Addressing weaknesses laid bare by COVID-19, infrastructure projects are poised to drive world economies back to pre-pandemic positions with a simple mantra to build back better. As global design firms restructure operations, projects also are being reconfigured to fit a continental shift in client priorities.
Last year’s pandemic-induced shutdowns slowed many global markets to the point of contraction. As a result, this year’s Top 225 International Design Firms reported major revenue changes and the rankings shuffled accordingly. WSP Global Inc. ranked No. 1 on the 2021 list, a position that the Montreal-based engineering firm has not held since 2017. The company increased its revenue from $4.57 billion on last year’s list to $4.71 billion this year, based on 2020 revenue.
Total international revenue for the Top 225 was down 7.1% among surveyed companies, decreasing from $72.31 billion in 2019 to $67.14 billion in 2020. Even though revenue for many global firms fell last year, many companies anticipate market conditions to get better in the near future. With nuanced differences, Top 225 companies are refocusing their international reach to take on infrastructure recovery projects worldwide, designing pandemic-ready operations and responding to their respective markets in the process.
A Structural Shift
The most prevalent changes Top 225 International Design Firms reported for last year related to internal company structures and operations. As firms shifted in-office employees to full-time home offices during COVID-19 lockdowns, they faced finding new ways to stay connected to their satellite teams. For many firms, this meant replacing what was once regular in-person team visits to virtual check-ins.
“It seems that our business opportunities have not changed due to the COVID-19 pandemic. What did change is our way of working,” explains Wim van den Brink, CEO of Bilfinger Tebodin. “We found out that it is a lot easier to work from a distance than we initially thought. Therefore, it will be easier for us to execute international projects that are not close to our domestic market without having to send a team of people there.”
CEO Matt Squires of SSH reported that the company is still reeling from global pandemic effects. “We are still experiencing its impact on local and international construction and how it presents considerable challenges to the sector,” he says. “However, since SSH at the early stage of the lockdown in 2020 decided to fully embrace our innovative technological platforms, we have been able to ensure that we uphold our standards to successfully deliver within our project programs.”
A diversity of teams worldwide has enabled the company to respond to pandemic challenges with flexibility, says Squires. “Despite the challenges brought on by the pandemic, we have, on an international level, handed over several high-end projects to clients over the past year,” he shares. “We take pride in the fact that we have been able to maintain business continuity and to continue to give each project that we are involved in the same attention, consideration and care that SSH always has done prior to these unprecedented circumstances.”
Soontaek Jeon, corporate strategy and planning at Samsung Engineering, says that workflow at the company’s head office in South Korea “has not changed.” He adds: “I still go to the office in Korea. But the abroad site is totally different.”
Lost in Translation
Changing COVID-19 travel restrictions have further increased the distance felt between Samsung’s domestic and overseas operations. “It is not easy to get there and meet the people who are involved in the business,” says Jeon. “Therefore virtual meetings and remote control systems are now used in various situations. For future projects, many systems are being developed for contact-free business.” Like many global companies, Samsung leans on references and experience to expand its portfolio of work in international markets, says Jeon. But even with virtual communication systems replacing in-person meetings, a lot can be lost in translation due to differences in culture.
“We think the cultural difference is probably the biggest. In the case of Koreans, they try to finish their work quickly, while foreigners seem to use their time leisurely.”
Kwak Joon Sang, President, Dohwa Engineering
“The technology, systems and methods are not much different on the global playground,” explains Jeon, “but the client/labor/working culture is very different. Therefore, it is necessary to establish strategies for each region or country.” He adds that “in Korea, understanding client and work [culture] is more important than the regulations.”
Dohwa Engineering president Kwak Joon Sang agrees that “the cultural difference is probably the biggest.” He says Koreans “try to finish their work quickly, while foreigners seem to use their time leisurely,” explaining that a lack of cultural insight can cloud a company’s vision for expansion into new markets. “We feel there are more regulations, as we are not familiar with each country’s laws. However, if you get used to the laws of a country, you may feel that there are fewer regulations at times,” Sang says.
The Top 225 International Design firms reported a mixed bag of regions that have the “greatest opportunities” for growth in the international construction market.
When it comes to infrastructure projects, TYPSA GROUP sees the greatest opportunities in Australia, Northern Europe, the U.S., Canada and Central and Southern Asia.
Large urban infrastructure projects are still in high demand, especially in transport (metros, railways, LRT and airports), water (dams for drinking water, water desalination and wastewater treatment plants) and energy (wind and solar). says TYPSA President and CEO Pablo Bueno Tomas. “New challenges are encountered in regions where sustainability standards are more demanding, as they require us to adopt new ways of designing.”
Aurecon has its sights set on opportunities in Asia. “Asia also plays a pivotal role in rebalancing our portfolio over the next three to five years,” says CEO William Cox. “The trend in the long-term remains very favorable for this part of the world, with nearly $26 trillion expected to be invested in Asia between 2016 and 2030.”
With last month’s approval of a five-year, $715-billion INVEST in America bill—which includes packages for surface transportation and water infrastructure—the road to rebuilding U.S. infrastructure is taking shape and international firms are taking notice of the current administration’s priorities.
“The U.S. will be a region with plenty of construction opportunities, especially with President Joe Biden’s multi-billion-dollar clean energy initiative in renewable energy,” says Min-Li Lee, vice president of CTCI Corp., as well as investment in semiconductor facilities, data centers, life science facilities and infrastructure projects. “At the same time, however, contractors in the U.S. market are faced with challenges such as rising material costs and fewer skilled workers for clean energy projects.”
But he notes not to forget strained trade relations, “Due to the U.S.-China trade war, in the Asian region, India, Indonesia and Vietnam also offer rich opportunities for us with the rapidly developing markets arising from the migration of traditional labor-intensive industry and high-tech.”
Hospitals | By Jonathan Keller
Photo courtesy of Surbana Jurong.
Surbana Jurong (No. 24) subsidiary B+H Architects is designer on the Shenzhen Children’s Hospital and Science and Education building in China. The design aims to create a “micro-landscape” with rooftop gardens.
International Market Insights
Over the years, the U.S. share of the international market has changed. U.S.-based firms had 34.2% of the market in 2012 but that figure fell to 23.3% this year. In 2012, American firms averaged $292.35 million in international revenue. In 2020, that number was $206.14 million. Long-term ENR data shows Chinese firms have gradually increased market share from 0.8% in 2003 to 5.6% this year.
Overall, seven reported mergers and acquisitions among Top 225 firms have made the list slightly more top heavy in terms of reported revenue, according to ENR data. The top 25 listed firms accounted for 65.12% of total international revenue in 2012. In this year’s list, the top 25 firms accounted for 72.5%, a 11.3% increase. Of this year’s Top 225, 192 firms had less revenue than firms in equivalent ranked positions last year. Among 184 firms that answered questions about company backlogs, 23.9% reported they were lower than at the same time last year. Previously, that figure was 12.2%.
Collectively, more Top 225 firms reported more decreases in their international staff than increases, a first according to the data ENR has on record. About 34.4% of firms reported shrinking international staff, 32.5% reported increases and 33.1% reportedly kept staff the same. Last year, 13.86% of firms said they decreased international staff.
Last year’s No. 1 firm, Wood, dropped to No. 6 after a substantial dip in revenue—falling from $6.27 billion on last year’s list to $3.21 billion this year for an almost 50% decline. Notably, the company’s international petroleum revenue decreased from $3.6 billion to about $2 billion and industrial process revenue decreased from $939 million to $307 million.
“Wood has not escaped from COVID-19 unscathed since the pandemic presented a systemic risk to business across our global footprint,” says Azad Hessamodini, president of growth and development, about the company’s revenue change. Compounding that, and as a result of widespread lockdowns in 2020 and the ensuing slowdown in economy, he says “demand for hydrocarbons was significantly curtailed, leading to a surplus in supply and dampening activity and investment in that sector.” Early in 2020, before the pandemic ramped up, the company also completed divestment of its nuclear business, which further contributed to the overall year-on-year revenue decline, says Hessamodini.
“Looking back, I think we can say that COVID-19 was also an opportunity to test our adaptability.”
Thomas Spitaels, CEO, TPF SA
Surbana Jurong (No. 24) subsidiary B+H Architects is designer on the Shenzhen Children’s Hospital and Science and Education building in China. The design aims to create a “micro-landscape” with rooftop gardens.
“Good news is that we are seeing tangible outcomes in terms of improved backlog and pipeline of opportunities as business activity approaches pre-COVID levels,” says the CEO. COVID-19 has had a clear impact on the company’s ability to reach new clients, he explains, “compounded by difficulties with site access, which dampened our full capacity to execute work-in-hand. We see a lasting effect in productivity gains from technology implementations during COVID-19, but as vaccination rates approach the target herd-immunity levels, we look forward to getting back to exploring new client opportunities.”
Maintaining existing relationships in a virtual world has been a challenge felt by nearly all Top 225 global companies. Adapting to current market conditions is a crucial first step, says Thomas Spitaels, CEO of TPF SA. “Looking back, I think we can say that COVID-19 was also an opportunity to test our adaptability,” he says. The company enjoyed success last year by overlapping its operational and social objectives. “What we had been discussing for years was implemented in a few weeks, with results that overall were better than expected,” says Spitaels. “Reducing commuting to work meetings is something that will certainly remain with us as a legacy and can be an important asset toward our climate change objectives,” he says. “How we are going to integrate the flexibilization of work and the impacts that this will have on the world labor market will be the great challenge of the coming years.”
Europe’s Climate Change Cleanup
Emerging from pandemic lockdowns, European design firms see good prospects in planned infrastructure investments to rebuild national economies. And with variants of the “build back better” mantra being repeated in many countries, the firms are gearing up for a boost in environmental work.
In areas such as digitalization, climate and social enhancement, the pandemic has “acted as a great accelerator of trends that were already there,” says Mike Haigh, chair of U.K.-based Mott MacDonald Group. He is “cautiously optimistic” about prospects. But the next 12 months will be “an undulating journey,” he says.
While the pandemic weakened the private building sector, infrastructure demand remains “good” for Stockholm-based Sweco A.B., says Åsa Bergman, president and CEO. She sees signs of market improvement and “our order book remains strong.”
Business at Netherlands-based Royal HaskoningDHV has been mixed, with data centers “booming” while its airport design unit has been hit by pandemic lockdowns, says Niels Schallenberg, global director of water and digital for the firm. The Netherlands government “helped a lot by continuing their business,” he adds.
Sweco and Royal HaskoningDHV are bullish about prospects in the environmental sector as decarbonization of economies and habitat protection rise in the global political agenda, with national and regional targets to cut emissions and clean up the environment enlarging markets. "We and [our] competition do well when there is rapid change," says Mattias Goldmann, chief sustainability officer at Sweco, who cites the European Union's "Green Deal" as a major development.
With decarbonization now a global priority, renewable energy is boosting work for for Royal HaskoningDHV, particularly offshore wind projects, says Matthew Hunt, an environmental director. He says the firm has worked on more than half of the North Sea's offshore projects, with developers now expanding into such new markets in East Asia and the Baltic Sea.
Sweco is involved with plans for carbon capture and storage (CCS) projects, notably in Norway, says Goldmann. After years of talk about CCS “as the next big thing,” the technology must have a role in achieving greenhouse gas emission targets, he believes. Norway, last fall launched its "Longship" CCS program, initially targeting cement production and waste incineration sites. The government expects to cover two-thirds of the forecasted 10-year program's $3-billion cost, with the private sector making up the balance.
Goldmann says can’t easily quantify the amount of Sweco's environmental work as it’s “part of everything we do.” This systemic approach “is becoming an edge for us … starting in the Nordic and Benelux” countries and moving across Europe, he adds.
Denmark’s Cowi A.B. reports rapid growth in new orders following last year’s “best results ever,” says Lars-Peter Søbye, president and CEO.
For SNC-Lavalin’s engineering, design and project management unit, Atkins, group sales have been flat and “slipping” a little in the U.S. and Middle East, according to Phillip Hoare, president. But demand is strong this year, and “we’ve grown our backlog … in every region,” he adds.
Cowi and other firms stand to benefit from “massive investment” in infrastructure planned by governments to rebuild post pandemic economies, says Søbye. “We have [already] started benefitting from the plans,” he adds. Haigh is also optimistic about post pandemic recovery, now increasingly underpinned by climate considerations.
Mining | By Jonathan Keller
Photo courtesy of DRA Global Inc.
According to World Bank data, the Republic of Guinea has one of the fastest growing GDPs in the world, including a 7% rise in 2020. Much of that increase is driven by the country’s mineral wealth, particularly bauxite, but also gold. DRA Global Inc. (No. 60) was awarded the contract for one of Guinea’s newest gold mines, the Tri-K Gold project, after completion of a Definitive Feasibility Study.
Long experience working in Africa prepared DRA Global to deliver during COVID. “We delivered projects in Africa during the Ebola outbreak so we have an idea of some of the requirements,” says Senior Vice President Christo Visser. Strict quarantine measures required a major commitment from on-site staff. “Some of them couldn’t get home for around six months to South Africa due to travel and quarantine restrictions,” adds Visser. “Their and their families’ commitment has been absolutely admirable.”
The site centers around the gold processing plant, which will extract gold using both gravity and Carbon-in-Leach processes. It adds a leaching agent, a dilute cyanide solution, and activated carbon together to the mix of ore and water. The leaching agent removes the gold from the ore, which is then adsorbed by the carbon.
The plant aims to produce 120,000 ounces of gold per year.
Sustainability is “a core area of our expertise,” says Bergman. Based in Nordic Europe, “we have an advantage due to the fact that we are working in countries … that have had [concerns about] sustainability for a very long time,” she says. Sweco is “ramping up” recruitment in climate related sectors which are “where we will need resources going forward,” Bergman points out.
With the expected surge in environmental work, Søbye is “really concerned about running out of talent.” He urges governments to boost skills training in the sector while “we as a business [also] have our responsibility.” Creating “attractive workplaces” is one responsibility he cites, which is being guided by the pandemic experiences.
After adapting quickly to pandemic working conditions, Cowi is reviewing future office options and will start trials on new arrangements this summer. “We don’t have all the answers yet,” says Søbye. Royal HaskoningDHV ’s Schallenberg expects “hybrid” arrangements with home offices for regular work and in-person interaction for innovative activities.
Learning to work remotely has been a beneficial outcome of the pandemic, but as “a creative industry” design firms need face-to-face contact also, says Hoare. “Things will never be as they were before,” adds Haigh. He sees some regions reverting to 100% office work while in the U.K., for example, one or two days at home could become the norm. Offices will need “collaborative spaces” with fewer staff “just sitting at a desk.”
Pandemic lockdowns have also cut “travel costs and out-of-pocket expenses” to underpin profit margins, says Schallenberg. Such savings are in part “here to stay,” believes Sweco’s CFO Olof Stålnacke.
Atkins generated savings by reducing travel and accommodation requirements and by being “more agile and flexible” in its office use, says Hoare. “We upped our investment in digital” focusing on design transformation, project management and digital twins, he adds.
Royal HaskoningDHV’s digital investments will allow the firm to move downstream from project design to supporting “the whole life cycle” of assets, says Schallenberg. Now with around 350 staff, the digital business is growing by 30-50% a year, he adds. The company is also developing software for sale.
Booming Business Markets
As the pandemic ebbs and flows around the world, Asian operations are “pretty much locked down, while U.S. and U.K. offices are reopening,” says Haigh. In North America, Mott McDonald had “decent growth” last year and predicts more this year, he adds. Expansion in Canada has been “tremendous” in the last two to three years.
Meanwhile, the U.K. “is just booming ... we are expecting a growth rate of about 10% [a year],” says Søbye. With investment flowing into U.K. infrastructure projects, such as high speed rail, the market for Atkins is “very positive,” says Hoare. U.K. demand remains “pretty strong,” adds Haigh.
But with staff still being furloughed, the U.K. is “challenging,” says Bergman, who is “positive” about the firm’s long term prospects. In Germany, where she says Sweco has various troubled projects, new leadership has begun turning the business round. “We are now much more strict when we come to project accounting and project governance,” CFO Stålnacke points out.
In the Nordic region, Sweco’s business is reporting double-digit profit margins in Sweden while conditions in Denmark and Norway are improving, according to Bergman. Cowi’s Scandinavian market is “very strong” particularly in Norway and Sweden, Søbye further explains.
In Asia, prospects for Royal HaskoningDHV “continue to grow,” particularly in Vietnam, the Philippines and Australia, according to Schallenberg. But despite its “big potential,” Indonesia “is still not taking off,” says the executive.
Cowi is reassessing its project involvement in Singapore, where it has struggled to gain a toehold since moving there a few years ago, according to Søbye.
Hong Kong, where Atkins has deep roots, is a solid market with potentially destabilizing political undercurrents. The company is aware “how fast the situation there can change,” says CEO Hoare. For Mott McDonald, demand remains good in Singapore, Hong Kong and also India, despite the severe pandemic there, says Haigh.
Royal HaskoningDHV’s roughly 200 India-based staff are being kept busy locally, especially in the water and port sectors, says Schallenberg. Unlike some competitors in India, “we are not playing the offshore card” of using relatively low local wages to support work in third countries, he adds. With some 2,000 staff, SNC Lavalin’s India resource base for work in third countries is now placing greater emphasis on digitization and automation, says Hoare.
SNC Lavalin is a relatively new entrant to Australia’s burgeoning infrastructure market. Having secured work recently on the Sydney Metro transit system project, the firm “has turned a corner penetrating that market,” says Hoare.
Australia is a “very important market” for Mott McDonald, which has grown from zero to nearly 1,000 staff in a decade, according to Haigh.
With impacts from COVID-19 and resulting low oil prices, the Middle East has been “a real challenge” for Atkins. However, in Saudi Arabia, the company’s order book “is starting to grow again after a year of decline,” says Hoare.
Despite the pandemic, DHV/Royal Haskoning avoided shedding any of its environmental team last year, says Hunt. Now "confident about the year ahead," it is recruiting "heavily," he adds.
Time will tell how much of that growth and confidence will withstand the ebbs and flows of the changing post-pandemic market.