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                                                                  EXHIBIT 10.40

MORRISON KNUDSEN CORPORATION
MORRISON KNUDSEN PLAZA
P. O. BOX 73
BOISE, IDAHO U.S.A. 83729
PHONE: (208) 386-5000

ROBERT A. TINSTMAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER


January 11, 1999


Mr. Roger J. Ludlam
8 Bridgeton Way
Hopkinton, MA 01748


RE: OFFER OF EMPLOYMENT

Dear Roger:

There is no doubt in my mind that it would be mutually beneficial, to you and
MK, should you decide to join the company.  It's clear to me, Dennis and all the
MK executives who had an opportunity to meet you, that your depth and breadth of
experience would be an important factor in the achievement of the company's
strategic and financial goals.

On behalf of Morrison Knudsen Corporation (the "Company"), I am pleased to offer
you employment pursuant to the terms and conditions set forth in this letter and
subject to Board of Director approval.

1.   Position and Services to be Rendered.  The Company hereby agrees to employ
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     you as Executive Vice President and Group President/CEO of the combined
     Heavy Civil Construction and Mining groups.  You accept such employment and
     agree to devote your full time and attention exclusively to rendering
     services to the Company.  You will report to the Company's Chief Executive
     Officer.  Your actual first date of active employment with the Company will
     hereafter be referred to as the "Effective Date".

2.   Salary.  You will receive an annual base salary of $375,000 commencing as
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     of the Effective Date, payable in accordance with the Company's normal
     payroll practice (i.e., every two weeks).  Your position will be a regular
     full-time position and you will be
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Roger J. Ludlam
01/12/99
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     assigned a Grade Level of 27.  The Company will review your base salary
     annually to determine any increase.

3.   Signing Bonus.  You will be paid a signing bonus of $400,000.  This payment
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     will be made on the first payroll period following the Effective Date.

4.   Annual Cash Bonus.  You will be considered for a 50% of base salary annual
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     cash bonus at the end of each fiscal year as determined by the Compensation
     Committee of the Board of Directors.  Management retains the discretion to
     pay between 50% and 150% of the target bonus amount, based on individual
     and/or group-level performance.  In accordance with our discussions, since
     you did not develop the 1999 performance targets or budgets, your
     performance will be evaluated based on both qualitative and quantitative
     factors; after 1999 the measures will be based primarily on group
     performance.

5.   Stock Options.  You will be granted options to purchase 200,000 shares of
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     the Company's common stock, under the Company's Stock Option Plan, at a
     price equal to the per share closing price of the Company's common stock as
     of the Effective Date.  The options shall vest 20% each year for five
     years.  Such options shall be subject to the terms and conditions of the
     Stock Option Plan and such additional conditions as the Compensation
     Committee may impose.

6.   Long-Term Incentive Plan:  I have asked the Compensation Committee of the
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     Board of Directors to approve a Long-Term Incentive Plan that would pay you
     and four other executives a bonus equal to one years base salary, if the
     Company achieves cumulative earnings per share of $2.02 for 1999 and 2000.
     It is not an easy target, but it is within the range of what the Company
     can do if all the operating groups (including Heavy Civil and Mining)
     perform well.  While the plan has not been finally approved by the
     Committee and Board, it is on the agenda for such approval at the January
     20 and 21 meeting.

7.   Fringe Benefits.  You will be entitled to the Company's standard relocation
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     assistance when you move from Hopkinton, Massachusetts to Boise. Should
     your relocation costs exceed established maximums, these costs will be paid
     by the company.  You will be reimbursed for up to three trips back to
     Massachusetts during the first six months of your employment.  The Company
     will reimburse you for all reasonable and customary living expenses until
     your home in Massachusetts sells and your wife relocates to Boise.
     Additionally, you will be entitled to all other group plan and other
     benefits that are normally offered to regular full-time salaried employees:
 
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Roger J. Ludlam
01/12/99
Page 3 of 5

[X]  401(k) Savings Plan: The company will match every dollar you contribute to
     the plan, up to 5% of your eligible compensation (maximum eligible
     compensation is $160,000);

[X]  group medical and dental plan and all other benefits as described in the
     Handbook for Salaried Employees (a copy of which is provided under separate
     cover), and all other group plans and benefits that are normally offered to
     regular full-time salaried employees.

[X]  Should you choose to continue your physicals at the Mayo Clinic, the
     company will bear the costs, including airfare and accommodations, every
     two years. The Company's standard policy is to provide an annual physical;
     should you, at some point, choose to have your physicals done in Boise, you
     will be provided the benefit pursuant to normal company policy.

[X]  Vacation: The Company has a paid time off (PTO) policy which would provide
     you with three weeks of paid time off during the first 5 years of MK
     service. Consistent with our discussions, you will be granted an additional
     week of paid time off on an exception basis during your first five years of
     MK service. The PTO accrual will not be modified to provide for this
     additional week; the time will be granted to you, outside the normal PTO,
     and granted to you as leave with pay.

[X]  Deferred Compensation Plan: The company has a deferred compensation plan
     for certain levels of management; as a senior executive of the company you
     would be eligible to participate. This plan allows for deferrals of up to
     50% of base salary and up to 100% of bonuses. I have provided, as an
     attachment, a calculation showing the annual payout that would result from
     a one-time $100,000 deferral at the present rate of interest provided in
     this plan (7.33% currently: Moody's rate plus 50 basic points, this rate is
     adjusted annually).

8.   Executive Life and Disability.  In addition to the fringe benefits set
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     forth in paragraph 7 herein, during your employment, you will be provided
     with supplemental benefits, at no cost to you, which shall result in the
     following levels of coverage, inclusive of any coverage provided by basic
     Company-sponsored benefits:

     a.  Pre-retirement (up to age 65) life insurance, equal to three times your
         annual base salary. . This is a whole life type policy funded over a
         seven-year period that provides a cash value should you remain employed
         beyond the seven-year period;

     b.  Post-retirement (age 65) life insurance, equal to one times your annual
         base salary as of the date of your retirement; and
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Roger J. Ludlam
01/12/99
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     c.  Supplemental disability coverage which, when added to coverage from
         other Company-sponsored and government sources, will provide long-term
         disability income equal to 60% of the sum of your base salary plus your
         most recent annual bonus.

9.   Massachusetts Home: The company agrees to share in any loss you experience
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     on the sale of your home as a result of your relocation to Boise. No risk
     of loss of two-thirds of any incurred costs to you, to-date, for the
     Massachusetts home custom furnishings and decorating that are not covered
     in the final sale price or not incorporated in an Idaho home.  MK agrees to
     pay two-thirds of the loss (on an audited basis, with the requisite
     documentation).  You will be eligible for participation in the "Buyer Value
     Option" program, described in my letter of December 2, 1998.


10.  Contingencies.  This employment offer must be contingent upon the following
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     contingencies:

     a.   Your passing of a drug screen test, pursuant to the Company's
          Substance Abuse Prevention Program, and your continued compliance with
          such program.  After reporting to work, you will also be required to
          complete an "Employment Certification" form that complies with the
          passing of the Drug-Free Workplace Act of 1988.


     b.   Your execution of a release authorizing the company to complete a
          background investigation through the Pinkerton organization.  Negative
          findings with respect to personal financial management or arrests
          and/or convictions could result in the withdrawal of this employment
          offer.

     c.   Your compliance with the following laws:

          [X]  In accordance with Public Law 99-603, the Immigration and
               Naturalization Act of 1986, this offer is made pending receipt of
               verifiable documentation from you confirming your eligibility for
               employment under the terms and conditions of this Act. Proof of
               U.S. citizenship or adequate identification is required before
               any hire can be processed. You must present acceptable documents
               for employment eligibility verifications when you report for your
               first day of work.

          [X]  In accordance with Public Law 100-679, the Office of Federal
               Procurement Policy Act Amendments of 1988, the Company is
               prohibited, for a period of two years, from hiring former
               government officials or employees (military or civilian) who
               participated personally and substantially in the conduct of
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Roger J. Ludlam
01/12/99
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               any Federal agency procurement. Consequently, this offer is
               contingent upon receipt of information from you that your
               employment with the Company will not result in a violation of the
               Procurement Policy Act. You will be required to complete an
               employee certification form verifying your prior employment
               before your employment with the Company begins.

As we discussed, a commitment from you is needed by January 18th; should you
choose to accept this offer, it would be expected that you begin work two weeks
thereafter.

By accepting this employment offer, you agree to the terms and conditions
established herein.  To indicate your acceptance of this offer, please sign the
facsimile copy of this letter and return it to me.  An original will be provided
for your signature at a later date.  If you have any questions, please do not
hesitate to contact me.


Sincerely,

/s/ Robert A. Tinstman

Robert A. Tinstman

Attachment

AGREED AND ACCEPTED:


/s/ Roger Ludlam
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Roger Ludlam


DATE:
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1/14/99