David Hecker was an experienced trial lawyer well versed in the construction industry before he joined Kiewit Corporation in 2003. Shortly into his tenure as infrastructure group general counsel for the Omaha-based construction management giant, however, he realized that he and his legal team contribute in many more ways to the company’s success than through litigation.
OFF THE CLOCK WITH DAVID HEECKER
David Hecker didn’t grow up as an fan of opera, but he has grown to love it. In recent years, Hecker has served on the board of directors of Opera Omaha and currently acts as its secretary.
Opera Omaha is the only professional opera company in Nebraska, founded in 1958 as a volunteer association. In 1970, after immense support from the community, it became a “fully professional opera company.”
Currently Opera Omaha brings three exceptionally high-quality operas to Omaha each year, according to Hecker.
Opera Omaha is also highly regarded in the region for its extensive education program—programming includes free events to inform audiences about opera story lines and vocal master classes.
In fact, lawsuits are but a minuscule part of the story. Kiewit’s lawyers are an integral part of the business from project proposals through the receipt of the last payment for a completed job. “We cover projects from cradle to grave,” Hecker says. “We even work on proposals that don’t result in contracts.”
Legal staff collaborate regularly with other departments—a much different premise than working for a law firm where lawyers are focused only on specific cases. “I don’t feel like a hired gun here,” Hecker says. “I’m part of a team.”
Over the past dozen years, Kiewit has greatly increased its private sector work. The more than 130 year-old company first made its reputation in the public sector, particularly on large infrastructure projects. That strategy has continued to evolve the last two decades, and today about half of the company’s revenue comes from the
private sector.
The company has grown rapidly as a result, from about $3.5 billion in revenue in 2003 to approximately $10 billion now. To support that impressive growth, the legal department has increased in size and scope, Hecker says. “When I started, there was just one lawyer dedicated to contract work; now there are seven,” he adds.
The complexity of contract terms when dealing with private sector clients is greater than with the public sector, where winning contracts often comes down to having the lowest bid price. Private sector clients, on the other hand, make decisions based on several issues in addition to cost. For them, the length of the construction schedule, financial risk allocation, and prior working relationships with the general contractor or construction management firm could be as important—or more so—as the contract price.
Those factors require the attention of attorneys to ensure that Kiewit makes its desired profit on each project. That work begins with Hecker and fellow attorneys poring over the terms of request for proposals (RFPs) from prospects and Kiewit’s proposals.
After a client awards Kiewit a new project, its attorneys work on the contract language with a keen eye on the risks that the company will assume over the course of the engagement. These contracts can run longer than a hundred pages. Various clauses delineate who is responsible for aspects of the project, penalties and incentives regarding deadlines, and who has to absorb costs if certain things go wrong. For example, if unforeseen site conditions—say, a large chunk of buried rock ledge—become apparent after construction begins resulting in a significant scheduling delay, who must absorb cost overruns?
In construction, the adage, “time is money,”
rings truer than in most other industries. For instance, the sooner a retailer gets a new store built and opened, the sooner it will start bringing in new sales. There’s a strong imperative for construction schedules to be accelerated, as a result. “There’s a lot of pressure for many clients to get started on construction with less than full information,” Hecker says.
Often, construction begins before the design documents are completed, leading to instances where work has to be modified on the fly or redone. This adds time and additional cost. Kiewit attorneys aim to protect the company’s best interests in managing these risks, contract by contract. “Sometimes risk is allocated to the contractors, sometimes to the client, and sometimes it is split between the two,” Hecker says.
Conflicts can arise after projects are underway for any number of reasons, though, despite the best efforts to assign risk and responsibility in the contract. Large construction projects, after all, are highly complex beasts. Less than strong, open communication between suppliers, contractors, subcontractors, designers, and owners sometimes turns minor gaffes into major headaches. Hecker’s team seeks to identify potentially contentious issues early by following projects as they progress, even visiting job sites to get to the bottom of things.
“We’re able to be out there finding solutions to issues before they become problems,” Hecker says. This makes legal personnel part of the project team, a role that Hecker appreciates, and that he hadn’t experienced previously in his career.
Sometimes disputes with clients can’t be settled by negotiation, and matters often go to mediation or arbitration. Neither side ever wants the issue to escalate to the courts, Hecker says. Kiewit wants to maintain good working relationships with all clients, knowing that they will likely seek return business in the future. In the rare cases when mediation or arbitration fails to yield a resolution, the issue may end up in court. At any given time, Hecker says, his team has only about a half dozen cases in litigation—a small number given the volume of Kiewit’s business. In a sense, an issue that prompts a suit is a failure. “Very often, it indicates that we missed opportunities to resolve the matter much earlier,” Hecker says.
Some public sector entities are prohibited from using mediation or arbitration, though, so the courtroom may be the most viable option in those instances. “Litigation is expensive and often produces an unsatisfactory resolution,” he says.
Underlying these high-stakes decisions are Kiewit’s values, culture, and history. An employee-owned, privately held company, leaders have historically focused on long-term success more than quarterly profits. “You have a personal investment as a stockholder,” Hecker says. “It’s a different sense than you would have as a hired gun in a private law practice. There’s a sense here of building a legacy.”
That ethos extends from Kiewit employees to their communities—particularly at the corporate headquarters in Omaha, Nebraska. Peter Kiewit, former president and son of the company’s founder, set the tone for charitable giving by bequeathing much of his fortune to a charitable trust. The company encourages employees to volunteer with community groups, and often provides financial support for their efforts.
As with Kiewit’s many prominent infrastructure projects, the company that Forbes magazine once called “the ultimate meritocracy,” is built to be long-lasting. Hecker and his infrastructure team, along with attorneys in other groups and their colleagues in other departments, are committed to securing a bright future for the company and their community. After 130 years, Kiewit’s employee-owned, privately held formula continues to stand the test of time.
