Casino Enterprise Management

You have heard of Perini Building Company. There is no doubt you have seen the behemoth construction sites of its projects in progress and marveled at its buildings in completion. This is not simply a numbers game, as Perini is the largest U.S. building company for the gaming and hospitality sector, nor is this because there are only a handful of builders out there that cater to the gaming industry. This is because Perini is not afraid to build iconic buildings, the awe-inspiring feats of architectural acrobatics that have never been built before and will likely never be built again, the buildings that make you stop dead on the sidewalk and look up, the buildings that are remembered — The Luxor Hotel, Caesar’s Palace, Paris Hotel & Casino, The Colosseum, Mohegan Sun expansion, The Ritz-Carlton, Lake Las Vegas, Green Valley Ranch, Morongo Casino Resort & Spa, and Red Rock Casino Resort Spa.

Dick Rizzo, Perini Building Company’s vice chair, says the decision to take on these complex and unique projects is simple: They are awesome opportunities — literally and otherwise. “We take them on with the excitement that they are so unique and so new — and have never been done before,” he said. “It’s part of the incentive to roll up your sleeves and rise to the occasion. You go to CityCenter right now and every building is iconic. They have world-renowned architects being commissioned to design one-of-a-kind buildings,  and that’s their hook — the uniqueness of the architecture of these structures. Well, each one of them has never been built before. They’re all extremely exciting to get involved in because of that. I think we always rise to the occasion because you only get the opportunity once in a lifetime to do these one-of-a-kind buildings.”

But that’s not to say building into the unknown is easy. “We’re constantly being challenged,” Rizzo said. “When we first got into this business, I remember thinking about The Luxor Hotel, ‘We’ve never done that before, we’ve never built a pyramid.’ But we said, ‘We’ve got to start somewhere,’ and we took it on. And when they asked us to build the replica of the Eiffel Tower, we said, ‘We’ve never done that before, and that’s pretty awesome.’ But we did it.”

If someone told Italian stonemason Bonfiglio Perini in 1894 that his small, family-owned civil works business would one day not only be responsible for the construction of a glass pyramid enclosing the world’s largest indoor atrium, but also a life-size replica of the Eiffel Tower, there is no doubt that these projects would have seemed beyond impossible. Nonetheless, the precedent that Bonfiglio set, sealing deals with a handshake and holding his word to the highest level of trust, laid the foundation that, over the following 113 years and several acquisitions of other building companies, allowed Perini to grow into one of the top 20 builders in the United States (according to Engineering News-Record), with offices and projects scattered across the country. Perini Building Company is the number one builder of gaming and hospitality projects in the United States and is experiencing record growth with $2.5 billion in revenues in 2006.

Rizzo says at this point, the company’s size and experience is making it easier to grow and improve. “We’re working on what is the largest privately funded program ever attempted in the history of the United States, CityCenter owned by MGM MIRAGE,” he said. “Three or four years from now, there will be programs out there that we’ll be even more uniquely qualified for because of what we’re going through right now. We’ve been number one in Las Vegas for many, many years, and number one in Native American Gaming. As programs get larger, the number of firms able to show they are qualified to do them becomes smaller and smaller. But our credentials continue to grow because of what we’re involved with right now.”

This growth is a benefit to Perini’s clients as well, especially those with big plans. “We’ve never said no unless we’ve been in a position financially where we’ve had to guarantee something that we didn’t have the financial wherewithal at the time to do,” Rizzo said. “And [because of our current financial position], I don’t know that there’s anything someone could bring to us that we couldn’t figure out somehow.”

More than money, Perini’s biggest concern is capacity — having enough experienced people on hand to ensure the company’s high standards of quality are carried out on even the most challenging structures. “We have to look at who we are and what resources we have,” Rizzo said. “We ask ourselves, ‘Do we have the experience and expertise to do this new mega-product?’ We only have a limited corral of folks, so we have to pick and choose the projects … I think timing of some of the work is part of the stuff we turn down. It’s just not in the cards for us to be able to do it for a client when they want it done because we just don’t have the available staff.”

But many potential clients are realizing that instead of seeking out another company that may not be as uniquely qualified for a large project, it’s worth it to wait. “I’ve been constantly amazed by people coming to us and saying ‘When can you do it?’” Rizzo said. “When. Not, ‘Here’s when we want it done, can you do it at that point?’ It makes me feel pretty damn good that people are willing to wait for us.”

What they’re waiting for is quality — “We’ve been blessed by a client base that keeps a pretty high standard,” Rizzo commented — and that standard of quality is on the rise. Rizzo says Red Rock Casino Resort Spa is both one of Perini’s finest projects and an example of where the gaming industry is headed, with its contemporary, high-end and experience-driven design that is less focused on a theme. “When I went though it last night, I reminded myself of how special it really is,” Rizzo said. “If you go through it, every place you look, there is something wonderful about what we did. The products we used — that we were allowed to use — and the way we’ve used them in the design is really spectacular. It has really become a new standard for the direction that contemporary casino architecture is going at this point. … Everything’s designed for the offerings they have, not the theming.”

“You see it in Native American Gaming, too,” he added. “You see less and less Native-themed casino-hotels and more non-Native themed facilities that really are trying to compete with the Las Vegas hotel-casino. Perini did the Hard Rocks down in Hollywood and Tampa, Fla., and other than the fact the Seminole tribe owns those facilities, there’s no Native American influence at all — they’re Hard Rocks. Most Native American work now is more to compete with the newest and greatest things that are happening in gaming in Las Vegas. The California Native American casinos are all pretty much moving away from the theme environment and toward experience-driven design and a contemporary look.”

“To be a part of the projects that are recognized as setting the new standard is certainly great for us,” he continued, “because we continue to build our credentials in terms of being part of these programs that everyone seems to want to do now. By association, you gain credibility.”

With 80 percent of the company’s work coming from existing clients’ repeat business, Perini is using that credibility to continue its growth. The company is now in the enviable position to make major business moves to keep up with its clients’ desires. A year and a half ago, just to keep up with demand from Native American gaming properties in the state, Perini acquired Rudolph & Sletton (now known as Rudolph & Sletton, A Perini Company), a company already well known for its work in the high-tech, biotech, pharmaceutical and hospital sectors, and considered among the top five general contractors in California. “We knew we were going to be challenged by the amount of new work we have in Las Vegas and back East, so we needed to find another way to continue to service Native American gaming clients in California,” Rizzo said. “The acquisition of R&S was the solution in our book. We’ve been able to get them involved with all the Native American work that we were involved with — and then some — in California.”

Native American projects in California that R&S has been involved with are: Foothill Oaks Casino, Placerville; Pechanga Hotel and Resort Expansion, Temecula; Viejas Casino North Expansion, Alpine; Chumash Casino and Hotel, Santa Ynez; and Sycuan Band of the Kumeyaay Nation Parking Structure and Site Improvements.

Rizzo says Perini couldn’t have taken on any of that work without R&S. As the company’s transition into the gaming sector continues, he expects nothing but stronger relationships and more projects down the road.

“Those who are in gaming really didn’t know them well, so that’s been a bit of a challenge in terms of introducing them — who they are, their credentials,” Rizzo said. “But with the support we give them through Perini management, we’ve been fairly successful at getting them in a position to do everything that we’ve been asked to do there. … It’s very difficult working somewhere when you’ve never worked before, but it’s just a matter of getting into the gaming market, understanding the uniqueness of it, and being able to get some experience in the marketplace to build from. And they’re doing that.”

Rizzo predicts, based on the negotiation of the new Tribal-State compacts and despite the current referendum issue, that within the next year or two, there will be about $3 billion to $5 billion in gaming expansion opportunities available for R&S and Perini in California alone.

So with R&S holding its ground in California, Perini has focused its shovels elsewhere. On the East Coast, the company is the contractor on the MGM Grand at Foxwoods and a Gaylord hotel and convention center in Washington, D.C. — two extremely large projects measuring in at approximately 2 million square feet each. And according to Rizzo, these projects are just the beginning. “We see gaming being very active for us in the next two to three years both in New York and Connecticut,” he said. “We’re involved with two tribes right now in New York about potential new gaming opportunities there for them. And, of course, potentially there is Pennsylvania. We also hope to get involved with [some projects recently announced in Atlantic City] but haven’t really started to pursue that yet. … Massachusetts has just started to discuss the potential for gaming as well, and we’re well-positioned there. (Perini’s corporate base is in Massachusetts.)

In Las Vegas, Rizzo says between CityCenter, The Cosmopolitan Resort & Casino, and Trump International Hotel & Tower Las Vegas, Perini is overwhelmed (in a good way), with no end in sight. “We have a very large preconstruction group that works with our clients on projects one to three years before they actually break ground,” he said. “So we have a great window into the future based on what we’re working on in pre-construction right now. I can assure you — though I can’t speak about individual projects — that I’ve never seen the sum of those projects in pre-construction any greater than it is today. Much of what we’re working on won’t start for at least another year, and we’re not booking any work prior to the first quarter of 2009 — and would probably feel more comfortable booking work starting in 2010.”

Because of the company’s unique position, with its large size, impeccable reputation and impressive credentials, Rizzo expects Perini to stay incredibly busy in Las Vegas indefinitely. “We believe the future here in Las Vegas is extremely bright for large, complex projects,” he said. “We’re at a position right now where there is no more real substantial capacity left in the community, based on the amount of work that’s going on right now. … But all of this tremendous amount of work on the boards would be available, hopefully, waiting for the market to say, ‘Yeah, we have the capacity and the resources to take this on.’ We have several clients just waiting for us to say when we can get started on a program, based on what we are doing currently. We’re really very bullish about Las Vegas.”

This is despite a considerable rise in building costs. Rizzo says the excitement to invest in Las Vegas has withstood cost inflation as of yet, and many are still able to justify their programs. He is also optimistic about the future. “I don’t think [the market] is going to go up as much as it has in the last two years; I think everyone’s expecting it to stabilize a little more,” he said. “I feel confident that Perini can keep its budgets within a range that will still pencil out for our clients in the future.”

Perini is also concerned about its clients’ schedules, as fast-tracked projects, started without a complete design, and ballooning budgets often go hand in hand.  Rizzo says the company is constantly looking for new ways to overcome the challenge of how to turn around projects quickly without compromising quality. “There isn’t really a formula for [staying on time and budget] — it really is a commitment and mindset of our people,” he said. “When we first got into this business years and years ago, we basically said, ‘Our clients are crazy. They ask us for the most impossible schedules.’”

Now, he says, the Perini team works together to design and build something to within a baseline budget. “It’s a constant effort on the team’s part to get all that done in a budget and in a schedule that in many cases is really unrealistic,” he said. “But we try to figure it out; it’s amazing how creative the mind can be when it’s asked to be. People marvel at what we do, and we look back and say, ‘Well, you just have to think outside of the box sometimes,’ say, ‘OK, is there a better way to do this?’”

“It’s not just throwing warm bodies at it,” he added. “It’s good planning, it’s good pre-purchasing, it’s good value engineering in terms of understanding what’s cheaper or less expensive, what doesn’t affect the schedule.”

“But more than that, it’s a mindset,” he continued. “You get in a groove and you’re being constantly challenged to do it, so everybody rises to the occasion. They build on that experience, and on the next project they say, ‘Well, we did this and it worked on the other one, so we’ll continue to do that.’ It’s really a matter of us pushing our people and pushing our subcontractors to a new level based on having a well-planned, well-organized program and having people with the right intentions on the job, recognizing that it can be done.”

But it is the actual doing that really sets Perini apart from, as Rizzo puts it, “the average-bear construction company.” Because all building companies do basically the same thing (build buildings, of course) in the same way, Rizzo says it all comes down to how well you get the job done and how well you meet your commitments. “It’s relationship building for us,” he said. “It’s being people of our word. If we say we’re going to do something, that we’re going to do it for a certain price and on a certain schedule, we’re not going to let you down. We’ve always risen to the occasion, and our performance record is impeccable. … Our motto is ‘Building Relationships on Trust,’ and we live by our word. I think that means a lot to our clients, and I think that brings them back to us when they want to do another building — we’ve done what we’ve said we were going to do. That is a good thing for them and a good thing for us.”

And sometimes even Rizzo can’t believe just how good of a thing it is. “I have to pinch myself every once in awhile and say, ‘We’re really doing this,’” he said. “It’s really incredible what we’re doing. … It’s history and it’s building icons. It’s leaving a mark on the landscape for a client. It’s a good feeling.”

Building Green

Perini Building Company’s current CityCenter project is the largest LEED project ever registered with the U.S. Green Building Council. 

Dick Rizzo, vice chair of Perini Building Company, says building green is the wave of the future, predicting that in five to 10 years, every building will have a sustainability requirement. “It’s going to be such an integral part of our future building programs,” he said. “We’ve got to be prepared to deal with it. … We have a staff of six certified LEED professionals right now who are working at CityCenter, and they will be an investment in our future for any green building that we do. (Recently acquired) Rudolph and Sletton is further ahead … they have close to 40 certified LEED professionals on staff.”

Rizzo says that despite the perception that going green costs more money, clients shouldn’t be put off by the prospect. “If you look at the first cost, it probably is [more expensive],” he said, “although some of that first cost is really coming down. New products have been developed to accommodate green building and are becoming more cost-competitive. Plus, if you really look at the life cycle of these buildings and the cost to maintain them … there’s certainly a payback. You have to look at the big picture — if you plan on owning a green building for any length of time, seven to 10 years for instance, it is certainly going to offset a good portion of the initial cost from both the operational and tax incentive sides.”

Mary Huyck is an associate editor at Casino Enterprise Management. She can be reached at (701) 293-7775 or editor5[at]aceme.org.