Perini Corporation Business Information, Profile, and History

Company Perspectives

What Sets Us Apart? A reputation formed over more than a century, one project at a time. Relationships built on trust, leading to a collaborative professional relationship with our clients. The financial strength and institutional knowledge required to carry out the largest of projects. Know as the "go to" contractor that private developers and public agencies turn to with some of their most challenging assignments. These are some of the qualities that set Perini apart in our industry. They also make us an ideal partner for design-build and alternative delivery projects. We can assist our clients with every phase of development, from budgeting and pre-construction through to project financing and facilities management. Perini's unique expertise and commitment to client satisfaction have made the company the "partner of choice" in several key markets.

History of Perini Corporation

Consistently ranked among the top 50 contractors in the United States by Engineering News Record magazine, Perini Corporation services the public and private sectors in general contracting, construction management, and design-build services from its world headquarters in Framingham, Massachusetts. Perini has built some of the America's most intriguing and challenging structures, including the Massachusetts Turnpike Extension--the largest highway contract awarded in the 1960s--the Trump Taj Mahal Casino Resort in Atlantic City, New Jersey, the Paris Casino Resort and the Egyptian-themed Luxor Hotel and Casino in Las Vegas, Nevada, and the expansion of the La Guardia Airport in New York. Perini Corporation is organized into three operating business segments: Building Operations; Civil Operations; and Management Services. The majority of the company's clients are from the hospitality, gaming, corrections, health care, sports, entertainment, and education industries.

Early History

Perini Corporation grew out of the hard work of Italian immigrant Bonfiglio Perini. In 1892, five years after he emigrated from Gotolengo, Italy, where he had been a stone mason, Bonfiglio Perini won contracts to build waterworks projects in the eastern United States. One of his first large contracts was a 20-mile bluestone wall in the Catskill Mountains of New York, which historian Bob Steuding praised in Constructor as "a majestic project when you think about it, a giant piece of sculpture." Bonfiglio Perini also built one of the nation's first hot-mixed asphalt highways in 1917 in Rhode Island. In 1918 Bonfiglio Perini brought his sons officially into his business by incorporating the company as B. Perini & Sons, Inc. On Bonfiglio Perini's death in 1924, four of his ten children took control of the company. Louis Perini acted as president, Joseph as treasurer, Ida as secretary, and Charlie, the youngest, eventually became vice-president of equipment. They continued their father's tradition of hard work, setting new paving records in 1930 on the Boston-Worcester Turnpike, their first million-dollar contract.

A Postwar Period of Growth

In the 1950s the company name changed to Perini Corporation. This decade was a period of tremendous growth for the company--especially internationally. Perini built the world's largest uranium ore concentrator for Consolidated Denison Mines Ltd. in Ontario, Canada. To secure the company's growth as a large-scale contractor, Louis Perini developed path scheduling--a way of routing project needs--to ensure project efficiency. Louis "was an absolute demon when it came to productivity," his son David Perini told Constructor. He was "always looking for a way to do things faster and better." The company quest for efficiency and productivity effected Perini's engineers. By the 1950s, entry-level engineers were prepared for future leadership roles in the company by a 36-month training program that gave them experience in all aspects of construction. The training program, David Perini noted in Constructor, was "probably the most important program in the company, because these young engineers are the feedstock, the people who will lead Perini one day." The program continued into the 1990s.

Perini Corporation offered stock to the public in 1961. The company continued its reputation as a large-scale contractor throughout the 1960s, building the 750-foot-high Prudential Center in Boston, the world's tallest building outside of New York at the time, and the Calima Hydroelectric Project in Colombia, South America, which was a 3 million cubic-yard earthfill dam with 35,000 feet of tunnel.

In 1972 the third generation of Perinis assumed control of the company when David Perini took over his father Louis's position as president and chairman. David was well prepared to assume the role; he joined the firm as assistant to general counsel in 1962 after finishing his law degree at Boston College, and served as vice-president, general counsel, and vice-chairman before taking over the top position. Even though David had gained much academic knowledge, Louis served as his role model. "Dad ate and slept the construction business," David told Constructor. David remembered that the Engineering News Record wrote that "more than a little bit of the heart went out of the construction industry" when Louis Perini passed away. In 1991 the U.S. Army Corps of Engineers Historical Foundation posthumously honored Louis as one of the top contractors in the engineering and construction industry.

Under David Perini's control, Perini concentrated on growth. The company outgrew the second-floor Framingham storefront headquarters that it had occupied since the 1920s and moved to the company's old equipment shops, which it transformed into a modern office building that included a courtyard and sun deck along the Sudbury River. Perini expanded its business operations through investing and acquiring interest in other companies. After the 1974 merger of a Perini-owned Canadian pipeline subsidiary with Wiley Oilfield Hauling, Ltd., Perini gained control of 74 percent of Majestic Contractors Ltd., a Canadian pipeline construction company. This company built section two of the Trans-Alaska Pipeline, which consisted of 82 miles of heavy pipe built above ground and 67 below. In the same year, Perini acquired Mardian Construction Co. of Phoenix, Arizona. After a troubled venture in open-highway construction, the company began in the 1980s to focus on acquiring firms whose specialties, such as civil works and large-scale urban construction, meshed well with the existing Perini businesses. "Most kinds of construction require a certain degree of specialization. It's generally not a good idea to work in someone else's backyard," Kirchenberger noted in the Providence Business News. Perini acquired R. E. Dailey & Co. of Detroit, Michigan, in 1980, and Loomis Construction Co. of New Mexico in 1984.

Restructuring Real Estate Activities

In the 1980s, Perini took steps to reorganize its real estate activities. In 1984 the company made its real estate investment division a separate entity called Perini Investment Properties Inc. Perini Corporation and Perini Investment Properties Inc. were autonomous organizations trading under different names on the American Stock Exchange, but David Perini served as chairman and major stockholder for each. By the mid-1980s, Perini's real estate activities were confined to its wholly owned subsidiary, Perini Land and Development Company, which owned and managed commercial, residential, and industrial properties. As early as 1957, Perini had begun its investment in developmental property with 5,500 acres in West Palm Beach, Florida. By 1988 Perini Land and Development Company had developed 35 percent of West Palm Beach with housing, commercial development, and entertainment facilities. The Villages of Palm Beach Lakes, a 1,400-acre property holding 4,000 residences, offices, retail shops, golf courses, and more than 7,000 people, "has become one of the most profitable projects" for the company, according to the Palm Beach Post. Throughout the early and mid-1980s, David Perini told the Business Worcester, "our real estate development operations made the major contribution to our overall results." Perini's real estate profits peaked in 1987 due to ten consecutive years of record earnings in Perini Land and Development Company's five real estate markets: Arizona, California, Florida, Georgia, and Massachusetts. Its holdings in Florida contributed the most toward profits.

Perini Land and Development Company ensured the appeal of their real estate through unique marketing techniques. Eager to attract buyers in Golden Gateway Commons, its eight-year-old condominium project in San Francisco, California, Perini Land and Development Company hired the Mulhauser and Young advertising agency to craft a fresh approach. Starting with a new name and logo, Mulhauser and Young promoted the 1,254-unit project as a neighborhood. The most influential aspect of the marketing campaign, however, was a direct mail campaign that included cans of spaghetti, a bar of chocolate in the shape of the new logo, and a shopping bag that listed the neighborhood shopping attractions. Moreover, Perini Land and Development Company advertised in the real estate and business sections of the Sunday San Francisco Examiner and Chronicle and the western edition of the Wall Street Journal, instead of the traditional trade and consumer press.

Perini's real estate success slowed in late 1988 as the real estate industry slumped, and by the early 1990s this portion of the company accounted for only 5 percent of corporate revenues. However, as the company incurred losses in its real estate investments, the company's construction divisions began to report record earnings. The construction business grew to be the most significant contributor to profits in the early 1990s. Reacting to this shift in trends, Perini consolidated its general construction divisions into the Perini Building Company Inc. in December 1991 to further penetrate the nationwide building market. The consolidation was designed to allow Perini to take advantage of its name recognition; until that time Perini's acquisitions had acted independently. The Loomis, Mardian, and R. E. Dailey companies were united into the Perini Building Company in name, but continued to operate from their existing offices. Eastern U.S. Division headquarters are located in Framingham, Massachusetts, Western U.S. Division headquarters in Phoenix, and Central U.S. Division headquarters in Detroit. Perini gathered the construction division's executive, administrative, and operational functions into the corporate structure, which centralized decision-making and project allocation.

Perini reorganized its heavy construction division in that same period. The heavy construction division had extensive experience in building mass transit systems like the San Francisco Bay Area Rapid Transit system, and in building infrastructure projects like the Tunnel and Reservoir Plan in Chicago. Perini targeted the infrastructure market for growth into the year 2000 because, according to materials published by the company, "over 40 percent of the nation's bridges are rated deficient, and roughly the same percentage of highway miles are in poor or fair condition." Anticipating the need for future efficiency, Perini divided the heavy construction division into two operating entities, the Metropolitan New York Division and the U.S. Heavy Division. The Metropolitan New York Division handled contracts in New York and other large eastern cities, such as Baltimore and Washington, D.C., while the U.S. Heavy Division was responsible for work throughout the rest of the United States.

Perini International's projects made significant contributions to Perini earnings beginning in 1985. The international division has worked in 20 countries, primarily on the construction of U.S. embassies. The division has erected U.S. embassy buildings in Zaire, Gabon, Brazil, and Paraguay. In 1992 the division continued to build for the U.S. Department of State in Djibouti and Venezuela, for the U.S. Air Force in Egypt, and for the National Oil Company in Morocco. The division also began efforts to expand into new overseas markets, focusing initially on Mexico and Latin America.

Joint Ventures Lead to Growth

A source of past success and future growth for Perini was the joint venture. Forming joint ventures was one way that Perini has diversified its operations, won large infrastructure contracts, built its reputation, and shared its financial risk. Executive vice-president of construction Thomas Dailey said in Perini: Second Century that Perini's "shared sense of purpose has enabled our joint venture partnerships to be successful, and to contribute to our growth and reputation." Perini began working with other firms beginning in the 1890s, and relationships forged during World War II allowed the company to expand into Australia, Canada, India, and South America. Some projects that Perini contributed to through joint ventures were the Trans-Alaskan Pipeline, the North River Water Pollution Control Project in New York City, and the Trump Taj Mahal Casino Resort.

In 1988 Perini sought further growth through a joint venture in the hazardous waste cleanup market. The company joined with Ashland Technology and Versar Inc. to form Perland Environmental Technologies Inc., which provides scientific, environmental engineering and construction services for hazardous-waste management and cleanup. Perini controlled 90 percent of Perland Environmental Technologies in 1991. That year Perland won a $19 million award to work on the New Bedford harbor Superfund site in Massachusetts. Perland positioned itself to take advantage of the market growth by seeking out projects that would expand its expertise. It has worked on soil stabilization, incineration, and groundwater treatment at Superfund sites in Michigan. Perini expected Perland to contribute significantly to profits, noting that the hazardous waste-cleanup market grew 15 percent in the early 1990s, and that the company expected the market to expand to $5 billion per year by 2000.

In the early 1990s company management, anticipating Perini's future growth, initiated a plan called Mission 2000 to attempt to anticipate the company's needs in the year 2000. Teamwork between company divisions, subsidiaries, trade organizations, and through joint venture partnerships was cited as "a prerequisite for success." Allying Perini with companies whose specialties enhance Perini's work helped the company remain competitive. Given the goal of working with companies that work in similar fields, Perini sold its share of the pipeline company, Majestic Contractors, Ltd., in early 1993 because Majestic's core business did not mesh well with Perini's other divisions. The resultant divisions and subsidiaries could all work together through internal joint ventures. One such internal joint venture between the Eastern U.S. Building Division and the U.S. Heavy Division allowed Perini to work on a $190 million project at the Deer Island residuals treatment facility in Boston, which included building sludge and gas storage tanks.

Perini's competitiveness, noted David Perini in a company publication, would be enhanced by the company's participation in public/private ventures, which included prisons, health centers, sports arenas, and toll roads. Public/private ventures were projects which traditionally had been paid for with taxes but were increasingly being funded by private investors. Project development vice-president Robert Band explained in a company publication that "public/private ventures leverage future revenues generated by projects such as toll roads, lease-back prisons and sports arenas, and present them as the credit in the financial transaction." Tolls, rent monies, and ticket sales supplement or even replace tax dollars in these projects. Band called Perini's public/private venture approach, which included project design, finance arrangement, and a guaranteed maximum construction cost, "the project delivery system of the future." The company used this approach when it built the Somerset County Prison in Pennsylvania, which allowed the state to lease the prison for 20 years instead of purchasing it outright.

In addition to securing its reputation through new projects and joint ventures, Perini was concerned with maintaining a company supportive of its employees' needs. Concerned about the rights of nonsmokers in the mid-1980s, Perini constructed smoking lounges that had large fans to draw out smoke to accommodate its employees who smoked. Vice-president of human resources Douglas Mure said that "we were ahead of the game," when the Environmental Protection Agency declared passive smoke a carcinogen. Perini emphasized safety as well as health by giving an annual President's Award for safety. The company also employed a retired Occupational Safety and Health Administration (OSHA) inspector to inspect facilities weekly and paid foremen to go to safety meetings. "If they come to [the meetings], have no recordable injuries for the week, pass a safety inspection and give their crews a 'tool-box talk' on safety, they win a $50 bond," according to the Rochester Business Journal.

Even though Perini regarded itself as a family-owned business, it recognized the advantages of employee ownership in a company. In 1992 the company revised its all-cash bonus plan for top executives and operating management to include 60 percent common stock and 40 percent cash. The cash savings would be invested in company growth and the stock awards would "promote stock ownership among many employees," vice-president of finance James Markert relayed to the Wall Street Journal. The adjustment would affect about 100 of the company's 2,000 employees.

Anticipating growth into Perini's second century of business, the company planned to double its construction operations by expanding its work in infrastructure, environmental and general building markets. The company decided to stay in the real estate business but to reduce its level of investments. In his 1992 message to stockholders, David Perini focused on Perini's reputation. He noted that "a company and its reputation are like a building. They take much longer to build than to demolish. Build your image and reputation and do nothing to damage your good name."

Reversal of Fortune

The late 1990s proved to be challenging for the company as various real estate investments turned sour, which left profits faltering. In 1999, the company reported a net loss of $16.04 per share. In 2000, Perini initiated a $40 million recapitalization plan that increased its net worth to $38 million, allowing it to focus on its core construction operations.

The company's fortunes began to turn around and in 2002, the company reported its third highest net income in its history--$23.1 million--due in part to the completion of several projects in the hospitality and gaming industries. Perini Management Services had a good year as well and secured U.S. government contracts to update embassy locations across the globe. Perini also benefited from contracts related to the rebuilding of Iraq and Afghanistan. Other new contracts included the construction of Glendale Arena in Phoenix, Arizona; hotel expansion in Atlantic City; new Hard Rock hotels in Tampa and Hollywood, Florida; the Chumash Casino & Resort in Santa Ynez, California; and the Pala Hotel & Casino in Pala, California.

While the company was experiencing growth, especially in its building operations segment, it did face challenges brought on by an overall economic slowdown in the United States and its company's exposure to losses related to its involvement in Boston's "Big Dig" project--this multi-billion dollar tunnel project routed Interstate 93 under downtown Boston and is known as one of the most controversial and expensive public works projects in the United States.

Nevertheless, Perini forged ahead with its growth plans. The company expanded its foothold in the southeastern United States in 2003 by purchasing James A. Cummings Inc., a builder of educational, municipal, and commercial developments. Two years later, the company added Cherry Hill Construction Inc. and Rudolph and Sletten Inc. to its arsenal. The latter, a California-based building contractor and construction management company, had $700 million in annual revenues at the time of the deal.

Perini appeared to be on track for future success with a construction backlog of nearly $7.9 billion at the end of 2005. By focusing on healthcare facilities and casino projects, Perini had carved out a coveted niche in that sector of the industry. During 2005, the company landed several lucrative contracts including the MGM Project City Center, a $3.4 billion urban complex covering 66 acres located between the Bellagio and the Monte Carlo casino resorts in Las Vegas. The project included a 4,000-room hotel tower, casino, convention center, showroom, 500,000 square feet of retail and restaurants, three boutique hotels, and several residential towers. Perini also secured a $1.28 billion contract to work on The Cosmopolitan Resort and Casino located on the Las Vegas strip adjacent to the Bellagio Hotel and Casino. This project included the construction of two high-rise hotel and condo hotel towers 600 feet tall.

Principal Subsidiaries

Perini Building Company; Perini Civil Construction; Perini Management Services Inc.; James A. Cummings Inc.; Cherry Hill Construction; Rudolph and Sletten Inc.

Principal Competitors

Clark Enterprises Inc.; The Turner Corporation; Washington Group International Inc.

Chronology

• Key Dates
• 1892 Bonfiglio Perini wins contracts to build waterworks projects in the eastern United States.
• 1917 Perini builds one of the nation's first hot-mixed asphalt highways in Rhode Island.
• 1918 Perini incorporates the company as B. Perini & Sons, Inc.
• 1961 Perini Corporation goes public.
• 1980 R. E. Dailey & Co. of Detroit, Michigan, is acquired.
• 1984 Loomis Construction Co. of New Mexico is purchased.
• 1993 The company sells its shares of Majestic Contractors, Ltd.
• 2000 Perini initiates a $40 million recapitalization plan.
• 2003 James A. Cummings Inc. is acquired.
• 2005 Perini adds Cherry Hill Construction Inc. and Rudolph and Sletten Inc. to its arsenal.