US project and programme management giant Hill International is daring to be different, eschewing notions of one-stop-shops and sticking to what it does best. President David Richter tells Mark Hansford why.
In what is an extraordinary period of time in the history of the construction industry, where global consolidation and the creation of amorphous one-stop shops is the business model of most, Hill International dares to be different.
Hill International, with 3,100 employees in 100 offices worldwide, simply provides programme management, project management, construction management, construction claims and consulting services. That’s all. And that’s all it wants to do, explains president and chief operating officer David Richter.
“We started out as a claims firm and over the years have moved into project and programme management. Those two businesses are very synergistic,” explains Richter.
“But some of our biggest competitors - the likes of URS, Aecom and CH2M Hill - are primarily design firms, and there really is no synergy between design and project management,” he states. “There is nothing that is going to make a great designer a great project manager.”
And Richter is sure that when it comes down to it, it is the high end services Hill offers that are what clients really need.
“Every owner has the same concerns. He doesn’t want it [the project] a year late; he doesn’t want it 20% over budget; and he doesn’t want to spend valuable time in courts with the contractor.
“Yes, doing design does open the door to clients at an early stage. But we still think that there is no synergy between the disciplines,” he says, pouring scorn on the notion that the giant one-stop-shop is the be-all and end-all for meeting clients’ needs.
“Yes, doing design does open the door to clients at an early stage, but we still think that there is no synergy between the disciplines”
“Yes, the firms are getting bigger. Clients have a bias towards bigger firms as they have a track record and reputation for delivery. If they didn’t, they wouldn’t be so big. But there really is nobody who is going to hire one firm to design it [the project], manage it and build it,” he says. “Very rarely are these skills all in one firm. We have focused on project and programme management and that is where we are going.”
There is one chink in Hill’s powerful armour, though. The firm lacks cost consultancy skills. But this is something that is soon to be addressed through acquisition, says Richter - and he’s looking to the UK.
“The one piece of our puzzle missing is a cost management arm and the best firms are British,” he states. This, of course, is something not missed by US giant Aecom or Dutch giant Arcadis which last year bought Davis Langdon and EC Harris respectively. Only Turner & Townsend and Gardiner & Theobold remain as independently owned, decent-sized acquisition targets.
“We have missed out on a couple of firms recently,” says Richter. “But in the next couple of years we will have a major QS firm as part of our business. We have our eye on two. It is about picking the right firm, with the right culture at the right time.
Richter cautions that this “right time” is not now, with the UK market looking gloomy post-2012 Olympics. He senses a better price will be on offer in a few months’ time.
“I am not sure the [UK] market has bottomed out yet. Once those working on London 2012 have downed tools, there is going to be quite a while before they are busy again,” he says.
Of course, all UK based firms are more than aware of this themselves and most have been eagerly ramping up their international operations to replace and expand on UK incomes. It is no different for Hill International which has spent the last two decades massively scaling up its international operations to shield it from downturns in its home market.
Richter is both a civil engineer and an attorney. He was made President and COO in 2004. Prior to his current position, he had been President of Hill’s project management group, the company’s largest operating division, since 2001.
“Unfortunately one of the markets not doing so well is Europe, and particularly the UK. But that is only temporary”
Before that, he was senior vice president and general counsel of Hill. Richter has also been a member of Hill’s board of directors since 1998.
Richter is a member of the Board of Directors of the Construction Management Association of America, as well as a member of the Young Presidents’ Organisation. Before joining Hill, he was an attorney with New York law firm Weil, Gotshal & Manges.
“I joined the company 17 years ago when 95% of our business was in the US. But even then there was no question that our growth was going to come from outside the US,” he says.
Mushrooming project management
“Our view is that construction is happening everywhere on the planet and the outsourcing trend in project management is continuing, particularly as projects get more complex. We have seen the whole project management industry mushroom.”
And Hill International is pretty bold about where it is willing to work, winning contracts in some of those markets traditionally seen as out of bounds such as Afghanistan, Iraq, Saudi Arabia and Libya.
“Our experience is that design firms have been very bureaucratic and very conservative,” says Richter.
“Our goal is to get as global as we can. Going international isn’t that risky - in fact it’s the opposite. Just like getting bigger is less risky. It’s a good way to mitigate the risk of a downturn in one market.”
Libya would be a good example of that - the firm has been operating there since 2007 and it was one of its biggest markets. But it was forced to close its Tripoli office and extract its 200 staff last February as the Arab Spring kicked off.
This caused a resulting dip in income from the region, but despite that the firm is still expecting revenues to exceed $500M (£325M) for the first time this year - an 11% increase.
As of Christmas the Tripoli office is open for business again, and Richter expects strong growth as the country gets back on its feet.
“We have reopened the office in Tripoli and expect to get back to work in the next couple of months. We were managing some of the country’s biggest education projects and the government has recently told us that education and healthcare are going to be its priorities,” says Richter. “It’s an oil rich country and assets are being unfrozen. We believe Libya will be one of our biggest areas in the near future.”
It’s not just Libya where the firm is prepared to boldly go in the search of global growth. One of Hill’s most recent contract wins, awarded just before Christmas, also typifies this approach.
This came from the Iraq Ministry of Youth & Sports, and will see Hill providing project management services in connection with construction of the new £65M, 30,000-seat Al Anbar Olympic Stadium in Al Anbar.
The two-year contract has an estimated value to Hill of approximately £2.1M and will involve design review work plus, site supervision, resident engineering, project management and quality control.
The firm is also managing a major housing development in Basra and Richter is optimistic about the prospects of more to come. “Iraq is going to be a huge market,” he says.
Latin America and Australia are also booming now for Hill, with another boom market - China - a slower grower.
“We are active in China and have three offices there. But to date our success has been less than we anticipated,” says Richter. “But China is a place where you really have to build long term relationships and over time we will have a lot of work there.”
Blot on the landscape
The only real blot on the landscape is Europe. “Unfortunately one of the markets not doing so well is Europe, and particularly the UK,” says Richter. “But that is only temporary,” he adds.
The firm employs around 150 people in the UK, mainly in its claims arm. Richter says one of the benefits of buying a UK cost consultant would be to buy into the UK project management industry.
Until then Hill continues to grow organically. “We are consistently looking for great professionals,” says Richter.
“Our UK claims business gives us a very high reputation and that attracts the best and brightest - especially thosewho would feel their skills would be lost in a design team.
“We are always looking for good people, particularly now we are growing and expanding.”