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The Future of Architecture and Engineering: A Q&A with NLingenieurs Managing Director Jacolien Eijer

Jacolien Eijer
JacolienEijer
Managing Director
NLingenieurs
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 Jacolien Eijer, managing director of NLingenieurs based out of Amsterdam, the Netherlands. Jacolien leads the Dutch engineering association in the management of developed and natural environments. She is a trained environmental engineer and has held positions at Antea Group as well as Witteveen+Bos. She has also worked in various Dutch government offices in both data standards and knowledge management.   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 way companies collaborate is changing rapidly and it will become very significant in the near future. In the Netherlands, there is a shift away from a conventional contract model. This is true in both the infrastructure sector as well as in residential and commercial construction. We are seeing a spirit of co-creation beginning to take hold. In the public infrastructure sector, there is a shift to use DBFM (Design, Build, Finance, & Maintain) contracts.  DBFM contracts still include a customer (the public) and a contractor (a private firm). Contractors, however, are allowed more freedom to design and given responsibility for the whole life cycle of a particular project. For example, if a firm constructs a new road, they are responsible for that road until a new one must be built. Though these contracts have room for improvement, they are paving the way to a more collaborative partnership model. In residential and commercial construction, you see that the traditionally dominant position of developers is changing. Through new forms of crowd-sourced funding and more initiative and power being placed with the end user, a big shift is occurring in how work is managed. Ideally, each stakeholder will contribute and bring their specific strengths to a project. This includes clients, contractors, and government entities, if applicable. Bringing parties together at the beginning of a project--before bids or proposals are even created--helps to eliminate the internal struggle often felt throughout over price. A more collaborative approach means that each stakeholder brings their own expertise to the table to maximize project quality and efficiency. The big question in these changing relationship structures is twofold: How are the risks of the projects best divided? How do we as engineers provide good value to our clients while still receiving a fair value for our expertise? Of course, technology also has the potential to significantly alter the way we work. I believe, however, that the biggest impacts from developments in this field will take shape more than five years from now.   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: Although we try to focus procurement in the Netherlands on best overall value, there is an enormous pressure for the lowest rates in actual practice. Long term contracts are negotiated in a highly legal environment where business is quoted and described in great detail. Of course, not all costs are foreseeable and this can lead to major problems during production. Moreover, we are dealing with clients who are less knowledgeable. This lack of knowledge effects the bid in terms of correctness and quality. Thus, price becomes the deciding factor. In a market with many providers, this leads to rock-bottom prices and hassle during production. In large contracts, you still see projects organized more hierarchically. Here, the construction company that won the bid “cherry picks” the most lucrative sections of the contract for itself and subcontracts out the rest of the project. This leads to engineering companies getting involved at the end of the bid process, often with little to no input on cost projections. These firms then have difficulty supplying a financially viable solution to a project they weren’t involved in planning. In the Netherlands, engineers are perceived as employees simply punching the clock. It is critical to turn this notion around! Engineers must position themselves as trusted advisors and suppliers of integrated, sustainable solutions to complex problems. The added value engineers can provide needs to be embedded in the quality of solutions. Yes, that means higher costs. And, yes, breaking out of the “lowest bid wins” pattern is risky. Ultimately, however, it is better for the industry and its customers.   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: In 2008, I was in a very different role at a different organization. Regrettably, the government of the Netherlands did not act strongly in advance or during the crises. A large portion of the business world, including the engineering sector, had a difficult time and had to switch to survival mode. I would have liked to see the government take on some challenges, such as the issue of energy and sustainability. In doing so, the government could have provided some perspective for the industry. Unfortunately, the government instead focused on costs and cost savings. Even within my own organization, NLingenieurs, there has been an emphasis on cost savings over the last few years. The Dutch economy is now rebounding a bit, so firms are able to look forward. As the new director of NLingenieurs, I am excited to help shape the future!   Q: What is the biggest challenge you are currently tackling within your firm or association? A: As the leader of an industry specific association, I have two challenges: (1) to ensure that the engineering sector is well established and regains its position as complex problem solver, and (2) to ensure that we have a vibrant organization in which members actively participate and continue to fund future initiatives.   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: Within my association, communication is essential. This will be my main focus in the coming years. Internal communication among members, committees, and agencies can be done more effectively. I would like to see a much more open organization, one not afraid to share knowledge. Of course, it’s important that these communications are concise so as not overload each other with information. I would also like to improve the digital work environment of the members--that's complex because we represent about 110 different companies and members. Standardization and providing a unified software option would help accomplish this. Within our association office, we have an open environment where employees are quite free to find a good balance between work and private life.   This post is part of a question and answer series with global industry leaders on the future of the architecture, engineering, and environmental consultancies.  

The Future of Architecture and Engineering: A Q&A with FRI Managing Director Henrik Garver

Henrik Garver
HenrikGarver
Managing Director
FRI
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 Henrik Garver, managing director of the Danish Association of Consulting Engineers (FRI) based out of Copenhagen, Denmark. Henrik specializes in market development for the building, infrastructure, energy, and environmental engineering segments. He has unique insight into the AEC industry, digital technology, global competition, and international 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: Building Information Modeling (BIM) and digital technologies will, with the power and capacity that is provided through cloud computing and more powerful computers and servers, become a game changer for the industry over the next five years. Digital technology will force the AEC industry to rethink what services they provide clients and how these services are best created.   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 an increase in M&A-activity, as the firms need the ability to provide top-of-the-range services to more clients and in more locations. At the same time there is an increasing role in becoming the trusted advisor to a larger number of clients, as investors and financiers also need to evaluate the technical feasibility of projects. The AEC firms should focus on their core skills in order to remain best-in-class. At the same time they should start targeting new client segments, for whom the technical assistance provided by AEC firms has a significant value, in their assessment of project risks.   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: From our analysis of the industry, we saw a significant reduction in backlog by mid-2007. But the AEC industry did not react to this decline, as there was significant shortage of staff at the same time. An early reaction, based on the data available in the market, would have given companies a full year of preparations, prior to the crisis. As an association, we are focusing even more on the data that we can provide to member firms, in order for them to get a better position in the market.   Q: What is the biggest challenge you are currently tackling within your firm or association? A: How to position the entire AEC industry as the key player in BIM and the use of digital technologies.   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 the entire IT-infrastructure to be cloud-based. This enables office staff to work from anywhere in the world – and still collaborate on documents in real-time. As a result, it is possible to improve the work/life balance for FRI-staff.   This post is part of a question and answer series with global industry leaders on the future of the architecture, engineering, and environmental consultancies.

The Perils of Overlooking Ethos in Expansion [and How to Avoid Them]

Eduardo Niebles
EduardoNiebles
Manager Director
BST Global
There are thousands of books, articles, and excerpts on globalization, international business, and global strategies, each divulging different ways to gain market share and global brand recognition: Should you adapt your products to the marketplace differently? Take advantage of economies of scale? Or look at global growth based on cost and risk reductions given the geographical opportunities? When considering a new global growth model, business leaders usually cover the basics. First, they look at their business model to determine how to adapt the company’s value proposition to the new geographical market participants, and then they determine what infrastructure (enterprise resource planning, outside partnerships, and organizational management – to name a few) is needed to succeed. But one element that is often overlooked – or worse, assumed to be inherently part of the strategic process – is the ethos of the business. The ethos of your business sets the tone for how your organization operates. This core set of values – be it trust, fairness, honesty, or even environmental awareness – is not automatically incorporated into your global strategy; you must make a conscious effort to include it. Just as you discuss how you will create new sales opportunities, you must also consider how your company ethos could affect which strategies you adopt, what trade-offs you might make, and to what degree the ethos of the business itself may need to change. While it is one thing to adapt your business model to gain competitive advantage or to create a “blue ocean” of opportunity, changing your company ethos to quickly gain market share in a new region is a recipe for failure in the long-term. The ethos of a business should not be changed, altered, or adapted to win new business outside of your home geographical boundaries, in my opinion. As simple as incorporating your core operating principles into your international strategy may sound, there are countless case studies on companies that failed when going global because the leaders made trade-offs on mandates of their business ethos that they assumed came naturally, but often did not. To make sure that you continually incorporate your business ethos into your global expansion plans, consider these steps as you go through your global development and execution process:   Align business ethos with key performance measurements. A balanced scorecard (BSC) methodology is a good way for leaders to not only measure performance across key perspectives such as finance, customers, and internal business, but to also integrate external and internal processes. BSC helps leaders see where they have made trade-offs between future success and short-term gains, and ensures that success does not come at the expense of core ethos.   Compare defined activities to core values. Think of this step as a checks and balances system for your plan. Once your organization defines and prioritizes key activities of the global strategy, each action needs to be compared with your business ethos, defining expectations as it relates to what will be executed. A byproduct of this exercise is that you will also see what areas the company needs to excel in to guarantee your core competencies transcend to other regions.   Create a strategy map. Intangible assets like ethos, corporate culture, and employee skills are becoming increasingly vital in today’s world of mobile resources, social networks, and real-time information. However, measuring these assets is often difficult. By developing a strategy map, you can help your employees understand why intangible assets are key to the success of your global plan. The map also helps convert intangible assets into tangible outcomes, as it shows the cause-and-effect links to how your intangible assets can create or change the desired outcome. Creating a successful global organization takes time, patience, commitment, and the flexibility to adapt quickly based on the information you receive on the ground as you begin to execute. By making sure that your business ethos is firmly embedded throughout your global expansion, you can better ensure that you are building a long-lasting organization that fully encompasses your tangible and intangible assets as you leave your home geographical boundaries. How does your organization focus on long-term sustainability without compromising its ethos? Share your ideas in a comment below!

How to Plan Successful Change Initiatives

Stan Bunn
StanBunn
Group Manager
BST Global
Only one in four change management initiatives are successful over the long term. Or more importantly, 75% of organizational change programs fail to sustain initial gains, according to a survey by Towers Watson. All too often, I hear business leaders outline the need for organizational change. From adding a new product to restructuring the company to adopting new business development software, change initiatives can drive profits, increase efficiency, and provide competitive advantage. Yet many fail to recognize what it really takes to bring meaningful change to their company. And this failure can have significant financial impact: for every $1 billion spent on strategic initiatives, $149 million is lost due to poor project performance. That means nearly 15% of every USD invested in strategic initiatives is lost. Minimizing the importance of change management can cripple even the most well intended initiative. In some cases, organizations lack the operational imperative to invoke the change. While in others, it comes down to a lack of buy-in from key middle managers who are actually tasked with bringing the change to fruition. Whatever the reason may be, many of these failures can be avoided with a well-defined change management plan. By setting a clear vision that succinctly identifies the problem you’re hoping to address and the people and processes you’re looking to modify, you can dramatically increase your chances for success. In order to bring meaningful change to your organization, it is imperative to develop and communicate your vision for success with all employees from the onset of the project. To help you achieve this, keep the following steps in mind:   1. Establish the issue you’re trying to solve. Are you looking to reduce days sales outstanding (DSO)? Gain a better handle on your utilization rate across the resource pool? Increase project visibility by introducing new project management software? Improve accuracy in your revenue / backlog forecast? Begin your plan by clearly defining what problem you want to resolve.   2. Quantify your current position and identify your target outcome. Perhaps your present DSO is 120 days and your targeted outcome is 85 days. Or maybe you are managing resources by office and are now looking to eliminate silos by leveraging staff across offices and disciplines with an enterprise resource planning system. Or let’s say you are loosely tracking opportunities on spreadsheets and would like to introduce a database solution to enable more timely capture of key clients and company-wide visibility throughout your pipeline. Ask yourself: What is your present situation and what objective would you like to achieve?   3. Prepare a project plan with achievable milestones. The key word here is achievable. Your goals must be realistic – do not set yourself up for failure by setting impossible targets. Develop a solid plan by defining the scope, schedule, budget, and resources required to execute the change initiative.   4. Identify your executive sponsor. Establishing that your project is sponsored by the C-suite immediately provides clear direction to the rest of the organization. Today’s engaged executive sponsors must have a vested business interest in the project, going beyond securing resources to also provide feedback, enforce schedules, and serve as a moderator when critical issues arise.   5. Enlist change management champions. In addition to selecting an executive sponsor, recruit senior influencers that other employees look up to within the organization to be on your change management deployment team. These advocates can help drive buy-in from staff and solidify the change for the long-term.   6. Execute the plan and don’t stop until you reach your intended destination. As you implement the change, set checkpoints along the way to ensure progress is being made. Share updates regularly to showcase progress and ease resistance. Transparently communicating with your employees as you drive the change will help keep morale high as you seek your targeted outcome. Establishing and communicating a clear vision for your change initiative from the beginning can help reduce internal barriers and ensure long-term success. What change management challenges have you faced in your organization? How did you overcome it? I encourage you to share your own experiences and insights in the comment section below.

Nordic Highs: Seeing Opportunities in Slow Growth Markets

Henrik Garver
HenrikGarver
Managing Director
FRI
Following the global financial crisis, credit crunch, and other fallacies that have squeezed the global economies since 2008, the Scandinavian economy is slowly recovering. Up until mid-December of 2014, the gross domestic product (GDP) for Denmark was up, with a meager expected growth rate of 1,4%, according to the Ministry of Economic Affairs and the Interior. But, revised figures released on last month indicate an even more moderate growth rate of just 0,7%. However, in spite of slow growth rates in the national economies, the Scandinavian consulting engineering sector has still managed to seize many opportunities that the market has had to offer. Most significantly, the infrastructure and energy sectors have grown in importance across the region, while the building sector – particularly with regards to commercial buildings – have seen a steep decline. In addition to choosing the right positioning in their Scandinavian home markets – that is, a stronger focus on infrastructure and energy with less dependency on buildings, many of the consultancies in the region have seen international growth as the way to create more value for owners and clients, and to provide new exciting projects for their staff. The most recent example of this is the Rambøll acquisition of US-based Environ in December 2014, but also companies such as COWI, SWECO and NIRAS are developing their international businesses at a much faster rate than their domestic business units. Expanding into new international markets, particularly in other parts of Europe, in the Middle East and Africa, and in the North American market, allows consultancies to utilize key experts within the company, as well as build and efficiently use stronger sourcing centers – in order to drive higher profits in declining markets. The tricky bit is that, in order to make international sourcing centres and key expert sharing a viable growth strategy, a growing volume of projects is required. Without multiple projects within a region and a large number of large scale global projects, setting up the resource centres will not be cost efficient. What’s more, this method challenges staff and managers by requiring them to work at an increasing extent with multinational teams on projects inside as well as outside of their home region – something that, in the past, would have been handled by a purely domestic staff. Nevertheless, once implemented, this strategy gives companies the structure and resources to grow in the international markets at an even faster pace. And the results of these international efforts are already visible. By utilizing the domestic markets of Scandinavia as a solid home base, Danish consulting engineering companies have over the past three years surpassed Danish contractors in international revenue, according to the Export Profile 2014. Additionally, profit ratios appear to be back at their pre-crisis levels, according to the 2014 Sector Review. The major players, such as Rambøll, COWI, Grontmij, SWECO, and NIRAS are financially strong, so more growth is to be expected. The success of these business models will likely drive new international strategies by the second-tier of companies with 200-1.000 staff in 2015. What’s more, consulting engineering staff numbers have grown across the Scandinavian countries. In fact, the Danish consulting engineering industry now employs more staff outside of Denmark than in Denmark, a development that has been driven by first-tier companies with more than 1.000 staff, like Rambøll, COWI, and NIRAS. For 2015, we will continue to see high demand for consulting engineering services in the infrastructure, energy, and environmental sectors, both in Scandinavia and internationally. I expect that the Scandinavian commercial building sector will recover, while the public sector will keep a steady demand for consulting engineering services. Thus, it appears that the solid base for growth will continue in the years to come – and the Scandinavian industry will be ready once GDP growth begins to grow significantly.

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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