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Reaching across the Globe

In times of world economic recession, it pays to be a firm with global reach, says Aecom Programme Management global director Tim McManus. John McKenna spoke to him about mixing international and local talent.

There was a distinctly American flavour to the three teams shortlisted for the role of Crossrail programme partner (News last week). This role, to manage the overall Crossrail programme on behalf of Cross London Rail Links, is being bid for by three consortia, all featuring big hitters from the United States.

Legacy 3 is a joint venture between US-owned Parsons Brinckerhoff (PB), Balfour Beatty Management and Davis Langdon. The Bechtel/Halcrow/Systra joint venture is awash with US talent and Transcend, a joint venture between Aecom, CH2M Hill and Nichols Group, is mostly American.

Thanks to their work on the London 2012 Olympics, the likes of Bechtel, PB and even CH2M Hill, are familiar names to British engineers. They have become renowned for their project and programme management expertise. Less familiar but arguably more pervasive in the UK marketplace is Aecom, parent company of consultants Faber Maunsell and Earth Tech and London 2012 masterplanner Edaw.

All three firms are gradually aligning themselves to the Aecom brand. But they are not the Aecom bidding for Crossrail. Instead, it is the US firm’s programme management arm, which is delivering high profile projects across the globe. These include the £10bn expansion of New York’s Second Avenue Subway, the £2.6bn upgrade of rail infrastructure in Queensland, Australia, and the £32.6bn redevelopment of Libya’s major cities.

So, with Aecom now introducing itself to the UK as a programme manager, is it fitting to call it the new Bechtel? Not quite, says Aecom Programme Management global director Tim McManus, speaking to NCE via video-link from New York. "Companies like Fluor and Bechtel do different things to what we do, with Bechtel for example operating as contractor," he says.

"We choose to stay on the same side of the table as the client as advisers." This role of trusted adviser and programme manager is, says McManus, only likely to become more popular with clients over the next four years, even though many countries are entering a recession. Indeed, engineering firms wishing to grow must have a global outlook, he says. "If you look at major capital programming it is essential you look at it within a global space," says McManus. "This industry is a £3.5trillion to £4 trillion per year industry globally. There are mega-projects happening all over the world and demand is still exceeding supply."

Pressure on the supply chain to meet demand may have eased in recent months, but it is still very much a seller’s market, says McManus, and for this reason there is an increasing trend to use engineering firms as trusted advisors. "Three to five years ago you would see five companies willing to tender," he says. "Now, as a client, you are lucky if you get two. A good example is the 2012 Olympic stadium where the Olympic Delivery Authority had to negotiate a deal with just one bidder. Contractors are reviewing client’s terms and conditions, saying: 'I won’t go near your project if you have onerous terms. I will go somewhere else, I don’t need to take the risk'. "It’s happened so quickly that many public agencies [clients] are unable to cope – that machine [public procurement] doesn’t move as quickly as the marketplace."

This all means that clients must face up to the reality that although they may think their project is the greatest ever, there are many others bigger and better happening around the planet, and contractors can take their pick, says McManus. Clients must now speak to the supply chain early on and actively market their projects to contractors.

However, this is easier said than done, when very few public bodies can class themselves as "intelligent" clients – bodies that employ many construction and engineering professionals and have experience of major projects. In western countries, this is mostly due to a skills shortage, while in the developing world it is due to lack of experience of major projects. "It is because a lot of junior and middle level managers have left public sector clients due to retirement and lack of supply of young talent," McManus believes.

"Now public agencies have major capital programmes and say 'I don’t have the staff or resource to do this'. "In countries like Algeria, [which has a £52bn national reconstruction and economic growth fund, including £7bn for an east-west highway and £3bn for rail upgrades and new lines], you have clients that have never done this kind of project before in their lives."

There is also the added pressure, says McManus, of ever-greater public scrutiny of public spending, largely due to the internet and the culture of 24-hour news. "If you look at 2012, everybody knows what’s happening with the budget," he says. "A lot of agencies in the world have not been prepared for that type of scrutiny." Within the context of all these pressures, clients increasingly find themselves needing firms with the expertise and experience of major projects to help them in the procurement and delivery of their schemes. As they become aware of this need and because they are competing in a global marketplace clients demand the best in global practice.

Paradoxically, however, McManus says that the key to global success as a trusted advisor is local knowledge. "Local knowledge is essential," he says. "We make sure we have people who know the subcontractors, know the suppliers, and know the trade associations." Aecom has this.

Fifty two per cent of its revenue comes from outside the US, mostly from companies such as Faber Maunsell. This means it has well established roots right across the globe, so that when the programme management team starts bidding, it can tap into significant local resources. "By establishing Aecom as a programme manager in the UK, we are not stopping what Faber Maunsell, Edaw and Earth Tech do," says London-based Aecom Programme Management director Nick Lawton. "We are just tapping into all of them." McManus adds: "I think it’s important we have someone from the local marketplace as opposed to bringing in an American. Doing that would be much more of a challenge than, say in the UK, bringing in Nick who will have these relationships already."

Rather than following the traditional contracting model of moving teams around the globe from one project to the next, McManus’s programme management team uses local resources and, where necessary, use its "Knowledge Excellence Centres".

These virtual hubs have between eight and 15 Aecom staff with expertise in particular disciplines, and experience of major projects. Each centre is led by two or three people, who aim to respond to McManus’s call for help within 24 hours, offering potential solutions for any project. If the idea is accepted and needs to be developed, that can also happen remotely, without the experts meeting the project teams face to face. "I can reach out and touch whatever ability we need and make them available to the client," says McManus. "I have got people in Boston and Los Angeles, who when I tell them 'we have got a problem in Abu Dhabi'…they get jazzed up about helping to deliver a solution." Lawton adds: "What impresses me is that it’s cross sector – these knowledge centres are discipline-based rather than sector specific, so learning from the air sector, for example, can benefit the rail sector."

Major Projects
Aecom is working on major projects across the globe.
Libya - Aecom has a five year contract with the Libyan government to manage the £32.6bn construction of new housing and infrastructure systems for all major cities.
United States - Aecom is providing engineering and programme management for the 14km Second Avenue subway in New York. This involves boring tunnels under some of the world’s most expensive properties.

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