While Chicago-based Clune Construction didn’t set out to dramatically expand its regional revenue by 2023, the company’s Midwest team did just that through a combination of smart decisions and good timing.
Midwest regional revenue totaled $822.62 million last year, more than doubling to $400.70 million in 2022, propelling Clune to No. 25 in ENR’s Midwest Top Contractors Ranking 2024, compared to last year’s number 32.
“It was a few years of planning to get there, and it happened in 2023,” says Dave Hall, Clune’s managing director. “It really has to do with the data center boom in Elk Grove Village and the western suburbs of Chicago. We’ve been chasing these projects, shifting teams, training people and hiring to be ready for it. And it all came at once, which is fantastic.”
One of 12 studios Clune completed for Barstool Sport’s new West Loop office in Chicago.
Photo by Kendall McCaugherty
Changing sectors
Clune’s equipment adapts to market fluctuations in the four main markets served (aviation, healthcare, critical data centers and interior/tenant improvement).
“When the company started [in 1997], we were a tenant/interior contractor. That was our only vertical,” says Vince Gutekanst, Midwest President and CEO of Clune. “As we started to evolve, we realized that we needed to try to expand a little bit into other verticals. Then came the mission critical data center market and then aviation and healthcare.”
Before the pandemic, about 75% of the company’s work was in the tenant/interior space, with about 20% in mission critical. Today, tenant/indoor projects account for more than 30% of total work as this market remains depressed but very competitive in the changing labor landscape, while data center work has increased to more than 50%. Clune diversified into health care about a decade ago and has led projects such as a 15,000-square-foot hospital simulation center in Lake Forest, Illinois.
“We’ve grown a lot, but it’s always been focused on excellence and not allowing us to be a commodity.”
—Dave Hall, Managing Director of Clune Construction
In aviation, while Clune isn’t building infrastructure, “we’re taking what we did very well, our background and the DNA of tenants and interiors, and building inside the airport,” says Joe Van Oosbree, managing director of Chicago operations at Clune. The firm has worked on a variety of hospitality improvement projects at both O’Hare and Midway airports in recent years.
Meanwhile, mission-critical work has exploded, in part because of a tax incentive passed by the state of Illinois in 2019, but also because of Clune’s leadership in realizing that mission-critical was the space for turn around as other sectors slow down. This vertical became a catalyst for growth in 2023, says Gutekanst.
“We had a big advantage because we had been in the space for a couple of years before it really took off. With our experience and track record, we’ve continued to gain traction with our customers. They saw that and started to emerge more opportunities,” he says.
But the company’s strategic plan doesn’t specify growth for growth’s sake. “When I started, we had 40 employees, now we have almost 800, so yes, we’ve grown a lot, but it’s always been focused on excellence and not allowing us to be a commodity,” says Hall.
This means not being afraid to turn down projects and clients that aren’t a good fit. “A lot of clients are just results-driven, they’re probably not for us and we’re not for them,” he says.
A 310,000 square foot, 48 MW data center recently completed in Aurora, Illinois.
Photo courtesy of Clune Construction
People first
As an ESOP, Clune’s team has an advantage, according to Hall. “My whole reason for doing my job is to make life really good for our people and their families,” he says. “I can do things that other CEOs can’t do. We had a really good year, so we gave out a few million dollars in extra bonuses because our employees are our shareholders.”
This philosophy carries over into the many benefits that Clune ensures for each of its people, such as paying 100% of all health benefits for all employees and their families and helping pay off student loans.
But the continued talent shortage has certainly had an impact. While the company saw its regional revenue double by 2023, revenue could have tripled.
“Last year we turned down nearly a billion dollars worth of work just because we couldn’t find people to do it,” Hall explains. “We could take on more than we do, but again, the metric I live by is how are my employee-owners doing? What’s their life like? We don’t have to grow; the only reason we grow as a company is because it creates opportunities for our people.”
“Clune is very responsive, organized and maintains great attention to detail.”
—Jonathan Gibbs, Executive Vice President, Product Delivery, Prime Data Centers
The Clune team believes it’s better to maintain a solid reputation for good, well-done work than to overextend yourself and possibly make mistakes on jobs.
But there are some strategies that help Clune reduce the impacts of the war for talent, such as bringing recruiting efforts in-house with several dedicated acquisition specialists. “We just discovered that external recruiters don’t have the same incentive as an internal talent acquisition person,” adds Hall. “It’s been very helpful.”
He has also been successful in pivoting team members from slower markets such as tenants/interiors to the growing mission critical. “For us, it’s about working as a team and making sure that if we pivot people into another market, we support them with everything we have,” says Gutekanst. “This strategy has paid off tremendously in helping to bridge this talent gap,” as has a robust internship program and an expansive focus on professional development at all levels of the organization.
Before the data center tax credit took effect, many of Clune’s teams in the space were building in Atlanta; Dallas; Columbus, Ohio; and Phoenix, following mission-critical booms in those locations, but now they’ve also been able to return to their home turf and help out in the Midwest as well.
While some contractors aim to hire for a project or short term, Clune’s goal is to hire people who will become lifelong employees.
“Recently, our founder, Mike Clune, ran into one of the top bounty hunters in the area, and the girl said straight up, ‘I’m not even trying to steal people from Clune anymore.’ Your people aren’t leaving,’” says Hall. “We try really hard to keep the best people here.”
Clune employees volunteer at the Greater Chicago Food Depository, which provides food and programs aimed at ending hunger in Chicago and Cook County.
Photo courtesy of Clune Construction
keep busy
At Salesforce Tower Chicago, a new 60-story, 1.2 million-square-foot Class A office building, Clune completed a 27-story, 675,000-square-foot build for a repeat law firm client early of this year Although an outlier in the slowing tenant/interior market, this was the largest project in Chicago in the past year, Gutekanst notes.
Other citywide work completed in 2023 included the Guinness Open Gate Brewery project, which transformed an empty railroad depot into a 15,000-square-foot brewery and restaurant, and Barstool Sports’ two-story, 40,000-square-foot Chicago office square meters, now. home to broadcast and podcast studios, a basketball court and other amenities.
For more than 20 years, Clune has partnered with Ernst & Young LLP (EY) on a range of projects, primarily through a competitive tender process. The most recent was the construction of EY’s new Chicago office at 155 N. Wacker Drive. Construction was about to begin when the pandemic hit, causing a long pause.
“We realized the design needed to be completely revamped to align with the way we envisioned our people working post-pandemic. Clune worked patiently with us and Perkins+Will, our architect, to reassess the entire project numerous times, providing value engineering and speed-to-market suggestions,” says Victoria M. Kim, EY’s regional real estate project and design leader. “We ended up with a perfectly executed project.”
Meanwhile, several confidential data center projects with clients such as Prime Data Centers, T5 and Server Farm to name a few have further strengthened Clune’s growing regional portfolio.
“In addition to aligning with Prime Data Centers’ core commitments to security and sustainability, Clune is highly responsive, organized and maintains a strong attention to detail, delivering projects on time and on budget,” notes Jonathan Gibbs, Executive Vice President. president of product delivery at Prime.
Although these critical projects may seem similar, each has its own challenges and characteristics. “One of the great ones we’re working on is in Itasca,” says Van Oosbree. “We have maintained this relationship with the client since 2019, we are still on the same campus doing work as they grow and we continue to invest in this area.”
Priority: safety
One of Clune’s major achievements in 2023 was its vastly improved safety record. By 2021, the company’s total recordable incident rate (TRIR) was up to 1.05, which was not acceptable, Hall says.
“We grew, as I think the whole industry did, from being a reactive organization to being much more proactive, really planning for workplace safety and empowering all of our employees,” he says. “All Clune employees can stop a job at any time and are encouraged to do so.”
The renewed focus on ensuring safety training for all employees has helped build awareness and full team buy-in to the company’s safety program. Collectively, these efforts helped reduce Clune’s TRIR to 0.53 in 2022, on 1.5 million work hours, and to 0.24 in 2023, on 1.7 million work hours, which included only two recordable cases and no lost time incidents.
“A recent focus on high-risk activities, energy management and more proactive activity in the field by our project teams has helped our safety program reach new heights,” says Mike Themanson, vice president of safety of Clune. “We look at our leading and lagging indicators to measure the effectiveness of our security program. Leading indicators are measured using our newly implemented SiteDocs software to conduct security audits and observations on our projects.”
With a large backlog and ample opportunities ahead in the Midwest, Clune is poised to continue its growth, whether intentional or not.
“It’s never been our strategy to grow our revenue like anyone else. It’s about long-term sustainable growth and the profitability and well-being of our employees,” says Hall. n
