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Should We Go Glocal?

John Mathew
JohnMathew
Product Director
BST Global
Entering a new international market is not a decision you make overnight. It requires significant research, planning, and change. Is your firm prepared? To help you succeed in the international marketplace, we’re kicking off a series of blog posts about glocalization best practices and recommendations for effectively doing business internationally. Continue to follow along with us to learn how to strategically leverage your resources and fuel your international growth. Should we go glocal? You may be wondering if it’s time for your firm to go glocal, or perhaps know it’s time but want to gain additional insight before taking your first steps.  Or you might already be part of a firm that’s gone glocal, and are looking to make some course corrections. Where ever you might be on this spectrum, I’d like to share some insights we’ve gained at BST by working with hundreds of consulting firms like yours around the world.  I’ve grouped these insights into two categories – the common considerations that most firms take into account before expanding internationally (that I will address in this post), and then the common afterthoughts that a number of firms only consider after expanding and wish they had contemplated sooner (that I will cover in subsequent posts). common considerations Legal In 1977, the United States passed the Foreign Corrupt Practices Act – or FCPA – which made it illegal for companies to influence anyone with personal payments or rewards.  Further amended in 1988 and then 1998, the FCPA applies to U.S. businesses as well as non-U.S. businesses that trade securities in the U.S.  It also applies to U.S. nationals, as well as foreign nationals that are in the U.S. at the time of a corrupt act. Then, in 2010, the United Kingdom passed the Bribery Act 2010, which raised the bar on the FCPA and is now considered to be one of the toughest pieces of anti-corruption legislation in the world.  In sum, the U.S. FCPA and the U.K. Bribery Act, and other similar laws around the world, have helped drive legal considerations top of mind for design consultancies that are looking to expand their business into new parts of the world.  And beyond these anti-corruption laws, we find that globally-minded firms are focused on understanding and complying with any local legal requirements in a new market, be they statutory or regulatory requirements. Safety Beyond legal considerations, most firms carefully assess the safety of doing business in a target market, taking into account the local socio-political climate and carefully considering whether it will be safe for employees to work there.  And even in stable markets, firms commonly take the time to assess the weather, terrain and other physical conditions that can contribute to a hazardous work environment, and factor that into their market entry decision. Culture Culture is another common consideration of firms looking to go glocal – including an assessment of the business culture in the target market and the compatibility of a firm’s internal culture in that target market.  There are times that a firm will need to adjust its culture in order to better serve a new market, and attract and keep local talent. Brand A fourth common consideration is brand.  As firms look to expand their footprint, they will often look at their brand and assess its fit, differentiation, and reception in their target markets.  Sometimes branding needs to evolve in order to represent a more global practice or connect to a particular market. All told, legal, safety, culture, and brand considerations are 4 vital components of going glocal.   Any globally-minded consultancy should take the time needed to thoughtfully address each of these in their strategy. In my next post, I’ll dig deeper on what we see as common afterthoughts when going glocal – that is, the things that growing firms often wish they had understood and taken on earlier. Do you have any successes or lessons learned while planning an international expansion related to the considerations above? Please share your experiences in a comment below. Author’s Note: This is the second 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 ICT Group Chairman Kiran Kapila

Kiran Kapila
KiranKapila
Chairman
ICT Group
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 Kiran Kapila, Chairman and Managing Director of Intercontinental Consultants and Technocrats Pvt Ltd (ICT Group) headquartered in New Delhi, India. Mr. Kapila is a chartered civil engineer, Chairman of the International Road Federation, Co-Chair of the Federation of Indian Chambers of Commerce and Industry (FICCI), and Member of the FIDIC Executive Committee. Mr. Kapila has strived to advance civil engineering and serve the ‘public good’ throughout his long and successful career. 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 future of the AEC industry in India will be governed by the consulting opportunities available, the procedure for the selection of consultants, the capacity building of personnel, a commitment to quality and competitiveness for all selections, and the streamlining of payment procedures. 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: AEC firms must work to get policy issues adopted for all jobs with preference to Qualifications-Based Selection (QBS) or at least Quality and Cost-Based Selection (QCBS) for the selection of consultants. This will ensure due weightage to quality in selection and appropriate compensation for the services rendered. Whichever institution plays a dominant role in this regard will attract good experienced firms to work for them and deliver projects of high quality. 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: Post GFC, the overall opportunities available globally are reducing. To adjust, firms are reducing their staff strength, but at the same time trying to retain their capabilities through multitasking or collaborating with other firms through joint ventures or mutually beneficial collaboration in order to retain their market share. Q: What is the biggest challenge you are currently tackling within your firm or association? A: The biggest challenges facing our firm are: The burden of service tax, wherein a firm has to pay service tax, even if payments have not been received from clients. The retention of skilled manpower with limited opportunities available. The task of enlarging the scope of rendering services through partnership, etc. 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 office environment is moving towards automation, with the prevalence of IT, internet, software applications, etc. This ensures  our work force is fully up-to-date with the available technological solutions, in particular, with regard to the environmental sustainability. In addition, we are chartering new partnerships for enhancing skills in areas where in-house capabilities are not adequate. 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: Authentically Melding a Global Brand With Local Resources

John Mathew
JohnMathew
Product Director
BST Global
Nearly 50% of architecture and engineering CEOs plan to increase their international expansion over the next 5 years, according to EFCG. Are you ready? To help you succeed in the international marketplace, we’re kicking off a series of blog posts about glocalization best practices and recommendations for effectively doing business internationally. Follow along with us to learn how to strategically leverage your resources and fuel your international growth. GLOCAL DEFINED So, this word glocal.  It is a decidedly English play on words to describe a much broader, global strategy that spans languages, borders, and markets.  In fact, the roots of this term glocal come from the Japanese word dochakuka, which can be translated as “global localization”.  Multi-national companies like Sony and McDonalds are often cited examples of going glocal, as they have tuned their advertising, branding, and offerings to the local markets they engage around the world. The Harvard Business Review has written about glocalization, stating glocal organizations have “global scale on technology, production and organization…but communication, distribution and selling customized to local consumer tastes.”  McKinsey offers a similar definition, describing glocal organizations as “multinational companies and local businesses developing business models specifically for local conditions.” To put it more succinctly, being glocal means thinking globally while acting locally. Here at BST Global, we get to work with architecture and engineering (A/E) consultancies around the world, and see firsthand how many firms are expanding globally or are getting ready to do so.  From our perspective, the firms that find success are those that figure out how to meld their global brand and expertise with a local touch and approach. Later on in this blog series, I’m going to share more detailed insight on what we see successful firms doing, but first I’d like to start with the more fundamental question: What is driving A/E firms to expand globally and embrace glocal strategies? The answer lies in some trends that are shaping the world and the A/E industry. GLOBAL A/E: GLOCAL A/E Noted New York Times journalist and Harvard lecturer, Thomas Friedman, in his bestselling book The World is Flat, describes today’s world as one that’s becoming a level playing field for commerce.  But according to renowned statistician Hans Rosling, in his study of 200 countries over 200 years, this wasn’t always the case. Looking back about 200 years, we see a world where every corner was facing a short lifespan and low income – that is, being sick and poor was the norm.  Fast forward to almost 70 years ago, and we see that after the Industrial Revolution, the Great Depression, and two world wars, the Americas, Australia and Europe have pulled away from the rest of the world towards a healthier, more prosperous standard of living.  And then coming up to present time, we see Africa and Asia making huge strides in their lifespan and income. Despite the many disparities that exist in the world today, the last 200 years have shown remarkable progress in closing the gap between “the west and the rest”.  We live in a converging world, where average lifespan and average income are increasing in all corners, with particularly rapid growth - and therefore opportunity - in Africa and Asia. Looking ahead, we can expect a continued shift to the east and south.  Global economic power will continue moving to rapid-growth countries like China, India, Sub-Saharan Africa, the Middle East and North Africa.  Indeed, these markets will become increasingly important venues for conducting global business. And to go along with this, the competition for talent will grow increasingly fierce. Studies show that 60% of the new jobs resulting from this shift east and south will require specialized skills.  But only 20% of the population will possess these skills. Furthermore, by 2025, the global South may become the major source of technical talent in the global economy. All the while, companies can take heart that increased worker mobility and technological advances are improving cross-border collaboration, and therefore the ability to leverage in-house talent on a global scale.  Ultimately, though, it’s predicted that greater workforce diversity will provide competitive advantage in the converging global marketplace, so being able to recruit and retain local talent is an important consideration as firms expand internationally. Against this backdrop of macro-trends that are impacting life and business in general, let’s look at some trends that are more specific to the architecture and engineering industry.  From an infrastructure perspective, there are some remarkable things happening. It’s anticipated that the world’s overall gross domestic product (or GDP) is growing to the tune of possibly doubling by 2030, with the highest economic growth expected in the Asia-Pacific region.  One impact of this growth is that the current transport infrastructure capacity will not meet 2030 demand – which means lots of work for firms who can help design and build this infrastructure. Looking at where in the world this work will be, the Asia-Pac region is the largest transport infrastructure market by far, projected to increase from 557 billion dollars a year to nearly 900 billion dollars a year in 2025. Also of note is that sub-Saharan Africa is expected to have the fastest transport infrastructure investment growth rate, at over 11% - representing another area of opportunity for A/E consultancies. An even more industry-specific data point comes from an EFCG 2015 survey of engineering CEO’s.  A portion of this survey focused on evaluating the most opportune markets in the world.  Each CEO respondent was asked to rate each world market in terms of growth and profitability.  Only four markets came out with an overall positive rating, with the US leading the way and Asia and the Middle East coming in second and third respectively as the fastest growing and most profitable markets for engineering firms.  This presence of Asia and the Middle East in the top 4 markets offers an industry-specific corroboration of that shift east and south we looked at earlier.  Indeed, the ongoing shift in global economic power is impacting the A/E industry. Another interesting finding of this same survey speaks to how the A/E industry has already been impacted by the shift of economic power and opportunity.  In the year 2000, there were 41 firms with greater than 100 million dollars in annual revenue that participated in the survey.  In 2015, only 15 of these firms still were in existence – in other words, 67% of the largest firms that participated in the survey 16 years ago are no longer around today.  The main reason for this?  In short, acquisition – most of the firms that are no longer around were acquired by other firms looking to increase their global reach and specialization, and better serve their emerging markets. So the data shows that we live in a converging world, and that there’s a shift in economic power and opportunity towards the global East and South.  We see that the global transport infrastructure market, as one leading indicator for the A/E industry, is pointing towards Asia-Pac and sub-Saharan Africa.  And engineering CEO’s are bullish on Asia and the Middle East, while the engineering industry continues to consolidate as firms look to tap into the growing opportunities around the world. Has your firm started exploring international expansion? Share your experiences in a comment below. Author’s Note: This is the first 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 Consult Australia CEO Megan Motto

Megan Motto
MeganMotto
CEO
Consult Australia
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 Consult Australia CEO Megan Motto based in Sydney, Australia. Megan Megan is also currently a Director of the Australian Construction Industry Forum (ACIF), Councillor of the Australian Chamber of Commerce and Industry (ACCI), Councillor and Treasurer of the Australian Sustainable Built Environment Council (ASBEC) and sits on the NSW State Advisory Council for the Committee for Economic Development of Australia (CEDA). She was named as one of the 2014 AFR/Wespac 100 Australian Women of Influence.  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 will be the biggest trend to affect this sector (and region), as it has already to date. As projects become bigger in scale, value and complexity, the consulting community is responding by pursuing stronger balance sheet growth so as to both spread and manage risk. Whether this risk is due to the imbalance of power between consulting firms and international construction consortiums, the cost of tendering, or sourcing adequate capacity for jobs, rapid growth strategies (usually through acquisition and merger) are fundamentally shifting the structure and culture of our industry. This is forcing change on a number of fronts, whether it be firms embracing technology to drive operational efficiency, or understanding the resulting cultural and behavioral changes that will impact project management and partnering relationships. The industry is never likely to look the same as it did a decade ago. 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: There is a growing gap between those consulting firms that are attempting to elevate their advisory services to compete with the management consultants in the built environment sector, and those that merely provide downstream services. This is partially driven by the size and capacity of the new global players, and a desire to reclaim the more lucrative and rewarding elements of the services supply chain. It is also driven by a desire by the industry more broadly to both participate more fully in higher order public policy and to remain relevant in an increasingly global, competitive and complex environment. This will mean, however, that firms playing in this space will need to develop new capability with regards to delivering fit for purpose policy advice rather than technical advice. The two might converge on the same information, but the delivery systems will be wildly different.  At the other end, it will be increasingly important for firms to demonstrate best practice technical services and have a clear strategy for talent attraction and retention, so as to remain viable for the future.  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 think for most Australian companies the biggest shock of the GFC was that our organizations didn't have exponential growth paths. In Australia we are now in our third straight decade of economic growth, and this has meant that many middle and even upper level managers had been lulled into a false sense of security that the good times would last forever and that we were innately resilient from external shocks. Thus we did not react fast enough to the changing conditions. We had become bullish in our budgeting, buoyed by past successes, and underestimated the speed with which we could react to income collapses with expenditure controls in professional services companies. In future I think the industry will budget more cautiously, and look more closely at lead indicators in the broader market.  Q: What is the biggest challenge you are currently tackling within your firm or association? A: Maintaining relationships with the senior leaders of the industry is actually a real challenge at present. The turnover and movement of individuals in the Australian AEC sector is astounding - partially from mergers, partly from more immediate financial return demands from shareholders, partly through demographic and intergenerational change. For Consult Australia this means being more connected to the members via social media as well as traditional communication channels.  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: Well although we are certainly not paperless yet, we certainly have LESS paper than a decade ago! I think the biggest change is of course the difference technology is making in terms of the autonomy of how work is packaged and delivered. Mobile connectivity means that work can be done any time, any place, and this is fundamentally changing our entire work culture. It means that we have more fluid boundaries between work and life, and this encourages more diverse workforces and more diverse working styles. This is a challenge for organizations as it necessitates more sophisticated management capability focused on outcomes rather than inputs.   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 Past FIDIC President Geoff French

Geoff French
GeoffFrench
Past President
FIDIC
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 Geoff French, Past President of the International Federation of Consulting Engineers (FIDIC) and Past Chairman of the Association for Consultancy Engineering (ACE) based in the UK. Geoff was also the 149th President of the Institution of Civil Engineers (ICE). He holds a Bachelors degree in Civil Engineering from the University of Southampton. 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: Making appropriate use of improved technology. 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 scale of the firms has increased very rapidly. It seems that our sector will become much more like the accountancy and audit sector where a few, very large firms, dominate. 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: Better diversification of both markets and business sectors would have helped – as would cutting deeper and faster. Q: What is the biggest challenge you are currently tackling within your firm or association? A: Helping clients get the right solutions to their problems by ensuring they are asking the right questions of their consultants. 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: There has been a lot of change in what we use at work but relatively little in how we work. People still come together to work in offices both large and small – and seem to enjoy working in that way. 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.

A Case for Progressive Technology Change

John Mathew
JohnMathew
Product Director
BST Global
Intellectual capital is a key asset of a professional services firm. It encompasses the knowledge and expertise of the firm’s staff, and is central to selling and delivering services. As a byproduct, many consultancies have a technically focused and collegial culture, as building and sharing intellectual capital contributes to competitive advantage and success. While well founded and well intentioned, this kind of culture creates challenges for many project-driven consultancies as they look to develop their project management discipline and ensure projects are managed to standards of technical quality and commercial viability. As staff members take on project management roles, they are often operating in an environment that prioritizes technical innovation and excellence over adherence to project scope, schedule, and budget commitments. And so, a common project management challenge for professional services is managing the tension between scope, schedule, budget, and quality. Compounding this challenge is a tendency to place technical experts in project management roles, without developing their project management skills. This can lead to project managers who view the commercial and transactional aspects of project management as someone else’s job, which in turn impedes a firm’s ability to monitor and control project schedule and financial performance. Facing this dynamic, project-driven consultancies rely on their project management and accounting functions to jointly facilitate several key processes, including project initiation, revenue recognition, billing, and collections. Some firms also look to address these challenges with business systems. But those firms that view technology as a solution unto itself often find their improvement efforts futile – they fail to understand that technology is only one component of the overall solution, which really encompasses people, process, and technology. Implementing business systems can be a unique and valuable change agent for a firm, if done incrementally and iteratively. With the different levels of interactions that occur across the project lifecycle – transactional, transformational, and tacit – this progression also serves as a basis for phasing business system capabilities into an organization, in the following manner: 1. Establish a foundation of project controls. The core accounting and financial management function (or “back office”) provides a solid foundation for the introduction of business systems into a project-driven consultancy. Deploying a back office system – one that automates core financial processing and reporting, project revenue and billing management, and time and expense entry and posting – establishes a central facilitator and repository of transactional activities that can then be leveraged to drive additional project delivery improvements. 2. Create firm-wide project and operations visibility. Once core back office functions are automated, firms should focus on information delivery to operations personnel. Begin by defining key performance indicators by which projects, staff members, and operating units will be measured. This sets the stage for role-based dashboards that deliver real-time, online performance measurements and analysis, tailored to the project, resource, and operations managers in the organization. In turn, deploying dashboards provides a valuable opportunity to communicate and reinforce current operating standards and expectations through role-based training and development programs. 3. Evolve project delivery processes and tools. As Jim Collins indicated in Good to Great, one of the keys to organizational transformation is establishing a culture of discipline that is marked by a consistent framework within which people have responsibility and freedom to operate. Business systems can help evolve and sustain this framework, particularly after enabling the delivery of relevant, timely information to operations personnel that helps them focus on their areas of accountability. At this stage, many firms are in a position to improve and mature other key project delivery processes, such as project planning, resource scheduling, earned value management, collaboration, and work management. With the continued emergence and evolution of business systems that help automate and facilitate processes, project-driven consultancies face a myriad of decisions and challenges as they look to effectively leverage technology to improve business performance. Spanning the project lifecycle – from business development and marketing to project and resource management to finance and accounting – there are countless business systems that firms can choose to deploy. But before implementing a business system, take a step back and think holistically about your organizational structure and business processes. Business system implementation often presents a valuable opportunity to realign roles and responsibilities, as well as progress and mature standards and practices.  Resist “band-aid” implementation approaches; and instead identify and focus on core issues in an incremental, iterative manner that holistically addresses people, process, and technology. Where’s the low-hanging fruit in your organization, ready for the picking and ready to be that next step on the path of progressive transformation?

The Future of Architecture and Engineering: A Q&A with SKOL Managing Director Matti Mannonen

Matti Mannonen
MattiMannonen
Managing Director
SKOL
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 Matti Mannonen, Managing Director of the Association of Finnish Consulting (SKOL) and Director of the Federation of Finnish Technology Industries based in Helsinki, Finland. Matti has over 30 years of international experience in consulting management. He specializes in sustainable development, transportation planning, and the construction of water and energy systems. He holds a Masters degree in Civil Engineering from the Helsinki University of Technology.   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 AEC industry will become fully global. There will be new competitors, but also more work. Sustainability will become a determining factor in all industries.     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: Under a new competitive model, we can only survive by providing the best value to clients.  We must also be able to demonstrate value to our clients.  This will come in the form of innovative solutions, cost-efficient sourcing and networks, co-creation with clients and stakeholders, turn key services, digitalization, alliance formation, and risk sharing.    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: 2008 was a paradigm shift. Until then, you always had good markets somewhere. In 2009, every market was experiencing a recession, so being in many markets did not help.  Companies must be more agile than before and be prepared for continuous uncertainty. Outsourcing and flexible agreements should be used as a buffer. As the life cycle of products and services gets shorter and shorter, renewal in companies must be constant.    Q: What is the biggest challenge you are currently tackling within your firm or association? A: In Finland, we are fighting for good procurement practices. This will occur through better information capture and an improvement in the quality of the resources and skills of procurement units and individuals.  We want members to take a holistic view of projects that looks at life cycle costs and sustainability.    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: We have shifted to a multi-space, flexible office with all of our IT in the cloud. All employees have the choice to work wherever they like--at home, in a cafeteria, or on the beach.  We work very collaboratively. Informal information flows are fast and efficient and the atmosphere is good. We also have a retention officer who is in charge of the continuous development of skills and practices.   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 ACE CEO Nelson Ogunshakin

Nelson Ogunshakin
NelsonOgunshakin
Chief Executive Officer
ACE
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 environmental consultancies. Over the next few months, follow along with us as industry leaders share their thoughts. In this post we spoke to Nelson Ogunshakin, President and Chief Executive of the Association for Consultancy and Engineering (ACE) based out of London, United Kingdom. Nelson has 30 years of experience in engineering and construction. He has advised numerous organizations on commercial and financial transactions deals in the UK, Europe, Africa, Middle East, Asia, and North America.  He has extensive experience with construction, telecommunications, free trade zone development, mining, transportation, oil and gas, real estate, and hospitality related investment projects.   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 use of Cloud technologies to facilitate remote working and increase flexibility in the working environment will have a major impact on the future of the AEC industry. Technology as a driver of change in working methods – for example, smart mobile phones – will also be significant.   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: Larger firms are better at understanding this technological imperator than mid-sized ones, while smaller ones are somewhat in denial. There is a consensus on the importance of BIM (Building Information Management) Systems. Still, the need for global operating platforms to deliver across different business landscapes will be critical to future success.    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: More attention to global trends and a better understanding of the true impact of globalization would have helped to prepare for the GFC of 2008. A sharp re-adjustment in risk appraisal by the financial system was overdue, but the timing was hard to predict. Since the crisis? We work to diversify portfolio and service offerings, expand geographical reach, broaden market diversification, and use technology to gain competitive advantage.   Q: What is the biggest challenge you are currently tackling within your firm or association? A: Firms are integrating vertically and horizontally into fewer, but larger practices. Managing the wider strategic implications of this market consolidation is a major challenge. In addition, we are working to increase demand for high quality and competent engineers and consultants in emerging markets. We hope to establish social and economic infrastructure development programmes across these major growth markets.   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:  Our office environment now requires more agility and dynamism. Technology is a game changer. The use of newer technologies for communication, measurement, and relationship management lets us make decisions faster than ever. It also allows the flexibility to work from home or anywhere to complete projects/tasks without distraction. Today, it is necessary to be politically astute and aware of foreign markets. This knowledge helps predict trends and better deploy strategy. More and more, we involve members/clients in the development of future infrastructure research. 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 KENCA Chairman, Jae Wan Lee

Jae Wan Lee
JaeWanLee
Chairman
KENCA
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 Jae Wan Lee, Chairman of Korea Engineering & Consulting Association (KENCA). Jae Wan is also the CEO of Sekwang Engineering Consultant Co. Ltd., as well as the President of the International Federation of Consulting Engineers (FIDIC). He holds Ph.D. and Masters degrees in international transportation, as well as a Bachelors degree in civil engineering.   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 future of the AEC industry can be divided into two parts: business and technical. The business aspect of the industry is good in that the establishment of the Asian Infrastructure Investment Bank (AIIB) will increase opportunities in the Asia-Pacific region, including North Korea. Moreover, the Iranian economic sanction relief will not only create projects, but also will make firms more competitive to enter the Iranian market. As for the technical side, there are no new trends that we are not already aware of. The forces which have been causing a major transformation in the AEC industry for the last several years are still in effect. Some of the most powerful catalysts for these changes include: information technology (IT) and environmental issues. The firms’ core business strategies are being made through the use of IT, such as internet, intranet, and extranet, which may lead to the evolution of new business models in the AEC industry. Moreover, these new trends are also leading to changes in the way firms conduct business with regards to collaboration and competition with other firms. An example of this is the use of Building Information Modeling (BIM) for communication and management purposes. In recent years, global appreciation for environmental issues has been shifting priorities for many industry leaders, emphasizing the need for conservation of natural resources and minimization of waste. Issues such as natural disasters, sea levels rising, and climate change need countermeasures and restorations. Moreover, where the industry was primarily focused on infrastructure and economic development, it has now shifted its focus to sustainability.   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: In previous years, the primary role of AEC firms was the design and construction of facilities. However, with the trends mentioned above, their role is shifting to maintenance, management, and monitoring of facilities and people. Project management consulting (PMC) is becoming a popular service provided by global AEC firms, and they are adopting practices such as green procurement to appeal to their clients. The reason for such a shift in the industry is due to various environmental issues and the need for sustainable infrastructure to combat these issues. Moreover, as people are becoming more aware of these problems, there’s a greater demand for highly trained experts in the AEC industry to consult and manage global facilities and infrastructures. Much of the decision-making in the AEC industry is knowledge and experience-based, hence individuals with such expertise become highly sought after by competing organizations. AEC firms must invest in ways to manage information, transform it into knowledge, and promote corporate learning to share the expertise across the organization. It is important that AEC firms recognize the benefits offered by new technology and use it to remove barriers in the physical world of business, thereby gaining competitive advantage in the global economy.   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: Until half way through the new millennium, Korean AEC firms were denied large-scale project opportunities in the global market. The reason being that they could not meet the prequalification requirements without forming a consortium with other firms. Instead, they built their presence in the global market by starting with smaller-sized projects and by successfully delivering these projects one by one. They gained the confidence of their customers and established a positive reputation in the industry. Korean AEC firms suffered low contract volume in 2008-09, mainly due to the global financial crisis. The worsening engineering contract environment was attributable to demand decline for products. This unfavorable turn of events intensified competition for the dwindling numbers of engineering contracts. Ultimately, Korean AEC firms were not discouraged and successfully overcame the crisis. While experiencing the recent crisis, we learned that the Korean AEC industry had to eliminate a low pricing strategy to win contracts and abandon construction-oriented business models only for contract value consideration. In my opinion, risk management is a crucial factor to leading a successful project. Risk taking and its management is key to staying competitive in the global engineering business. Diverse risk factors exist in overseas markets. Currently, with their very survival at risk, Korean AEC firms have made sweeping changes to improve their capabilities in areas from engineering to project management, while weeding out deficiencies in their business to find better solutions. Korean AEC firms are trying to diversify by looking overseas from the Middle East and Asia to other regions in order to mitigate business fluctuation. More than anything else, they are trying to develop high value engineering capabilities such as Front-End Engineering Design (FEED) and PMC to secure profitability and sustainable growth in an integrated global engineering market. Korean AEC firms are also focusing on nurturing global standard engineers who have extensive global experiences and diverse language skills. They actively invest in talent development and attract talented people by proactively recruiting promising new graduates and professional engineers who can compete at the international level.   Q: What is the biggest challenge you are currently tackling within your firm or association? A: One of the biggest challenges being faced by KENCA is that there are too many AEC firms within the country competing with each other. In the past, when Korea was experiencing rapid economic growth and infrastructure development, there were enough projects for the growing number of AEC firms in the country. However, the domestic market has been slowing down gradually since 2010. Due to the fact that there is no concept of mergers and acquisitions (M&A) in Korea, too many firms still exist and continue to grow despite a dwindling global economy. For example, even Samsung Heavy Industries Co Ltd and Samsung Engineering Co Ltd, who are affiliates of the South Korean conglomerate Samsung Group announced their merger in 2014, but then canceled. Moreover, as Korea’s procurement policy does not meet the global standards, firms are receiving earnings shock when conducting foreign business.   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: As our member firms are slowly changing their business models and practices to accommodate the changes in the industry, KENCA has also been striving to meet their needs by rearranging our organizational structure and updating our technological resources. We are currently relying on the internet to conduct market research and to form alliances with national, as well as international, associations and firms. However, we still have a long way to go as Korean firms are still using traditional management methods for all types of projects. Hence, we must conduct research on the types of projects conducted by our member firms as well as their management styles to provide them with better alternatives. We also need to introduce a new financial management system to our member firms that is more widely used by global firms today.   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.

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