Helbling executive search consultants discuss the active sectors, opportunities and trends that are making this an interesting and exciting time in the industry such as: technological innovation, alternative project delivery methods and strategic business development processes.

1. Facilities Construction Real Estate Engineering
R E TA I N E D E X E C U T I V E S E A RCH
Architectural,
Engineering
&
Construction
Outlook
2012
Active
Sectors
Part
I
Trends
in
Strategic
Initiatives
The
A/E/C
industry
has
finally
begun
to
stabilize
itself
and
although
McGraw-­‐Hill
Construction
(MHC)
does
not
see
an
overall
recovery
until
2013
or
2014,
most
economists
agree
that
2012
will
be
a
year
of
gradual
progress.
As
A/E/C
firms
continue
shifting
their
focus
from
sustaining
themselves
to
enhancing
their
growth,
they
are
looking
towards
markets
that
offer
significant
opportunities
such
as:
healthcare,
higher
education,
data
centers
/
mission
critical,
power
and
energy,
and
emerging
countries.
And,
while
the
industry
will
continue
to
see
mergers
and
acquisitions,
joint
ventures
and
public-­‐private
partnerships,
other
new
initiatives
are
gaining
momentum
including:
technological
innovation,
alternative
project
delivery
methods
and
strategic
business
development
(BD)
processes.
Helbling
&
Associates
is
an
executive
search
firm
that
specializes
exclusively
in
construction,
facilities
management,
real
estate
and
engineering.
While
our
clients
are
involved
in
diverse
geographical
and
vertical
markets
with
each
having
their
own
dynamics
and
goals,
a
commonality
among
them
is
that
they
all
took
a
proactive
approach
during
the
past
few
years.
They
analyzed
their
processes
and
procedures
to
streamline
operations,
they
focused
upon
and
expanded
their
niche
markets
and
they
integrated
advanced
technologies
into
their
services.
All
of
these
initiatives
are
now
paying
off,
increasing
their
level
of
sophistication
and
strengthening
their
positions
in
the
marketplace.
Within
this
outlook,
Helbling
discusses
the
industry’s
active
sectors
and
the
opportunities
and
trends
that
are
making
this
an
interesting
and
exciting
time.
Markets
to
Watch
in
2012:
➡ Healthcare
While
the
healthcare
market
is
already
at
a
historically
high
level,
REED
Construction
Data
is
forecasting
an
8%
increase
in
construction
spending
for
2012
and
a
13%
increase
for
2013.
Sharing
the
challenges
of
financing
and
government
policy
uncertainty
with
other
sectors,
healthcare
is
seeing
the
demand
for
specialty-­‐ 73% of healthcare
care
facility
construction
and
renovation
of
existing
facilities
surpassing
those
issues.
The
U.
S.’s
construction is currently
aging
population,
outdated
facilities
and
quickly
advancing
technologies
are
driving
activity.
for modernization of
The
U.
S.
Census
Bureau
projects
that
by
2020
the
number
of
Americans
65
years
and
older
will
facilities to update IT
grow
from
40M
to
54.6M,
an
increase
of
36%.
If
the
number
of
hospitals
expands
in
conjunction
with
the
senior
population
over
the
next
two
decades,
the
country
will
see
more
than
2,000
infrastructure for
additional
hospitals
and
about
340,000
additional
beds.
greater clinical
integration, and to
Healthcare
reform
will
also
help
keep
this
sector
active.
According
to
National
Real
Estate
Investor,
the
32M
individuals
who
will
be
covered
under
the
new
law
will
require
64M
sf
of
make them greener and
additional
space.
The
increase
in
overall
square
footage
needed
would
be
11%
by
2019.
more patient-friendly.

2. According
to
the
results
of
a
survey
by
Health
Facilities
Management
and
the
American
Society
for
Healthcare
Engineering
(ASHE),
73%
of
healthcare
construction
is
currently
for
renovations
and
modernization
of
facilities
to
update
their
IT
infrastructure
for
greater
clinical
integration,
and
to
make
them
greener
and
more
patient-­‐friendly.
It
should
be
noted
that
a
dominant
trend
is
to
focus
more
on
ambulatory
than
on
in-­‐patient
care
facilities
to
effectively
address
the
needs
of
the
population.
Related
construction
projects
included
in
this
sector
are:
nursing
homes,
assisting
living
centers,
physician
offices,
clinics,
outpatient
centers
and
continuing
care
retirement
communities.
➡ Higher Education
Despite
decreased
endowments
and
continued
tight
financing,
higher
education
institutions
are
The USGBC claims that
initiating
/
continuing
their
long-­‐term
capital
programs.
Over
the
last
several
years,
this
sector
higher education leads
has
become
increasingly
ambitious
towards
green
building,
sustainability
and
energy
efficiency,
all sectors in green
which
are
the
primary
drivers
of
new
construction
and
renovation
projects.
building in terms of
The
United
States
Green
Building
Council
(USGBC)
claims
that
higher
education
leads
all
sectors
square footage,
in
green
building
in
terms
of
square
footage,
having
the
highest
number
of
registered
and
certified
LEED
projects.
The
decreased
operating
costs
that
result
from
green
building
are
the
having the highest
impetus
for
this
activity
as
this
concept
can
reduce
energy
usage
by
30
–
50%
on
average.
With
number of registered
institutions
facing
extremely
high
deferred
maintenance
costs,
effectively
managing
these
and certified LEED
expenditures
can
determine
their
long-­‐term
financial
stability.
Additional
benefits
of
green
projects.
building
include
carbon
footprint
reduction,
an
initiative
to
which
many
institutions
have
committed.
Among
the
largest
healthcare
projects
are: Among
the
largest
college
and
university
construction
projects
in
the
‣ Stanford
University
Medical
Center
Expansion
(CA)
–
$3.5B
planning
phase
are:
‣ Medical
Lifecare
Campus
(CA)
–
$3.3B
‣ Fordham
University
Lincoln
Center
Expansion
(NY)
-­‐
$1B
‣ North-­‐Shore
Long
Island
Jewish
(NY)
–
Approaching
$2.5B
‣ University
of
Maryland
East
Campus
Redevelopment
(MD)
‣ Scripps
Health
(CA)
–
$2B -­‐
$700M
‣ Union
Center
Medical
Campus
(NV)
–
$1.5B
‣ Palomar
Community
College
District
Proposition
M
(CA)
-­‐
‣ Louisiana
State
University
Medical
Center
(LA)
–
$1.2B $613M
‣ Howard
University
Medical
Campus
(DC)
–
$1.1B ‣ Bluegrass
Community
Technical
College
(KY)
-­‐
$480M
‣ University
of
California
San
Diego
Health
System
(CA)
–
‣ Indiana
University
of
Pennsylvania
Student
Housing
-­‐
More
than
$1B $250M
-­‐
$400M
‣ Seattle
Children’s
Hospital
(WA)
–
$1B ‣ Arts
&
Transit
–
Academic
Building
for
Creative
/
Performing
Arts
(NJ)
-­‐
$300M
‣ University
of
Connecticut
(CT)
–
$1B
‣ Mixed-­‐Use
Campus
&
Osteopathic
School
(AL)
-­‐
$279M
‣ CA
Pacific
Medical
Center
Cathedral
Hill
(CA)
–
$900M
‣ George
Washington
University
Science
&
Engineering
‣ Duke
University
Health
System
(NC)
–
$800M
Building
(DC)
-­‐
$275M
‣ Veterans
Administration
Hospital
(CO)
–
$800M
‣ New
York
City
College
of
Technology
New
Academic
‣ Exempla
St.
Joseph
Hospital
(CO)
–
$750M Building
(NY)
-­‐
$252M
‣ Prince
George’s
Hospital
(MD)
–
$600M ‣ Academic
Village
at
Point
Park
University
(PA)
-­‐
$244M
‣ Massachusetts
General
Hospital
(MA)
–
$579M *Source:
ENR
11/7/11
‣ Carl
R.
Darnall
Army
Medical
Center
(TX)
–
$503M
*As
of
November,
2011

3. ➡ Data Centers / Mission Critical
Globally,
the
total
annual
value
of
data
center
construction
is
approximately
$50B
and
Microsoft
experts
say
this
market
could
reach
an
annual
value
of
$78B
by
2020.
The
value
of
the
U.
S.
data
center
construction
market
is
currently
about
$15B
/
year
and
will
likely
grow
to
$18B
/
year
during
that
same
time
period.
Considering
the
average
cost
of
building
a
data
center
is
At current prices, decreasingly
sharply
from
about
$15M
/
megawatt
(MW)
to
$6M
/
MW,
this
marks
significant
growth.
At
current
prices,
annual
data
center
construction
spending
would
increase
to
$50B
per
annual data center
year
in
the
U.
S.
and
to
about
$218B
globally.
construction spending
This
sector
is
being
fueled
by
“cloud
computing”,
a
domestic
stimulus
package
that
provides
would increase to
networking
services
to
under-­‐served
markets
and
the
entire
world
becoming
more
technology-­‐
$50B/year in the U. S. dependent.
According
to
Internet
World
Stats,
the
number
of
Internet
users
has
jumped
from
and to about 1.043B
users
in
2006
(16%
of
the
world’s
population)
to
2.11B
in
2011
(30%
of
the
world’s
$218B/year globally. population).
In
addition,
the
number
of
smart
phones
is
projected
to
rise
from
500M
in
2011
to
2B
by
2015
(International
Telecommunications
Union).
➡ Power & Energy
According
to
Associated
Builders
&
Contractors
(ABC),
power
is
expected
to
be
the
leading
construction
market
in
2012
with
an
increase
of
9%
as
it
continues
to
benefit
from
the
growth
and
demand
for
both
sustainable
energy
sources
and
traditional
power
sources.
Driven
by
federal
legislation,
population
growth
and
expansion
into
remote
areas,
nearly
446,000
MW
of
new
capacity
are
under
some
degree
of
2011 Global Spending On New development.
Renewable Energy = $195B
Although
natural
gas
and
coal
are
dominating
new
capacity,
the
renewable
energy
industry
is
still
growing
at
an
impressive
rate.
In
2011,
global
spending
on
new
renewable
energy
projects
hit
a
record
$195B.
According
to
analysts
at
Bloomberg
New
Energy
Finance,
annual
investments
in
clean
energy
are
expected
to
reach
$395B
by
2020,
driven
largely
by
solar
and
off-­‐shore
wind.
It
should
be
noted
that
significant
opportunities
exist
for
shale-­‐gas
extraction.
More
pipelines
and
new
major
production
facilities
may
be
necessary
to
handle
shale
gas
from
sites
around
the
U.
S.,
which
will
provide
a
strong
boost
to
construction
in
multiple
sectors.
➡ Emerging Countries
It’s
no
secret
that
developing
countries
offer
large,
multi-­‐national
engineering
and
construction
(E
&
C)
companies
interesting
opportunities,
especially
in
the
infrastructure
market.
Most
construction
growth
over
the
next
10
years
is
expected
to
occur
in
China,
India,
other
Asia
Pacific
regions,
Brazil
and
the
Middle
East
due
In a study performed
to
plans
for
massive
spending
on
infrastructure.
In
a
study
performed
by
PricewaterhouseCoopers
by PwC, 25% of large
(PwC),
25%
of
large
E
&
Cs
noted
geographic
expansion
as
a
primary
opportunity
to
grow
their
business
over
the
next
few
years.
However,
entering
these
markets
can
be
difficult
as
each
poses
E & C firms noted
unique
challenges
and
foreign
companies
tend
to
have
a
disadvantage
at
winning
government
geographic expansion
contracts.
as a primary
opportunity to grow
One
such
emerging
market
is
India.
Having
a
population
of
over
1.2B
and
experiencing
8%
average
growth
in
real
GDP
over
the
past
decade,
India
has
become
one
of
the
fastest
growing
economies
their business over the
in
the
world.
In
fact,
PwC
predicts
that
India
will
become
the
world’s
third
largest
economy
by
next few years.
2050.
2010
revenues
of
the
Indian
engineering
and
construction
market
were
$47.8B.
While
there
are
challenges
to
working
in
India
such
as
lengthy
lead
time
and
its
intensely
local
market,
firms
are
attracted
to
the
staggering
sums
of
investments
that
are
planned
in
multiple
vertical
markets
and
the
popularity
of
public
-­‐
private
-­‐
partnerships
in
the
country.

4. Trends
in
Strategic
Initiatives:
‣ Strengthening competitive advantage through innovation.
Today’s
technology
is
continually
encouraging
A/E/C
firms
to
consider
new
ways
of
improving
and
streamlining
their
processes.
Many
firms
are
focusing
on
technology
because
they
believe
in
its
potential
to
increase
their
revenues
and
to
strengthen
their
competitive
advantage.
According
to
Deloitte
&
Touche’s
‘Mid-­‐Market
Perspectives:
America’s
Economic
Engine’
report,
technology
has
superseded
talent
acquisition
in
middle-­‐market
firms
with
70%
of
executives
surveyed
saying
that
their
productivity
has
increased
due
to
improved
business
processes
and
technology
developments.
Some
of
those
advancements
have
been
in
green
building,
Building
Information
Modeling
(BIM)
and
new
software
applications.
Much
innovation
in
E
&
C
centers
on
green
building
due
to
owners
wanting
to
integrate
sustainability
and
energy
efficiency
into
their
projects.
Firms
that
are
unable
to
offer
these
concepts
to
owners,
especially
healthcare
and
higher
education
institutions,
are
at
(and
will
remain
at)
an
extreme
disadvantage.
Healthcare
and
higher
education
organizations
are
particularly
performance-­‐driven
and
are
increasingly
demanding
green
construction
and
LEED-­‐certified
projects.
In
fact,
many
major
colleges
and
universities
have
announced
that
they
will
only
build
LEED-­‐certified
facilities
going
forward.
Also
supporting
this
initiative
is
the
U.
S.
Green
Building
Council
(USGBC).
In
April
2011,
the
organization
added
a
healthcare
category
to
its
LEED
rating
system,
encouraging
developers,
designers
and
contractors
of
healthcare
projects
to
implement
its
services
and
programs.
New
technologies
also
continue
to
shape
the
way
projects
are
designed
and
delivered.
Pressures
continually
mount
to
keep
project
costs
downs
and
to
increase
efficiency
which
is
why
BIM
has
gained
much
traction
in
recent
years.
BIM
has
made
its
way
to
popularity
with
owners,
designers
and
contractors
due
to
the
many
benefits
it
offers
and
its
market
will
only
expand.
With
tablets
being
adopted
quickly
throughout
the
industry,
a
new
generation
of
applications
is
emerging.
Some
of
the
applications
are
being
designed
by
construction
entities
using
in-­‐house
project
teams
or
by
partnering
with
vendors.
Mid-­‐sized
firms
say
there
is
a
need
and
a
desire
to
build
applications
that
fill
gaps
currently
not
served
by
enterprise
vendors.
‣ Offering alternative project delivery methods.
The
companies
who
sustained
themselves
in
recent
years
and
who
are
now
in
growth
modes
adapted
their
services
to
meet
the
needs
of
their
customers.
Because
the
primary
objectives
of
owners
are
maximizing
their
return
on
investment
(ROI)
and
generating
revenues
as
quickly
as
possible,
new
alternative
project
delivery
methods
have
become
very
attractive
in
certain
situations.
Integrated
Project
Delivery
(IPD)
is
expanding
its
presence
due
to
its
reputation
for
providing
an
efficient
construction
management
process.
It
is
understandable
that
owners
want
to
assemble
project
teams
early
which
can
be
the
key
to
a
successful
project.
This
method
gathers
architects,
contractors,
facilities
staff
and
major
subcontractors
together
to
easily
provide
“design-­‐assist”
services,
mitigate
potential
problems
and
streamline
the
entire
process.
Prefabrication
and
modularization,
effective
methods
in
Europe,
are
emerging
concepts
in
the
U.
S.
that
are
expected
to
accelerate
due
to
owners
wanting
to
shorten
schedules,
decrease
costs
and
address
the
worsening
labor
shortage.
“Lean”
methods
caused
a
revolution
in
manufacturing
many
years
ago
and
emerged
in
the
A/E/C
industry
only
in
recent
years.
This
method
of
construction
is
more
focused
on
control,
maximizing
value
and
minimizing
waste
and
is
effective
on
certain
types
of
complex
projects.
Value-­‐based
contracting
is
a
collaborative
concept
that
offers
a
drastically
different
approach
to
projects.
Instead
of
negotiations
revolving
around
costs,
they
are
based
upon
contractual
performance-­‐centered
arrangements.
According
to
the
International
Association
for
Contract
&
Commercial
Management
(IACCM),
companies
that
have
adopted
this
approach
have
been
successful
at
achieving
margin
improvements
of
10%
or
more.

5. ‣ Improving business development practices.
Many
A/E/C
firms
are
experiencing
lower
profit
margins
due
to
limited
opportunities
and
increased
competition.
Because
acquiring
work
has
become
a
major
challenge,
companies
need
to
be
adaptable,
strategic
and
responsive.
Therefore,
they
are
redefining
their
BD
efforts
and
implementing
practices
that
generate
the
best
ROI.
A
significant
number
of
entities
have
increased
the
involvement
of
their
principals,
senior
executives
and
owners
in
their
BD
while
others
now
involve
key
operations
and
estimating
personnel.
Although
these
measure
can
be
helpful,
they
are
not
comprehensive
solutions
to
developing,
building
and
nurturing
relationships
with
new
and
long-­‐term
clients.
Organizations
that
have
closely
analyzed
their
BD
processes
have
learned
that,
to
achieve
the
greatest
ROI,
they
have
to
selectively
pursue
projects
that
support
the
long-­‐term
goals
of
the
company
and
provide
the
proper
training
and
guidance
to
employees
while
clearly
defining
expectations
and
following
through
with
accountability.
In
closing,
there
are
many
positive
trends
in
the
A/E/C
industry
that
are
presenting
opportunities
for
organizations
to
be
innovative
and
proactive
in
their
vertical
markets,
operations,
project
execution
and
BD.
The
companies
who
are
most
adaptable
and
progressive
in
their
initiatives
will
experience
the
most
success.
Learn
about
the
industry’s
trends
in
talent
management
by
reading
our
A/E/C
Outlook
2012:
Talent
Management
Strategies
Sources:
American
Public
Power
Association,
American
Society
of
Healthcare
Engineers,
Associated
Builders
and
Contractors,
Bloomberg
New
Energy
Finance,
DatacenterDynamics
Global
Industry
Census
2011,
Engineering
News-­‐Record,
Health
Facilities
Management,
International
Association
for
Contract
&
Commercial
Management,
International
Telecommunications
Union,
Internet
World
Stats,
McGraw-­‐Hill
Construction,
Microsoft,
National
Real
Estate
Investor,
U.
S.
Census
Bureau,
U.
S.
Green
Building
Council,
World
Economic
Forum,
Yudelson
Associates
Authors:
Sami
L.
Barry,
Strategic
Business
Development
Marc
K.
Datz,
Senior
Managing
Consultant
Matthew
D.
Lesher,
Managing
Consultant
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York
City’s
Growing
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Market
Subscribe
to
Helbling’s
quarterly
e-­‐Newsletter
and
Search
Assignment
Alerts
by
visiting
our
home
page
at
www.helblingsearch.com.
Social
Media:
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blog.helblingsearch.com
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@helblingsearch
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