The Tumultuous 90s
At about this time, CH2M HILL corporate management began to assess the directions its phenomenal growth was heading. It began to identify certain aspects of the firm’s workload that drove the market and hence, the nature of the workload itself. The best minds in the firm began to foresee that the entire world of commerce and industry was in the throes of enormous change and that CH2M HILL needed to address those changes if it was to continue to maintain its leadership position. A strong effort at self examination pervaded the atmosphere at the highest levels of management and intensive planning began in order to place CH2M HILL into positions which could best accommodate the new demands resulting from the rapidly changing business climate.
The highlights of CH2M HILL’s Strategic Business overview, as described in an internal report, defined the new directions that the firm was taking with regard to its selection of projects it was willing to undertake. A principal objective was how best to resolve the dual issue of feeding the voracious appetites of customer demand and the internal need to seize every opportunity to participate in the global market for the ever more complex available projects. More and more, management found itself in the position of having to take increased risks in the type and scope of the projects it sought. The report shows that in 1995, the company participated in approximately 5% “At-risk” projects out of total revenues of $805 Million, but in 2001 it expected the percentage to rise to 22% of projected $1.5 Billion of revenue. In addition, the report showed that the firm was increasingly conducting an ever-growing share of its business in a joint-venture relationship with other firms. This growth of shared commitments rose from roughly 0.02% in 1983 to 2.7% in 1998.
Because of the dynamic leadership guiding CH2M HILL, change started to take place quickly. As you continue to read the History of the firm during the 90s you will perceive that the outer form of the firm was redesigned to meet the new challenges, but the heart and soul of its human elements were left untouched.
The start of this decade saw the staff count reach 5,000 employees, and Gross Revenues reached just under a half billion dollars. With size came the inevitability of structural changes to manage the growth. CH2M HILL COMPANIES LTD. formed a new subsidiary, CH2M HILL INTERNATIONAL, LTD. (CHIL) under the direction of Howard Schirmer, an experienced manager in International work. Les Wierson had managed the International activity until this time and he had shepherded the overseas operations into a very promising field of activity. While the firm had provided engineering services outside of North America for more than 20 years, the new international company would help expand those services to clients worldwide. Its focus would be to provide design and engineering services to any country seeking improved public health and environmental needs. CHIL’s services were initially planned to be concentrated in Europe, Asia, and Australia, in addition to continuing its efforts to build a solid base of operational expertise in the Middle East. Expansion was successful in terms of gross revenues, but net profits continued to be elusive. The rationale that CH2M HILL must have a foreign presence in order to sustain itself in the future guaranteed continued funding of the International arm of CH2M HILL; however, the struggle to develop a formula for working in the International market at a profit continued.
Ralph Peterson was elected President of CH2M HILL LTD, the parent organization. To that eminent position Ralph brought his outstanding managerial talents plus a whole basketful of new ideas and concepts. CH2M HILL began to take on a new form, while still attempting to retain all the values and principles that had always permeated the company’s very soul. The combined companies topped one-half billion dollars in gross income in 1991 and the staff population was over 5,300 people. By this time, CH2M HILL was a leading force in its field; in fact it had been named the nation’s top environmental employer. Its continued growth screamed for a different and more easily controlled management structure. Slowly at first, Ralph began to institute major changes in the way CH2M HILL was organized and particularly, how it was managed.
Lyle Hassebroek was named President of CH2M HILL, INC, and Craig Zeien was named Director of Technology. These two extremely capable men set about to assist President Peterson in planning the early stages of reconfiguring the company’s organizational structure.
The IOTECH operation was terminated due to a change in U. S. Government policy regarding private usage of the Cesium-137 capsules which were integral to the services provided by IOTECH. It would be many years before the total dissolution of the radiation pogram would be completed.
The phenomenal growth of Operations Management International (OMI), now operating internationally, required that it be restructured into a holding company. Under the leadership of Don Evans, this CH2M HILL subsidiary continued its successful operations, becoming an industry leader in the process.
The Industrial Design Corporation (IDC) also continued its onward march toward a majority position in its field. Walker Engineering, a local engineering firm specializing in mechanical/structural engineering, decided that it had a better future as part of IDC and was integrated in the IDC organization.
Gross revenues now exceeded $561 Million and continued to increase at a slow but steady pace. In keeping with President Peterson’s plans for revising the structure of CH2M HILL, a Business Line Organizational format was adopted. In addition, a QI (Quality Improvement) program was initiated to better review and control the Project Delivery System
Phil Hall was named Chairman of CH2M HILL, LTD., and Craig Zeien was named President of CH2M HILL, INC.
The need to provide more direct focus on attaining more federal government work led to the formation of Federal Group, Limited (FGL). The FGL group met with early success by obtaining a major role in the Hanford cleanup project in alliance with Bechtel Engineering. Subsequently, the FGL group associated with Kaiser Engineering, and as Kaiser-Hill were awarded the immense Rocky Flats management contract to clean up the nuclear waste resulting from nuclear weapons production.
The Hanford Cleanup Project, a major effort designed to cocoon the “C-Reactor”, one of the original Hanford production reactors started.
IDC passed the $100 Million mark in gross income, and staff size passed 1,000. CH2M HILL again achieved national recognition when Forbes Magazine, a highly respected business oriented publication, ranked CH2M HILL as the 296th largest privately held corporation in the country.
CHIL, the International Business Group, started up and staffed the major Environmental Policy (EPT) project in the former Soviet Union, and established operations in Mexico and Argentina.
With the retirement of Mike Fisher a CH2M HILL pioneer, and Executive Vice President, a new CFO, Sam Iapalucci, was hired. Mike had led the firm in its financial matters for many years, and was widely recognized as the molder of the Policies and Procedures of the firm’s regional administrative staff.
The Rocky Flats Closure Project, a joint venture with Kaiser, doing business as Kaiser-Hill finally got under way. The project consisted of dismantling the former nuclear weapons production facility and providing remedial services to decontaminate 6,300 acres of land and a large number of contaminated buildings.This was a huge project which the government had originally estimated would cost $37 Billion and take over 70 years to complete. With proper funding levels, and other conditions remaining favorable, the Kaiser-Hill team made a cautious estimate that it could be done by year 2006 at a cost of approximately $6 Billion.
The Canadian subsidiary (CHEL) acquired Gore & Storries, a well-respected Canadian firm with a highly regarded history in Water and Wastewater type services throughout Canada. The Canadian operation was, by now, a solidly placed organization with excellent contacts throughout the Northern Provinces, and was contributing an important impact on CH2M HILL, LTD.
(CAPCO) was formed to provide CH2M HILL with the skills necessary to develop and structure projects, and to provide access to the capital necessary to support the firm’s business activities. This would allow CH2M HILL to participate in non-traditional projects as a project developer, and potentially its owner, so that the client can be offered a wide range of services to meet their rapidly expanding needs. CAPCO allowed the firm to be “at the table” with traditional clients who are exploring new project delivery approaches. The need for some of the services provided by CAPCO was the result of several developments in the global water market, primarily client interest in building, owning and operating projects, strong interest by industrial clients to shed non-core assets, and the continued loosening of constraints which drive greater demand for contract operation services in the U.S.
CH2M HILL was selected as a supplier to the Olympic Games to be held in Atlanta in 1996. This, in turn, promised to lead the firm into new areas of expertise around the world as an acknowledged leader in “environmentally sustainable development.” The Engineering News Record Ranked CH2M HILL as the No. 1 “Pure Design” firm and No. 6 in overall categories.
By this time, the existing Management Information System (MIS) used by the firm was hard pressed to deliver project financial information. The system, created in-house was out-of-date, and the information was not linked in a relational basis. Furthermore, the mainframe computers on which the system ran was obsolete. President Peterson selected a MIS task force led by Gene Suhr to investigate and recommend a new MIS. A new MIS, based on programming provided by Oracle, was finally selected. Unfortunately, the switchover from the old “flat-file” system to the new relational data base system did not go well and only after many months of trials and tribulations did a workable system evolve.
A major step in the continuing reorganization of the Corporate structure of CH2M HILL, LTD. was made when it was reorganized along global business lines…
Approaching $800 Million in revenue and some 5,000 employees, the little engineering firm from Corvallis, Oregon paused and took stock of itself. It turned 50 this year and it reviewed with pride its accomplishments over the prior half century. What it saw gave it cause for celebration and it approached that issue in the same thorough manner as any other project- – -the 50th Anniversary celebration events held throughout the firm, including an impressive “Bash” held at the Smithsonian Institution in Washington, D.C., delivered thanks for the past and continued promise for the future!
The list of surviving CH2M HILL early pioneers was diminished when Richard (Dick) S. Ivey passed away in August of this year. Dick was a driving force in CH2M HILL’s history, having founded the planning discipline and serving as its Director for many years. Dick was a mentor and good friend to many CH2M HILL employees who will remember and miss him now that he is gone.
The second of the four founders of CH2M, Holly Cornell, passed away on Tuesday, July 1. Holly was the first employee and was always out front as a leader of the firm. His leadership had spanned four decades and had touched the lives of employees, clients and entire communities wherever and whenever he was called upon.
The largest Asian project to date started in Singapore. To meet the burgeoning water demand of its 4.2 million people, Singapore’s Public Utilities Board (PUB) turned to CH2M HILL to bring creative and sustainable water supply solutions. Taking advantage of the latest technologies, CH2M HILL designed a demonstration project and “water reclamation” plants to produce potable water (NEWater) from reclaimed secondary effluent. Beginning in 1997, CH2M HILL also provided planning, design, construction management, and commissioning services for a unique, large-scale wastewater deep-tunnel conveyance and treatment system program.
The Deep Tunnel Sewerage System featured approximately 30 miles of 10- to 20-foot-diameter conveyance tunnels installed under the island nation. The Changi Water Reclamation Plant, on the eastern side of the island, became one of the world’s largest “greenfield” wastewater reclamation facilities. The plant, scheduled for commissioning in 2008, would have an initial average capacity of 800,000 cubic meters/day. It will be expanded in subsequent phases to provide a final capacity of 2.4 million cubic meters/day.
The entire $4.5 billion (USD) program, when completed in 2016, will help Singapore meet its infrastructure needs for the next 40 years and will result in cleaner waters around the island, a healthier environment for the people of Singapore, and the enhancement of Singapore’s reputation as a high-tech center in Asia.
In January of this year, CH2M HILL demonstrated its commitment to the principles of Sustainable Development by hiring Paul Bierman-Lytle as Director, Sustainable Development. This signaled to the world that CH2M HILL was endorsing the ever growing popularity of the Sustainable Development movement which had become a vital force in many areas of this country as well as throughout the developing world.
CH2M HILL had worked in Egypt for more than 20 years, primarily on water and wastewater projects funded by USAID. Under the umbrella of the “Institutional Strengthening and Policy Reform” project begun in 1998, Alexandria overhauled the city wastewater utility’s financial and management systems, bringing in computerization and customized software programs. The CH2M HILL team, supported by OMI, developed a privatized management model designed to track the compensation of the utility’s 5,000 employees and helped the city make the cultural shift to becoming a fee-based operation, serving over four million citizens.
To inform the public about the complexities of sanitary services, the USAID-funded project created a broad-based public awareness program. This program included a 13-part television series, miscellaneous printed materials, and a school-learning program with teacher training, a student textbook, and a four-day instructional unit. One of the students recognized the benefits of CH2M HILL’s work, echoing sentiments on which the company had built much of its business: “I learned that if we keep the wastewater network from blockage, there will be no flooding or pollution, and we won’t have infectious diseases.”
Gross Revenues for the year ending Dec. 1998 now stood at $1.2 Billion and the staff count exceeded 7,000.
By the end of 1999, all systems were in place to launch an expanded employee ownership program. For the first time in company history, beginning January 1, 2000, any full-time United States employee in the CH2M HILL family of companies could become a shareholder and owner of the company. The initial rollout was limited to the United States because of legal restrictions in the countries where CH2M HILL was working. Bonuses equivalent to stock value were given to employees outside the United States until these restrictions could be further analyzed.
In addition to being able to purchase stock directly, employees could participate in the payroll deduction stock purchase program, allowing them to set aside a portion of their pay to purchase CH2M HILL stock at a 10 percent discount. By March, 2000 employees could buy and sell CH2M HILL stock in the internal market at the first-time-ever trading price of $6.34 per share.
While the timing of the initial road show events seemed problematic, coinciding as they did with a runaway, Internet-driven, speculative stock market, in retrospect the rollout of the new ownership program could not have been more perfectly timed. Within a year, employees used to seeing escalating 401(k) investments now watched the bottom fall out of those investments while CH2M HILL stock performed at a remarkable pace.