, to adjust the cost of a project in line with change orders.

"We don't create them," Tutor says during the call. "Maybe we're a little hard-line that we get paid, when owners make changes, and we're not as flexible and giving as others, but all we ever do is if you change you are going to pay, whether you pay the hard way or the easy way, you are going to pay."

Analysts say Tutor Perini's partnership with Bechtel should erase any concerns about aggressive bargaining over change orders.

"Having the Bechtel name can really complete that consortium," Parikh said.

Cuomo administration officials say that the contract to be signed will have plenty of protections for taxpayers, requiring that the winning bidder pick up the tab for needless cost overruns.

With more federal transportation money becoming available, Fisher says the losing bidders should not have a hard time finding work. This summer, the federal Department of Transportation increased to $17 billion the pool of federal money it can loan to states and cities interested in rehabilitating aging infrastructure.

"The market for big projects is quite good, especially for those with access to federal loans and financing," Fisher says.

More news

Sorry to interrupt...

Your first 5 are free

Access to Newsday is free for Optimum customers.

Please enjoy 5 complimentary views to articles, photos, and videos during the next 30 days.