Forward trends and future moves

Listening to Bob Nilsson is fun. He has an American enthusiasm that is infectious and, unlike some of his fellow countrymen, he is prepared to laugh at their culture. "It is amazing to some Americans that there is more to life in the rest of the world than what is reported on CNN's news channel," he grins.

Nilsson spent more than 30 years working for Turner, one of the largest construction companies in the US. He has worked alongside Bovis Lend Lease's president, Sir Frank Lampl. He was one of the first people in the US to use e-mail and although he claims to have "dabbled" in the IT business, this is an understatement. He has worked at board level for IT companies and his own website is aptly titled www.whatsreallyhappening.com.

His first message is not to underestimate the construction industry. "We are the most creative industry in the world," he says proudly. "Every job we do is a one-off. But we are also archaic in our structure and how we manage our businesses."

He believes the traditional project structure which isolates contractor, architect, engineer and so on is eroding rapidly. And one of the key issues brought about by this change is that it is now necessary to understand finance. "People have to know a lot more about the financing of projects than they did 25 years ago. How many projects now show that the finance takes as much time as its design or execution?"

He says: "Financial engineering is a great way to do business. But it's a hell of a lot different to worrying about where bricks and mortar are coming from. The guys that do financial engineering are a key part of the business. We have got to begin to think about how we run our business units, projects units and ultimately the entire business."

He is seeing the growth of companies that are not just contractors, engineers or architects but provide an all-round service - what he terms as mega-service providers (MSPs). He comments: "The services we provide are far broader now than they ever were, but at the same time the specialists in certain areas are exceedingly successful."

He cites specialist leisure developer Rockwell in the US as a typical example. It began with high-quality leisure developments of hotels, restaurants and other facilities. It is what Nilsson describes as a company with a "truly creative design environment". He adds: "It will not disappear because it is as creative as anyone in the world. While the MSPs are growing, there are specialists, like Rockwell, who will also grow."

He sees a move towards programme management, where one company assumes the responsibility for the entire project - it might be a contractor, designer, financier, a separate contract administration function, or an MSP.

"The concept of being able to go in and deal with the big project is what these MSPs are going to be focusing on," he says. "It's the direction in which we are heading. There are a million contractual issues with this, issues of responsibility, and so on. But interestingly, the person running that kind of operation is not the one who walks out of engineering or architectural school. We are looking for a different set of skill levels to run this kind of business."

The impact of IT on the construction sector is going to be colossal, according to Nilsson, who does all his own business and purchasing on the internet. "We are all getting e-mails today - the internet and intranet is changing our lives.

"How many people have an IT department?" he asks. " And how many are happy with the way it works? The single biggest problem we have is that IT departments are run by technicians and the rest of the company is run by builders, engineers and architects. The IT people know only a little, if anything at all, about how buildings are put together and the contractors and professionals know virtually nothing about IT departments."

"Yet there are IT companies selling collaborative services to the construction industry - great companies with whizzbang ideas - but they don't know what their client does. They don't know how the process comes together."

Nilsson believes the answer to the problem of getting IT departments and the rest of the industry to understand each other is by education. "We have got to figure out a way to get our schools to educate the people who become engineers, designers, architects, and IT specialists, to walk and talk and think in the same language. It is incredible that it is not already happening. We've got to improve this system."

Mergers among the major IT companies will also have an impact. "This is something really significant. Are they going to work for us or are we going to work for them? And what if they decide to tie in with someone else? We need to look at how it will affect our business," says Nilsson

And then he laughs at just how difficult it is to get a computer up and running. It means turning the power on, logging in, waiting for Windows to boot up, before you can even start. "It is insanity. I can turn a key and my car starts!"



So what else is going to change over the next 10 years? Cultural issues will become increasingly important, believes Nilsson. "There are very few cultures which use the word 'no' as much as Americans. In Asia, no one will say 'no'. I don't think we can begin to comprehend what this is all about.

"Along with cultural education comes the disappearance of political borders."

He goes on to explain the impact of a country like China on the rest of the world. "If you look at China, it has more than 1.3 billion people. Assure an income level of around $10,000 per family per year by 2010 and do you think the strongest countries in the world will be in western Europe? No. The impact economically from a country like this will be astronomic, and if you don't understand how to do deal with those cultures and businesses, you are not going to be an MSP.

"Its influence is going to be far and large. We saw a little bit of it in Japan in the 1980s. You have to pay attention to that part of the world if you are going to be a big player."

Nilsson adds: "Look at what the Chinese are doing with software development. Nowhere in the world is the use of software in computers more advanced than at university level in China. We had better know what is going on over there and understand it. If we don't we are going to be left behind."

He is shocked at the lack of Asian participants in construction organisations, forums and conferences in the UK. "No one is better in the world at copying good ideas than the Asians. I say that in the most complementary way possible. They have taken our technology, they built it faster, better and learnt how to improve it."

The role of minorities and women as providers and clients is simply not being addressed, according to Nilsson. "Look at the clients who we are selling services to - it is the private sector or government. There is a 50% chance you will be selling to a minority or a woman. We are crazy not to address this. It is something we have to think about. We have not paid attention to it and none of us are doing a good job of it today."

The whole issue of demographics and the lack of a workforce in the future is one that frightens Nilsson. "Look at any country in western Europe. By 2050, one out of three people will be retired. What does it mean for our workforces?"

The areas of sustainability and the potential for environmentally recyclable buildings are also high on Nilsson's agenda. "Why not go into Honda and say we'll build you a car plant, we'll run it for 10 years, and then we'll come in and take it apart and leave a green field for you. It sounds far-fetched but I don't think it's that far-fetched.

"Why not offer that as a service. It's going beyond the design of the building. There is only a fixed amount of materials available in this world and recycling them is essential."

Nilsson believes the industry will also face increasing competition from companies such as management consultants KPMG and Accenture. "We may not like it but these guys are in our business and they will offer almost anything we can offer. They are out there and they are a force to contend with and we need to understand how they operate," he says.

The traditional company structure with the chief executive at the top of the tree is also going to change. "People will work from home. You will have a set of procedures and a set of regional offices which will operate electronically. The old fixed office is going to be redundant."

Nilsson would like to take this one step further and asks what kind of person is going to run our businesses? They will need the following skills:

l Technical primary education.

l Non-technical/secondary education.

l Language capability - must be able to communicate with other countries in their language.

l Finance - major part of education, how to run the business.

l Merger and acquisitions - must understand how these work.

l Cultural linkage - must understand other cultures.

l Mobile/fixed family - changing patterns, where are you going to raise your kids?

l People skills - the most important part of the whole equation.

l Outside interests - the managers need outside interests to get a balance of life and understanding of other people.

"The computer is changing our life and the way we do things," he says. "It is going to change the structure of our business. It is wonderfully exciting, but we need to think of these issues because we have got to look at who is going to run our business for us in the future."