2003 Top Contractors - Southwest Market Finally Taking Off
By Scott Blair

General contractors in Arizona, New Mexico and Nevada reported significant increases in construction revenue for 2003. After three years of declines or lukewarm growth, the top 125 contractors showed a gain of 8.4 percent over 2002.

While most contractors saw improvement, the companies that aggressively went after new business, while taking care of their regular clients, fared best. "The primary reason for our growth in 2003 is an increase in our business development efforts," said Frank Martin, president/CEO of Martin-Harris Construction. "However, the largest increase is the result of an increase in the activities of our private developers, some of which we have had relationships with for more than 22 years." Martin-Harris took over the top spot in Nevada for the first time since 2000, and moved up to No. 5 in the region.

Overall, the Nevada market jumped 14 percent above 2002 and saw more than $2 billion in revenue from contractors participating in this survey.

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Arizona enjoyed a 6.2 percent increase this year. "We were encouraged in 2003 and look forward to 2004," said Jim Constance, COO and southwest division president of Howard S. Wright Construction Co. The mid-sized company doubled their revenue in 2003 and jumped 30 spots to No. 45 on our annual ranking. "Our focus has never been on being the biggest contractor in the Southwest but rather forming those relationships that transcend the one or two projects."

Tucson continues to shine, and with some of the lowest office vacancy rates in the country, there should be plenty of construction starts to keep the market busy through 2004, according to McGraw-Hill Construction-Dodge. Look for our new ranking of the top 10 Tucson contractors, on page 62.

New Mexico was finally invited to the ball, with an almost 7 percent increase in revenue over 2002. "The Governor has cut taxes, it's an election year, and interest rates are still low," said Matthew Martin, president of Gerald Martin General Contractor. "The construction of highways and schools are priorities, so we anticipate the letting of these contract types to continue."

Among specialty categories, general building and water supply showed healthy gains, while transportation leaped 35 percent to over $1 billion. On the downside, industrial process/ power construction plummeted 60 percent, and manufacturing continued its downward spiral, falling 45 percent from 2002 and a jaw-dropping 73 percent from 2001.

Many opportunities await contractors in 2004, along with a few challenges. "The Las Vegas market will certainly continue to expand over the next two years," said Frank Martin. "However, rapidly increasing costs of building materials such as steel, wood and other components, as well as land cost and availability, are major concerns."

Other storm clouds on the horizon could come from reduced publicly funded projects if state and local government coffers continue to lag. Also, despite a boost in federal spending on homeland security-related projects, the growing federal budget deficit could adversely affect future spending. Contractors anxiously await decisions on several key bills before Congress, including a continuation of TEA-21, which had cleared the Senate at press time. In General, the prognosis for 2004 looks good in the region, with healthy office vacancy rates and increases in healthcare and residential construction.

Alternative delivery projects continue to increase in most of the Southwest. However, procurement options are still limited for state-funded projects in New Mexico.
"Design/build still has a high $10 million threshold, and CM at Risk has yet to be a viable option," said Matthew Martin, who also serves on the board at the NM-AGC Building Branch. "On a positive note, House Bill 573 (sealed competitive proposals/ best value contracting) has been approved by the legislature. Although the rules of its implementation are still being drafted, we anticipate seeing this procurement option coming to fruition by year's end." To reflect an industry in transition, a new category has been added to rank overall alternative delivery revenue from 2003. Our top 125 contractors reported over $2.5 billion in revenue from design/build, CM at-Risk and job order contracting projects.

For this year's Top Contractor survey, we sent surveys to over 1,000 contractors in Arizona, New Mexico and Nevada. The rankings are based on 2003 tri-state construction revenue, as supplied by each ranked company. Any company that did not disclose their 2003 revenue was not included in the rankings.

While we aspire to send a survey to every company interested in appearing in the rankings, we apologize if your firm was missed in this year's research. If you would like to be included in future rankings, please contact Southwest Contractor at 602-631-3080.

Southwest Contractor would like to thank the companies that participated in this year's ranking. Due to the overwhelming response, we were not able to include the following companies in our overall rankings.

$3-5 million range: Hernandez Companies, Whiteriver Construction, Caliber Construction, McGuire Construction Corp., Surface Contracting and McShane Construction Corp.

Below $3 million: Kimo Construction, CMX LLC, Henry Benning Associates, Compass West, ICON Builders, America's Contracting Service, PMA Consultants LLC, Patton Johnson Contractors, Millennium Association and J.R. Filanc Construction.

View 2003 Top Contractors List