When Top Grade Construction was launched in 1990, the company had big plans to be a leading civil engineering contractor and excavator in the Northern California marketplace.

Seventeen years later, the company seems to be on track to accomplish that goal if it can maintain its record-setting growth. Between 2005 and 2006, Top Grade’s revenue grew 78 percent. In 2007, Vice President of Business Operations Brian Gates expects revenues to exceed $220 million.

Led by Gates’ father, President and CEO Bill Gates, the Livermore, Calif.-based company’s core business includes excavation, grading and paving in the public and private sectors. It operates out of three locations in California.

When Top Grade formed in 1990, the business focused on private work, primarily in the commercial and industrial sector. Since the early ’90s, “business has changed dramatically,” Brian Gates says.

With impressive foresight, Gates says, Top Grade began planning for the impending residential collapse back in 2002 by diversifying its revenue streams.

Following Building Trends
Until the early 2000s, 90 percent of Top Grade’s work was still private and in the residential and commercial sectors. Today, 60 percent of its revenue is generated by private work and 40 percent comes from the public sector.     

With an eye toward emerging trends, the company built a public works department, complete with a seasoned estimating and field staff.

Gates says public construction opportunities in California, particularly related to improving the state’s transportation infrastructure, will generate new revenue for Top Grade and the revenue breakdown is quickly approaching the 50/50 split.

But unprecedented growth forced the company to take a closer look at its internal operations this year, starting with studying its management systems. Although Gates says the company will continue to grow, it will be at a more controlled rate.

“We are looking at vertical integration through materials acquisitions and are moving from an entrepreneurial model to a much more professionally managed business structure,” he says.

Cutting-Edge Investments
To perform the job better than the competition, Top Grade has made significant investments in outfitting its equipment fleet with new technology available in the marketplace. Gates says the company is considered a leader in the utilization of GPS technology, investing more than $4 million in GPS-based systems for its fleet since 2001.

At the suggestion of Project Manager Dennis Batye, one of the company’s tenured area managers, the company incorporated the technology with its fleet well before the competition.

“Just as we were starting to invest heavily in large scrapers, it was evident that GPS technology was something that was out there and that was still very new that the competition was not yet embracing,” Gates recalls. “In our mind, the competitive advantage is the cost savings that we can pass onto the owners in the bidding and building process. We have adopted a mindset internally that technology has become a core competency of our business.”

Using GPS modeling, Top Grade can accurately grade large projects, from master-planned communities to retail chains and malls. The company’s internal modeling department can convert CAD files to 3-D models, which can then be calibrated on the GPS system for precision grading. “It allows us to be quicker in terms of starting a job; we are able to increase production and lower the costs,” Gates notes.

The company is also embracing technology to automate its internal operations. “From an adoption standpoint, we have an opportunity to embrace technology in a variety of different facets,” Gates notes. In January, Top Grade started implementing an application suite from Oracle that will automate processes from tracking and reporting near real-time job costs and processing payroll, to managing purchase orders.

Gates says an impeccable safety record sets it apart from the competition, stating that its “safety incident rating is among the lowest in the industry.”

Top Grade has received several industry awards for this commitment, including the Safe Contractor of the Year, awarded by the Engineering and Utility Contractors Association.

The Top Choice
Evidence that Top Grade has fulfilled its original expectations can be seen in its high-profile jobs today. In 2006, the firm was chosen by real estate developer SunCal Companies as the general contractor to complete $130 million worth of civil work for the Delta Coves residential waterfront community.

The 320-acre site at Bethel Island, Calif., will include 494 lots with docks, 19 new streets and a new man-made marina. Top Grade is in charge of managing, scheduling and subcontracting the work necessary to complete the project.

The site’s rolling hills and dense overburden along the south perimeter of the project called for controlled grading, clearing and grubbing. “Due to its complexity and sheer size, it was the biggest project this company had ever taken on,” Gates explains.

Because no subsurface water was allowed to leave the site, Top Grade built detention basins using cofferdams and lagoons. These dams and lagoons also eliminated the need for reverse osmosis systems, saving the owner $15 million.

Using GPS technology, Top Grade prepared a site that would require 6 million cubic yards of excavation and earthwork. The technology required only two grade checkers for the project.

Without it, Gates estimates eight to 10 would have been needed. In addition, with the help of subcontractors, more than 2 million square feet of deep dynamic compaction, 10,000 borings and a slurry wall were completed on site.

Finishing Touches
In December, the company will complete the levee breach to fill the lagoons and provide the property with waterway access to San Francisco Bay and numerous deltas. “It will be a monumental project when we finish, but it’s also been an eye-opening experience for the entire staff,” he says. “Overall, our success on the project has given our entire organization confidence and we are now pursuing other $100 million-plus … projects.”

Leveling the Playing Field

Not only is advanced technology changing how contractors compete for business, but it is also changing the quality of the projects being built.

GPS technology in particular has been one of the most-adopted systems in the construction industry for its ability to finish projects raging from mass excavation to compaction to fine-grading work.

“The construction industry is moving toward the general application of 3-D grade-control, whether by using GPS-based or total station-based guidance,” says Arthur Taylor, segment manager for grade control with Sunnyvale, Calif.-based Trimble Navigation Ltd.

For civil contractor Top Grade Construction, GPS technology has made the difference between doing an average job and exceeding the client’s expectations by completing precision grading on time and under budget, says Vice President of Operations Brian Gates.

“In recent years, Trimble has seen an increasing adoption rate for GPS in the excavator machine segment,” he says. According to Taylor, the increase is driven by improvements in GPS offerings for excavators; distribution improvements across all operator skill levels and contractor sizes; increased market awareness; and increasing availability of excavators that come equipped with GPS.

First introduce by Trimble in 1997, 3-D grade control technologies have benefited the entire project team from the owner to the machine operator, Talyor says, and are fast becoming the standard rather than the exception. “Positioning technologies and solutions both on and off the machine on the construction site will very soon become standard,” he predicts. “These changes will result in better collaboration on projects, with faster and more informed decision-making.

“Performing earthwork smarter, faster and more profitably is critical to success in today’s highly competitive construction industry. Contractors need to perform all parts of the job faster and more accurately than ever before.”

As Taylor explains, such “increases in productivity mean operators can spend more time being productive and less time waiting for surveying and grade checking.” In addition, personnel, fuel, site delays and machine costs can be reduced.

Although the technology has helped lead contractors such as Top Grade into unprecedented growth, it does have its limitations. In some cases, equipping a machine with a GPS system requires taking it out of production, and preventing it from generating profit for the owner.

In addition, training operators to use the equipment is a hurdle that contractors must overcome. Top Grade, for example, uses an on-site, in-the-cab training program provided by Trimble where operators learn about the equipment and how it is used. Trimble also provides ongoing tech support.