Thinking globally, delivering locally

Global resourcing and ways to do it most effectively were the topics for discussion at a recent roundtable organised by Infrastructure Intelligence and supported by BST Global. Denise Chevin reports.

Denise Chevin
18 July 2016

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Running an engineering consultant is increasingly becoming a global concern. Even those that are not yet multinational conglomerates can find themselves following clients overseas or outsourcing work to engineers and technicians on other continents to help cope with the troughs and peaks in workload back home.

Whatever their size and however they operate, businesses can face huge logistical and commercial challenges: how can teams across different locations be used to maximise efficiencies? What is the balance to be struck between central control and local autonomy? How can technology help? And for those looking to outsource UK work to oversees agencies to help smooth out the up and downs of projects cycles – what might be the best way of going about that?

These were some of the questions around the table when a group of consultants and contractors met a few weeks ago to debate the issue of global resourcing at the St Pancras Hotel in London with BST Global.

Globalism versus localism

One of the biggest challenges facing our participants was the rise of localism in the UK, which is putting pressure on firms to have a presence in the area even if this is unprofitable and unnecessary. For contracting firms where the work has to be physically delivered on the ground, consultants acknowledged that there was a logic to this. But in engineering it often made more sense from both a technical expertise and economic point of view for designs to be generated more efficiently from a centre of excellence. With modern technology the designs and drawings do not need to be produced on the project’s doorstep.

But procurement from local authorities is increasingly driven by the Social Value Act, which enshrines in law the need to procure in ways that will benefit the local community even if it’s not the cheapest way of doing the work. One participant said that up to 10 per cent of the points awarded on a recent bid was for their social agenda.

“What we’re finding is that public sector clients want to know the work is being done locally, in other words that you’re putting back into the local community,” said one participant. “And we’ve had a problem with that. In Wales they wanted to see the work done there, but our design work is done nowhere near Wales.”

Paul McCormick of AECOM concurs: “Localism is really important for all our key clients. Our UK business is about 8,000 people across 60 offices in the UK at the moment. That’s not efficient. As a company that has expanded fast with multiple legacy offices in the same cities we are working hard to optimise our estates portfolio and matching that to clients and workflow. But what we’re seeing is that clients still want that local input.

Smaller firms taking part in the discussion said that localism was closing the door to public sector work for them because they tended not to have offices in different regions. Organisations were pushing for local employment even though it might not offer the best value for the taxpayer.

“It’s a real challenge. Obviously local authorities want to create roles for local people, and some of the contracts that we have say that we have to do that, and we will do that. But I think there’s a genuine naivety around procurement, and within the massively competitive environment that we work in. Some of us probably did economics at school, and it just doesn’t work,” remarked one consultant.

Using local resources isn’t just a UK-wide issue – but was often a demand of oversees clients too. “We have spent a long time trying to create an organisation that is global, but delivers locally,” says Duncan Wilkinson of Arup. “We work out of five regions across the world, and each of those has local people, working locally. But having an overarching organisation gives a global reach.”

He said that this was made easier by technology and the intranet: “We have a forum, so if somebody has a problem in Hong Kong, they can post about it on the forum and by the next day they’ll be inundated with replies from around the world. It’s great, we’ve actually learned to become a sharing organisation. The digital connectivity is amazing, in terms of trying to get that global reach, but with a local delivery.”

Martin Bellamy from BAM Nuttall brought a different perspective as a contractor: “When I was running the international business from Holland we would tender jobs from Holland, win the job, send a bunch of ex-pats to that country, do the job, then go somewhere else.

“That became a totally unsustainable business. There are regional contractors and consultants that are as good as us at pouring concrete, so we had to become regional; we had to establish regional businesses in different areas.

“And that’s the only way you can become competitive, because then you have local staff, and you also get to know the people. But establishing a regional business has to be sustainable, so there has to be a five-year business plan to make it worthwhile.” 

In-house centres of excellence overseas versus outsourcing

When it came to using overseas resources to supplement UK work, there were two schools of thought. Some of our participants set up their own centres of excellence whilst others tended to outsource to third parties. There are pros and cons to both – with regional centres providing a way of controlling quality and consistency.

Mark Cowlard of Arcadis explained its approach: “Arcadis operates within seven global regions, and each of those regions has teams within a global excellence centre. We employ colleagues that work there and they operate and deliver the same as colleagues in the UK.

“They’re not third party, they’re not subcontractors, they’re not someone to blame if something goes wrong, they simply work at the end of a ‘long corridor’. If they don’t deliver to the required standard it’s usually because the person in the UK hasn’t briefed them properly.

“We have local global excellence centres for a number of reasons. One reason is to give us access to markets that we traditionally can’t access because the cost is too high, so it allows us to lower the cost, maintaining the profit margin delivered to our shareholder, and therefore growing our revenue in new markets.”

“It also gives us the ability to flex our resources and respond quickly to the needs of our customers, and maintain the quality and brand of the product in what is generally a resource constrained marketplace.”

The view round the table was how the need to ramp up resourcing quickly was certainly going to become even more of a necessity. “Infrastructure spend in the UK today is probably around £12bn year. If Heathrow runway three goes ahead, that will increase infrastructure spending by about 50 per cent in some years of delivery over three or four years. How many of us around this table have got the ability to ramp up our resources by 50 per cent? And that’s excluding the impact of HS2, Crossrail, the Tideway Tunnel and all those other big projects,” observed one participant.

In terms of outsourcing to third parties, to help with peaks in workload, companies had had mixed results. “The reason that we started outsourcing was to expand our workforce very quickly, within a day or two, and then contract back down again if the project wasn’t going ahead. I can understand why firms set up their own overseas centres because we’ve suffered with the quality at times from the outsourcing companies. It’s actually put quite a dampener on certain sectors of our business because of that quality,” remarked one. Now they always send a team out to do the briefing, impart knowledge, and keep them informed on building regulations and standards. “So even though they’re a separate company, we treat them as part of our staff, because we see the benefits of it, and we find that the better informed they are, the better the quality we get back.”

Control versus autonomy

Where companies were operating with overseas centres, the discussion turned to the issue of how much control should be exerted through the operation or whether it was better to allow greater autonomy. The consensus seemed to be that making it work is about having the right people – that is, those capable of making decisions and reacting appropriately. “It’s difficult to find those people, but they also have to be empowered to make those decisions, trying to retain control is slow and not responsive enough,” said Steve Wooler of BWB.

Eduardo Niebles from host BST Global remarked: “We are a medium-sized niche technology company that caters to the AE industry with five offices around the world. We learned very quickly that you have to have a very flat line, executive organisation, and you have to find the right people and empower them. Every one of our employees outside of America spends up to three months with us at our HQ in Tampa learning the culture, getting trained on what they’re expected to deliver.

“It’s a big investment, but it works for us as our business has grown significantly the last 11 years.”

Miles Barnard from Mouchel says: “I think with regards to the UK and abroad, firstly you’ve got to appreciate that it’s very different running a business in, say, Saudi Arabia than in Australia, there’s fundamentally different business cultures. So to make it successful, for us, we have to have very clear control, governance, delegations of authority. Business systems might help, but it’s about the control and governance. Most importantly in terms of running these offices is we take a person who understands what Mouchel is about, and they will be the business leader in that territory.”

Duncan Wilkinson of Arup gave his take: “What we used to do was employ people from around the world to come and work with us in the UK, and then they’d go back to South Africa and Australia and set up a practice, but it would have a UK partner, who oversaw it.

“And over the last 25 years, we have slowly bought the franchises back as part of the local business. We’ve got to the stage now where those people who are out there are local people, who’ve grown up with the business locally, and rather than us putting in central control, they are local people running the business locally who feel part of this global organisation.”

With mergers and acquisitions rife in the sector it was not surprising that conversation turned to the issue of allowing new additions to maintain their own culture or establishing or more homogeneous culture quickly. One of our participants said that from past experience where companies were allowed to retain their own way of doing things within a group, it was hard getting them to work together, partly because of lack of consistency in the way they did things.

Others said that it is essential to get everyone on the same systems, even if it was painful. Once that had been achieved it was easier to work on cultural alignment. 

Where should we be moving in future?

Miles Barnard, Mouchel: I think it’s about collaboration, particularly on the big infrastructure we’ve got now, between designers and contractors. If you can collaborate to deliver a solution, then I think you end up with a far better value solution.

Martin Bellamy, BAM: The market is very positive, but it’s ultracompetitive, so much so that we’re beating each other up a little bit. As an industry, I think there’s room for some kind of improvement there.

Paul McCormick, AECOM: The biggest challenge for us as an industry is moving away from the very old traditional business models, to something closer to a Google type of delivery.

Bruce Tomlinson, HR Wallingford: Let’s embrace technology. Perspective is important, relationships are important, and human insight is important.

Duncan Wilkinson, Arup: I would say, competence is not a function of age. And I would say that if you’re incompetent at 25, you tend to be incompetent at 50. So undervalue your young people at your peril. If you want to learn about technology, you go to a 16-year old.

Eduardo Niebles, BST Global: Technology is really an enabler. The industry is going to change dramatically in the next five or 10 years. And I don’t think it’s going to come from a Google, it’s going to be an engineering firm that figures out how to integrate networks and data, the logging of data, etc.

About the sponsor
BST Global provides integrated business management software solutions for the world’s leading architects, engineers, and environmental consultants. More than 100,000 professionals across six continents and 65 countries rely on BST solutions each day to manage their projects, resources,finances, and client relationships. The company’s latest offering, BST10, is the world’s first multilingual business management system to be built exclusively for the architecture and engineering industry and made available both in the Cloud and On-Premises. For more information, visit www.bstglobal.com 

Who was present?

Miles Barnard – managing director of Mouchel Consulting

Martin Bellamy – executive director of BAM Nuttall

Rick Burgess – technical partner PRP

Michael Casey – group board director of Hydrock

Paul McCormick – managing director of AECOM’s transportation business

Denise Chevin – Infrastructure Intelligence

Michael Clarke – chief financial officer of ADAS Group

Mark Cowlard – UK risk and operations director, Arcadis 

Anil Ilyer – chief operating officer ACE

Eduardo Niebles – director at BST Global International Group and host

Nelson Ogunshakin – chief executive ACE, chairing the meeting

Bruce Tomlinson – chief executive at HR Wallingford

Mark Watson – head of ICT strategy BMT Group

Duncan Wilkinson – director of Arup

Diane Williams, business development manager ACE

Steve Wooler – chief executive of BWB