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The Power of Partnership and Collaboration in the E/C Industry
The Power of Partnership and Collaboration in the E/C Industry

The word Partnership brings to mind the simple maxim that “two heads are better than one”.  Simply stated, partnerships offer advantages that cannot be realized individually. They allow participants to collectively define a problem and explore potential solutions that meet the objectives of all parties involved. When organizations sharing common interests join forces, they’re able to cast a much wider net to achieve their shared goals.

A quick Google search on “The Power of Partnership” will yield nearly 250 million results spanning across a wide array of concepts and disciplines. The resulting wealth of information alone is evidence enough to showcase that partnerships can be beneficial within any industry or service. However, this is especially true within the engineering design and construction (E/C) industries where positive trends toward partnership can be seen within the professional organizations serving the industry, the firms doing business within it, and in the way that business is being awarded and funded at the public agency level.

There are a number of national and local professional organizations that share similar objectives, primarily aimed towards promoting the advancement of the engineering industry and the professionals working within it, serving the public good, and advocating for infrastructure and environmental stewardship. Over the past few years, the Illinois Section of the American Society of Civil Engineers – Transportation & Development Institute (IS-ASCE T&DI) has partnered up with many organizations sharing these same goals, including the American Council of Engineering Companies (ACEC), American Public Works Association (APWA), Illinois Society of Professional Engineers (ISPE), Institute of Transportation Engineers (ITE), Transportation for Illinois Coalition (TFIC), Advancing Women in Transportation (WTS), along with other technical institutes that fall under the Illinois Section umbrella. With these partner organizations, IS-ASCE T&DI has enjoyed the ability to jointly host events aimed at providing associated members with industry related updates and networking opportunities. The enhanced attendance resulting from these alliances allows for increased exposure of presenters’ topics to a wider audience and provides a time-saving benefit for the presenter (typically public agency officials) by eliminating the need to commit to multiple events hosted by each individual organization, in effect “killing two birds with one stone”.

The Illinois Section of ASCE (IS-ASCE) recently teamed up with ACEC, APWA, ISPE, IRTBA and TFIC for the annual legislative day, in which more than 100 design and construction professionals traveled to Springfield, Illinois to appeal to state legislators about the importance of infrastructure investment and the urgency to create a long-term and sustainable funding source for transportation infrastructure. The welcome reception, hosted by TFIC and IRTBA, had a large number of state representatives and senators in attendance. The following day, more than 140 meetings with state legislators took place in an effort to push the infrastructure investment agenda at the individual level. A large part of the success of this event can be attributed to the fact that these organizations came together to collectively plan and organize this event and pulled from their individual membership bases to maximize attendance accordingly. Likewise, collaborative efforts are taking place at the Illinois Section level to assist the Chicago Infrastructure Trust by lending professional engineering expertise from participating members, and the ACEC Design Professional Coalition, by way of financial support, to address the critical political and public policy issues that promote and protect the interests of the industry, its member companies, and the public good.

One of the biggest E/C-industry stories of 2014 was organizational consolidation, headlined by the acquisition of URS by rival firm AECOM. The partnership combines two major competitors to definitively position AECOM as number one on the ENR Top 500 Design Firms list and created the first $10-billion design firm. The scale of this strategic transaction should help to drive profitability (as margins are typically very thin in the E/C industry) and gives AECOM, a firm typically known for its strengths in design and program management for buildings, transportation systems, and the education sector, a strong presence in the energy sector (in which URS generates over 70% of its revenues). Similarly, the combination of firms such as WSP and Parsons Brinckerhoff, Amec and Foster Wheeler, Arcadis-RTKL and Callison, POWER Engineers and Burns and Roe Group, allows the resulting firms to present a wider range of services and opens up new opportunities that may not have previously been possible to either standalone firm. The combination of design capabilities, construction experience, and financing power realized by these major acquisitions allows these megafirms to provide design-build-operate-maintain services, an alternative delivery method gaining traction in the transportation industry.

Another recent trend towards partnership can be seen in the teaming arrangements that have developed among firms competing for new business. This can be seen in the fact that a number of Illinois Tollway contracts were awarded to joint ventures¹ over the last several years. Additionally, on recent proposals, simple teaming agreements² have been submitted in lieu of formal joint venture/partnership agreements. Likewise, there is an extensive list of subconsultants performing work on these projects, further developing the partnering relationships resulting from these types of teaming arrangements. These teaming agreements allow clients additional opportunities to distribute their workload among the large pool of consultants in the region.

Lastly, partnerships between public agencies and the private sector, known as Public-Private-Partnerships (P3s)³, are continuing to make progress in the transportation market and are increasingly being seen as an innovative funding mechanism for major infrastructure initiatives. While P3s have been used successfully for decades in the United States, mounting financial pressure at the federal, state and local levels has resulted in agencies employing a renewed focus toward P3s as a way to reduce operational budgets by turning maintenance and operations of facilities over to the private sector. The Indiana Toll Road, a P3 between the State of Indiana and two foreign companies, was awarded a contract in 2006 to operate a 157-mile stretch of Indiana’s public roadways. Even though the project has failed to generate a profit for the private investors due to lower vehicular traffic than was initially forecast, it ultimately saved the taxpayers of Indiana more than $100 million per year in operating costs. Similarly, a number of other states including California, Illinois, Michigan, Kentucky and Georgia are all courting investors in hopes of attracting corporations to fund P3 projects, assuming a portion of the risk and expense in exchange for a share of the profits.

In summary, partnerships within the E/C industry continue to carry great promise and offer huge advantages to all involved. Professional organizations sharing common interests are serving the industry together rather than competing within it; consolidating business organizations are expanding their portfolios in terms of the breadth and depth of services they offer; firms competing for new business are creating teaming agreements to complement and strengthen their project teams; and partnerships between the public and private sector are being employed as an innovative funding mechanism for infrastructure improvements. All of these powerful alliances should continue to be fostered and encouraged to keep the industry moving forward together.

[1] Joint Venture: a combination of two or more persons or businesses in which the parties agree to form a single for-profit enterprise that shares assets,   revenues, expenses and control over the enterprise for a finite period of time.

[2] Teaming Agreement: the action of joining forces with another vendor for submission on a proposal.

[3] Public-Private-Partnership (P3): a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies.

 

References:

Clearsight Insights. (2014, July 29). Consolidation in Engineering & Construction Market Continues. Retrieved from Clearsight Advisors: http://clearsightadvisors.com/consolidation-in-engineering-construction-market-continues/

Illinois Tollway. (2015, April 29). The Illinois Tollway Professional Services Bulletin 14-3 Selection Committee Results. Retrieved from Illinois Tollway: http://www.illinoistollway.com/doing-business/construction-engineering/professional-services-bulletin

Onvia. (2013, October 23). Five Examples of Public-Private Partnerships in Action. Retrieved from Onvia: http://www.onvia.com/blog/5-examples-public-private-partnerships-action

Schleifer, T.C. (2014, April 30). Consolidation’s Consequences in Construction Services. Retrieved from Engineering News-Record: http://enr.construction.com/opinions/viewpoint/2014/0505-consolidation8217s-consequences-in-construction-services.asp

Tulacz, G.J. (2015, May 11). The 2015 ENR Top 500 Design Firms: Consolidation Complications. Engineering News-Record, p. 1-17.

Wikipedia. (2015, May 16). Public-private partnership. Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Public%E2%80%93private_partnership

Wolf, Carol. (2011, July 7). The Public-Private Indiana Toll Road is in Trouble. Retrieved from Bloomberg Business: http://www.bloomberg.com/bw/magazine/the-publicprivate-indiana-toll-road-is-in-trouble-07072011.html

The Power of Partnership and Collaboration in the E/C Industry

Partnerships offer advantages that cannot be realized individually. They allow participants to collectively define a problem and explore potential solutions that meet the objectives of all parties involved.