Building the New Economy

And DPR, unlike many of its rivals, has embraced those ideas. "I used to look at Silicon Valley companies and ask, What makes them so different?" says Ronald Davidowski, 51, a Chicago native who first came to the Bay Area in 1969. "Eventually I came to understand that what made them different was empowerment and ownership. Employees genuinely believe that if they do well for the company, they will do well for themselves. That's how HP, Intel, and Sun attracted great people and continued to grow."

That's also how DPR vowed that it would grow. The company's ways of working are vastly different from the industry norm. Job candidates, for example, are put through 8 to 10 interviews, because DPR wants to make sure that they can handle its freewheeling culture. The main trait that DPR looks for isn't technical proficiency or intellectual dexterity -- although both of those qualities count for a lot. Rather, it's the confidence to make high-stakes decisions on the spot. "We expect our people to understand our customers' expectations and to exceed those expectations," says Doug Woods, 47, a UCLA graduate whose career in construction began with summer jobs as a teenager. "We don't expect them to wait for permission in order to do the right thing."

Chris Smither certainly doesn't wait. At the Novell construction site, he recounts how his team kept the project going through one of northern California's worst winters in a century. Smither knew that El Niño was coming. He also knew that he had two options for dealing with it. The first was to push back the project's completion date (one day for every day lost to rain) -- a delay that Novell was contractually obliged to permit. The second was to outsmart Mother Nature.

"We took the second option," Smither says. Subcontractors worked 10-hour shifts and on weekends to install the site's utilities -- underground sewers for storm water and waste product, communication conduits, electrical infrastructure -- before the rains arrived. Then Smither secured access to the site by accelerating construction of the parking lot that surrounds the campus, including all of the lot's curbs and gutters. Finally, Smither built a temporary road to provide cranes, bulldozers, and other heavy vehicles with access to the interior of the site during the storm. "The crane road cost a lot," he says. "But it was a lot cheaper than shutting down the job for six months."

The result of these and other on-the-fly innovations: While many of his competitors were literally stuck in mud, Smither's crew worked through 125 days of rain, and Smither kept the project's schedule from being extended. Not bad for the youngest project manager in DPR history -- and, for a job of this size, probably the youngest project manager in the country. "At a traditional contractor, you don't become a project manager until you've had 15 years of experience, no matter how good you are," says Smither, a five-year veteran of DPR. "This company doesn't base decisions on seniority. If you've proven yourself, if you can do the job, you're going to get more and more responsibility."

To Build a Great Company, Build Great Teams

DPR's founders didn't set out to reinvent the construction industry. They just wanted to build a company that worked -- in an industry where most companies don't work very well. Early on, they hired Jim Collins, then a professor at the Stanford University Graduate School of Business, to help them think through what they were creating. He urged the three partners not to focus on revenues, profits, or contracts. Instead, he argued, they should wrestle with purpose, mission, and values.

"We had a business plan," says Woods. "But things really began to take shape when we agreed that this company would exist to build great things. We decided to do something spectacular."

The founders then agreed on a second principle: To build a company that was capable of building great things, they would build a new kind of relationship with customers. During the 1950s, a sort of golden age for the construction industry, builders and clients got along pretty well. Construction firms operated on margins of about 10%, and lawsuits were few and far between. But during the 1960s and 1970s, the competitive-bidding process, which had originated with public-works projects, spilled over into the private sector -- and drove a wedge between builders and clients. Builders desperate for business fueled bidding wars; average margins shrunk to less than 3%. It wasn't unheard-of for winning bidders to sign contracts that included no margin at all. They figured that they would earn their money through change orders -- expansions or modifications that allowed builders to impose additional fees.