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Systems Integration Planning: Plan Twice, Cut Once


Eddie Shasek
EddieShasek
Project Director
BST Global

Have you ever felt like you are swimming in a pool of sharks? Take back control of your software integration project and feel like the customer again.

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A&E Mergers Best Practices: Driving Joint Success

Eddie Shasek
EddieShasek
Project Director
BST Global
The documents are signed, ownership has shifted…the challenge of joint success just got real. After ownership shifts the success of the joint entity becomes the mission. It is incumbent on both firms to quickly stabilize and start to grow in the new normal of joint operations regardless of how smooth or rocky the negotiation, due diligence, and closure process was. Plan → Communicate → Execute → Refine What is the game plan? Planning a program to address overall success vs just systems consolidation makes all the difference. It is way too easy to just dive right in to a straight data conversion project to get to one system. With this approach, one of the two entities will end up suffering major gaps in understanding and possibly even capabilities. It is better to first focus on a plan for the alignment of the corporate structure, processes and people; then let the system integration tasks follow that lead. In my next post, I dive deeper into Systems Integration Planning. Talk to me Every good integration plan must include a solid communication plan, including an outline of who will participate, when and how. Your people have to be on board for organization to reach its full joint potential. Ensure there is clear ownership of the communication plan for each company. Plans should address: What will happen when Communications should start with a summary notification to all people affected at all levels. Craft a unified message of what the objectives, major milestones, and general timeline are expected to be. Let your people know when they will start to feel their daily life, processes, and systems change. Participation of each entity and key roles Follow up with more targeted and strategically timed messages from various group leaders to specific audiences addressing concerns or anticipated questions relevant to that group. Internal marketing for a positive change As the integration project progresses, these messages may evolve. Because of this, each message should set the expectation that adjustments of timing, content, and decisions may occur throughout the process. The changes should be equally communicated, demonstrating management’s ability to adjust as progress is made. Don’t fall in to the trap of driving to a goal that is no longer appropriate based on new information. Be sure to brand the initiative and leverage many forms of communication beyond email to align with what is typical and effective in your firm. It is about getting the word out with no surprises. During a merger your people will naturally question how the changes affect their role. Be open to reduce anxiety in the organization. What is it that you do here? As previously mentioned, the systems consolidation should follow the lead of a process integration or at least follow a detailed analysis of overlaps and gaps in how the separate entities were run. In the process analysis be sure to: Identify overlaps and gaps early Identify adjustments by role and process Clearly define what the recommended process is going forward in the joint environment on both sides Identify how the systems integration project needs to enable the intended new process in the near and long term To build an integration plan that joins not only systems but also process, the fulcrum should be a business process catalog. This can be leveraged when identifying the general approach to each process area for each entity that will be integrated. Focus on elements of the process that are most likely to be disconnected. You must define: What roles are involved and the level of detail that is managed at each level? Is the process manual/paper based vs. automated workflow or even an email based process? Who has what access to data and decision making authority to execute the process efficiently? Is there a material difference in volume or other factor in one entity driving the process differences that cannot be adjusted? Leaving disconnects unsolved or dictating process will just result in the process unraveling in the future. Everyone involved needs to believe that the new way is the right way for joint business success at some level or it really won’t amount to much other than a shelf full of optimistic unused documents. There can be only one. Often there is a need to integrate the systems and data of the two entities on an accelerated schedule for joint reporting. This is commonly a contingency of the deal or an investor’s way to see progress on the efficiencies that are expected as the business costs are consolidated. One tactic that should be considered to take time pressure off of the implementation is to create a bridge reporting pack. Find ways to commingle the separate systems’ reporting data manually or via similar outputs from each system that can be summarized and collated outside the system on a temporary basis. This allows the proper amount of time that you need to follow good process when consolidating processes, roles, data, and systems in thoughtful steps. You are never really done. After go-live on your joint system with commingled data, the focus should shift to finding the inevitable data issues in the details of individual project, billings, or other records. Plan to have some project core team members transition into a temporary support group accessible to the new users. Resist the urge to add more functionality and customizations or to kick off a phase two of implementation for at least a few months. This allows for operational stabilization. Be sure to reserve some ad hoc time from your software vendor’s consulting or technical staff to be available on-call or even on-site to address any technical business interruptions quickly. Leverage the experience of your vendor at this time; they do this for a living. Understand your cost of down time and recovery plan should larger issues surface in the weeks following your go-live date. And finally, continue to ensure daily tasks are done prior to starting a second phase of implementation. Do you have an industry standardization M&A success story? Let us know in a comment below.

Going Glocal: Making Money

John Mathew
JohnMathew
Product Director
BST Global
Ultimately, going glocal for a design consultancy isn’t just about expanding reach and impact – it’s about delivering positive results to the bottom line. Achieving profitability in a foreign market can be quite a challenge for firms who don’t have prior experience doing business abroad. Entering a new market often requires a different operating paradigm, but inexperienced firms can overlook this and end up impeding their return on investment. Let’s examine one last common afterthought as part of our Going Glocal blog series: making money. Common Afterthought: Making Money When consultancies are expanding internationally for the first time, it can be tempting to count on an effective collections process as the key to making money. But in reality, financial success in a new market requires a more holistic approach that considers the entire project lifecycle, beginning with how projects are initiated. Below are some tips to help you get started: Review Contractual Terms: Review how contracts are written for projects in a new market, and consider terms that can help mitigate risk. For example, look at leveraging fee types that share risk with clients and seek to bill the project in a stable currency. In scenarios where volatile currencies can’t be avoided, you may want to look into a foreign exchange hedge to protect against exchange risk. Also, payment terms should be realistic and reflect the payment culture of the market you’re entering. Assess Project Setup: Look at how you internally resource and setup your projects for execution. When delivering a project in a new market, you may bring together multiple operating units to deliver the work, including organizations that you’ve just added in your new market and more experienced organizations that live elsewhere in the firm. Some firms hit a limitation with their internal business system, in that they can’t setup up a single project that spans multiple internal organizations. They then have to setup multiple internal projects to represent the single project they’ve contracted to deliver for their client. This adds administrative burden to project management, impedes visibility into overall project status, and can lead to otherwise avoidable schedule delays and budget overruns. If this is something you’re dealing with, consider switching to an industry-focused business system that accommodates multi-organization, and even multi-company projects. Distribute Budget Accountability: As you setup projects for a new market involving multiple internal organizations, give consideration to how these working organizations have responsibility for the overall budget on a project. Some firms will hold the lead organization on the project responsible for budget performance, while other firms look to distribute budget accountability to each organization performing work. By doing the latter, you are in a position to get better insight into where project variances might arise during delivery. This often occurs in specific working organizations that spend more than budgeted and need more attention to keep the project on track and profitable. Digitize Vendor Invoices: Projects in new markets can also bring about new cash cycle challenges. For example, as you engage subconsultants and other vendors to assist with a project, it can be difficult to keep track of their invoices – particularly when the project is happening in a location that may have a new office or no office at all. Look for ways to digitize your vendor invoice routing process, whereby invoices are scanned and electronically routed around for review, approval, and ultimately vendor payments. This way you can rest assured that vendor invoices don’t go unaccounted for and lead to surprise downstream costs on the project. Anticipate a Different Payment Culture: As I mentioned earlier, entering a new market can entail getting acclimated to a new payment culture – a culture that unfortunately may be longer and have more steps than your existing markets. For example, you may now have to send out a pro forma invoice to a client and get approval before sending out a final invoice. And, you may be expected to personally visit a client in order to receive payment. Understanding the payment culture of your new market is essential to managing expectations internally and externally, as well as sharpening the business case for cash cycle improvements. Automate, Automate, Automate: If you are facing lengthier payment cycles in a new market, one way to offset them is to further automate your internal billing and collections processes. Look at streamlining the process for generating internal pre-bills that go to project managers for their review before sending an invoice to a client. This can be supported by a business system that supports electronic pre-bills that can be edited and annotated online by project managers. Also look to implement a collections system that drives and captures collections activities in support of getting paid, so that there’s better transparency and accountability, and ultimately lower accounts receivable. Making money in new markets can be challenging, not only because of longer payment cycles in some geographies, but also because of internal inefficiencies and bottlenecks that are only exacerbated by more far-reaching projects and more distributed project teams. To successfully go glocal, you must take the time to look at how you structure your contracts and projects, and manage your cash cycle, and then make the necessary improvements. Do you have any financial lessons learned from an international expansion? Let us know in a comment below! Author’s Note: This is the sixth article in a series on glocalization as it relates to the architecture, engineering, and environmental consulting industry.  

Going Glocal: Becoming One Studio

John Mathew
JohnMathew
Product Director
BST Global
In a design consultancy, you’re constantly focusing on who’s staffed, and who has availability – it’s core to life in professional services. And when you look to expand your operations, effectively managing resources becomes even more important. Are you prepared? All professional services firms manage their resources in some form or fashion. It may be done in a thoughtful, disciplined manner, or completely ad hoc and perhaps even as an afterthought. As you think about expanding your operations, know that this will cause you to lean further on your current resource management practices. And for many firms, going glocal also sparks a recognition that becoming a more integrated global practice – or, becoming “one studio” as some firms coin it – is a key strategy for better sharing work and resources across geographic boundaries and ultimately better serving clients in all markets. Let’s examine this concept as part of our continued series on global expansion. Common Afterthought: Becoming One Studio A building block for an integrated practice is a resource management discipline that goes beyond a loose, ad hoc process. To get there, there’s a three step process that I’ve seen successful firms follow: Target One Operating Unit: Choose an office, department, or studio in your firm that has an appetite for change and is looking to make resource management improvements. Focus on its active projects—those currently underway—plan them through completion, and implement an integrated project staffing and utilization management process and system in that unit. Also consider including the scheduling of leave or vacation time, so that this unit achieves basic visibility into staff assignments and availability. Extend to Additional Units: Once you’ve achieved success within one operating unit, bring in additional operating units that work on projects with your first unit, so that you can begin to extend your resource management practices to better facilitate sharing of staff across units. You may also consider including additional projects, such as potential projects and non-chargeable endeavors. This will provide full visibility into staff availability spanning both active and proposed projects, as well as vacation and other types of non-chargeable time. Integrate Earned Value Management: Now, you will have a collection of operating units that are benefitting from your new resource management framework, forming an impetus to get the rest of the firm onboard.  Consider integrating earned value management into your resource management process. This will build on the project planning discipline established in Steps 1 and 2.  Also consider leveraging your resource management system to provide resource and revenue forecasts across the firm, as you now have quality staffing plans to leverage for much better operational visibility. This three step approach can be significantly aided by an industry-focused business system, and it’s also a process that can be adjusted to align with your firm’s specific needs and appetite for change.  If you’ve struggled in the past with establishing a resource management discipline, know there’s a proven way to get traction and move towards the goal of becoming one studio. Has your firm successfully evolved resource management efforts and made progress towards a more integrated practice? Tell us more in a comment below! Author’s Note: This is the fifth article in a series on glocalization as it relates to the architecture, engineering, and environmental consulting industry.  

Going Glocal: Managing Human Capital

John Mathew
JohnMathew
Product Director
BST Global
“Companies have long had difficulty maximizing the visibility and mobility of their best people.  Managers can struggle to find the right person for a specific project, and talented workers can’t always see opportunities that might help them grow professionally and develop their expertise.” --McKinsey This task can be especially challenging for firms that are expanding operations and market reach. For the next step of our Going Glocal blog series, I’d like to explore another common afterthought post international expansion—managing human capital—and offer some tips for planning ahead. Common Afterthought: Managing Human Capital As professional services firms, one of your most important assets is the knowledge and expertise of your staff.  But keeping tabs on this knowledge and expertise, and effectively leveraging it to pursue and deliver work, is a challenge for many firms.  An already difficult challenge is made even tougher when existing staff become more dispersed and new staff is added. How can you better prepare for this challenge? Go Digital: One key to addressing this challenge is to find ways to digitize your talent pool.  How can you capture and store your employees’ qualifications in an electronic manner, so that their education, registrations, skills and project experience are readily accessible when you’re looking for the right expertise to position in a new market? Human capital management can greatly assist here, particularly when integrated with the marketing, project, and resource management functions of your core business systems.  Having employee qualifications available to the folks in your firm who are pursuing, scheduling and delivering work can greatly improve their ability to leverage talent even as the firm expands. Develop Cultural Skills: Beyond technology, it’s also important to think about other ways to develop staff as the firm looks to enter new markets.  If a new market means a new culture for the firm to understand, look for ways to grow cultural awareness amongst your staff, as well as build skills related to working with different cultures and being on diverse and dispersed project teams.  There also may be a need to grow your staff’s language skills, and perhaps add or develop multi-lingual staff. Uncover Leaders: As you develop your staff and better understand their qualifications, be on the lookout for leaders that you might tap to seed an office in your new market.  While an essential part of going glocal is leveraging talent local to a market, you will certainly want to ensure that there are experienced staff in your new market that are well-connected throughout your firm and well-versed in your firm’s operating practices and methodologies. Find Balance: Going into a new market often causes firms to think about adding staff.  For most firms this becomes a discussion of build vs. buy – that is, should we grow our staff organically via recruiting, hiring and development, or should we grow via acquisition of another firm who is already operating in the new market?  A growth-oriented firm might consider a balanced approach, leveraging recruiting, hiring and development to nurture long-term retention, while using acquisition to strategically open up new markets in an accelerated manner. Effectively managing human capital is essential to going glocal. But whether or not you are thinking about expanding your firm’s footprint, it’s always a good idea to look for ways to better leverage your talent.  After all, as a consultancy, your human capital drives your expertise and your brand, which in turn help you grow your staff and your reach. Have you had success with any of these techniques? Tell us more in a comment below! Author’s Note: This is the fourth article in a series on glocalization as it relates to the architecture, engineering, and environmental consulting industry.  

The Future of Architecture and Engineering: A Q&A with AJCE Secretary General Yoshi Yamashita

Yoshi Yamashita
YoshiYamashita
Secretary General
Association of Japanese Consulting Engineers (AJCE)
In an industry centered around innovation, the question always remains – what’s next?  To help answer this, we’ve launched a series of blog posts exploring the past, present, and future trends in architecture, engineering, and construction consultancies. Over the next few months, follow along with us as industry leaders share their thoughts. In this post we spoke to Yoshi Yamashita, Secretary General of the Association of Japanese Consulting Engineers (AJCE), headquartered in Japan. Yoshi is a trained civil engineer and works to enhance the status and competence of private Japanese consulting engineers through his work at AJCE. Q: What do you think is the most significant trend that will impact the future of the AEC industry in your region over the next 5 years? A:  Keeping the economic growth rate up--which is linked to budget on public works In Japan, the maintenance and renovation of social infrastructure from the past 50 years of development will be a significant project. Strengthening alliances and development through mergers and acquisitions (M&A). In Japan, there is a decreasing trend of young professional engineers’ participation in our industry, coupled with the aging of tenured engineers. Q: How do you see the current role of AEC firms shifting, what do you think is causing that shift, and how must AEC firms react to survive? A:  From domestic to global. The demand and capacity of the domestic market is limited, though the domestic market is safer and easier in terms of long term survival. This makes AEC firms act protectively and conservatively. It’s important to remember that escaping from challenges cannot guarantee success in international markets. While the domestic market is in good condition, AEC firms should invest in business development in the overseas market – human resources, tools and systems (and know-how), experience, and investment. To be successful, AEC firms need a specialist’s advice, alliance with overseas firms, development through M&A, etc. Q: Knowing what you know today, are there things you would or could have done differently to prepare for or react to the Global Financial Crisis of 2008? Are there things that you are doing differently now because of the GFC? How have you evolved your processes or policies post-GFC? A: This is a difficult question. We should train ourselves to distinguish if we are doing or going to do something beneficial to people, not for money. However, proper service remuneration is necessary to keep firms sustainable and to gain rewarding future opportunities for young engineers. Q: What is the biggest challenge you are currently tackling within your firm or association? A:  Consolidation with related associations to better represent our industry to the client and to society. This will also create business opportunities. Education and capacity building of young professionals who can compete in the international market. Involvement in political decision making processes--this is a very tough challenge. Q: How has your office environment changed, and how is your firm continuing to evolve your workplace environment, procedures, and technologies, to accommodate the evolving demands of the incoming millennial workforce? What considerations and changes are you making regarding collaboration, efficiencies, work/life balance, technologies, etc.? A:  The effort of our association (AJCE) is to promote the opportunity of capacity building for young professionals and business development of member firms through an exchange program with overseas FIDIC Member Associations. FIDIC tools and trainings are used to facilitate challenges. Business development or deployment in domestic and international markets are basically in the hands of each firm. CEO’s policy and strategy are key to success. Association’s support on this matter is limited. To become a stakeholder is one of the most important objectives in future. Government has been leading and controlling the infrastructure market in Japan. To get out of this difficulty, we must expand our business overseas and increase competence of professionals. How? Education in school and firms (English proficiency, international way of thinking, more exchange with foreign people, business debates, risk awareness, integrity, etc.), alliance with FIDIC Member Associations, training of young professionals in foreign firms or through overseas projects, successful mergers and acquisitions (M&A), etc. Above all, motivation, seriousness, middle-long term strategy, and a financial perspective from CEOs are deemed to be the most essential factor. Author’s note: These answers are my personal opinion, and thus do not represent the opinions of AJCE. This post is part of a question and answer series with global industry leaders on the future of the architecture, engineering, and environmental consulting industries.

The Future of Architecture and Engineering: A Q&A with STD-företagen Managing Director Magnus Höij

Magnus Höij
MagnusHöij
Managing Director
Swedish Federation of Consulting Engineers and Architects
In an industry centered around innovation, the question always remains – what’s next?  To help answer this, we’ve launched a series of blog posts exploring the past, present, and future trends in architecture, engineering, and construction consultancies. Over the next few months, follow along with us as industry leaders share their thoughts. In this post we spoke to Magnus Höij, Managing Director of the Swedish Federation of Consulting Engineers and Architects (STD-företagen) headquartered in Stockholm, Sweden. Magnus joined the Swedish Federation of Consulting Engineers and Architects in 2014. He was previously editor-in-chief for several publications, including Computer Sweden and Internet World, covering topics on IT and online services. He has great interest in the technology, marketing, organization, and personal skills needed to make a successful business and has penned several books on IT and business. Q: What do you think is the most significant trend that will impact the future of the AEC industry in your region over the next 5 years? A: Globalization and digitalization will probably be two the trends that we will talk a lot about and that will have big impact for our industry. The processes and legal frameworks will be increasingly global, which will lead to a global market for expertise and knowledge. Digitalization will not only help us work more efficiently, we will be able to construct new things and we will be able to participate in the dialogue with customers and other constructors in the building process even more than today. Q: How do you see the current role of AEC firms shifting, what do you think is causing that shift, and how must AEC firms react to survive? A: The need for innovation in the world of construction and infrastructure is huge. As companies, we need to meet this need with a higher degree of new and provocative ideas, based on our deep understanding of the technological framework. But we also need to bring in new perspectives from not only engineers, but also architects, behavioral scientists, statisticians, political analysts, etc. in order to tie these trends and insights together. Q: Knowing what you know today, are there things you would or could have done differently to prepare for or react to the Global Financial Crisis of 2008? Are there things that you are doing differently now because of the GFC? How have you evolved your processes or policies post-GFC? A: I wasn’t in this industry at that time. However, I think that our industry is working with issues that could in many ways be needed to avoid this kind of crisis. A good infrastructure is a foundation of a modern society. Without it, the society is more vulnerable. Our ability to tell that story to politicians and decision makers will also determine how well we will manage the next financial crisis. Q: What is the biggest challenge you are currently tackling within your firm or association? A: Our ability to adopt to the rapid changes in the marketplace. Our companies are quickly becoming both more global, crossing borders to other industries and facing challenges from totally new players in the market. As an organization, we need to keep up with these changes, understand the new landscape, and try to lead the way for the industry in to the future, not be dragged there. Q: How has your office environment changed, and how is your firm continuing to evolve your workplace environment, procedures, and technologies, to accommodate the evolving demands of the incoming millennial workforce? What considerations and changes are you making regarding collaboration, efficiencies, work/life balance, technologies, etc.? A: The most important part of taking care of younger staff is about leadership. We must make sure that each and everyone can find his or her best way to contribute. Teamwork is so important in the modern work life. That could, in part, be done by adding new tools, hardware, physical planning of the office, work hours, etc. But everyone is unique in so many ways, that each leader must be able to adapt to each situation. Investing in leadership skills is priority 1, 2, and 3. This post is part of a question and answer series with global industry leaders on the future of the architecture, engineering, and environmental consulting industries.

Going Glocal: Scaling the Operation

John Mathew
JohnMathew
Product Director
BST Global
As firms expand globally, one of the things they can overlook is the need to scale their operating structure and practices to accommodate doing business in a new part of the world. Don’t let this happen to you! Earlier, I shared some common considerations firms take into account before expanding internationally. Let’s build on those concepts and dive deeper into some common afterthoughts that many firms recognize after expanding and wish they had contemplated sooner. Today, I’d like to examine scaling the operation. Later in this series, I’ll discuss three other major afterthoughts: managing human capital, becoming one studio, and making money. Common Afterthought: Scaling the Operation Some important aspects of scaling your operations may not be top of mind as you look to grow your global footprint. After the fact, two things in particular can become evident– the need to add a new company and the need to setup a new currency – but with some additional planning, you can be ready in advance. Do you need to add a new company? Doing business in a foreign market can warrant a separate balance sheet.  This may be due to local legal requirements, but even if not required by the law, your firm may still want a separate balance sheet for its new business venture if you want to isolate liability and risk from your main operating company.  In order to have a new, separate balance sheet, you need to add a new company to your internal operating structure.  This company will need its own chart of accounts, which may mirror the chart of accounts of an existing company, or perhaps be an abbreviated chart of accounts if you are creating a holding company. In some cases, you may decide to leverage some accounts across your internal companies, such as tax accounts, and in all cases you’ll want to think about inter-company accounts to monitor the transactions between your internal companies and tie them out.  Beyond a chart of accounts for the new company, you’ll also want to think about how this company will be organized into cost centers, which may be departments or offices or other operating units. As you setup both accounts and cost centers for your new company, consider an overall mapping structure to bring together accounts and cost centers across all of your companies so that you can get firm-wide visibility into financial performance. Furthermore, for some firms, adding a company is a catalyst for evolving and reorganizing their profit and loss statement. Do you need to add a new currency? In addition to assessing whether or not a new company is necessary, doing business in a foreign market requires an assessment of whether a new currency needs to be incorporated into your firm’s operating practices.  The need for an additional currency is primarily driven by one of four things: 1) a project contract that requires billing a client in a new currency, 2) the need to pay vendors in a new currency, 3) the need to pay employees in a new currency or 4) a financial reporting requirement in a new currency.  If none of these drivers are relevant, you’re in luck – you don’t need to add a currency.  But if any are true, then you need to go about making that currency a part of how you do business. As you go about adding a currency, think about how the currency is going to be used – whether it be in financial reports, project status and invoices, and/or individual financial transactions.  This will have a bearing on how you want to maintain exchange rates in relation to this new currency – for example, if you’re using the currency for financial reporting only, then you may just need month-end exchange rates, but if you’re using the currency for posting transactions, then you may want more frequent exchange rates. Additionally, if you are going to use your new currency in association with projects and invoices, you may need to think about establishing new rate schedules in this currency, depending on the associated project contracts. All told, adding a company or a currency to your firm’s operating structure requires careful thought and execution.  For most firms, these are rare endeavors, so I suggest enlisting the help of an expert when you’re thinking about doing either and make sure you get it right. Do you have any real-world examples surrounding this common afterthought? Tell us more in a comment below! Author’s Note: This is the third article in a series on glocalization as it relates to the architecture, engineering, and environmental consulting industry.  

The Future of Architecture and Engineering: A Q&A with CESA Manager Wallace Mayne

Wallace Mayne
WallaceMayne
Manager
Consulting Engineers South Africa (CESA)
In an industry centered around innovation, the question always remains – what’s next?  To help answer this, we’ve launched a series of blog posts exploring the past, present, and future trends in architecture, engineering, and construction consultancies. Over the next few months, follow along with us as industry leaders share their thoughts. In this post we spoke to Wallace Mayne, Principal Engineer and Manager of Contractual Affairs for Consulting Engineers South Africa (CESA). As manager, Wallace provides assistance to member firms and clients relating to new legislation surrounding procurement and contracts as well as other legal matters affecting CESA. Wallace is a trained civil engineer and has worked on the City Council of Johannesburg as well as the Water Institute of Southern Africa. Wallace holds a Bachelors and Masters in Civil Engineer as well as an MBA from the University of Witwatersrand in Johannesburg, South Africa. Note: The latest Biennial Economic Capacity Survey (BECS) compiled by CESA for the period January-June 2015 provides an overview of the engineering sector and forms the basis for most of the answers provided below. Q: What do you think is the most significant trend that will impact the future of the AEC industry in your region over the next 5 years? A: The most significant trend impacting the future of the South African AEC industry is the poor state of the national economy. The economy has a very low growth rate (between 1.5-2.5%) and may take 5 years or longer to recover. The low growth rate/depressed economy is exasperated by the problems that have beset public sector procurement. The public sector accounts for 57% of the fee income of CESA member firms. Problems include: Procurement irregularities/ corruption (including award of tenders to middlemen who ‘on sell’ the tenders to competent AEC firms) Discounting of fees (average level 25%), Mismanagement of budgets (slow release of projects into the market-place), Relegation of quality standards for firms and a focus on Price and Preference (an award of preference points for achieving transformation e.g. black ownership, training spend, etc.) Slow or non-payment by clients (by both Public and Private Sector, but especially Private Sector) Another major trend (threat) impacting our sector is the diminishing number of experienced engineers in our sector Q: How do you see the current role of AEC firms shifting, what do you think is causing that shift, and how must AEC firms react to survive? A:  Regarding the shifting of the current role of AEC firms and what might be causing that shift: The true role of consulting engineers (planning, design and monitoring) has not significantly altered except in the sense that: Firms have had to struggle for work and focus on business principles in addition to technical expertise The majority of Public Sector clients have an acute shortage of managers with technical expertise and where possible/permitted the firms are assisting the clients in this regard Firms are assisting clients in arranging finance for their projects e.g. Public Private Partnerships (PPPs), approaching development banks, arranging loans Considering how AEC firms must react to survive (and how they have reacted): Consolidation of firms (bigger firms ‘buying up’ smaller firms’) Entry of multi-national firms into South Africa to merge with the bigger South African firms Firms are looking for work elsewhere, beyond South Africa borders, mainly in Africa and the Middle East, where 24% of the total fee income was derived Many firms are forming joint ventures with and developing wholly black-owned firms to boost their preference points in the public sector procurement process Smaller firms are cutting back on training, mentoring, and coaching investment as these are no longer affordable in the current environment of ‘tight/very low margins’. Q: Knowing what you know today, are there things you would or could have done differently to prepare for or react to the Global Financial Crisis of 2008? Are there things that you are doing differently now because of the GFC? How have you evolved your processes or policies post-GFC? A: This is a difficult question to answer as the effects of the GFC were largely countered by massive investment in the construction sector required for the staging of the 2010 Soccer World Cup in South Africa. The effects of the GFC were not felt until after the World Cup event. In South Africa, the construction sector is familiar with the 'boom/bust’ nature of the sector and is well-geared to making changes to accommodate these economic phenomena, so it was ‘business as usual’. CESA has not adopted any special processes as a result of GFC. Q: What is the biggest challenge you are currently tackling within your firm or association? A: CESA is focusing on addressing the following challenges in the sector: Improving the public sector procurement system e.g. separation of construction procurement process from the procurement of standard goods and services process, the inclusion of quality in the procurement system. Effective reporting of procurement irregularities Slow progress of identification of engineering work currently ‘sitting’ with the Competitions Commission. Cannot outlaw non-qualified people undertaking engineering work until approved Q: How has your office environment changed, and how is your firm continuing to evolve your workplace environment, procedures, and technologies, to accommodate the evolving demands of the incoming millennial workforce? What considerations and changes are you making regarding collaboration, efficiencies, work/life balance, technologies, etc.? A:  CESA has recently undergone changes in executive leadership and at the moment is focusing on “working better and smarter” (like a well-oiled machine): In getting the basics update e.g. organisational structure, job descriptions, performance contracts, profit-centres In meeting/serving the needs of its members e.g. newsletters, events, advisory services, representation Raising industry awareness of the Association e.g. interacting with clients, organising conferences and meetings Ensuring its sustainability (financial and relevance) e.g. budgeting and cost controls What considerations and changes are you making regarding collaboration, efficiencies, work/life balance, technologies, etc? Collaboration – interacts with the Engineering Council of South Africa (ECSA), built environment professional groupings, other voluntary associations Efficiencies – no major changes Work/life balance – have not considered this aspect Technologies – no changes envisaged, have modern IT and Office Equipment This post is part of a question and answer series with global industry leaders on the future of the architecture, engineering, and environmental consulting industries.

Strategy

The path to realization of long-term organizational objectives begins with a clear strategy. To achieve business success, a corporate strategy should detail the mission, vision, and direction of the entire organization, providing employees with a comprehensive plan for how to contribute and collaborate toward common goals.

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