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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.

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.

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.

A New Reality: How Digital Technology will Transform the AEC Industry

Eduardo Niebles
EduardoNiebles
Manager Director
BST Global
As an industry, we are in uncharted territory. When will an Uber-type company change the AEC industry as we know it, and how can we plan to be a part of it? We read how Mega-trends are redefining the world--in all cases, digital technologies top the list. Financial technology ("FinTech") companies, more flexible than their big bank counterparts, are forcing changes. The amount of information collected and interpreted is growing. No CEO wants to look back and reflect failing to prepare for this fourth 'industrial' revolution. I agree the convergence of various types of digital technologies happening all at once is a key trend. I am, however, of the opinion that we will not witness an Uber-type scenario in the AEC sector. Digital technology will serve as an enabler and not a disruptor to the industry. It will enable new business models to innovate, redefine experiences, and fortify sustainable businesses. The visible impact of digital is how people can now work in a more collaborative way. Social, mobile, cloud, and BIM allow for architects, engineers, surveyors, contractors, and others involved in a project to work from one set of drawings. Moreover, while it is easy to become an Uber driver, the AEC sector necessitates skilled and credentialed professionals to drive creativity, intuition, and judgment. They have the experience to know what questions to ask. Hence, I can envision a new type of AEC firm arising as a result of digital - the digital consultancy. What is a digital consultancy and how can today's firms begin the digital transformation? The digital consultancy represents more than the use of technology to improve operational efficiencies. Rather, it is about creating the environment for employees to gain the knowledge and skills to innovate and build the capabilities to deliver the specific customer value which leads to better shareholder value. It is about data, people, and knowledge. The distinction is placing employees and customers at the center of everything it does as it moves into the digital economy. Consider the following concepts as a strategy map to begin your digital transformation: Communicate the mission - Elevate technology to a chair in the boardroom. The responsibility falls on the CEO. In many ways, the CEO is the Chief Digital Officer. Disrupt yourself - Don't look to disrupt your entire business at once. Keep your primary revenue source intact, but look at the edges of your business to innovate new services and new customers. Use real time information to measure your disruption and get the necessary feedback. Enhance your talent - Hire, train, or create the necessary roles to build the capabilities to deliver customer value. "Data Scientists" or “Digital Engineers" could be new roles to augment new services such as data mining or analytics to smart city schemes. Find new partners - Look to partner with technology companies. Why wait for these digital natives to come in on their terms? Create partnerships to learn from them. Create an ecosystem of partners that can innovate, invest, and offer better customer experience. The consultancy that figures out that the opportunity is for digital to transform the work itself will become the disruptor. There is no opting out of digital transformation-- have you started discussing your digital scenario?