U.S. Environmental Consulting & Engineering Industry by ...

Volume XXXI Number 9/10 Environmental Business International Inc.Consulting & Engineering and IT in 2018

ENVIRONMENTAL FIRMS CHASE GROWTH, EMBRACE IT

Characterizing the environmental consulting & engineering industry

in 2017 and 2018 has to start with the Trump Administration and the unpredict-able president Donald Trump. Admittedly this has been a principal topic of two pre-vious editions of Environmental Business Journal in 2018, so not much more space will be devoted here to the double-edged sword syndrome of ‘good for business but bad for the environment’ that results in a relatively neutral effect on the environ-mental industry, nor to the ‘Trump Effect’ and its impact on specific industry seg-ments or client sectors that was detailed in EBJ’s mid-2018 survey of the same name.

The results of the 2018 midterm elec-tions and the change of control of the House of Representatives to the Demo-cratic Party should have more impact on politics then it does on short term envi-ronmental industry forecasts. Most ana-lysts agree with EBJ that economic factors like interest rates, tariffs and tax policy will have a more direct impact on the business the next two years.

More outside of political control, but equally influential to environmental in-dustry growth, are the pace of develop-ment and infrastructure investment, and the movement of property values, stock market indices and oil prices. These factors also collectively impact the gross domes-tic product (GDP), consumer confidence and other economic indicators that most environmental companies agree are more influential to their business prospects than the specific regulatory programs or fund-ing mechanisms for which they used to advocate more strenuously.

These factors are summarized on the tables on page 3. The tables update recent history and roll out updated short- and long-term forecasts from a variety of sourc-

Inside EBJThe U.S. environmental consulting & engineering industry has shaken off environmental policy and political setbacks and worked to benefit client initiatives, investments and risk profiles in the increasingly deregulatory environment. 2018 growth at 4-4.5% will likely be a peak as more concerns cloud the horizon than the promise of new market drivers ..............................................................................1-10

Technology Plays in Environmental Consulting & Engineering ....................11-29NV5 stays on leading edge in acquiring drone firm and building optimizer .............11

KCI commits to innovation strategy: acquires laser scanning firm LandAir .............14

GHD launches advisory and digital units to add ‘edge’ to existing services ..............17

Tetra Tech invests in aviation technology and digital design tools ...........................20

GZA’s Superfund sites are moving along towards remediation .................................22

SNC-Lavalin continuously seeks the best digital alliances to provide value-added propositions to their clients .....................................................................................24

ERM strives to be the leading digital EHS service provider with the strongest digital ecosystem of partners ..............................................................................................27

EFCG reflects on technology trends and forecast scenarios for 2019 .......................30

J. Doehring says watch out for wildcards on the economic horizon ........................35

7 Mile Advisors predicts a moderate to strong outlook for 2019 .............................37

Small companies remain optimistic knowing some uncertainties are ahead ............39

U.S. Environmental Consulting & Engineering Industry by Media

Source: Environmental Business International Inc., San Diego, Calif. EBJ’s annual model of the environmental consulting & engineering industry based primarily on revenue analysis, surveys and interviews of C&E firms, analysts and experts. Units in $mil. of revenues generated

4,220 3,730 3,670 3,560 3,270 3,460

3,730 4,020 4,710 5,200 5,040 5,590

1,980 2,5003,890 4,900 5,560

6,7701,750 2,630

3,5604,530 5,230

6,550

1,250 1,230

1,590

2,0102,440

2,710

980 1,160

1,830

2,1802,610

3,010

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1995 2000 2005 2010 2015 2020

Multi-MediaRenew able EnergyNatural ResourcesAir QualityEnergy Mgmt/Eff iciencyWaterWastew aterSolid WasteRemediationHazardous Waste

Environmental Business Journal, Volume XXXI Number 9/10

2 Strategic Information for a Changing Industry

Environmental Business Journal ® (ISSN 0145-8611) is published by Environmental Business International, Inc., 4452 Park Blvd., #306, San Diego, CA 92116. © 2018 Environmental Business International, Inc. All rights reserved. This publication, or any part, may not be duplicated, reprinted, or republished without the written permission of the publisher. To order a subscription, call 619-295-7685 ext. 15 or visit us online at ebionline.org/ebj. A corporate electronic subscription with internal reproduction license and access to data starts at $1,250 and allows up to five registered users with rates increasing in five user increments. Discounted corporate subscriptions are available for firms with under 100 employees and single-issue access, non-profit or individual subscriptions are $995.

Editor in Chief: Grant Ferrier Federal Analyst: Andrew PatersonManaging Editor: Lyn Thwaites Research Manager: Laura CarranzaClient Services: Moe Wittenborne, Celeste Ferrier Contributors: George Stubbs, Jim Hight, Brian Runkel

EDITORIAL ADVISORY BOARD: Andrew Paterson; James Strock, Serve to Lead Group; P.S. Reilly, NextGen Today; Dr. Edgar Berkey; Walter Howes, Verdigris Capital; Paul Zofnass, President, EFCG

es into an instrument that we at EBJ use to help guide our environmental industry growth forecasts.

If anything clouds the current econom-ic outlook it is the seeming inevitability of a correction. While the term ‘correction’ is more frequently used for the stock market and by the investment community, it can apply to industry performance and the GDP as well. Economists would gener-ally assert that a 5-10% ‘correction’ in the stock market from a prolonged bull market run is not necessarily a precursor to eco-nomic collapse, but even the current slide of the 13-14% that the S&P 500 and the DJIA have fallen as 2019 begins from their October 2018 peaks has already stoked fears of a wider economic growth correc-tion and has had a direct impact on pri-vate investor activity, as well as corporate investments.

As the accompanying charts showing annual growth rates of key environmen-tal segments compared to the GDP il-lustrate, the environmental industry has shown waves of growth above and below economic growth rates throughout its history. Most notable has inevitably been recession, and especially the Great Reces-sion, but not to be underestimated is the impact of government shutdown or bud-get sequestration that contributed to down cycles in 1996-1997 and 2013-2014. The wall-faceoff government shutdown that the Trump Administration orchestrated to usher in the new Congress in 2019 there-fore could be expected to have an impact of possibly a year or two of hobbled growth if history is any guide.

GROWTH PEAK IN 2018 This edition of Environmental Busi-

ness Journal and the accompanying data set in spreadsheet format provides EBJ’s final analysis on 2017 environmental con-sulting & engineering industry growth of 4%, updates our forecast to 2022 and per-formance of the top 600 or so companies competing in the market. The expectation is that the year 2018 will end up with growth between 4% and 4.5%, which is higher than any year since 2012. The con-sensus among analysts and professional service consultants that serve the C&E in-dustry is that 2018 was the best year for

U.S. Environmental C&E Industry vs. GDP Growth: 1990-2020

Source: Environmental Business International Inc., annual model of C&E industry.

Annual Growth in U.S. Environmental Services; 2000-2020

Source: Environmental Business International Inc., San Diego, CA, environmental contracting includes two seg-ments: Hazardous Waste Management and Remediation/Industrial Services

-4%

-2%

0%

2%

4%

6%

8%

91 93 95 97 99 01 03 05 07 09 11 13 15 17 19

USA GDP grow th C&E Grow th

-9%

-6%

-3%

0%

3%

6%

9%

00 02 04 06 08 10 12 14 16 18 20

Env'l Contracting Grow th

C&E Grow th

Env'l Lab Grow th



Environmental Industry: Key Growth Factors2004-2008

2009-2010

2011-2013

2014-2016

2017 20182019-2020

2020-2022

Economic Growth (GDP) + -- + +n + + +n n

Property Values ++ - - + + + + n+

Federal Government Spending + + - n - n- n n

Oil & Gas, Commodity Prices ++ -- + -- + n+ - +

Construction Activity + -- + ++ + + + +

State & Local/Infras. Spending + - - n n n n+ +

Environmental Policy & Regs - n n+ n+ -- -- - -

Recession R r

Average Env’l Industry Growth 5.9% -0.4% 3.8% 3.6% 4.6% 4.0% 3.5% 3-4%

Average C&E Growth 6.8% -0.4% 2.2% 1.7% 4.0% 4.3% 3.2% 2-3%

Average Env’l Contracting Growth 3.4% -0.1% 2.8% 0.0% 1.6% 1.0% 1.0% 1-2%

Environmental Infrastructure 4.5% 3.1% 4.1% 3.3% 4.1% 4.1% 4.0% 3-4%

Average US GDP Growth 2.2% -0.3% 1.9% 2.1% 2.3% 2.6% 2.1% 2-3%

Average Oil Price Growth 27.9% -3.6% 12.5% -24.1% 23.8% 31.2% -4.7% 0-4%

Construction Activity 6.8% -13.2% 4.1% 9.4% 4.1% 5.7% 5.5% 3.9%

Source: EBJ, Environmental Business International Inc., Environmental Industry Summit 2018 presentations by Grant Ferrier updated throughout the year

Key Market Driver & Forecast Elements: Segment Growth 2014-2020e

2014 2015 2016 2017 2018e 2019e 2020e

GDP: USA 2.4% 2.4% 1.5% 2.3% 2.6% 2.4% 2%

GDP: Global 3.4% 3.1% 3.2% 3.7% 3.9% 3.9% 4%

Oil Price -9% -47% -16% 24% 31% -5% -5%

Natural Gas Price 18% -40% -4% 19% 7% -4% -2%

US Oil & Gas Production 17% 7% -6% 6% 15% 9% 6%

Stock Market (S&P/DJIA) 9% -1% 11% 22% 4% 6% 8%

U.S. Construction (PIP) 11.0% 10.7% 6.5% 4.1% 6% 5% 4%

Housing Price Index 4.3% 5.6% 5.6% 6.4% 5% 4% 2%

Housing Starts 8.5% 10.8% 5.6% 2.5% 3% 3% -5%

Water/Wastewater Rates 3.9% 3.3% 3.9% 3.7% 3% 3% 4%

EPA Budget 3.8% -1.2% 0.0% -0.5% -5% -2% 2%

Environmental Industry 4.5% 2.9% 3.6% 4.6% 4.0% 3.6% 3.4%

Environmental C&E 1.3% 2.4% 1.4% 4.0% 4.3% 3.4% 3.0%

Environmental Contracting -0.7% 0.1% 0.5% 1.6% 1.0% 1.0% 1.1%

Environmental Infrastructure 3.3% 3.1% 3.5% 4.1% 4.1% 3.9% 3.9%

Sources: Economic growth rates are a consensus of reputable sources like IMF, EIU and others; Oil price forecast for 2018 and 2019 based on annual average price estimated by U.S. EIA’s industry outlook; Construction a consensus of US Census, FMI and Dodge estimates; Housing Starts from US Census; Water rates from EBJ’s index of three water/wastewater rate surveys and EPA budget from EPA Budget in Brief and EBJ estimates; EBJ Segments are estimates derived from multiple sources but predominantly complia-tions of company revenues and forecasts in each segment; Environmental Contracting includes hazardous waste management and remediation/industrial services; Environmen-tal Infrastructure includes solid waste, water utilities and wastewater treatment works segments.



Share of Top Companies in U.S. C&E Industry 2000-2017

Source: Environmental Business International Inc. (San Diego, CA), C&E industry database. Unlike the table below where yearly totals are made up from ranking fixed by 2017 environmental C&E revenues, top ranked firms are resorted every year. 2013 was a notable year with federal government sequestration and close to $1 billion in revenue was lost by C&E firms., heavily weighted to the top tier.

19% 19%22% 21% 21% 22% 22% 23%

26% 27% 26% 27% 28% 26% 27% 26% 27% 28%30% 29%33% 30% 31% 32% 32% 34%

38% 39% 40% 41% 41%39% 38% 36% 38% 37%

44% 43%48%

45% 47% 49% 50%53%

57% 58% 58% 60% 61% 59% 57% 56% 56% 55%53% 53%58% 56% 59% 61% 63%

68%73% 74% 75%

78% 78% 76% 73% 73% 73% 73%56% 56%

62% 60%64% 66%

70%75%

80% 82% 83%86% 86% 84%

81% 81% 81% 81%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2002 2004 2006 2008 2010 2012 2014 2016

T o p 5 C &E T o p 10 C &E T o p 30 C &E T o p 100 C &E T o p 200 C &E

Top 5 & 10 U.S. Environmental C&E Firms 1995-2017 (Gross Environmental C&E Revenues in $mil)

1995 2000 2005 2010 2011 2012 2013 2014 2015 2016 2017

AECOM - 355 778 1,768 2,230 2,281 2,128 3,009 3,036 2,942 3,018

Jacobs 130 152 348 237 261 347 546 597 611 830 2,675

Tetra Tech 109 466 930 1,414 1,406 1,667 1,322 1,605 1,580 1,772 1,959

Stantec - 44 220 645 680 646 720 754 701 1,246 1,268

Arcadis 129 154 450 1,143 1,136 1,086 1,031 1,332 1,248 933 911

ERM 226 309 487 655 771 905 941 940 946 888 902

Golder 80 133 363 798 925 1,168 1,174 986 563 785 817

Leidos (SAIC) 150 196 380 699 621 624 361 301 280 367 541

Black & Veatch 373 352 364 354 335 369 391 380 397 427 493

CDM Smith 307 431 448 607 530 464 489 505 485 484 490

Total C&E: Net 15,510 17,410 22,340 26,830 27,800 29,030 28,630 28,990 29,690 30,100 31,300

Top 5 in 2017 368 1,171 2,726 5,207 5,713 6,027 5,746 7,297 7,175 7,724 9,831

Top 5 Share 2% 6% 11% 17% 18% 18% 18% 22% 21% 23% 28%

Big 10 in 2017 1,504 2,592 4,769 8,320 8,895 9,556 9,102 10,408 9,846 10,675 13,074

Big 10 Share 9% 13% 19% 28% 28% 29% 28% 32% 29% 31% 37%

Source: EBJ database of C&E firms; Top 10 are ranked by gross environmental consulting & engineering revenues in 2017

many of their clients in a number of years, but many approach 2019 with some cau-tion. EBJ forecasts growth of over 3-3.5% for the C&E industry in 2019, guided by the economic input factors summarized and detailed on page 3.

The looming scenario of a recession and its depth and duration of course impacts any forecast. Indeed the outlook for short-range business planning and resource allo-cation inside of companies should account for likely recession and possible timetables, so environmental industry companies are best advised not to overshoot their project execution and business development re-source allocations given the possibility of recession scenarios, and the possibility of another capital R recession.

For the environmental contracting seg-ments, which include hazardous waste management and remediation & industri-al services, the outlook for growth is some-what more modest in the 1-2% range, with higher weight put on industrial out-put, property values, federal budgets, and oil & gas industry dynamics.



2016 U.S. C&E Market Matrix: by Media by Service ($mil)

By Media/ServiceHaz

WasteRemed-iation

Solid Waste

Waste-water

Water EnergyAir

QualityNRM RE

Multi-Media

Total

Invs/Assmt/Audit 748 1,731 396 623 1,017 416 199 1,121 123 - 6,370

Lab/Testing Svcs 20 102 - 142 128 - 25 27 - - 440

Permiting/Compl. 525 102 138 849 1,107 - 822 134 254 - 3,930

Design 813 1,425 413 1,245 1,535 224 448 766 146 284 7,300

Project Mgmt. 426 1,273 482 628 642 96 249 294 169 - 4,260

Monitoring 16 148 17 170 161 8 274 120 - - 910

Information Mgmt 66 25 17 57 54 24 149 40 - 363 800

O&M 16 25 9 1,302 321 8 75 - 54 - 1,810

Pollution Prev. 482 25 138 340 - - 75 - - - 1,060

SEM 56 51 - 57 54 8 50 53 - 1,271 1,600

other 112 183 112 249 332 16 125 115 23 352 1,620

Total 3,280 5,090 1,720 5,660 5,350 800 2,490 2,670 770 2,270 30,100

Source: Environmental Business International Inc., San Diego, CA, based primarily on annual surveys of C&E firms, units in $mil.

U.S. Environmental Consulting & Engineering Market by Customer, 2015-2018

2015 2016 2017 2018 2015 2016 2017 2018

Chemical/Pharma 2,100 2,190 2,350 2,520 7.1% 4.3% 7.3% 7.2%

Oil & Gas 1,920 1,930 2,090 2,240 -10.3% 0.5% 8.3% 7.2%

Primary metals 320 330 330 350 3.2% 3.1% 0.0% 6.1%

Metals Fab/Coating 450 460 480 510 2.3% 2.2% 4.3% 6.3%

Mining 670 670 710 750 3.1% 0.0% 6.0% 5.6%

Tech/Electonics Mfg 360 370 410 450 2.9% 2.8% 10.8% 9.8%

Transpo. (auto/aero) 750 750 790 840 4.2% 0.0% 5.3% 6.3%

Pulp & Paper 400 390 400 420 2.6% -2.5% 2.6% 5.0%

Other Mfg. 970 990 1,030 1,090 4.3% 2.1% 4.0% 5.8%

Water Utilities 1,220 1,280 1,360 1,450 6.1% 4.9% 6.3% 6.6%

Power Utilities 1,920 2,020 2,140 2,280 7.3% 5.2% 5.9% 6.5%

Solid Waste Util/Cos 570 580 610 640 5.6% 1.8% 5.2% 4.9%

Pet. Retail/Gas Stations 760 760 770 810 2.7% 0.0% 1.3% 5.2%

Banks, Law, Real Estate 1,540 1,600 1,670 1,780 5.5% 3.9% 4.4% 6.6%

RE Developers 550 590 630 680 7.8% 7.3% 6.8% 7.9%

Other 470 490 510 540 4.4% 4.3% 4.1% 5.9%

Private Total 15,020 15,450 16,330 17,400 3.0% 2.9% 5.7% 6.6%

Federal 8,050 7,880 7,940 7,970 1.4% -2.1% 0.8% 0.4%

State 1,570 1,600 1,660 1,720 1.9% 1.9% 3.8% 3.6%

Local 5,050 5,170 5,370 5,560 2.4% 2.4% 3.9% 3.5%

Government Total 14,670 14,650 14,970 15,250 1.8% -0.1% 2.2% 1.9%

Total C&E 29,690 30,100 31,300 32,650 2.4% 1.4% 4.0% 4.3%

Source: Environmental Business International, Inc., San Diego, CA, units in $mil.



U.S. Census Data on Environmental Consulting Services for 2015: NAICS Code 54162

FirmsEstablish-

mentsAvg

OfficesEmployees

Avg Employees

Est Rev @150k

Estimated Share

500+ Employees 72 706 9.8 143,720 1,996 21,560 69%

100-500 Employees 117 527 4.5 15,657 134 2,350 8%

20-100 Employees 625 1,000 1.6 22,838 37 3,430 11%

<20 Employees 7,680 7,771 1.0 26,028 3 3,900 12%

Total: NAICS Code 54162 8,494 10,004 1.2 208,243 25 31,240 100%

Source: Environmental Business Journal adapted from U.S. Census Bureau, 2015 data; Revenues per employee estimated at $150,000 per employee.

Gross Revenue Performance of Environmental C&E Firms in EBJ Database: 2009-20172009 2010 2011 2012 2013 2014 2015 2016 2017

Flat 7% 8% 9% 9% 8% 8% 7% 8% 11%

Growth 33% 65% 57% 60% 64% 62% 73% 69% 67%

Decline 60% 28% 34% 31% 29% 30% 19% 23% 23%

Source: EBJ’s database of C&E firms; 600-700 with revenues reported in 2009-2017; Flat represents less than 1% growth or decline or ‘Flat’ in response to survey or interview

Infrastructure segments mostly associ-ated with solid waste, drinking water and wastewater systems all look to post more steady annual growth of 3-5% as invest-ment momentum continues in these still largely underfunded assets. More trends on the infrastructure segments and the environmental testing segment will be presented in a subsequent environmental industry overview edition of EBJ.

Business trends in the consulting & engineering segment can usually be sum-marized in clients, services, media, geogra-phy and companies which are the 5 main dimensions that EBJ uses to break down the C&E business in the analytical frame-work of its C&E industry model. Detailed tables and charts on the C&E industry are presented in the following pages with vary-ing levels of detail and in the C&E dataset.

Noteworthy highlights in the client breakdowns include the significantly high-er growth in private sector markets in the last two years, compared to government growth rates. Since the year 2015, private sector markets for environmental con-sulting & engineering firms have gained a net of $2.4 billion in annual revenues compared to only half a billion dollar gain in government markets. Oil & gas and chemicals, due to both their size and their relative growth, have paced this recent pri-vate sector growth. Power and water utility companies and renewable energy as well as property developer markets have also

Revenue Performance of U.S. Environmental C&E Firms by SizeFirms 2013

Firms 2017

Net 2017

2015 Growth

2016 Growth

2017 Growth

Big >1 bil 6 4 7,582 -0.1% -0.4% 2.8%

Large>100 mil 45 46 11,526 2.2% -0.2% 5.4%

Mid 20-100 mil 135 148 5,566 4.9% 3.4% 3.4%

Small 10-20 mil 142 153 1,980 3.8% 3.2% 2.1%

Small 5-10 mil 187 219 1,388 4.1% 6.3% 5.7%

Small 1-5 mil 767 790 1,719 3.0% 5.2% 5.1%

Small <1 mil 6,694 6,718 1,541 5.0% 5.6% 4.7%

Total 7,976 8,078 31,302 2.4% 1.5% 4.0%

Source: Environmental Business Journal’s annual models of the U.S. environmental consulting & engineering industry. Note: Prior to 2017 firms of 1-2 persons or sole proprietorships were not counted in the number of firms columns and totals were in the 3,200-3,300 range

Distribution of U.S. Environmental C&E Firms in 2017

Envl Revs Only FirmsGross

Env’l C&EAverage

Net Env’l C&E Revs

% of Mkt% of Gross

Big >1 bil 4 8920 2230 7,582 24% 25%

Large>100 mil 46 13248 288 11,526 37% 38%

M 20-100 mil 148 6254 42 5,566 18% 18%

S 10-20 mil 153 2084 14 1,980 6% 6%

S 5-10 mil 219 1446 6.6 1,388 4% 4%

S 1-5 790 1800 2.3 1,719 5% 5%

S 0.2-1 mil 2109 1015 0.5 997 3% 3%

S <200k 4609 554 0.1 544 2% 2%

Total 8078 35321 4.4 31,302 100% 100%

Source: Environmental Business Journal’s annual model of the U.S. environmental consulting & engineering industry.



U.S. Environmental Consulting & Engineering Industry

Source: EBI Inc., San Diego, CA, based primarily on annual surveys of C&E firms, units in $mil.

1,330 1,410 1,240 1,470 2,100 2,7801,710 1,640 1,720 2,280 2,6803,3401,750 2,730 2,920

3,2603,970

4,840

5,0905,130

7,170

8,7508,050

8,040

3,5904,230

5,950

6,4606,620

7,690

1,3501,450

2,240

2,7403,630

4,690

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1995 2000 2005 2010 2015 2020

Other

S tate & Lo c al

F ederal

Indus trial

P o wer

Oil & G as

C hemic al

posted well above average growth, and as EBJ’s rolling ‘Snapshot’ surveys show, oth-er high-growth client categories include healthcare, tech, and to a lesser extent hospitality, retail and institutional markets like universities and K-12 education that manage a significant platform of real estate and the incumbent risks associated with land assets and the built environment.

OIL PRICE SWINGS No private sector market discussion

is complete without reference to the per-petually unpredictable fluctuations of oil prices that can play an outsized role in environmental industry dynamics, at least for the many companies who count them amongst their major clients. As the Brent crude price charts on page 9 show, crude oil prices peaked at $140 a barrel in July 2008, but crashed to $35 a barrel at the end of December 2008 during the global financial crisis that became known as the Great Recession. Six months later, by the end of June 2008, the price had recovered somewhat, doubling to $70 a barrel, and then increased fairly steadily the next three years to hit $120 a barrel in April 2011.

The price of Brent crude traded in a fairly consistent range between $100 and $120 a barrel for the next three-and-a-half years in 2011-2014. Brent crude saw the $100 per barrel price for the last time in September 2014, and it then collapsed by half to $50 a barrel in only 4 months by January 2015, and bottomed out a year later at $26 a barrel on January 20th 2016. Starting in February 2016 at around $30 a barrel it took more than 18 months to get to $60 in October 2017, an oft cited threshold for upstream development of horizontal drilling or shale oil resources in North America. To the surprise of most analysts the price continued to over $80 a barrel in May 2018, and hit a 4-year peak at $86 on October 4th 2018. At the end of 2018 the price of Brent crude had dropped back to $50 a barrel more in line with, but significantly lower than 2019 average per barrel price of $61 expected by the U.S. Energy Information Administration. Suf-fice it to say the cycle of oil price volatil-ity is unlikely to change, making industry forecasts and predictions problematic, but environmental service companies are fairly

U.S. Environmental Consulting & Engineering Industry by Client

Source: EBJ annual model of the U.S. environmental consulting & engineering units in $mil

U.S. Environmental C&E Industry: US vs. non-US Revenues

Source: Environmental Business International Inc. EBJ annual model of the U.S. environmental consulting & engineering firms based primarily on annual surveys and revenue analysis of C&E firms, units in $mil and $bil.

2,150 2,280 2,440 2,720 2,880 2,880 2,680 2,690 2,860 3,050 3,190 3,3401,630 1,710 1,820 1,990 2,120 2,300 2,470 2,610 2,770 2,960 3,100 3,2503,180 3,260 3,410 3,620 3,720 3,840 3,970 4,010 4,200 4,460 4,650 4,8408,470 8,750 9,010 9,210 8,350 7,940 8,050 7,880 7,940 7,970 8,000 8,0406,580 6,460 6,510 6,590 6,420 6,470 6,620 6,770 7,030 7,280 7,550 7,690

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Chemical Oil & Gas Pow er Industrial Federal State & Local Other

18.1 19.5 21.1 22.5 23.3 22.2 22.5 23.2 24.1 23.4 23.6 24.1 24.4 25.5 26.8 27.7 28.5

2.602.81

3.033.36 3.83 4.01 4.29 4.56 4.91 5.28 5.40 5.64 5.69 5.79

5.89 6.09 6.30

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2004 2006 2008 2010 2012 2014 2016 2018 2020

USA Non-US



Source: Environmental Business International Inc. (San Diego, CA), Envi-ronmental Business Journal & EBI Report 728. Figures in EBJ’s list of top ranked C&E firms are revenues generated for calendar year 2017 in gross environmental consulting & engineering (C&E) not including construction and remediation construction, but including project management/construction management. Environmental construction (air, waste, water), remediation con-struction and federal waste management or contracting services are counted in the middle column labeled Cont/HW. This list is a result of independent research and EBI surveys. In some cases, revenues are approximations derived from executives, analysts and reputable business information sources and published materials. Although EBI has made every reasonable effort to be accurate, figures are not the result of internal or external audits and are not guaranteed to be accurate. Errors and omissions are unintentional.

Top U.S. Environmental C&E Firms in 2017Company Gross $mil Cont/HW Env’l C&EAECOM 18,482 1,233 3,018 Jacobs (CH2M in 2017) 15,125 1,560 2,675 Tetra Tech 2,850 839 1,959 Stantec Consulting 3,093 - 1,268 Arcadis 3,503 50 911 ERM 902 - 902 Golder Associates 997 - 817 Leidos 10,581 - 541 Black & Veatch 3,361 381 493 CDM Smith 1,173 331 490 Ramboll 1,620 - 486 SNC-Lavalin (Atkins in ‘17) 9,080 - 454 ICF 1,246 - 436 HDR Inc. 2,362 672 425 Fluor Corp. 18,678 1,870 391 GHD 1,373 123 372 Brown and Caldwell 363 - 363 Parsons 3,486 123 330 Wood Group (Amec FW in 2017) 6,328 760 316 NV5 368 - 313 TRC Companies 887 - 310 Carollo Engineers 272 - 272 GeoSyntec Consultants 285 - 251 Hazen and Sawyer 244 - 244 Louis Berger (WSP in 2018) 948 - 237 WSP Global 5,050 79 224 Burns & McDonnell 2,683 62 206 Woodard & Curran 203 - 199 OBG: O’Brien & Gere 271 - 198 WorleyParsons 3,290 - 197 Weston Solutions Inc. 297 - 196 Cardno Ltd. 880 - 194 Battelle 887 - 177 SCS Engineers 185 19 166 Terracon Consultants, 660 - 165 Bureau Veritas 617 - 160 Apex Environmental* 156 - 156 Huntington Ingalls 7,441 - 150 Kleinfelder Inc. 372 - 149 EA Engineering Sci and Tech 146 - 146 Michael Baker Corp. 611 - 141 Haley & Aldrich Inc 192 - 134 North Wind Inc 269 70 132 Mott MacDonald 2,278 - 131 Navarro Research and Engineering 148 - 120 Trinity Consultants 118 - 118 ATC Group Services 253 70 117 Langan EES 248 - 112 Ecology & Environment 105 - 105 GEI Consultants 162 - 102 CEC Civil & Environmental Consultants 135 - 99 SWCA Environmental Consultants 97 - 97 Anchor QEA 91 - 91 HydroGeologic 90 - 90 Bechtel Group 25,617 1,705 88 Freese & Nichols 151 - 88

accustomed to being prepared for their oil & gas compa-nies to either turn on or turn off the demand spigot on a moment’s notice.

RESILIENCY SHOOTS UP SERVICE CHARTSService trends show information management and in-

formation technology applications as the highest rated growth categories for C&E firms. IT applications and the increasing strategy amongst C&E leaders to acquire and develop their own proprietary IT assets is a trend delved into later in the profiles included in this edition (see pages 11-29). The relatively generic categories of project man-agement and project engineering are rated for growth not too far behind IT, but notably ahead of investigations or impact statements or permitting or most other forms of ‘front-end’ work which fell down the ranking list (see table on page 10), as construction trumps analysis & planning.

Resiliency planning debuted on EBJ’s survey list and ranks 4th out of 20 service sub-categories. Resiliency in the face of adverse weather events and natural disasters, and yes even long term climate change impacts, all have seen notable increases in demand across almost all client sec-tors. While resiliency and climate change adaptation proj-ects are not often standalone projects or the primary objec-tive on integrated projects, they are increasingly required elements of more and more projects related to any form of asset management, and particularly infrastructure. (Cur-rent research by EBI on climate change adaptation practice areas will be published in an upcoming edition of CCBJ.)

A final note on services is that private sector remedia-tion, redevelopment and brownfields moved up the charts to the 5th rated service category in terms of prospects for growth in the next 2 years, but that government reme-diation fell all the way to the bottom, notwithstanding a number of companies who reported some recovery in their Department of Defense remediation projects in 2018.

Looking at the environmental consulting & engineering industry by media, perhaps the most telling story is to look at market breakdowns in 5 year increments as portrayed on the chart on page 1. Here you can see the steady growth of water and wastewater markets from less than $2 billion in annual revenues in 1995 to $6-7 billion in 2020, and air quality markets going from $1.2 billion to $2.7 billion.



USA Energy-Related Carbon Dioxide Emissions By Fuel 1990–2016 (million metric tons of carbon dioxide)

Source: U.S. Energy Information Administration, Short-Term Energy Outlook Figures, June 2018; Natural gas CO2 emissions surpassed those from coal in 2016. CO2 emissions from petroleum and other liquids, which have been the largest source of energy-related CO2, have been increasing since 2012 after remaining relatively constant from 2004 to 2007 and then generally decreasing through 2012. Since the beginning of the 2007–09 recession, coal CO2 emissions have also generally declined. Although total coal CO2 emissions in 2016 were lower than those from petroleum and other liquids, coal is more carbon intensive, with more CO2 released per Btu of energy. The decline in coal CO2 emissions has contributed to a lower overall carbon intensity of U.S. energy consumption and kept emissions below pre-recession levels. Natural gas CO2 emis-sions have increased every year since 2009. The natural gas share of electricity generation has grown as coal declined, partially offsetting the decline in coal CO2 emissions from coal, and natural gas CO2 emissions sur-passed coal in 2016. However, because natural gas produces more energy for the same amount of emissions as coal, growth in natural gas consumption contributed to the overall 2016 decline in total emissions.

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1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Coal Natural Gas Oil

Consulting work related to the ongoing generation of hazardous waste and com-pliance associated with hazardous waste management and exposure to hazardous materials has been the only significant cat-egory to decline in annual revenue from 1995 to 2015, losing about $1 billion. Market growth in remediation services has held up, although the rate has reduced in recent years. The emergence of renewable energy consulting & engineering services, as well as the sustained position of natu-ral resource markets is also evident on the charts.

In terms of companies the fairly unique characteristic of the environmental con-sulting & engineering business that the top companies do not inexorably take over more and more market share has been noted in the past in EBJ, but is worth reit-erating. The combined factor of the federal government sequestration in 2013, fol-lowed by the oil price crash highlighted the heavy dependence of the larger environ-mental consulting & engineering firms on those two major market categories, prob-ably more than any industry structural dynamic has impeded the competitiveness of the largest firms. That being said there are factors that feed growth into the lower tiers of the market including the broad-based client sectors in municipal and state government markets and small industry. Also the environmental consulting & en-gineering business has relatively low barri-ers to entry for those with qualifications or experience who want to launch their own business or branch off from existing firms. This latter effect has been in evidence for some time in the industry, and generally is exaggerated during larger waves of merger and acquisition activity, not unlike we have seen in recent years.

The fluidity of talent is not the most welcome syndrome to executives. A re-cent EBJ Environmental Industry Sum-mit panelist called for a truce of compa-nies hiring away his managers at 20-30% raises, impractical yes, but indicative of the likely perpetual competition for tal-ent in the environmental industry. While the people performing the project work are generally the same people, the corpo-rate players booking that revenue have changed over time. The table and chart on

Crude Oil Price 2003-2019: Brent Spot Price (Dollars per Barrel)

Crude Oil Price 2016-2019: Brent Spot Price (Dollars per Barrel)

Source: U.S. Energy Information Administration citing Thomson Reuters

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Percent of U.S. Personal Transportation Units or ‘Cars’: 2020-2050

2018 Survey

2017 Survey

2018

Self-Driving in 2020 7.8% 10.05% -2%

Self-Driving in 2030 17.9% 20.23% -2%

Self-Driving in 2050 36.8% 40.43% -4%

Electric in 2020 11.4% 12.25% -1%

Electric in 2030 26.1% 23.17% 3%

Electric in 2050 44.3% 44.03% 0%

US Life Expectancy

2018 Survey

2017 Survey

% Change in 2018

2020 78.6 78.8 (0.2)

2030 80.1 80.2 (0.1)

2040 81.6 81.9 (0.3)

2050 83.4 83.8 (0.4)

2100 85.2 86.7 (1.5)

Source: EBJ 2017 & 2018 Snapshot Surveys.

Ranking of Environmental Markets by Services2018 Rank

2017 Rank

IT/EMIS software/systems/training 1 4

Project mgmt./Construction mgmt. 2 1

Design and project engineering 3 2

Resiliency planning 4 --

Private remed/redev/brownfields 5 7

Operations & maintenance 6 5

Permitting/compliance 7 12

Industrial waste mgmt/in-plant svcs 8 6

Water recycling/reuse 9 8

Energy: Performance contracting 10 11

Green building design/construction 11 14

Outsourcing EHS functions 12 3

Impact Assessment & Permitting 13 --

Investigations/assessments/audits 14 10

Monitoring & analytical work 15 9

Smart growth/”green” planning 16 16

Ecological restoration 17 18

Waste minimization 18 13

Solid waste diversion/recycling 19 15

Gov’t remed/base closure/conv 20 17

Source: EBJ Snapshot Surveys in 2018: “Prospects for growth in the next two years”

page 4 illustrate that the top 5 companies account for just 28% of the C&E market today and the top 10 only 37%. And as the table at the bottom of the page shows today’s top 5 represented only 2% of the market in their corporate entities in 1995. Comparing these numbers to other indus-tries shows why many still characterize the C&E industry as fragmented and holding potential for future M&A opportunities. The availability of capital also supports ongoing consolidation, but a still relatively finite number of actively acquiring firms and the large number of small growing firms indicate that the level of fragmenta-tion will remain relatively high compared to other industries.

Comparing recent growth as a function of company size (see table on page 6) shows that the largest companies at least have re-turned to positive revenue performance from collective decline in 2013 and 2014, although in aggregate the largest firms still trail smaller companies in growth. Mid-size companies have perhaps been more aggressive in acquiring and promoting or-ganic growth, and that looks to continue with the dynamics of active private equity investors, seasoned management and more engaged internal shareholders feeding the

drive for growth.

One last note on the company ‘universe’ in environmental consulting & engineer-ing as EBJ has called it, we have added a sub-category at the small end of the market given the availability of more accurate U.S. Census data based on North American Industry Classification (NAICS) system codes and elimination of double count-ing in government databases. The raw data somewhat restructured from the U.S. Census Bureau is presented on page 6 with EBJ’s universe model portrayed below. The EBJ model previously did not count sole proprietorships or 1- and 2-person compa-nies in the firm count, but given their large numbers we have now included the line item at the bottom of the chart. This in-creases the total environmental C&E firm count to from 3,600 to 8,000, although the revenue contribution from the smallest companies to the entire industry has only changed marginally from EBJ’s previous C&E industry model that estimated the revenue contribution but not the absolute numbers of sole proprietorships.

Nevertheless firms generating less than $1 million in annual environmental C&E revenue represent 5% of the industry, and $5 million or less about 10% of the indus-try, so as one observer said, “anybody can be a consultant.” And while barriers to en-try are low, the prevailing concern is there being sufficient quality engineers and proj-ect managers to sustain growth and client relations in a still growing and expanding market in terms of types of expertise de-manded by the diverse client base.

We can all admit that the environmen-tal consulting profession lacks glamor and that not many Halloween trick-or-treaters dress up as environmental consultants or climate change resilience specialists, but glamor is not what got most of the first generation of company owners into the profession in the first place. Perhaps to-day’s political dynamics and new wave of environmental, economic and social chal-lenges will instigate a new wave of talent into the industry. The environmental in-dustry can only hope so. There is certainly much more work to be done.



NV5 Acquires SkysceneIn December 2017, NV5 Global

acquired Skyscene LLC, a leading provider of Unmanned Aerial Vehicle (UAV) flight services headquartered in San Diego, California. NV5 antici-pates that the acquisition of Skyscene will initially add $5 million to opera-tions. The acquisition was made en-tirely in cash and will be immediately accretive to NV5’s earnings. Integrat-ing NV5’s LiDAR (Light Detection and Ranging) mapping technology with Skyscene’s UAV flight services positions NV5 as one of the leading UAV LiDAR aerial mapping service providers in the nation. Traditionally provided with fixed wing aircraft or helicopters, the use of UAV LiDAR adds value to NV5 clients by provid-ing higher resolution mapping, rapid mobilization, and more cost effective services than can be achieved using manned aerial vehicles or traditional survey methods.

NV5 STAYS ON LEADING EDGE IN ACQUIRING DRONE SERVICES FIRM SKYSCENE AND BUILDING OPTIMIZER ENERGENZ

NV5 Global, Inc. is a provider of professional and technical engineering and consulting solutions ranked #45 in the Engineering News Record Top 500 Design Firms list. NV5 serves public and private sector clients in the infrastructure, energy, construction, real estate and en-vironmental markets. NV5 primarily focuses on five business verticals: construction quality assurance, infrastructure engineering and support services, energy, program management, and environmental solutions. The Company operates out of more than 100 locations nationwide and abroad in Macau, Hong Kong, and the UAE. Since its inception in 2009, NV5 has grown into a client focused consulting firm with $500M in annual revenues. The firm’s growth has been accomplished through a combination of strategic acquisitions and organic growth with a focus on cross-selling services throughout the NV5 platform.

Scott Kvandal serves as Chief Synergy Officer of NV5. He has over thirty years of experience in the infrastructure engineering industry. Most recently, Mr. Kvandal was Chief Operating Of-ficer of the Western Region of Bureau Veritas North America, where he grew the firm to national leader in code compliance and operating revenue within his group to $120 million. Before joining Bureau Veritas, Scott was President of Berryman & Henigar, and earlier, he served as President of Barrett Consulting Group. As Chief Synergy Officer of NV5, Scott is responsible for enhancing the cross-selling of services between the firm’s five business verticals leading to ac-celerated organic growth.

EBJ: Which are the key technology solutions that NV5 provides? How is technology changing the way that NV5 operates?

Kvandal: NV5 is continually seek-ing ways to enhance the value of services provided to our clients through new and evolving technologies. Two new technolo-gies that NV5 has incorporated into the delivery of our service offerings is the use of Unmanned Aerial Vehicles (UAVs), commonly referred to as “drones” and our energy management and sustainability services through the recent acquisition of Energenz by NV5.

USING UAVS WITH ADVANCED SCANNING EQUIPMENT

Entry-level UAV applications are use-ful in taking pictures and videos. However, a completely different level of expertise, technology and equipment are required for creation of full planimetric drawings or full engineering-grade topographic maps with surfaces and mark-outs. The substan-tial technology investment, experience and commitment are simply beyond the in- house capabilities and resources of most organizations.

Our UAV division provides aerial map-ping using LiDAR and digital imagery. These different but complimentary datas-ets are often used in conjunction to pro-duce planimetrics, topographical maps, 3D surfaces with break lines and contours, as well as overhead and underground util-ity mapping and design. We operate UAVs that carry highly sophisticated equipment on board; for example, a survey-grade LiDAR scanner and IMU (Inertial Mea-surement Unit), thermal cameras, multi-spectral cameras and cameras designed for stereo collection for photogrammetry.

Terrestrial (land-based) and manned aircraft LiDAR has been in use for a num-ber of years, but until recently, the technol-ogy for acquiring LiDAR data from UAVs has been unavailable.

UAV data collection is performed by our highly trained and certified pilots. They set up NV5’s state-of-the art equip-ment and operate it correctly, following safety guidelines out in the field while working near high tension lines, power lines and transmission poles. Each system is equipped with an onboard Global Navi-gation Satellite System (GNSS) receiver, which is used to create a post-processed

trajectory when paired with a local base station on the ground. Finally, data is tied down to, and checked against survey ground control to ensure that the accuracy standards for each project are being met.

We are committed to keeping up-to-date on accuracy standards, and often reference publications such as the United States Geological Survey’s LiDAR Base Specification and the American Society for Photogrammetry and Remote Sensing’s Accuracy Standards for Digital Geospatial Data.

ENERGENZ: TECHNOLOGY TO OPTIMIZE BUILDINGS

Today building lifecycle management is governed by two overriding missions: to keep energy efficiency at an all-time high and operating costs at an all-time low. However, in a world where physical in-frastructures haven’t quite kept pace with its digital counterparts, organizations are soon realizing the value proposition that resilient structures and energy-efficient buildings bring. Effective energy use goes far beyond motion-sensor lighting, and there is a real opportunity for improving



the operational value of mechanical sys-tems in a building. In such a scenario, En-ergenz is redefining efficiency in the built environment by diving deep into compli-cated mechanical systems to discover the hidden defects followed by quantifying and fixing those defects with controls opti-mization. Primarily an engineering consul-tancy, Energenz partners with clients to re-duce operating costs in energy spend while improving the life of a building through environmentally safe measures.

Following a technology and data-driven approach, Energenz has a team of engi-neers that use software to carry out ana-lytics on big data in order to monitor and continuously commission a building.

EBJ: How does NV5 differentiate from competitors from the technology stand-point?

UAV SERVICESSome companies have their own in-

house UAV group, but the capabilities are usually limited and not sufficient for engineering design. Building a substantial in-house UAV operation is not practical for most organizations. They might invest in the equipment only to realize they do not have the highly-experienced, dedicated staff or necessary training to provide qual-ity UAV mapping services.

Even organizations with full aviation departments find it challenging to intro-duce UAVs into their operations. The as-sociated expense for equipment and crews is often a barrier to entry.

Instead, it’s more efficient and econom-ically viable for companies to work with an experienced, full-service UAV mapping provider like NV5. We are invested in pro-viding the best UAV mapping services by having a dependable UAV division. We employ full-time highly-trained licensed pilots, mapping staff and a management team that continually provide these ser-vices to clients and teaming partners.

MONITORING BASED COMMISSIONING (ENERGENZ)

Many of our competitors follow a tra-ditional approach to optimizing buildings, a one-off type of assessment that looks at a

snap shot of information from the build-ing data and relies on physical inspections and manual spreadsheet based analysis by a team of engineers. This approach tends to be cyclical, initially energy savings are achieved and costs are decreased.

However, over time (12 – 36 months), the building will drift back to its original state and the process will need to be carried out again.

Utilizing technology, Energenz con-nects to a building and continuously gathers thousands of data points at very granular time intervals. This not only al-lows us to do a much deeper dive into the opportunities for energy savings in a more efficient manner, it also enables us to con-tinually monitor and further optimize the building over time. The end result is that we not only significantly reduce the energy costs within the building, we maintain these reductions over time.

EBJ: You acquired Skyscene about a year ago. Can you give us some back-ground on the technologies that you acquired through Skyscene?

Kvandal: NV5 first began contract-ing Skyscene as a subconsultant for pro-viding drones, licensed pilots, and UAV operational knowledge for existing NV5 projects. NV5 has an expansive survey department that has been using terrestrial LiDAR equipment for a number of years. Our power delivery energy clients have been requesting more detailed inspections of their electrical transmission and distri-bution facilities in which a survey grade LiDAR unit mounted on a UAV would provide. After some initial testing and veri-fication of the accuracy in data collection, NV5 acquired Skyscene in 2017.

Many use a one-off assessment that looks at a

snapshot of information from building data... Energenz

connects to a building and continuously gathers thousands

of data points.

The combination of NV5’s expertise in the use of LiDAR scanning equipment and processing, combined with the experience and expertise in advanced UAV operations, has proven to be a powerful combination and has now become a differentiator in the marketplace.

EBJ: Can you provide an overview of the type of demand that this type of technologies have on an industry level?

UAV SERVICESThe uses for UAV services have been

expanding both in nature and in volume as the industry becomes more aware of the potential applications. The demand and nature of UAV applications has continued to increase as we educate our current and future clients with the capabilities of us-ing UAVs with a variety of technological sensors.

A few of the applications in highest de-mand include:

• Inspections of power utility in-frastructure

With the use of UAV LiDAR tech-nology, NV5 is not only able to provide detailed inspections of aerial facilities in a safe manner but also able to import the LiDAR data into PLS-CADD classifica-tion and design software. We are able to provide an entire, full-service solution to our clients from start to finish.

• Mining Operations Support Ser-vices

With the use of UAVs and remote sen-sors, NV5 is able to periodically map min-ing operations and quickly provide accu-rate measurements of mining volumes that cannot be provided using conventional surveying techniques.

• Topographical Mapping thru Vegetation

Because of the nature of LiDAR scan-ning, NV5 is able to map the surface to-pography through thick vegetation, for ex-ample, thru sugar cane fields. This cannot be performed using conventional survey-ing methods without clearing or damaging the vegetation.



• Topographic Mapping

Whereas using conventional survey-ing and use of manned aircraft for topo-graphic mapping is commonplace today, we believe that UAV mapping will be the standardized delivery approach in the fu-ture. Our UAVs carry the same equipment on board as a manned aircraft, but UAVs can fly lower and slower, capturing denser, more accurate data.

• Solar Farm Installations and Per-formance Monitoring

In addition to providing the necessary topographic mapping required for the de-velopment of new photovoltaic solar, NV5 is able to use UAVs mounted with thermal cameras that can be used in conjunction with specialized software applications to monitor the individual photovoltaic pan-els’ performance. This ability not only provides owners to routinely evaluate their solar field’s performance but gives them detailed information of panel performance that is otherwise necessary to be collected manually and thereby incurring extensive labor costs.

• Commercial Roof-Mounted Photovoltaic Installations

During the design process for a large roof mount (>1MW), a detailed roof plan is critical to maximizing system opera-tion, permitting and safe operation of the project long-term. Traditionally, attaining a detailed roof plan requires a significant amount of time and investment compar-ing as-built drawings, online aerial imag-ery, and a detail site visit with multiple people actually pulling tape to locate fea-tures and validate dimensions. The high resolution imagery, LiDAR and other im-aging technologies offered by NV5’s UAVs cuts out a majority of that investment as we are able to provide a detailed roof plan from a single UAV flight with sufficient detailed imagery to ensure that return site visits are not required. Additionally, the collected data enables designers to opti-mize roof arrays with greater confidence to the real world shade profile throughout the day and year.

Finally, NV5’s UAV group’s rapid de-ployment and short lead time to turn-

around final roof plan drawings saves time and money in the solar project’s develop-ment cycle.

EBJ: Have the technology acquisitions had an impact in NV5’s overall profits?

Kvandal: The acquisition of both Skyscene and Energenz have been accre-tive to NV5’s earnings. With that said, the growth of these new technologies is somewhat buffered by the ability of our clients to understand (it requires an educa-tion) the technology, its ability to provide more accurate data and the value of the enhanced service offering. For instance, while the power and energy utilities have quickly embraced the use of UAV tech-nologies, others like State Departments of Transportation have been more reluc-tant to adopt the new technology. Often, we have provided a real test in the clients’ use of conventional technology to that of using UAVs. The increased accuracy com-bined with a more cost-effective solution quickly becomes apparent, but it requires an education process.

We believe that we are a little ahead of industry’s full acceptance... We want to be

on the “leading edge”, but not on the “bleeding edge” as we integrate new technologies.

EBJ: What was the main reason behind these acquisitions?

Kvandal: The main reason for the ac-quisitions was primarily responding to an identified need in the industry but, in the case of Skyscene, we were encouraged from one of our utility clients as they had a high demand for the service and were unable to develop the technology internally.

EBJ: Change and integration is always challenging. How have you been able to complement the services that you provide with these new technologies? What type of training did you provide to NV5’s personnel regarding the new technology?

Kvandal: The integration of the tech-nologies has been quite synergistic without too many challenges. The integration of new technologies, which have recognized to be of high value to our clients, has been embraced by our technical teams and cli-ent managers. The challenge in the case of UAV services, has been the speed at which we can train our staff in the efficient pro-cessing of data. For every hour of data col-lection flight time, there is typically one to two days of data processing time required by well-trained and experienced data pro-cessors.

As a team of engineers and consultants, we view the software and technology we use as a tool to provide value to our clients through our services. We invest significant time and effort into improving the tech-nology in order to enhance these service offerings and deliver them more efficiently and cost effectively.

There have been opportunities to utilize the technology for other NV5 services such as commissioning, training is provided to the engineers within this business unit, so they can effectively utilize these tools to enhance their processes and differentiate from the competition.

EBJ: Why do you consider that the transaction was performed at the right time? How does it fit in your overall growth strategy?

Kvandal: We believe that we are a little ahead of industry’s full acceptance of these new technologies. But, this is exactly where NV5 wants to be positioned. We want to be on the “leading edge”, but not on the “bleeding edge” as we integrate new tech-nologies. NV5 was well experienced in the use and application of terrestrial LiDAR. Combining the use of LiDAR with a drone was a natural next step technology.

NV5’s tag line is “Delivering Solutions – Improving Lives”. Part of our strategy is to incorporate new technologies into the delivering our solutions, i.e., Delivering Solutions – Thru Leading Technologies”.

EBJ: Do you have in-house personnel devoted to technology related R&D?

Kvandal: NV5 does not have a team of personnel dedicated to developing new



technologies. We believe the strategy of identifying new technologies developed in the industry and integrating them into our service offerings is a faster and more cost-effective solution for NV5.

EBJ: Will you consider acquiring ad-ditional technology related companies? Which are the technologies that you believe would be of high value to your organization and your clients?

Kvandal: We are looking into incorpo-rating new technologies for use in the en-ergy compliance regulations and sustain-ability as well as in the security of facilities and property.

EBJ: Are you currently using technol-ogy as a way of diversifying NV5’s rev-enue streams into a more recurring or subscription-based revenue as opposed to the traditional project based, “time for money” model?

Kvandal: We like the recurring revenue model and believe our Energenz services are well-suited for the subscription-based revenue model. We financially engage with our clients using a subscription- based model where we charge a monthly fee. This subscription-based revenue makes us extremely “sticky” with our clients. They literally see the NV5 logo in front of them every day. This not only positions us per-fectly for additional services such as Com-missioning and MEP design, we continue to have that long-term relationship with every client we sign up, this is so powerful in itself. As a large portion of this service is automated once we are set up, it also en-ables us to recognize revenue not tied to head count and achieve higher margins due to breakage, much like a Netflix ac-count.

EBJ: How do you think that tech services M&A is driving growth in the environmental industry?

Kvandal: NV5 seeks to acquire new technologies in order to add value to our clients and differentiate our firm in the marketplace.

KCI COMMITS TO INNOVATION STRATEGY: ACQUIRES LASER SCANNING FIRM LANDAIR

KCI is a 100-percent employee-owned engineering, consulting and construction firm serv-ing clients throughout the United States. Their multi-disciplined service offerings allow them to provide exceptional turnkey expertise to federal, state and local government agencies, as well as institutional and private-sector clients. Operating out of more than 40 offices in 17 states and the District of Columbia, KCI’s team of more than 1,400 professionals offer technical expertise in transportation, resource management, environmental, telecommunications, utilities, facili-ties, and construction. Over the last decade, KCI has grown dramatically, more than doubling the size of their team, their top line sales, and bottom line net operating income. This growth has been achieved through a combination of organic growth and strategic acquisitions. KCI has completed one or two acquisitions each calendar year since 2012.

KCI CEO/President Nate Beil, PE, DWRE, joined KCI Technologies Inc. in 1988. Within four years, he started the company’s Water Resources Division, which became one of KCI’s top-performing business units. From 1995 to 2001, Nate served as head of KCI’s Environmental Group, and in 2001 he was promoted to manager of the firm’s Mid-Atlantic region. He has served as president of KCI since 2006, and assumed the role of CEO in 2018.

Thomas Sprehe, PE, BCEE, is a Senior Vice President and Director of Innovation and Technology. He joined KCI in 1997, assuming the role of vice president and head of the envi-ronmental division. In 2002, he was promoted to senior vice president and named manager of KCI’s environmental market, which includes the firm’s water, wastewater, solid waste and geo-technical engineering, hazardous waste and environmental compliance, and industrial hygiene practices. In 2017, Tom took on the role of director of innovation and technology.

EBJ: You acquired LandAir Surveying a little over a year ago. Can you give us an overview about LandAir Surveying and the technologies that you acquired?

KCI: Founded in 2001 by President and CEO H. Tate Jones, PLS, LandAir began as a traditional surveying company but quickly embraced the ongoing tech-nological evolution occurring within the industry. In 2005, the firm began offering laser scanning and has since grown in ca-pabilities and reputation to be considered among the top 3-D laser scanning firms in the country. Their team offered an array of geospatial services, including aerial map-ping, helicopter and fixed wing LiDAR (Light Detection and Ranging), terrestrial laser scanning, drone data capture, aerial photography, building information mod-eling (BIM) and virtual construction ser-vices.


KCI: LiDAR, laser scanning and un-manned aerial systems (drones) dramati-

cally improve the quality of visual in-spection, engineering and construction monitoring while reducing the overall cost of these services. Liability reduction is a major driver for 3-D modeling, as con-struction interferences may be significantly reduced. In construction, 3-D modeling allows for efficient pre-fabrication of com-ponents prior to installation in the field, as well as providing an essential tool for future asset management of those compo-nents by the owner.

Applying these technologies to service areas that had been performed using con-ventional methodologies is having signifi-cant impacts by reducing labor costs and improving efficiencies. They reduce the need for manpower while improving deliv-erables through applied technology.

In many ways, KCI has had to generate demand for the services through educa-tion and improved service. By introducing these technologies and then proving their efficiency, we have seen demand grow sig-nificantly to the point where our clients ask for these services. KCI is currently under contract with a state department



KCI Acquires LandAir Surveying

In August 2017 KCI acquired Lan-dAir Surveying (LAS), a Georgia-based consulting firm that is a recognized leader in utilization of advanced tech-nology. LandAir offers a complete range of surveying services, with a unique spe-cialization in terrestrial laser scanning and transportation surveying.

LandAir’s staff of 27 now offers an array of geospatial services, including aerial mapping, helicopter and fixed wing LiDAR (Light Detection and Ranging), terrestrial laser scanning, drone data capture, aerial photography, building information modeling (BIM) and virtual construction services.

With regards to the acquisition, LAS was already well-established in the mar-ketplace, was well-equipped, and already employed many highly-trained surveyors and technicians. Their team had already completed the R&D on the technologies, such as analyzing different software and equipment, and confirmed both their ef-fectiveness and profitability. As a firm with an established reputation in the field, LAS offered KCI a foundation with which to expand this segment of our business.

EBJ: Have you performed other recent technology investments that have had or will have a great impact in the com-pany?

KCI: Several years ago, participants in KCI’s Emerging Leaders Program pro-posed creation of an Innovation Incubator (i2) that would be used to fund develop-ment of innovation and technologies with-in the firm. This annual competition en-courages employees of all levels to submit ideas for funding. This ‘Shark Tank’ type program has given technological champi-ons the ability to advance their passions and ideas in several key areas, including machine learning, building information management systems, etc.

Our Director of Innovation and Tech-nology, Tom Sprehe, oversees the i2 proj-ects and ensures that a business case is fulfilled during their development. Some of the projects involve improvements to


KCI: The timing fit into our strategic plan for geographic expansion. In addi-tion, embracing new technology is critical to increasing both our technical expertise and our ability to efficiently deliver higher quality projects to our clients.

EBJ: Change and integration is always challenging. Can you describe the ap-proach that you took while integrating LAS?

KCI: We had begun to utilize laser scanning and drones in-house before LAS joined the firm. Immediately following the acquisition, we began to integrate the tech-nology throughout the company, which is an on-going evolutionary process. For instance, recently, we created a company-wide ‘Drone Community’, led by LandAir staff, to standardize procedures and share knowledge and drone resources across all technical practices.

As part of our integration plan, manag-ers had to address several challenges:

• proper use and operation of un-manned aerial vehicles (UAVs), includ-ing training and licensing drone pilots

• standardizing the use of 3-D models and associated software

• managing large datasets.Each involved a learning process that

was then improved as we scaled the tech-nology up to the corporate level.

EBJ: You have in-house personnel de-voted to technology related R&D, cor-rect? Why did it make sense to acquire LAS instead of generating your own technologies?

KCI: KCI utilizes both organic growth and acquisition strategies to improve and add new technologies. In 2017, KCI es-tablished a formal innovation and technol-ogy program to adopt and develop new technologies for future business develop-ment. As part of this process, we created a new position – Director of Innovation and Technology – to lead R&D efforts and monetize successful initiatives.

of transportation to survey intersections for the documentation and improvement of Americans with Disabilities Act (ADA) compliance. By using laser scanning, we were able to reduce required manpower, deliver the work three times as fast as con-ventional methods, and provide more de-tailed information – a point cloud of each location. This improvement in service led the client to assign the firm another two years of work.

EBJ: Has the acquisition had an impact in KCI’s overall profits?

KCI: Yes. The acquisition of LandAir and implementing their technological approaches has directly lead to increased profitability in our Southeast and South Atlantic Region Survey Practices, which doubled their budget during the 2018 calendar year. Demonstrating how these technologies enhance our current work has also led directly to additional backlog with existing clients.

EBJ: What was the main reason for this acquisition? What opportunities did KCI see prior to the acquisition? How have you been able to complement the services that you provide with these new technologies?

KCI: LandAir was a nationally recog-nized industry leader in the use of mobile and terrestrial laser scanners for detailed data collection and development of exist-ing condition models (BIM), and they had pioneered application of drone technology for safe, efficient and accurate acquisition of aerial photogrammetry. KCI has been working to embrace laser scanning and 3-D modeling organically for several years prior to the acquisition; however, deployment of aerial drones for photography was rela-tively new for the firm. The LandAir team has helped KCI educate our project leaders on the benefits of these new technologies, introduce them to our diverse client base, and incorporate them into virtually every aspect of our business. From the design of structures such as bridges and buildings to inspecting utilities to performing natural resource assessments, the technologies that we’ve acquired have improved our service offerings and will continue to do so as we expand their use throughout KCI.



internal processes, such as project tracking databases, and others involve adaptation of new technologies to our profession. Ex-amples include development and applica-tion of artificial intelligence and machine learning to utility surveys, and evaluation of new geophysical technologies to detect and map subsurface utilities and other underground anomalies. Development of new technology often includes creating or adapting software applications to facilitate data handling and analysis.

Outside of the i2 program, KCI con-tinues to adapt to and welcome new tech-nologies and methodologies that allow our team to better serve our clients. These instances can be need-driven, accelerating the research, development and application timeline in order to deliver a required so-lution. Recently, KCI engineers incorpo-rated mixed or augmented reality, using a Microsoft Hololens, to develop 3-D BIM models for a utility substation. Conversely, our construction management team iden-tified the need for a mobile e-construction suite and worked with our geospatial solu-tions and application development staff to create a mobile field services application, a cloud-based solution to improve construc-tion management and inspection work-flows and documentation.

EBJ: What are other key technology solutions that KCI provides?

KCI: In addition to those technolo-gies mentioned previously (laser scanning, BIM, drones, machine learning, e-con-struction, and mixed reality), the multi-discipline KCI team offers our clients an array of technology-based services; includ-ing geographic information systems; geo-spatial solutions; mobile, desktop and web application development; and asset man-agement, which are delivered through-out our various geographies and markets. Modeling, engineering and construction of natural resources, process engineering of water and wastewater treatment systems, design of sustainable buildings and elec-tric vehicle infrastructure are other great examples of our technical service offerings.

EBJ: How does KCI differentiate from competitors from the technology stand-point?

KCI: We have always been a leader and early adopter in the creative implementa-tion of technology, and we invest in our employees’ development of skills necessary to implement new technologies. Often, the greatest opportunities exist in combin-ing technologies such as aerial drones and LiDAR. We look to connect the dots in order to offer more value to our clients and better meet their needs.

EBJ: Will you consider acquiring addi-tional technology related companies?

KCI: Absolutely! As technology ad-vances across the spectrum of our services, we are always investigating growth oppor-tunities that complement our existing lines of business, or offer new areas of expan-sion. We continue to invest in preparation to support autonomous transportation and the expansion of electric vehicles, so that we will be ready to provide the ser-vices needed into the future. Infrastructure resiliency as a remediation strategy for cli-mate change is another area of focus, and we are actively seeking out both technolo-gies and firms that can help us meet those needs.

EBJ: How is technology shaping our industry? What trends have you noticed in the following areas:

1) SOFTWARESoftware applications have become

standard tools in the toolbox, and we are actively partnering with software develop-ers, as well as developing in-house solu-tions that create internal efficiencies and support client requirements. Big data will continue to drive the need for cloud-based information management, as well as ap-plications to facilitate processing large amounts of data efficiently.

2) DRONESThough unmanned aerial vehicles

(UAVs) are becoming the standard in our industry for both LiDAR and documen-tation, other unmanned remote sensing technologies, such as hyper-spectral and thermal imagery are being added to the payload to enhance the use of the plat-form. Aquatic and underwater drones are becoming increasingly used in water qual-ity monitoring, security applications and

condition inspection.

3) CYBERSECURITYOur increasing dependence upon com-

puters in the face of malicious threats de-mands that we keep cybersecurity as a top priority. Our clients are starting to dictate data handling practices and procedures to which we must adhere.

4) ROBOTIC PROCESS AUTOMATION (RPA)

We believe that RPA along with artifi-cial intelligence (AI) will reduce the depen-dence upon repetitive manual processing.

EBJ: How do you think that tech services M&A is driving growth in the environmental industry?

KCI: The ever increasing focus on sus-tainable solutions, protection of the envi-ronment and the intensifying effects of cli-mate change are generating more demand for technological improvements in moni-toring and modeling of environmental sys-tems. As a driver of efficiency and added value, the increasing use of technology is a natural component of growth in the envi-ronmental industry.

Acquisitions, like that of LAS, offer specialized firms who have initiated and/or completed the detailed R&D phases, and only seek the capital and infrastructure needed to advance their innovations into the broader market.

EBJ: Are you currently using technol-ogy as a way of diversifying KCI’s rev-enue streams into a more recurring or subscription-based revenue as opposed to the traditional project based, “time for money” model?

KCI: We are not doing that currently, for a number of reasons. We are watching the marketplace, and expect that new tech-nological innovations will commoditize data handling and management services so that subscription-based revenue works. Our current service business model in-volves adding value through our experience and intelligence. A positive value proposi-tion allows a client to feel comfortable that they’ve made a good deal, regardless of the revenue model for the consultant.



GHD LAUNCHES GHD ADVISORY AND THEN GHD DIGITAL TO PROVIDE A ‘DIGITAL EDGE’ TO ITS EXISTING SERVICES

Celebrating 90 years in 2018, GHD operates across five continents - Asia, Australia, Eu-rope, North and South America - and the Pacific region. The company has a presence across nearly all US states and Canadian provinces, with more than 130 offices with 4000 employees in North America, out of a total workforce of 10,000 people around the world. Revenues for the 2018 financial year grew to $1.5 billion, an increase of 12 percent on the prior year. GHD clients include a variety of private industries, crossing multiple business sectors, as well as public sector organizations. Both, GHD Digital and GHD Advisory businesses have expanded into North America to meet the needs of clients who value GHD’s technical strengths and ability to plan for the future. Responses to the Q&A are:

Iver Skavdal, North American General Manager – USA, is a civil engineer with more than 35 years of experience. Based in Santa Rosa, CA, he is responsible for GHD’s operations in the USA. He is also a member of GHD’s global Board.

Kristen Todtz, Associate and Senior Environmental Scientist, leads GHD’s award-winning Visualization Services team in North America. Based in Waterloo, Ontario, Canada, she has more than 20 years of experience in quantitative 3D hydrogeologic site evaluation and charac-terization, data management and litigation support.

EBJ: GHD has had tremendous growth over the last four years. What has been your strategy and how have you been able to achieve such a great result?

Skavdal: Our focus on organic growth with selective acquisitions has more than doubled revenues over the past four years. Thanks to successful diversification, even though our company was established in Australia, today we generate 57 percent of revenues from other regions: North Amer-ica, Asia Pacific, and Europe and Middle East.

Our goal is to be an industry leader in client service. This means we are always listening and evolving our services in re-sponse to the rapidly changing needs of our clients.

GHD is fully employee-owned, with more than 25 percent of people being ma-terial owners of the business. This culture of employee ownership helps us attract and retain outstanding professionals who are highly motivated to serve our clients, deliver projects, and pursue new opportu-nities.

EBJ: GHD has received various awards related to workplace equality. What has been your main focus? What are the changes that you have made to the com-

pany’s culture over the past five years that have had a great impact?

Skavdal: Diversity is a powerful driver of innovation and will be more important than ever if we are to be adaptive to the unpredictable consequences of disruption. Clients are looking for people who chal-lenge the norm and who can apply new tools to solve problems across a variety of market sectors. This is why we want our teams to have diversity of thought, back-ground and experience.

While our approach has been tailored to each region where we operate, our fo-cus areas have included: enhancing gender equality, cultural diversity, LGBTI inclu-sion and flexible working.

Three of our eight global Board Direc-tors are women, reflecting growing num-bers of women in senior leadership posi-tions overall.

We are particularly proud of the prog-ress we have made with flexible working, empowering our people to have an open conversation with their manager about work arrangements, provided they are still meeting the needs of our business and our clients.

EBJ: How is technology changing the

way that GHD operates?

Skavdal: Technology changes mean we need to constantly update our skillsets, workflows and delivery models to create more value for our clients.

New technologies will progressively automate some processes and tasks that people currently perform, while enabling our employees to focus on more complex or strategic tasks that add more value.

We are transitioning from a way of do-ing business which is defined by process and familiarity to one defined by change and new opportunities. Helping our peo-ple to develop new skills that will allow them to stay relevant and in demand is a very high priority for our leaders.

EBJ: GHD has a Digital team with over 500 technology professionals. Can you tell us more about it?

Skavdal: Launched in February 2018, GHD Digital is a distinct brand extension and service, recognizing the importance of digital technologies in consulting.

In addition to providing a ‘digital edge’ to our existing services – such as data ana-lytics, interactive maps and dashboards or immersive augmented reality experiences – we are also advising our clients on how they can change their business in response to digital disruption.

GHD Digital services also include cy-bersecurity and risk, digital strategy and transformation, smart technology and in-novation. GHD Digital teams are located globally.

EBJ: What are some of the new or most innovative environmental technology solutions that GHD provides?

Todtz: How we deliver and engage with our clients is rapidly changing in this age of disruption. GHD provides in-house cutting-edge technologies and services to our clients, who are eagerly seeking out innovative digital technologies to help streamline and transform their business.

Some of our technology solutions in-clude:

• 3D/4D interactive data-driven visu-alization models



Integrate geologic modeling with geo-statistical analysis, 3D features and visu-alization tools to develop 3D Conceptual Site Models (CSMs) that provide new in-sights into contaminated site conditions.

• Mixed Reality (via Hololens)/Aug-mented Reality/Virtual Reality

Creating immersive experiences for cli-ents and stakeholders, so they can explore a contaminated site or train for a chemical spill.

• Camera Tracking UAV Technology Camera tracking is new cutting-edge

digital solution which merges UAV with 3D data-driven visualization modeling. We are able to combine UAV footage with other data to give clients unprecedented insights into their assets.

• Custom Interactive Model (Gaming) Development

State-of-the-art 3D modelling creation with a custom interface platform, which provides our client with an interactive game-like experience of their current site conditions or proposed redevelopment plan. This is an innovative digital solution for decision makers when they can visual-ize a finished project before investment is approved.

• GHDs AR PopUp App Available in the Apple App Store, oue

AR PopUp is a new innovative digital plat-form to help engage and communicate 3D models with our clients. The AR PopUp provides endless possibilities for delivering, training and learning opportunities.

EBJ: GHD operates in various regions of the world. Do you use technology differently in different regions? What is the reason behind it? Can you provide some examples?

Skavdal: We aim to operate as a truly connected global network. Wherever pos-sible, we try to apply experience or capa-bilities we have developed in one region to all markets in which we operate. For example, we have developed a standard-ized approach to decommissioning large industrial assets in the USA, which we are now applying to projects in Australia and the UK. Each year we host a number of

Technical Conferences in cities around the world, which bring together our people from different offices and disciplines – this is a unique approach to sharing knowledge and experience.

EBJ: What are some outstanding projects in which GHD has used these technologies? (please provide a descrip-tion of each project and how technol-ogy facilitated its execution)

• Industrial SiteGHD’s client requested help for their

industrial facility. Even though more than USD30 million had already been spent on investigation and remediation, the regu-lator was asking for millions of dollars in additional environmental investigation ac-tivities, as they were unable to understand key chemical sources and transport char-acteristics at the site due to its subsurface complexity.

To help the regulator and all stake-holders gain a better understanding of the complex hydrogeologic conditions and contaminant distribution at the site, we

GHD Reports 12% Growth in 2018; Launches GHD DigitalGHD reported 12% growth in for the financial year ending June 2018 to $1.9

billion Australian or about $1.5 billion, driven by of strong demand for infrastruc-ture investment in the Australian market and the Asia Pacific region. Geographic diversification was also highlighted as a driver in the firm’s annual report, with 57% of revenue generated outside of Australia in North America (46%), the Asia Pacific (7%), Europe and the Middle East (4%).

In March 2018 GHD launched GHD Advisory in North America, including services that “go beyond traditional engineering” including: asset management; in-frastructure investment and economics; and risk, assurance and regulation. Roop Lutchman, who leads the business in North America, said: “Our North American clients are looking for someone who sees the big picture, not only across the whole life cycle of an asset, but across all their portfolios of assets…. We are extending our services across the entire life cycle of our clients’ projects; from the beginning of the asset’s life cycle, when a project is planned, designed and constructed, through its operations and maintenance, and ultimately to decommissioning, closure and capital recycling.”

In February 2018 GHD launched GHD Digital to: plan and develop digital strat-egy; execute the delivery of digital transformation; and monitor, benchmark and evaluate the health of digital investments for its clients. Global Digital Leader, Kumar Parakala, said GHD is “helping our clients with their digital business transformation priorities. Everywhere, people’s lives are changed by digital technologies combined with new business models, zero cost of computing and internet; and everyday there are exciting new opportunities for organisations to redefine their survival and growth strategies with new developments in water, energy and resources, property and build-ings and many services industries…. GHD Digital is progressively launching in key geographies across the globe and establishing key partnerships to provide holistic digital transformation solutions to clients… the Digital team has expanded to more than 100 people locally in 12 months, with more growth to come.”

CEO Ashley Wright said the two new groups have already had an impact on GHD performance: “GHD Advisory and our new digital business have exceeded expectations as we transform the ways that we work and create value for our clients.”

Fully employee-owned, GHD has completed 24 acquisitions in Australia and an equivalent amount elsewhere. North American acquisitions include: Conestoga-Rovers and Associates in 2014, Stearns & Wheler, Winzler & Kelly, Omni-Means, Commonwealth Engineering & Technology, RobsonWoese, Rosewater Engineering, Arizona Engineering Company, CSA Engineering, Protection Engineering Group, Mississauga and Kitchener, Carlton Engineering and The Sernas Group.



developed a 3D digital technology solu-tion, incorporating conceptual illustra-tion & animations, 3D/4D data-driven interactive models, camera tracking UAV technology, and mixed reality (Hololens). This helped the client demonstrate to the regulator that the site was adequately char-acterized, saving millions in additional in-vestigation activities.

• Emergency ResponseGHD helped a client develop a ‘virtual

classroom’ for emergency response using Augmented Reality (AR) for mock sce-nario HazMat training programs and AR PopUp app (iOS devices). This innovative program allows HazMat officers to educate first responders how to safely respond to train derailments and spills with hazardous goods reducing training costs and enabling the training to be done in a safe and secure environment.

EBJ: How does GHD differentiate from competitors from the technology standpoint?

Skavdal: Individual technologies are changing at a rapid pace. What’s more im-portant to us is the underlying culture we are creating, where we empower our peo-ple to question, innovate and engage with clients at a high level to help them achieve success. It’s this mindset that enables us to compete effectively and in turn develop multiple new technologies.

EBJ: In which areas of the world do you see that there is more environmental technology advancement?

Skavdal: While different countries may have different regulatory or client needs, the environmental industry is global. New technologies or solutions can emerge from anywhere, and can be localized for the spe-cific requirements of particular clients or regulators.

EBJ: Are new regulations arising due to this technological? How are these regulations different in various regions of the world?

Todtz: One trend we are seeing in USA and Canada is the EPA and other regulat-ing agencies are now requesting innova-tive digital technologies to be used in the development of a site’s Conceptual Site Model (CSM) to aid with communica-tion, project decision making and strate-gic planning for remedial activities. The use of data-driven visualization models in CSMs has proven invaluable in addressing the key site questions and communicating the answers, as well as providing insights into site conditions that are often not obvi-ous using less rigorous techniques. GHD has advanced in-house digital capabilities which means we don’t need to sub-con-tract this work out.

EBJ: What technology companies have you acquired recently and what are the technologies that these companies have brought to GHD?

Skavdal: The VR Space transaction oc-curred in 2016 and the team is now fully part of GHD Digital. There are no other recent technology acquisitions.

EBI continues its Environmental Industry

Summit series with...

Environmental Industry Summit XVII, March 21-

22, 2019; Coronado Island Marriott, Coronado CA

EBI’s signature event with 170+ executives in attendance

Pacific Northwest Environmental Industry

Summit IV, July 2019Washington Athletic Club,

Seattle WA

An interactive conference on why the Pacific Northwest continues to be a strong market for the

environmental industry with an mix of national and local players

presented by EBJ, Northwest Environmental Business Council, and 2020 Environmental Group

EBI Fall Strategy Summit V, November, 2019

HAK Conference Center, Washington DC

Presented by Environmental Business International and co-

hosted by Hunton Andrews Kurth LLP, EBI’s annual Policy & Politics

Summit delivers an insider’s perspective on elections, agencies,

policy directives, programs, bills and budgets for 2019-2020

New England Environmental Industry

Summit IVDecember 2019, Boston

An 1-day conference focused on the New England environmental industry with an mix of national

and regional players presented by EBJ and Environmental Business

Council of New England

GHD Gross Revenues ($AUS mil), 2012-2017

Source: GHD annual review

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500

1000

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TETRA TECH INVESTS IN AVIATION TECHNOLOGY SOLUTIONS WITH BRIDGENET AND DIGITAL DESIGN TOOLS WITH NDY

Tetra Tech is a leading provider of consulting and engineering services with $3 billion in annual revenue. As a global company that leads with science, Tetra Tech provides innovative so-lutions focused on water, environment, infrastructure, resource management, energy, and inter-national development. Tetra Tech identifies technical solutions that are tailored to their clients' needs and resources. Their solutions may span the entire life cycle of consulting and engineering projects and include applied science, data analytics, research, engineering design, construction management, and operations and maintenance. They work on projects around the world and currently have more than 17,000 associates in 400 offices.

Olivier Jeannot, leads Tetra Tech’s aerospace and information technology group and is re-sponsible for developing the overall strategy and vision for the aerospace group, including Brid-geNet, A Tetra Tech Company.

Paul Dunholter is the founder and president of BridgeNet, a Tetra Tech Company. Mr. Dunholter is responsible for the day-to-day operations of BridgeNet, which specializes in the design, implementation, and management of airport noise abatement programs; airport envi-ronmental issues; and customized software solutions for the aviation industry.

Frank Italia is a digital engineering specialist at NDY, also a Tetra Tech Company, and is responsible for adoption of new technologies with a focus on building information modelling (BIM) and design automation.

Tetra Tech Acquires Bridgenet

In January 2018, Tetra Tech Inc. acquired Bridgenet International Inc. (BridgeNet), an aviation tech-nology solutions firm based in New-port Beach, California, that is focused on aerospace data analytics, environ-mental and acoustic consulting, and 3-dimensional airspace visualization for federal and commercial aviation customers.

BridgeNet develops, sells, and supports its proprietary software, Volans, a web-based 3-dimensional application designed to create, evalu-ate and display flight operations. This tool enables engineers and aviation experts to simulate and display po-tential acoustic and environmental impacts from new performance-based navigation procedures and flight operations, as well as runway and airfield configurations. Volans is being used throughout the world, including in the United States, Can-ada, Australia, France and England.

EBJ: How is aerial data acquisition shaping the environmental industry? What impact is it having in operations, data services, etc.?

Tetra Tech: As air travel grows expo-nentially across the globe, smarter, more efficient, and larger airports are needed to meet that demand. Collecting and manag-ing aerial data is critical for airports and air navigation service providers (ANSPs) to understand the environmental impact of the growing aviation activity, including noise impacts. Understanding noise im-pacts is useful for airports’ relations with their local communities and required by the Federal Aviation Administration (FAA) before any airspace changes are considered. The FAA and ANSPs around the world require flight track data for use in calcu-lating noise exposure in a given area. This includes storing information about aircraft types, speed, and thrust and documenting the latitude, longitude, and altitude of ev-ery takeoff and landing. Firms that can ac-cess various forms of flight track data feeds and collect, process, store, and manage this prodigious amount of data are poised to be leaders in providing accurate and verifiable environmental solutions for noise, CO2

emissions, and fuel usage throughout the industry.

Aerial data is critical for airports and air navigation

service providers (ANSPs) to understand the environmental impact of the growing aviation

activity.

EBJ: You acquired BridgeNet about a year ago. Can you give us some back-ground on the technologies that you acquired through BridgeNet?

Tetra Tech: BridgeNet developed the VolansTM tool to optimize flight proce-dure planning (takeoffs and landings at airports) and assist in minimizing noise impacts in the community. BridgeNet also is a leader in 3-dimensional (3D) airspace visualization, using Volans to consolidate aviation, air traffic, and environmental im-pact data to create a one-of-a-kind visual-ization software tool used by airports and

Air Navigation Service Providers (ANSPs) such as the FAA.

BridgeNet develops and deploys inno-vative management and technology solu-tions that address complex aircraft noise and airspace issues for airports and air traf-fic organizations. With nearly two decades of experience and in-house developed soft-ware solutions, the company identifies and solves problems using a diagnostic process that mitigates political, community, and technical concerns and builds consensus for ideas and solutions.

BridgeNet is an industry leader in air-port environmental studies, flight proce-dures modeling, and uses hardware and software technologies to measure, analyze, and understand acoustic issues in airports and other industries. This technology has been used all over the world to provide consulting, support services, and airspace visualization for airports, government agencies, and partners. The technology supports our customers’ need to visual-



ize and communicate an understanding of complex navigation solutions and air traffic patterns, and the impact to com-munities, government officials, and other stakeholders.


Tetra Tech: Airports around the world are transitioning to Performance Based Navigation (PBN), giving them the ability to harness modern GPS technologies for more efficient use of the airport—includ-ing more on-time arrivals, better aircraft spacing, higher capacity, better fuel effi-ciency, and reduced CO2 emissions. This need is growing every year. The demand to understand PBN, manage the environ-mental impacts, and visually communicate PBN air space change is high due to the changing technological landscape and gov-ernmental compliance requirements.

Volans is used to evaluate the acous-tic and environmental impacts from new PBN procedures as well as new runways and airfield configurations, displaying noise impacts using various acoustic pa-rameters. Government agencies and air-ports such as London Heathrow and Gat-wick airports, the FAA, NavCanada, and Air Service Australia, have used the Volans 3D depiction to easily explain complex in-formation to stakeholders.

EBJ: What was the main reason for this acquisition? What opportunities did Tetra Tech see prior to the acquisition?

Tetra Tech: Our company’s aerospace management and information technology group supports the federal government, international, and commercial sectors. Tetra Tech is a world leader in Performance Based Navigation (PBN) and navigation systems support. Acquiring BridgeNet was a logical addition to our aerospace practice to assist our customers by pro-viding full lifecycle aviation services from airspace and ground support to environ-mental and aviation demand modeling, forecasting, and visualization worldwide. BridgeNet provided a valuable addition to Tetra Tech’s air navigation services: high-end, 3D visualization and animation of air

traffic, combined with environmental and acoustic expertise that benefits our clients.

EBJ: Change and integration is always challenging. How have you been able to complement the services that you provide with these new technologies? What type of training did you provide to Tetra Tech’s personnel regarding the new technology?

Tetra Tech: BridgeNet has trained key Tetra Tech personnel on the use of Brid-geNet’s Volans software, both for active FAA and international projects and mar-keting. BridgeNet’s technologies have meshed perfectly with Tetra Tech’s airspace design work and Performance Based Navi-gation (PBN) expertise. BridgeNet’s con-tracts with air navigation service providers (ANSPs) such as NavCanada and airports such as London Heathrow and London Gatwick are opening doors for Tetra Tech to expand into air space design in those re-gions. Recently we held a Volans industry day with key BridgeNet and Tetra Tech staff, Volans users, and industry experts to discuss user experiences and the future of Volans. This free, one-day event provided an opportunity to meet with leaders in air-space and flight procedure design, PBN, aviation environmental analysis, and air traffic noise outreach and education and training. During the event, BridgeNet presented and discussed innovative ways to streamline and modernize all aspects of these fields with the cutting-edge, visually impactful Volans technology.

EBJ: Do you have in-house personnel devoted to technology related R&D? Why did it make sense to acquire Brid-geNet instead of generating your own technologies?

Tetra Tech: Our company has many software experts that work across multiple sectors, including air navigation and air space planning. However, we lacked the expertise in 3D visualization, environmen-tal impact of flight procedures, acoustics, and direct work for airports. BridgeNet had all the necessary expertise and software tools to fill this gap to meet immediate cus-tomer needs. The BridgeNet acquisition aligned with Tetra Tech’s strategic goals to increase its position with its existing FAA

client, increase aviation domestic and in-ternational commercial sales, and increase service capability offerings through 3D vi-sualization of aircraft noise and acoustics.

EBJ: Have you performed other recent technology investments that have had or will have a great impact in the com-pany? How long will it take for these investments to mature?

Tetra Tech: In 2018 Tetra Tech acquired Norman Disney & Young (NDY) to ex-pand the Company’s global sustainable in-frastructure design and high-performance buildings practice. NDY provides high-end designs for infrastructure and facilities to minimize energy use, recycle waste, and capture and reuse water. Sustainable design is a key differentiator for Tetra Tech in the high-performance buildings market, and NDY aligned very well with the Compa-ny’s expertise in water and environmental management.

NDY created a digital Design Tools package used by engineers and design per-sonnel that improves the accuracy of the final design and accelerates any modifica-tion throughout the design process. En-gineers virtually mark-up PDFs of design drawings, and the mark-up elements and associated data can be used to inform en-gineering calculations and designs. Every graphic element that the engineer places over a PDF can be leveraged for calcula-tions and design analysis in real time. This removes the inherent inefficiencies associ-ated with using multiple software pack-ages in a single design workflow and using mark-up methods that cannot be further leveraged directly by being digitized in a useful and reusable format.

Sustainable design is a key differentiator for Tetra Tech in

the high-performance buildings market... NDY provides high-end designs for infrastructure

and facilities to minimize energy use, recycle waste, and

capture and reuse water.



The NDY Design Tools package is flex-ible enough to extend beyond concept de-sign. PDFs are stored in a SQL database, and data can be extracted and used to au-tomate element creation in 3D authoring software such as Revit and repurposed as input into other third-party software such as Asset Management and other engineer-ing calculations.

NDY Design Tools is built using a games engine technology, enabling faster, real-time solutions for various calculation types commonly used in building services design, which are dependent on a digital representation of a physical environment. Our clients value the calculation speed and graphical output, along with unique user interface features.

The implementation approach used to roll out NDY Design Tools involved en-gaging engineers throughout its develop-ment and holding a series of training ses-sions supplemented with user manuals. A dedicated support and development team is in place to assist and make enhance-ments to meet the most challenging design requirements.

NDY Design Tools continues to be enhanced, and the benefits already being realized will increase as the Design Tools continues to provide value to our design-ers, clients, and project stakeholders.

Tetra Tech Gross Revenues ($mil), 2012-2018 ($mil)

Source: Tetra Tech annual reports

0

500

1000

1500

2000

2500

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3500

2012 2013 2014 2015 2016 2017 2018

International U.S commercial U.S. federal U.S. state & local

GZA’S SUPERFUND SITE PROJECTS ARE MOVING ALONG TOWARDS REMEDIATION UNDER TRUMP’S ADMINISTRATION

Don Goldberg and Bill Zoino founded GZA in 1964 as a soils and foundations specialty consultant. Since then, the company has grown from a small consulting partnership to a major multi-disciplinary, employee-owned firm that focuses on environmental, geotechnical, ecologi-cal, water, and construction management services. With a staff of more than 700 people in 31 offices in the New England, Mid-Atlantic and Great Lakes regions of the United States, GZA has completed over 100,000 projects for a wide array of public and private clients for the past 50 years and counting. GZA is an employee-owned firm with gross revenues exceeding $100 million annually.

Answers provided by Albert Ricciardelli, Senior Principal, Environmental Cores Services Lead and Chief of Client Services. Mr. Ricciardelli has a strong mix of engineering and man-agement skills to helping our clients to address their environmental remediation challenges. During his 25+ years at GZA he has assisted clients on sites across the country, from California to Maine, and under both state and federal regulatory programs. He has assisted clients in negotiating cost-effective RODs under CERCLA and has served as Project Coordinator for Superfund sites in Region 1.

The list of high priority Superfund sites put in place

by Pruitt’s administration and being carried forward

by Wheeler’s has stimulated action... moving the sites further along towards

remediation.

EBJ: How has business been for GZA over the past couple of years? What are some of the highlights of the company? What about your environmental busi-ness unit?

Ricciardelli: Business has been strong with revenue growth in all of our Core Ser-vice Areas. Infrastructure work has been particularly strong with some highlights being geotechnical services in support of the Mario Cuomo Bridge in NY as well as the Greenline Extension project in Massa-chusetts. With respect to our Environmen-tal Core Service area, our growth has been consistent though somewhat slower than for our other Core Service areas with some highlights being projects involving assess-ment and remediation of PFAS as well as more traditional CERCLA work.

The secret to our success is a coupling of our deep understanding of the regula-tions with high quality and responsive technical service to address our clients’ environmental challenges in a responsible client advocacy manner.

EBJ: What impact has the Trump ad-ministration had on your business?

Ricciardelli: Our observation is that at least on one front there has been a benefit. The list of high priority Superfund sites (i.e., Superfund Sites targeted for immedi-ate, intense action) put in place by Pruitt’s



GZA Net Revenues by Core Service Area: 2010-2018

Source: GZA 2018

administration and being carried forward by Wheeler’s has stimulated action, cutting through red tape and moving the sites fur-ther along towards remediation.

EBJ: How is technology changing the way GZA operates?

Ricciardelli: Advancements in technol-ogy are greatly increasing our efficiency and allowing the development of more sophisticated evaluations to get the most out of the data we collect. For example, 3D modelling combines many types of data to show the distribution of contaminants and the effects of a remedial system over time. As our ability to collect and process ever-growing quantities of data expands, the level of effort to develop highly desirable graphics and models is reduced, and we are able to use them on more projects. Less effort is needed for compiling and mov-ing numbers and more time can be spent evaluating information and developing so-lutions.

Technology in various forms has en-abled the project team to expand capa-bilities, more efficiently manage critical information, compress project schedules, facilitate QA/QC and collaborate more effectively with clients and stakeholders. This has been realized particularly through our major technology platforms, which in-clude ArcGIS Enterprise, Autodesk’s suite of apps and EQuIS Enterprise.

EBJ: Where do you see opportunity when it comes to emerging environ-mental technologies?

Ricciardelli: All of our service areas are affected by emerging technologies, from advances in groundwater remediation sys-tems, to civil design work, to levee inspec-tions. Improvements in collecting, inter-preting, and communicating information are changing the way we interact with each other and with our clients.

EBJ: Which are some of the new or most innovative environmental technol-ogy solutions that GZA provides?

Ricciardelli: GZA leverages Enterprise GIS and Mobile GIS, coupled with other platforms such as AutoCAD and EQuIS, as a complete information management solution throughout the project work-flow. This has proven valuable for many project types and workflows. Specifically, in our field work involving the collection of water and soils samples for remediation and monitoring, geospatial technology has streamlined the workflow for field map-ping of locations, collection of samples, managing chain-of-custody, and help-ing to make the information actionable through more effective collaboration. This has also allowed us to further leverage our investment in mobile technology and fur-ther empower our workforce while more tightly integrating the “field” with the “of-fice”.

GZA’s Recent Acquisitions (2017/2018)

Emery & Garrett Groundwater Investigations: Leading groundwa-ter consulting firm, Emery & Gar-rett Groundwater Investigations, LLC (EGGI), located in Meredith, New Hampshire, now a division of GZA, provides consulting services to mu-nicipal utilities, public water authori-ties, hospitals, universities, Fortune 500 companies, developers, and mu-nicipal, state and federal governments. Serving the State of New Hampshire and the eastern United States for the past 28 years, EGGI has been recog-nized regionally and nationally by the EPA, the United States Geologi-cal Survey (USGS), and the National Association of Groundwater Scientists and Engineers, for providing technical leadership in the field of groundwater exploration, development, and protec-tion.

Civil Dynamics: A regional leader in specialty dam engineering consult-ing, Civil Dynamics (CD), a division of GZA operates out of GZA’s Fair-field, New Jersey office and provides dam engineering, inspection and maintenance, civil engineering, con-struction phase services, and other related services for public and private water suppliers, lake communities, and hydropower clients.

Melick-Tully and Associates: Melick-Tully and Associates, P.C. (MTA), based in South Bound Brook, New Jersey, along with GZA provides clients with comprehensive geotechni-cal, environmental, ecological, water, and construction management ser-vices. MTA’s clients are among the leading builders and developers in the northeast and their client base repre-sents all sectors of the commercial, in-dustrial, retail and residential markets; schools and universities; utilities; and architects and other design profession-als.



SNC-LAVALIN CONTINUOUSLY SEEKS THE BEST DIGITAL ALLIANCES TO PROVIDE VALUE-ADDED PROPOSITIONS TO THEIR CLIENTS

Founded in 1911, SNC-Lavalin is a global fully-integrated professional services and proj-ect management company and a major player in the ownership of infrastructure. From offices around the world, SNC-Lavalin's approximately 50,000 employees provide comprehensive end-to-end project solutions – including capital investment, consulting, design, engineering, construction, sustaining capital and operations and maintenance – to clients across oil and gas, mining and metallurgy, infrastructure, clean power, nuclear and EDPM (engineering design and project management). On July 3, 2017, SNC-Lavalin acquired Atkins, one of the world’s most respected design, engineering and project management consultancies, which has been inte-grated into SNC-Lavalin’s sectors.

Donna Huey, Senior Vice President and Director, Client Technology. Ms. Huey has more than 20 years with Atkins and she chairs one of Atkins’ worldwide technical networks focused on successfully integrating digital solutions into their business operations and putting them to work for their clients. As the former business sector manager for the applied technologies group, she has gained extensive experience in consulting related to technology selection, development, and implementation focused on innovating for the engineering marketplace. She’s considered an expert in the fields of technology project management, change management, and consensus development, and has brought her particular expertise in geographic information systems to bear for numerous clients throughout the United States such as FEMA, Home Depot, Florida’s Turnpike Enterprise, and the San Diego Council of Governments, and for projects ranging from transportation pavement management systems to floodplain delineation and mapping programs.

EBJ: How has business been for SNC-Lavalin over the past couple of years? What are some of the highlights of the company?

Huey: The last couple years have been extraordinary ones at SNC-Lavalin. We continued to deliver against our strategic objectives, strengthened our business and resolved several legacy issues. We also con-cluded the biggest and most transforma-tive acquisition in our 106-year history by bringing Atkins into the SNC-Lavalin family. We completed several challenging contracts, won important projects in all our sectors and have shortlisted for a num-ber of megaprojects around the world. Our safety record continues to improve and our commitment to ethics and compliance re-mains steadfast. We completed and won major projects, made inroads in ethics and compliance, and set the stage for a better gender balance across our organization.

EBJ: Which are the key technology solutions that SNC-Lavalin provides? How is technology changing the way that SNC-Lavalin operates?

Huey: In February 2018, we developed a new corporate vision—to strive to be the premier engineering solutions partner, committed to delivering complex projects from vision to reality for a sustainable lifes-pan. Our strong focus on digital technol-ogy reflects this determination. From har-nessing the innovative power of artificial intelligence to strategic acquisitions like

DTS (see box), we’ll continue to build our digital expertise.

EBJ: How does SNC-Lavalin differenti-ate from competitors from the technol-ogy standpoint?

Huey: From digital products and tools to Internet of Things (IoT), Mobility as a Service (MaaS) and strategic digital asset management solutions, our extensive digi-tal engineering and enterprise asset man-agement capabilities enhance both our cli-ents’ and our own business performance. A lean start-up methodology allows us to rapidly incubate and test innovative ideas. We’re also pushing the boundaries through the increased use of automation on proj-ects as well as our artificial intelligence (AI) and machine learning consulting services.

A lean start-up methodology allows us to rapidly incubate

and test innovative ideas.

EBJ: You acquired Data Transfer Solu-tions LLC (DTS) a little over a year ago. Can you give us some background on the technologies that you acquired through DTS?

Huey: DTS provides three lines of business: mobile asset data collection, enterprise GIS/IT custom solutions and VUEWorks, their enterprise asset manage-ment software. We have a long history of

SNC-LAVALIN FINANCIAL HIGHLIGHTS

Source: SNC-Lavalin Annual Report (2017).



SNC-LAVALIN Acquires DTSSNC-Lavalin acquired Data Transfer Solutions LLC (DTS) for $45 million in

October 2017. The acquisition added to the capabilities of SNC-Lavalin’s Atkins sec-tor and enhance sservice offerings in digital asset management for clients.

Headquartered in Orlando, Florida, with 78 employees, DTS is a leader in as-set management and geographic information systems within the North American market. As the creator of VueWorks, a comprehensive enterprise asset management software solution, DTS provides state-of-the-art tools and solutions to clients with large, complex infrastructure assets. These solutions help to inventory, manage and optimize physical assets across their life cycle.

The acquisition of DTS is aligned with the SNC-Lavalin’s global digital strategy and recognizes the pace of technological change in the engineering and construction industry and the need to support client needs with robust digital solutions.

The strength of DTS is in our people and their ideas; clients look to us for cus-tomized solutions to solve their unique data challenges. In today’s increasingly data-driven environment, with demands for real-time information at your fingertips, DTS brings a high level of technical innovation to the SNC-Lavalin portfolio.

providing these services to the public and private sector with a strong emphasis on transportation assets. This aligns us well within SNC-Lavalin’s Atkins business in North America. The VUEWorks solution is a nationally recognized, spatially enabled asset management software that enables computerized work order management, risk analysis and cross-asset work program-ming and investment optimization.

EBJ: Can you provide an overview of the type of demand that the technolo-gies have on an industry level?

Huey: The infrastructure industry is under tremendous pressure to meet the de-mands of growing populations, particular-ly in urban areas. The demands are both in optimization and maintenance; optimizing the design, construction and operation of new infrastructure, as well as maintenance management for aging assets to maximize their life cycles. Leveraging technology to analyze large amounts of data allows us to predict asset life cycle costs and main-tenance requirements, which gives asset owners and operators the opportunity to better manage their budgets and maximize their dollars.

EBJ: Has the acquisition had an impact in SNC-Lavalin’s overall profits? How was the outcome similar or different from the projections that you made prior to the acquisition and why are they different?

Huey: DTS is a small business within the SNC-Lavalin organization with slight impacts to business profits currently, but the business trajectory remains as original-ly projected. We’re continuing to focus on effectively communicating our value prop-osition and drawing out revenue synergies.

EBJ: What was the main reason for this acquisition? What opportunities did SNC-Lavalin see prior to the acquisi-tion?

Huey: Recognizing the potential trans-formational nature of technology on the infrastructure industry, Atkins refocused its strategy in 2015 and honed in on digi-tal asset management. This centered on the immediate needs of our clients to address both aging infrastructure management and new-build infrastructure. This focus drove

SNC-Lavalin and Atkins to seek the best digital alliances to bring value-added prop-ositions to our clients. We recognized the advanced market position of DTS and be-lieved that joining the organizations would provide a powerful force in the market and enable innovative solutions for growing client needs.

EBJ: Change and integration is always challenging. How have you been able to complement the services that you provide with these new technologies? What type of training did you provide to SNC-Lavalin’s personnel regarding the new technology?

Huey: As an industry leader in asset management, geographic information systems (GIS), and transportation plan-ning, DTS provides unique services as compared to our traditional services. By joining SNC-Lavalin and Atkins’ planning and engineering expertise with DTS’s asset management and technology capability, we enhance our ability to provide state-of-the-art tools and solutions to clients with large, complex infrastructure assets. The combined strengths of our organizations enable us to accelerate the pace of delivery and help our clients respond to the increas-ing challenges of digitalization.

We have connected DTS personnel with in-house infrastructure experts to work side-by-side and increase the depth

of analysis that is possible with the tools. These hands-on experiences help further knowledge transfer internally and then to our clients.

Soon after the acquisition, integration efforts began. Monthly webinars set the stage to explore synergies among our busi-ness units and accelerate our move into the digital arena. Through these events and presentations, employees learned about the DTS menu of services and products, positioning them to kick-start discussions with clients regarding the new offering and services.


Huey: The investment was in line with the company’s strategy of expansion in dig-ital technology to enhance efficiency of our service delivery to our clients across our core sectors. SNC-Lavalin also wanted to leverage digital technologies to drive new, expanded offerings and a basis for future growth.

Our global digital strategy recognizes the pace of technological change in the engineering and construction industry and the need to support client needs with robust digital solutions. To this end, we acquired DTS to reinforce our digital as-set management services. This acquisition



complements our deep engineering exper-tise and enhances our end-to-end service offering.

EBJ: Do you have in-house personnel devoted to technology related R&D? Why did it make sense to acquire DTS instead of generating your own tech-nologies?

Huey: We have personnel both within IT as well the businesses themselves. This approach prevents technology research from being siloed among business and cli-ent needs. Technology productization at the scale and maturity of DTS, particular-ly VUEWorks, doesn’t happen overnight and industry is demanding these solutions now. The sophistication of DTS, with respect to development and selling com-mercial software products, can benefit us as we consider commercialization of other software services.


Huey: The connection between the design process and technology and the pace of change in this space is profound and represents a massive opportunity to gain competitive advantage. In addition to digital asset management, we have been exploring opportunities in areas like intel-ligent mobility, cyber security and digital engineering. We have made some signifi-cant progress.

EBJ: Will you consider acquiring additional technology related compa-nies in the near future? Which are the technologies that you believe would be of great value to your organization and your clients?

Huey: We constantly monitor technol-ogy trends to understand how they may impact our services. Like DTS, we look at our client demands and our ability to respond to those demands. We do antici-pate needs to grow as technology advances, and will use a combination of in-house tal-ent, partnerships and acquisitions to meet these demands with the latter depending on the speed required to deliver at scale. The faster the growth, the stronger the in-clination toward acquisition to meet the

demands quickly. A more moderate pace of change would allow for partnering strat-egies to take hold or internal development investment to mature.

EBJ: Are you currently using technol-ogy as a way of diversifying SNC-Lavalin’s revenue streams into a more recurring or subscription-based revenue as opposed to the traditional project based, “time for money” model?

Huey: DTS VUEWorks software puts us securely on the path of non-labor-based revenue streams. As we watch technology continue to improve design and delivery schedules, we continue collaborating with our clients on procurement models which evaluate value and outcome. For example, we are conducting pilot projects, shift-ing from a traditional time and materials model to one that is value- or subscription-based and results in shared estimated sav-ings.

EBJ: How is technology shaping our industry? What trends have you noticed in the following areas:

SOFTWAREParticularly in the design space, the

trend is toward greater inter-operability with an emphasis on data centricity. We are less focused on files and file formats and more focused on discrete data ele-ments and access to those elements from any tool, anytime from anywhere.

DRONESWe have been leveraging the use of un-

manned aerial vehicles for some time. The trends we have seen are the type of data collection enabled, as well as the post-pro-cessing speeds. Data can be processed in near real-time, and with our investments in AI, we are able to analyze the data in near real-time as well.

ROBOTIC PROCESS AUTOMATION (RPA)

We started an RPA lab in our design center in Bangalore in 2016. Since then we have completed multiple projects which have resulted in time savings ranging from 25% to 80% on various repetitive tasks across variety of applications internally and for clients. We’re seeing a trend pairing RPA with AI so that less stable processes might be automated with the machine learning how to deal with exceptions at greater levels.

SNC-LAVALIN FULL LIFE-CYCLE SERVICES

Source: SNC-Lavalin Annual Report (2017).



ERM STRIVES TO BE THE LEADING DIGITAL EHS SERVICE PROVIDER WITH THE STRONGEST DIGITAL ECOSYSTEM OF PARTNERS

ERM is a leading global provider of environmental, health, safety, risk, social and sustain-ability related services with over 5,000 consultants working in Oil & Gas, Power, Mining, Chemicals, Technology, and Manufacturing in more than 40 countries. ERM is committed to delivering digital solutions to help their clients harness the power of data and technology to achieve greater levels of EHS and operational performance. Shawn Doherty, is an Executive Director on ERM's board and also the Global Head of Digital Business and Transformation. Shawn was formerly the Chief Commercial Officer for ERM from 2009-2017.

ERM Launches NexusNexus is a new technology plat-

form designed to streamline and en-hance how it delivers projects around the world to provide faster, better and safer outcomes for its clients. Nexus by ERM helps companies achieve greater levels of EHS and operational performance, realize new value and gain critical business insights.

Since August 2018, Nexus by ERM has been utilized on numer-ous site investigation and remedia-tion projects and programs in the US, Brazil, Europe, South Africa, In-dia and Australia. For these projects, the Nexus by ERM platform builds on industry-leading software, such as Earthsoft’s EQuIS™, ESRI’s Arc-GIS™ and Microsoft™, to provide the necessary linkages to create an inte-grated digital workflow. This includes project scoping and on-site data col-lection; data management and vali-dation; delivery of progress reports, dashboards, data insights and analyt-ics; and automated reporting.

“Nexus by ERM offers a seamless way to integrate project data with business data,” says Oliver Phipps, Lead Partner, Nexus by ERM. “For site investigation and remediation, this platform enables our clients to build a robust data asset that im-proves the management of legacy sites and programs, optimizes reme-diation costs and drives more effec-tive and faster outcomes, such as exit from liability or sale of a property.”

Nexus by ERM is just one of the ways the company is helping its cli-ents harness the power of data and technology to realize new value. It is striving to be the leading digital EHS service provider in the market.

In alignment with that ambition, ERM is technology-enabling core services one by one and adding new service offerings in Digital Advisory and Data Analytics to its market lead-ing Digital Systems service.

EBJ: Congratulations on the recent launch of ERM Nexus. Can you give us some background about this new technology platform?

Doherty: ERM has used robust data management and visualization tools to de-liver our services for many years, but these have typically been project-specific.

Reflecting many discussions with our key clients, we identified the opportunity to invest in globally-consistent and config-urable approaches to collecting, managing, visualizing and reporting data, helping us deliver our services faster, better and safer and create robust data assets for our clients and a tool kit to support decision-making and stakeholder engagement.

Following Design Thinking workshops in late 2017, we brought together an in-ternational team of consultants, together with external and internal agile develop-ment resources, to develop and release the end-to-end solution for our Site Investiga-tion & Remediation service. Global de-ployment started in August 2018.

In parallel, we are making rapid prog-ress on the development of Nexus by ERM for the Due Diligence part of our Mergers & Acquisitions service line. Global deploy-ment of that functionality is planned for early 2019.

EBJ: ERM has stated that the company is “striving to be the leading digital EHS service provider in the market.” Could you give us further detail on this vision?

Doherty: For more than a decade we have had a market leading position in help-ing clients select, configure, and deploy

Environmental Management Information Systems (EMIS) to improve their EHS performance. A little over two years ago we committed to building around that core in several ways. Our execution plan included standing up the digital infrastructure we needed to innovate around big data sets that we have and that our clients want help extracting value. For this, we hired a new CIO, he built a team, and we hired outside technology support. Secondly, we picked two service lines to technology enable in an effort to make them faster or better or safer. Lastly, we have added Digital Adviso-ry and Data Analytics around the core Sys-tems work we do. In short, we have added new talent to the firm, upskilled others, and utilized technology advisors when we needed. We have also set up a team to pur-sue digital acquisitions to speed up certain elements of our digital market strategy.

EBJ: Are there any additional environ-mental technology solutions that ERM provides? How is technology changing the way that ERM operates?

Doherty: We have an existing platform called iSafetyCase which is used in our technical risk services line. Like others, we are applying UAV technology to our data collection efforts across industries and use cases. Verdantix recently named ERM a Smart Innovator as a UAV service provider.

The biggest change in the way ERM operates is around how data is perceived. Our consulting industry grew up focusing on the activity and then coping with the resultant data. Today, we begin our en-gagements with data at the forefront (i.e., how much is needed, do we already have it, how much will be one-time use, and



how much can be re-used, what is the best way to collect it).

EBJ:Tell us about the Digital Advisory and Data Analytics services that you currently provide?

Doherty: Our Digital Advisory services are centered around helping clients inno-vate in the digital world while addressing core operational challenges such as em-ployee and contractor safety, operational risk, emissions and air quality, environ-mental risks. We help clients prioritise spe-cific opportunities and build out a road-map of projects that can drive performance up, drive cost out, or reduce risk. This kind of advisory work often leads to proof-of-concept projects that we scope and assist with.

Analytics and Data Management is a significant challenge for most of our cli-ents. Most often it is not clear what data exists and how the data can be exploited to improve EHS and/or operational out-comes. Our Data Analytics services help clients extract insights from their data to solve key business challenges. For example:

• Using advanced analytics to reduce cleanup liabilities

• Using analytics for efficient onsite safety management and to understand safety maturity

• Improved utilization of audit data to help drive program improvements

• Effectively managing large data sets for GHG reporting

• Using automation and data analytics to reduce reporting burden

• Predictive analytics for risk manage-mentEBJ: How does ERM differentiate from competitors from the technology standpoint?

Doherty: ERM’s is a client-centric con-sulting firm. Our key differentiation goal is to understand the client’s context and pain points better than anyone else. We can then use our consulting skills to frame the problem or opportunity best. That framing leads to a better application of technology and data. Additionally, we have built the

strongest digital ecosystem of partners we can bring to bear on any given opportu-nity.

EBJ: Why do you believe that the envi-ronmental industry has been slow when it comes to innovation?

Doherty: In addition to EHS’ legacy of being seen by corporates to be a cost cen-ter, the regulations that drive change in the EHS world tend to move slowly, so com-panies have moved slowly. Today, we see two drivers gathering steam.

The first is that EHS is becoming a hard-core operational issue with COOs increasingly recognizing that good op-erations mean good EHS (and vice versa). While the trend isn’t entirely new, the digital drive has enabled companies to be more effective and efficient, for example by having operational staff deliver an en-vironmental compliance requirement or a safety activity – then using common data platforms to feed the EHS team.

The second is that another ‘S’ – sustain-ability – is becoming critical to investors, which is accelerating the pace of change (with CEOs now paying a lot of atten-tion!). Mainstream investors are demand-

ing that companies disclose their business risks around climate change and funda-mental performance around GHG emis-sions. Once seen as ‘soft’ environmental data are starting to be treated like ‘hard’ financial data and this means that much more rigorous methods of measurement, monitoring and reporting are being devel-oped – and technology has a critical role to play.

EBJ: Do you believe there is a lot more investment now in data collection and digital technologies?

Doherty: In certain cyclical industries (e.g., oil & gas, mining) where headcount reductions have been severe in recent years, there has been a noticeable uptick in digital innovation programs. But more generally across all industries we serve, we see strong demand to better use of data to drive performance. Better use of data means the need for better data, better sys-tems to manage the data, and better ways of collecting data. That is spawning invest-ments in software, mobile apps, wearable sensors, vehicle safety monitoring systems, remote sensing and drone technology to name a few key areas.

EBJ: Where do you see the most oppor-



tunity in regards to digital technology in the environmental industry?

Doherty: Digital is already starting to change the EHS function in leading corpo-rations. Clients that ERM serve have hired us and other external advisors to assist in preparing multiyear digital roadmaps for EHS, prepare budgetary estimates for 2019-2020, and prepare and execute spe-cific scopes of work for Proof of Concept projects. It was only a few years ago that ERM was working mostly at the intersec-tion of EHS and operations. Today, we are seeing the impact of CTOs and CIOs on direction-setting for EHS. At present, most of the strategic emphasis in our client base is around cleaning up the data mess, both in terms of finding value in the exist-ing mounds of data being collected, sort-ing out the software systems being used to organize and store the EHS data, and the integration of these EHS systems with other operations-critical systems.

The next big move we see is for clients to start leveraging data for decision mak-ing and insights through advanced Data visualizations and Data Science. There is a lot of activity (and temptation) to try things around Wearables, UAV, AR/VR, and driverless equipment/robotics. How-ever, we are seeing limitations in scale due to IT systems and digital architecture con-straints that will take time to catch up. In the meantime, there is a need to advise in-dustrial organizations build realistic busi-ness cases and execution plans for digital.

EBJ: Are certain regions of the country leading technological innovation in the environmental industry?

Doherty: We don’t see any regional variations as such. We have major digital programs underway in South America, Australia, SE Asia, Western Europe, the UK, and North America. However, we see a higher awareness and demand to apply digital technologies in the energy, chemi-cals, pharma and technology sectors.

EBJ: How is technology shaping our industry?

Doherty: Data Acquisition technologies such as Drones, Wearables, IOT sensors are now becoming mainstream in Indus-trial Operations. We are now seeing a real

demand/push to leverage these to improve EHS performance. The need for firms like ERM to staff up with data scientists and other technologists is real. Specifically we are seeing applicability of these trends in the areas of Safety, Risk, Site Remediation and even overall ESG performance.

SOFTWARE Technologies such as Cloud, Mobile

Apps and Microservices are shaping En-vironmental software. This is making the cost and speed of deployment and opera-tion of such software much more effective for clients.

DRONES We are seeing a tremendous uptake of

drones in multiple areas like Safety, In-spections, Audits, Site Investigations and more. This is primarily because Drones/UAVs can safely and efficiently gather project-specific data at a fraction of the cost compared to more traditional aerial and ground methods.

CYBERSECURITY As part of our Risk Management and

Mergers and Acquisition services we are seeing an increasing demand for Cyberse-curity and related services

WEARABLESIndustrial Wearables provide a new

stream of data and a near real-time view of worker Health and Safety and poten-tially Performance. They are also a means of sending alerts and communication to workers at the right place and the right time to improve productivity as well as worker safety.

PROCESS AUTOMATIONRobotic process automation is an area

which we are closely watching and expect a gradual uptake in 2019 and beyond.

EBJ: Are new regulations arising due to this advancement in environmental technology?

Doherty: Yes. We’re seeing this as far as drone regulations, jurisdiction specific and evolving. Software and data (privacy, con-fidentiality and security) regulations are

also emerging in this space.

EBJ: Do you have in-house personnel devoted to technology related R&D?

Doherty: We rely on our partner eco-system to learn about emerging technolo-gies. For example, we are working closely with Microsoft and the emerging cognitive technologies in the Azure stack to under-stand how these apply to safety and risk. Internally we have strong technical com-munities aligned to data and technology and it’s application across our services. Our Data Analytics and Visualization technical community is more than 200 strong.


Doherty: We have a technology road-map to invest in core business processes that make us more efficient and hence sus-tainable, gives us more flexibility in how we staff our projects around the world for cost advantage to our clients, and makes us a more attractive place to work. For com-petitive reasons, we chose not to describe those projects and initiatives today.

EBJ: Will you consider acquiring tech-nology related companies in the near future? Which are the technologies that you believe would be of great value to your organization and your clients?

Doherty: Yes we will. We have an exter-nal M&A advisor on retainer just for digi-tal/recurring revenue opportunities. We have also added a digital M&A savvy man-ager to our internal M&A team.

EBJ: What are the social consulting services that ERM provides?

Doherty: ERM offers a comprehensive range of services in the social consult-ing space including strategy and policy development, public affairs/public rela-tions, internal communications, advocacy and crisis communications, social impact assessment, resettlement and livelihood restoration, social investment planning and development of local benefit sharing packages. With growing interest in cor-porate social responsibility at both a legal and public level, managing social as well



as environmental impacts of major proj-ects and ongoing operations is an absolute necessity.

EBJ: What involvement has ERM had in climate change adaptation and resil-ience planning, design or execution and what role does IT play in those projects and will it play in future?

Doherty: ERM has worked extensively with clients over 20 years on both climate change adaptation and mitigation. In rec-ognition of our extensive and leading edge work, ERM was the sole consultant sup-porting the Task Force on Climate-related Financial Disclosure (TCFD) with the de-velopment of the Technical Supplement: The Use of Scenario Analysis in Disclosure of Climate-related Financial Risks and Opportunities. This ERM work with the TCFD codified the current standard for stress testing businesses using different sce-narios against physical and transition risks and opportunities. Assessment of mate-rial issues related to climate change frames how business can plan to be more resilient in the future.

As a result of the work with TCFD and a range of companies in various sectors, ERM has been at the leading edge of ana-lyzing how the transition and physical risks from various scenarios impact businesses. With the increasing sophistication of glob-al models, we are leveraging more data and IT than ever before to analyze results and create action plans. For example, geospa-tial science and remote sensing technology (e.g. satellite imagery, drone imagery and LiDAR and other digital elevation mod-els), are all currently being used by ERM to model current and predicted future con-ditions of companies across the globe.

With the growth of cloud comput-ing and artificial intelligence, the use of geospatial science and remote sensing to predict future conditions resulting from climate change will become more accurate and robust, allowing for smarter decision making at the individual asset level. ERM is actively developing new partnerships with satellite companies and major IT providers to use remote sensing to assess methane leaks for clients.

EFCG REFLECTS ON TECHNOLOGY TRENDS AND FORECAST SCENARIOS FOR 2019

Environmental Financial Consulting Group (EFCG) conducts a detailed annual CEO survey of environmental and infrastructure engineering/consulting companies every year in ad-vance of its October CEO conference. Below are some of the 2018 results and comments by Andreas Georgoulias, Director at EFCG. EFCG offers financial and strategic advisory, bench-marking and valuation services, annual C-level executive conferences, internal ownership tran-sition advice, and buy-side and sell-side M&A services

EBJ: We have seen some engineering consulting and construction firms acquiring information technology or software to either broaden their service platform or else to make it more ef-ficient. Do we see acquiring or own-ing specific information technologies as increasingly a differentiator and increasing an acquisition strategy in our industry?

EFCG: Indeed, our historical analysis shows that over the last 20 years, annual OPEX and CAPEX IT spending has al-most doubled from 2% of net revenue in the mid 1990s, to 3.7% today, highlight-ing that firms increasingly focus on acquir-ing or developing IT. While IT spending continues to increase, according to EF-CG’s 2018 CFO Conference survey, 77% of firms believe that IT is a differentiator to win projects. EFCG does not have histori-cal responses to this question, but it can be assumed that far fewer firms would have regarded IT as a differentiator in the past.

Today, technology generates around 0.5% to 3% of revenues, depending on firm size. Firms on average plan to double or triple that within the next five years. However, since IT is more likely to gener-ate revenues for larger firms, there seems to be an advantage with larger technology budgets. Yet, if IT does provide a competi-tive advantage for larger firms, it does not have apparent effects on relative profitabil-ity, at least so far.

Notably, firms with less than $50M of revenues were less likely to see IT as a dif-ferentiator (67%), while 100% of $1B+ revenue firms believe IT is a differentiator. It is not clear why larger firms are more likely to regard IT as a differentiator; it may be due to the greater complexity and number of projects they work on, or to cover the need for connecting employees and enabling more efficient collaboration, as larger companies have multiple offices across states, countries and continents.

EBJ: What do you believe the consen-

Annual IT Spending for A/E/C Firms

Source: EFCG annual CEO Conference Surveys; IT Spending is all costs associated with MIS, communica-tion, IT, including “data center,” data & voice connects, ERP development + support, “applications develop-ment & support,” help desk / desktop support, intranet, telephone, outside services, computer, equipment and software costs & depreciation.

5

been asking more technology related question in our other surveys. We will provide some of the highlights in the following section.

II. Information Technology: Trends and Impact

IT Spending Appears to be Increasing:Although overhead spending has held steady for the last 20+ years, annual IT2 spending (opex and capex) has nearly doubled from 2% of net revenue in in the mid-1990s, to 3.7% today, reflecting increasingly complex and costly IT systems.

Not surprisingly, rising costs are considered the top IT challenge facing a/e/c firms (per our CFO Conf.). However, we think it’s more important to focus on the return on IT spending than on the dollars of IT spend, as improved IT can make firms more efficient, protect them from cyber-attacks (the #2 IT challenge), help them win work, and increasingly, generate revenue.

IT is Becoming a Differentiator to Win Work… While IT spending is increasing, according to our CFO Conference Survey, 77% of firms believe that IT is a differentiator to win work. We don’t have historical responses to this question, but we assume far fewer firms would have seen IT as a differentiator in the past. Firms with less than $50M of revenues were a bit less likely to see IT as a differentiator (67%), while all $1B+ revenue firms believe

2 All costs associated with MIS, communication, IT, including “data center,” data & voice connects, ERP development + support, “applications development & support,” help desk / desktop support, intranet, telephone, outside services, computer, equipment and software costs & depreciation.

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

% o

f Net

Rev

enue

Annual IT2 Spending for A/E/C Firms(Median firm; per EFCG's CEO Conf. Survey Data)



sus in our industry is for the potential of advanced information technology, machine learning, artificial intelligence and similar developments in reducing employment costs, increasing produc-tivity or even metrics like revenue per employee in a consulting engineering or project management company?

EFCG: It is difficult to evaluate the po-tential long-term impacts of innovation IT on the industry. Nonetheless, in our view, the proliferation of IT could not only improve operating efficiency, but also po-tentially disrupt the industry’s economics. Two notable aspects where innovation in IT can have a significant impact include:

Economies of Scale / Reduced Margin-al Costs. A major challenge in our indus-try is that there are limited economies of scale when it comes to billable hours. An engineer work-hour costs the same regard-less of whether the engineer works for a 10-person or a 100,000-person firm. How-ever, larger firms are more likely to achieve economies of scale on overhead. Yet, if IT enables firms to develop a product and/or service with a lower marginal cost, there should be substantial economies of scale that could lead to higher profit margins, particularly for larger firms.

Human Capital: CEOs consistently re-port that finding qualified employees is a major challenge, given the perceived “war for talent.” IT could reduce the amount of routine work that engineers need to do, and may reduce the pressure firms face to find more engineers to complete projects, and free up engineers to focus on added value tasks. Yet IT might also automate and/or replace jobs, and thus there may be fewer, but perhaps better paying, jobs overall. This might ultimately help our in-dustry compete with other industries for the best technical talent.

EBJ: We have seen the environmental management information software business as generally distinctively differ-ent from the environmental consulting and engineering business and indeed the business seems to have evolved that way with companies selling software or software as a service contracts, sepa-rate from their consulting engineer-ing partners that often act as business

IT Spending Increasing As IT is a Differentiator to Win WorkAlthough data collected by EFCG indicates that overhead spending has held steady for

the last 20+ years, annual IT spending (opex and capex) has nearly doubled from 2% of net revenue in the mid-1990s, to 3.7% in 2018, reflecting increasingly complex and costly IT systems. Not surprisingly, rising costs are considered the top IT challenge facing a/e/c firms, however, EFCG thinks it’s more important to focus on the return on IT spending than on the dollars, as improved IT can make firms more efficient, protect them from cyber-attacks (the #2 IT challenge), help win work, and increasingly, generate revenue.

According to EFCG’s most recent CFO Survey, 77% of firms believe that IT is a dif-ferentiator to win work. 46% of firms reported that IT generates revenue for their firms, which distinguishes IT from the other overhead functions (i.e. finance, HR, etc.). EFCG observed a similar relationship between size of firm and reliance on IT, as 67% of the $1B+ revenue firms generate revenue from IT, but only 13% of the <$50M revenue firms generate revenue from IT.

The amount of revenue generated by IT is quite small (0.5% of each firm’s revenue at the median), but is expected to increase to 2.3% over the next 5 years. However, there are significant differences between firms, as the top decile of respondents expects that IT will generate 11% of their firms’ revenue in the next 5 years. 58% of firms reported that they prefer to acquire new IT; 37% of firms prefer to develop it internally; and 8% of firms prefer to do both. Below are some examples collected by EFCG of in-house IT that was either acquired or developed internally by a/e/c firms.

A/E/C Firm In-house Tech Technology Description

Tetra Tech Bridgenet International

Aerospace data analytics and 3D airspace visualization for aviation customers

Aurecon Studio Magnified Digital communications for infrastructure

Arcadis E2 ManageTech and SEAMS

Data and predictive analytics for water companies, energy providers, and infrastructure operators

Black & Veatch Atonix Digital Data analytics for water, oil & gas, power, renewables, smart cities, and communications

Geosyntec OptiRTC Cloud software platform that integrates sensors, forecasts, and environmental contexts to actively control stormwater infrastructure

GHD VR Space Virtual reality, visualization, and simulation

MWH Innovyze (bought by EQT)

Provider of wet infrastructure business analytics software solutions for water/wastewater utilities, gov’t agencies, and engineering firms

Poyry #PoyryDigital To help clients take advantage of Industry 4.0, Big Data, the Internet of Things, and the Automation of Engineering

Ramboll Lawly Digital service offering for the environmental and health business sectors

SNC-Lavalin Data Transfer Solutions

Digital asset management and geographic information systems for large infrastructure assets

Tetra Tech Indus Data analytics, geospatial analysis, secure infrastructure, and software applications management

WorleyParsons Digital Enterprise / Advisian Digital

To help customers build and operate dynamic and intelligent digital operations within their projects



development partners. Do you think that will continue or do you think there is interest amongst the larger global players to own and manage these digital compliance and information manage-ment platforms?

EFCG: In the last years we have seen a number of large environmental consulting firms either acquiring or developing inter-nally new IT platforms. Given that large firms in general are more likely to see IT as a differentiator in winning new work, we also expect large environmental consulting firms to focus more strongly on acquiring or developing internally new IT platforms. This was highlighted in our 2018 CFO conference, where 58% of CFOs reported that their firm has acquired or plans to acquire new IT, while 37% reported that they are developing new IT internally.

EBJ: What is the general feel for the business outlook now at the end of 2018?

EFCG: It appears that the outlook for the a/e/c industry is good, as it has been since the 2008 recession. Growth appears to be accelerating as the median internal growth rate for 2017 was 5.8%, while in the 2018 CEO survey, CEOs estimated 2018 growth at 7%. Growth projections for 2019 are similar to 2018, at 7%. Over-all, we saw a “band” of 4-6% internal growth from 2012 to 2017, while 2018 and 2019 are expected to surpass that “band”, making the a/e/c industry an at-

tractive industry for public and private equity investors looking for consistent growth. The question is whether the band is wider than expected and if this hold true going forward.

Generally, we have observed that firms often over-forecast growth rates by 1% – 2%, which might possibly mean that the actual 2018 and 2019 growth rates would be closer to the 5.8% growth that was achieved in 2017. Yet, firms reported a median backlog figure that is up 10% over the last year, which supports the stronger projections up to 2019, and suggests that the industry may finally surpass the 4% - 6% growth band that it has been “stuck” in since the last recession.

Among other factors, we believe the op-timism in the industry is driven by near record high stock prices, continued low interest rates, tax reform, including lower rates and immediate expensing of capital expenditures, and the optimistic outlook for the US economy.

EBJ: How seriously or how much un-certainty or even trepidation in man-agement teams and boards of directors is there surrounding the potential for a downturn or recession of some dura-tion?

EFCG: While the general outlook for the industry is good, we believe that reces-sionary risk should be taken into account. Considering the history of economic cy-

cles in the US, a recessionary period might be approaching, as the ongoing 9-year economic expansion is approaching the longest ever cycle, which was 10 years. Re-cently there have been some inversions of the yield curve (i.e. some short-term bonds are yielding less than longer term bonds). The past is not necessarily a predictor of the future, but it is useful in providing some perspective.

To evaluate this, in the 29th EFCG CEO Conference, the participating CEOs were asked to comment on whether they expect a recession within the next twenty-four months. The perspectives were split 50 / 50, highlighting the general uncer-tainty that there is around the timing of the next recession.

Yet, it is also important to consider that profitability in the industry over the last 22 years doubled from 6% to 12% and median internal growth has been positive every year, even during recessions. There-fore, although there always remains a le-gitimate recessionary risk that has to be taken into account, this does not necessar-ily mean that in recessionary periods inter-nal growth and profitability in the industry should be expected to decrease.

EBJ: You have often counseled firms to plan and staff for slower growth scenarios and then use contract employ-ment to fill the gap if growth is at or above average. Does this still hold true and does the still persistent challenge to find qualified personnel render this approach too difficult?

EFCG: When looking for patterns in profitability projections reported by CEOs in our annual surveys over the last years, we observe that over the last 17 years, actu-al profitability has surpassed CEO projec-tions only in three years. This means that projections are challenging, though at the same time over-forecasting can have a sub-stantial impact on performance. For exam-ple, an unanticipated revenue shortfall of 5% could lead to a profit shortfall of up to 50%. The lack of inventory in the indus-try and its thin margins make profitability very vulnerable to revenue shortfalls.

In today’s business environment we continue to counsel firms to be cautiously

Internal Historic Annual Growth in A/E/C Firms: Median

Source: EFCG 2018. Comments: AEC is a growing industry, even in recessionary times and attractive for public & private equity investors clamoring for consistent growth. Note the “band” of 4-6% internal growth from 2012 to 2017; so with 2018 and 2019 expected to be above the “band” - is the band wider than we thought? Will this hold true going forward?



optimistic, and suggest that firms do not staff for growth until projects are in hand and are prepared to cope with less revenue than they think they’ll achieve, as under-utilized staff can have a very negative im-pact on profit margins. We believe this is a viable strategy as employees can always be incentivized to be more productive, and the cost for “over working” (overtime) is lower than “under working” (undertime).

EBJ: Larger firms seemed to be back on the growth path a little bit more in the last couple of years, but seemed to be challenged by margins and profit-ability. Do you see this as a trend of any merit or is it more related to the cycles of acquisitions that the bigger players in our industry have undertaken?

EFCG: Our historical analysis shows that profitability in the a/e/c industry has increased significantly over the last 20 years, but not much over the last 10 years. Profit margins seem to be leveling off at 10%-12% without a big difference by size of firm.

In our view, this happens because de-spite strong consolidation efforts, the industry remains fragmented and com-petitive, with multiple firms providing similar services and competing on price. Therefore, even though larger firms build up strong capabilities and reputations, and

aim to consistently improve operating effi-ciency, there is a limit on how much firms can improve profit margins in a competi-tive industry.

Larger firms also focus more strongly on “growth through acquisitions” to im-prove profit margins. Yet, acquisitions of-ten lower internal growth and margins in the short term as it can be challenging to sustain or enhance growth rates while im-plementing efforts to merge and integrate large firms with diverse service offerings in a new single entity.

Larger firms are also more diversified and exposed to slower energy and min-ing markets and non-U.S. geographies that have low or negative growth rates and generally develop more slowly, thereby af-fecting profit margins and growth rates. On the other hand, smaller firms are more likely to be involved in the US, which has a very strong a/e/c market that surpasses the growth of the US national economy.

Finally, larger firms find it harder to grow fully-diversified business and sustain high margins across all business sectors in the firm. While service diversification has its benefits, some smaller, niche-firms also provide very specialized services and be-come price-setters rather than price-takers, which boosts profitability levels in specific market segments.

EBJ: Retention rates and employee turnover have been key statistics you've tracked in recent years. Is there a mean-ingful trend there?

EFCG: Retention rates are frequently among the most significant factors for en-suring sustainable long-term growth, since the key assets of a firm are its people. Re-tention rates are also consistently reported by CEOs among the top factors for suc-cessful M&As. Again, people are the key assets firms acquire in M&As, therefore, cultural fit and management retention is most important.

For employee turnover, through our historical analysis we have observed that during recessions involuntary turnover in-creases as more employees are laid off and voluntary turnover decreases as it becomes harder for employees to find other jobs. Our historical analysis shows that since 2010, voluntary turnover has been increas-ing while involuntary turnover has been decreasing, which underscores that the a/e/c industry has been in an optimistic state ever since. When we evaluate firms by ownership, we observe that over the last 12 months, public firms have higher voluntary and involuntary turnover rates than private firms. Overall, turnover is highest among publicly traded and PE-owned firms.

EBJ: Any other shift in internal man-agement metric that merits CEO or board level attention?

EFCG: We have observed a clear trend on firms increasingly getting involved with higher risk projects, yet without being paid commensurately for accepting such risks. Through our CEO survey data compiled for our 29th CEO conference in 2018, we observed that CEOs expect revenues from alternative delivery (higher risk projects) to increase in the next five years, with design-build being the most common and increas-ing. Moreover, in the 2018 CFO confer-ence, almost half of CFOs reported that their firms are doing higher risk projects today than five years ago, and expect to do higher risk projects in the next five years as compared to today. However, only half of firms reported that they get paid commen-surately for such added risk.

Overall, the industry is becoming more

Historic Profitability: Median EBIBT / Net Revenues

Source: EFCG 2018. Comments: Significant improvement over 20 years, and profit margins only decline slightly during recessions: This is a resilient industry! 2018 and 2019 profitability estimated to be higher than 12% for the first time since 1996. Why? 1) Seeing the benefits of consolidation after a few years of significant M&A activity? 2) Positive impact of taking on risky projects? (or companies that negatively impacted - out of business?) 3) Increased focus on profitability and efficiency? E.g. better cost manage-ment or able to take higher prices?



exposed to fixed-price risk, design-build projects, and construction risk, which poses challenging questions to CEOs. Risks and rewards in alternative delivery projects have to be reviewed carefully, and firms need to assess their downside expo-sure and ensure they can afford delivering such projects. Currently, there is an imbal-ance of risk and reward that poses signifi-cant threats to our industry. In fact, several firms have faced existential threats from higher risk projects and have been forced to seek acquisitions.

EBJ: Last from an acquisition stand-point we have seen valuations remain pretty high and seemingly at the top end likely to remain so. Do you agree or do you see any fluctuation in the supply and demand balance in buyers and sellers in our industry?

EFCG: Indeed, according to EFCG’s historical analysis, M&A valuations for targets (sellers) trended up from 2013 – 2015, and have been holding at near re-cord high levels. As a result, higher M&A multiples are causing some firms to think about selling, many of which otherwise would not have considered it, so we expect to see continued high levels of M&A activ-ity in the near future.

We believe that high M&A valuations are driven by several factors, including:

10-year high valuations for publicly-traded firms, who are often the most active acquirers;

low interest rates / high borrowing ca-pacity make debt financing inexpensive and along with high earnings and flex-ible underwriting standards facilitate high availability of debt financing;

and lack of internal growth for larger firms, with $1B + revenue firms that are often publicly-traded focusing on acquisi-tions to achieve growth.

EBJ: And from a small company stand-point we have to believe from a demo-graphic view that there are hundreds and possibly thousands of companies owned by small ownership groups that started business in the seventies and eighties that will likely retire or sell. Does this create some kind of bubble in

Historical Employee Turnover Analysis: Median

Source: EFCG 2018. Impact of economic sycles: during recessions, involuntary turnover increases (more employees are laid off) and voluntary turnover decreases (harder for employees to find other jobs). Since 2010, vountary turnover has been increasing, and involuntary turnover decreasing.

the market or lump in the snake, and what business strategies may squeeze this out?

EFCG: Internal ownership transi-tions (IOT) continue to be a major challenge for employee-owned firms. In fact, EFCG’s historical analysis shows that the biggest reason firms are sold is because they do not have a sufficient IOT strategy, and thus are not able to fund their transition.

Firms can develop an IOT strategy and plan an effective ownership tran-sition, through a combination of key steps:

• Focus on achieving and maintain-ing peer top quartile profitability (or at least above median).

• Encourage younger employees to buy stock (help finance it, provide consistently strong returns).

• Minimize Working Capital (both reducing AR/WIP but also maxi-mizing Payables or “free capital”) to reduce cost of growth.

• Manage internal stock valuation strategically to find the right ap-proach for your firm’s strategy.

• Use IOT Planning Tool: Capi-tal Flow Model to ensure Capital Sources cover Capital Uses.

EFCGs mission is to help Architecture, Engineering / Consulting, and Construc-tion (“A/E/C”) firms become more busi-ness and financially efficient. Founded in 1990, the Environmental Financial Consulting Group, or EFCG, is the lead-ing M&A advisory and financial consult-ing firm focused exclusively on the A/E/C industry, having completed over 150 M&A transactions and served as a finan-cial consultant to over 500 large, mid-size, and small firms. EFCG utilizes its propri-etary database of A/E/C financial, opera-tional, and compensation data as well as private M&A valuation metrics to objec-tively support its arguments and provide advice to help its clients measure, improve and ultimately “harvest” their firm’s value.

Paul Zofnass is the President of EFCG and has been a strategic and financial ad-viser to the CEOs in the A/E/C industry for the past 35 years.

Donald “Chip” Elitzer is Director of M&A and has been part of EFCG since its founding.

Andreas Georgoulias is Director of In-ternational work, joining EFCG in 2018 after collaborating with the firm since 2006.

Rebecca Zofnass is a Senior Vice Presi-dent for EFCG, focuseing on EFCG’s Financial and Strategic Consulting, with expertise in post-merger integrations, cor-porate strategy, growth strategy and orga-nizational design.



DOEHRING SAYS WATCH OUT FOR WILDCARDS ON THE ECONOMIC HORIZON

J. Doehring & Co. provides advice and counsel on business strategy and planning, leader-ship development and transition, and breakthrough operations transformation for the profes-sional services community. Company clients range from large to small, broadly-diversified to niche-specialist, around-the-block to around-the-world. Responses provided by John Doehring, Founder and Managing Principal, an accomplished speaker, author, and certified management consultant focused on the professional services markets of design, planning, environmental and construction.

EBJ: What is the general feel for the short- and long-term business outlook now at the end of 2018?

Doehring: Overall, the business of de-sign, environmental, and construction professionals (architects, engineers, sci-entists) is today quite strong. Many firms have achieved new highs in revenues and profits, and backlogs are generally flush. Moreover, as was true before the great recession, the biggest issue on the minds of most principals now is how to get the existing work done — how to hire and keep the talent necessary to sustain the business. Many environmental consulting firms — particularly those serving eco-nomically-driven markets — are also quite busy today, while those primarily focused in regulatory-driven segments have seen more uneven business performance.

Over the longer term, industry leaders are much less confident about the future. Nearly everyone has a theory about when the next recession will start — and what will kick it off. Quite a few seem con-vinced that a downturn is just around the corner and will commence in 2019.


Doehring: Yes, there are many own-ers, principals, and managers who are concerned about the year ahead, and our prospects for an economic recession. A common reason cited for this concern is inevitability — it seems to some that, from a timing perspective, we’re overdue for a downturn. On the other hand, because

the last recession was so much different — strikingly deep but relatively short, and with a very long, slow, and fragile recovery – a case can be made for a different out-look, and against the inevitability predic-tion – at least in the short run.

There are of course several potential wildcards in our economic future worthy of our continued attention. Chief among these are the nascent and potentially ongo-ing trade war with China, a serious break-down in divorce negotiations between Great Britain and the European Union, and a rapid cool down in the U.S. domes-tic real estate market — triggered by ris-ing interest rates. Continued price volatil-ity and uncertainty in the energy markets (particularly oil & gas) is also a concern, as are volatility in other resource commod-itity markets.

EBJ: What sectors do you think pose the highest concern for environmental firms: oil & gas, federal markets, prop-erty development?

Doehring: Environmental consulting firms face a trifecta economic uncertain-ty. The global oil & gas business — and its future — is really up for grabs at the moment, dependent not only on normal supply and demand parameters, but also on geopolitical uncertainty in the Middle East and in Russia, and indeed continued development and progress with greener alternative energy sources. The current U.S. administration has aggressively pur-sued a rollback of existing environmental regulations, and this is likely to continue — weakening the outlook for many Fed-eral environmental opportunities. And finally, economically-driven projects as-sociated with residential, commercial, and industrial property development are sub-

stantively exposed to any correction of the U.S. economy. Most environmental firms serve at least one of these core market sec-tors (oil & gas, commercial or industrial property development, or government) and some serve all of them. It’s hard to say with which of these we should be most concerned: All three show potential for ac-celerating weakness.

EBJ: What regions are more susceptible to downturn, and what are safer than others?

Doehring: Our surveys indicate that all regions of the domestic economy are strong, and that future prospects for new design and construction work are roughly similar in each of the U.S. geographic re-gions. With limited exceptions, most geog-raphies are today benefiting from a strong and growing private sector economy.

Some regions of the country have made political and regulatory choices that limit prospects for regulatory-driven and/or government funded environmental work. Budgets for many public-sector projects remain significantly constrained, and with an iffy outlook. Other parts of the U.S. have made nearly opposite choices, target-ing major investments and public-sector infrastructure and environmental projects. As with other dimensions of our society – America has become a tale of two places, red and blue, with opportunities and a future outlook specific to each. (Editors note: Or as EBJ policy analyst Andy Pat-erson conveys it: Blue Cites & Red States that continue to sort themselves into even stronger hues.)

As is always the case, those areas of the country which grow the fastest are usually those which fall the most, while regions with low to moderate growth also slow at a moderate pace. As one client CEO likes to put it, “it always hurts less to fall out of a basement window.”

EBJ: Management consultants have of-ten counseled firms to plan and staff for slower growth scenarios, and then use contract employment to fill the gap if growth is at or above average. Does this still hold true or does the still persistent challenge to find qualified personnel render this approach too difficult?



Doehring: Some industries have con-siderable historical experience and success with employing contract labor, and as a result this strategy seems natural. Oil & gas is a good example, where companies have long utilized contractors and consul-tants to mitigate the up-and-down cycles of the business. By contrast, many profes-sional services firms (architects, engineers, scientists) are not deeply experienced with using variable cost, contract labor. These firms have instead long preferred a more stable, lifelong employment strategy – in part a function of their need for deep tech-nical experience and expertise, and also their rather conservative, risk-averse busi-ness model. Most professional firms aren’t terribly adept at downsizing underutilized staff, or of proactively hiring new staff. (Larger organizations — many focused in engineering and/or construction — do generally employ a more flexible delivery an employment model, though many of these probably also prefer stability, experi-ence, and lower staff churn).

Market uncertainty and volatility does conceptually argue for a more flexible approach to employment, and many en-vironmental firms could ostensibly ben-efit from greater use of an independent contractor or consultant staffing model. Nevertheless, today’s extraordinarily tight and competitive labor market, along with a relatively low acumen and investment in people-related systems (recruiting, hiring, onboarding, training, performance man-agement, compensation, professional and career development) make this approach too difficult for most.

EBJ: Larger firms seemed to be back on the growth path a little bit more than the last couple of years, but seemed to be challenged by margins and profit-ability. Is this oil & gas recovery or federal recovery, or do you see this as a trend of any duration, or is it more related to the cycles of acquisitions that the bigger players in our industry have undertaken.

Doehring: While many firms report sustained business growth in the last two or three years, most also admit to contin-ued pressure on fees and margins. Profit-ability has risen across much of the con-

sulting industry over last several years, but this is largely the result of strong upward lift on firm utilization (new work has come faster than growing the team). Margin pressures from increasingly price-focused or budget-constrained clients, additional and sometimes fierce (or even bordering on stupid ‘buying business’ with low rates) competition, and low courage for asking for higher fees among project teams — altogether have resulted in less than ideal business results.

Market segments (oil & gas, power, residential real estate, industrial and com-mercial development) are themselves cycli-cal in nature, but the larger trend overlay has been continued maturity and com-moditization of the environmental space, and a resulting downward slide on scope and fees.

While many firms report sustained business growth in the last two or three years,

most also admit to continued pressure on fees and margins.

EBJ: Retention rates and employee turnover have been key statistics in recent years. Is there a meaningful trend there?

Doehring: No question, employee turnover is up — to a median rate in some surveys of 15% or more. The reason for this is simple: staffing in the U.S. today is a seller’s market. With unemployment at a near all-time low, and an economy continuing the boom and grow, most em-ployees have more opportunity, and more options, than they have had in a decade. At the same time, many professional and environmental firms have failed to fully capitalize on the opportunity to become a better and more attractive employer. By comparison, companies that have focused their strategy on building more meaning-ful and lucrative work have during this period increased their employee team en-gagement – but unfortunately, these orga-nizations are still too few. A lot more must be done to mitigate continued turmoil and

turnover in the industry. Finally, many firms report that younger, less experienced, millennial generation staff have shown less interest in commitment or long-term em-ployment with the firm, more impatience with the pace of their career development, and more willingness to move on for a bet-ter (or different) opportunity.

EBJ: We have seen some engineering consulting and construction firms acquiring information technology or software to either broaden their service platform or else to make it more ef-ficient. Do we see acquiring or own-ing specific information technologies as increasingly a differentiator and increasing an acquisition strategy in our industry?

Doehring: No question, a business with proprietary intellectual property — including information technology and/or software — is much more likely to be more valuable, and more distinctive, than a firm without. Many companies stumble into this reality, creating (for instance) a new piece of software at first for in-house use, and only then realizing that they have cre-ated an external commercial opportunity. Fewer businesses have set out to acquire new hardware or software technology as a strategic objective — though there are many more of these conversations today in board rooms and strategic planning ses-sions across the industry. A proprietary system, process, or software solution can indeed really differentiate the business be-yond the more standard and sometimes commoditized service capabilities. On the other hand, many of these new product or service offerings represent a significant departure from the firm’s core business — optimal success strategies are often quite different, and positive business results are not at all certain.

EBJ: What do you believe the consensus is in our industry for the potential of advanced information technology and machine learning and artificial intel-ligence and similar developments in reducing employment costs or increas-ing productivity, or even improving metrics like revenue per employee in a consulting & engineering or project management company?



Doehring: Predicting how develop-ments in technology and information will impact and change the environmental industry is dangerous work! Still, it does seem clear that much of the work today could be affected (and potentially im-proved) through automation, objective analysis, and machine learning. Much en-vironmental work is a mixture of higher-end, solutions-oriented analysis and cre-ative thinking — along with lower-end, and repetitive, task-oriented work (either at the desk or in the field). We believe that we’ll likely see continued deployment of both hardware and software solutions to complement (and better leverage) the en-vironmental professional – through data collection, analysis, and management, and eventually improved, more rapid, and higher quality decision making.

EBJ: Any other shift in internal man-agement metrics that merits CEO or board level attention?

Doehring: Success in the environmen-tal consulting, management, and construc-tion sector has always required a balance of strong technical expertise and appropri-ate market and business focus. Managing a professional firm isn’t easy, and it is un-likely to become any easier in the future ahead. Business owners and leaders must continue to wear multiple hats: techni-cal professional, community engagement leader, business developer, client confi-dant, team leader, business manager.

I believe that progressive, success-oriented industry leaders should channel their limited managerial focus on just a few strategically important questions: 1) who are we, what do we want, and where are we headed as a firm, 2) how do we get new work, and how do we nurture new business developers, 3) what are the keys to operational effectiveness and firm profit-ability, and what are we doing to maintain and improve business results, and 4) who will lead the organization tomorrow, in both the short and long run. That’s pretty basic management, but there it is. Happy new year.

7 MILE ADVISORS PREDICTS A MODERATE TO STRONG OUTLOOK FOR 2019

7 Mile Advisors (7MA) provides industry-focused Investment Banking & Advisory Ser-vices globally, with an emphasis on M&A and private capital transactions. Working at the nexus of the rapidly converging consulting, technology, and AEC sectors, 7MA helps their clients determine the right potential buyers for their businesses, transition ownership, raise capital, grow through acquisitions, and evaluate new markets.

Neil Churman is a Director at 7 Mile Advisors where he leads the firm’s practice in In-frastructure, Industrial, Energy, and Environmental services. He has more than 10 years of experience working with AEC and environmental firms in M&A advisory and corporate de-velopment roles.

EBJ: What is the general feel for the short- and long-term business outlook now at the end of 2018?

Churman: After a turbulent and often unpredictable 2018, the macro outlook for 2019 and beyond appears to be moderate to strong. In the near-term, macroeco-nomic fundamentals (growth, unemploy-ment, interest rates, etc.) all appear to be on reasonably solid footing. For U.S. envi-ronmental firms, we expect a positive out-look across a range of markets, including petrochemicals & processing, industrial manufacturing & consumer goods, oil & gas (particularly in the midstream), and infrastructure. Longer term, trends around energy, infrastructure, resiliency, and cli-mate change all point towards continued growth in environmental services.


Churman: I think companies always need to be ready to respond to a poten-tial downturn. Most firms in the indus-try tend to “hire fast” and “fire slow”. In most environmental businesses, costs are predominantly “people costs” and when the outlook changes, firms need to be prepared to modify their cost structure as necessary. Firms that can “flex” their staff-ing models quickly will generally fare bet-ter in a downtown environment. As far as uncertainty, I think we are observing cau-tious optimism in the near- to medium-term, with the expectation that some sec-

tors may cool, while others remain solid. Firms that can be well-diversified in their end-markets and have versatile staff that are cross-trained will be most resilient if we do hit a slide.

EBJ: What sectors do you think pose the highest concern for environmental firms?

Churman: In general, firms that have all of their eggs in just one of these baskets should be concerned. As I mentioned, di-versification is generally a sound strategy to protect against a market downturn. With that said, firms that are solely focused on upstream oil & gas development will rise and fall with global oil prices, which have been volatile.

Diversification into midstream and/or downstream operations will help O&G firms reduce the impact of commodity price volatility. Anytime there is a gov-ernment shut down in the conversation (as there is as of late December), there is cause for concern about Federal work, but for the most part, trends in the Fed-eral environmental space, particularly with customers like the DoD, USACE, NOAA, etc. suggest that there is ample long-term opportunity, but firms need to be prepared for when work “moves to the right”.

Of these three, I’d suggest that develop-ment work is subject to the greatest level of volatility, as changes in interest rates, short-term economic conditions, includ-ing at the regional or local level, can im-pact projects.

EBJ: What regions are more susceptible



more important in the industry. Firms need it to find ways to provide new and innovative solutions to their customers and in many cases, we are seeing crossover between companies traditionally in the en-gineering space or the technology space. Services like remote sensing and geospatial acquisition, big data and predictive analyt-ics, asset management, and system integra-tion are all weaving their way into clients’ programs. Firms that can bring novel and proprietary solutions to the table, that are backed by accelerators, reusable code and methodologies, or software, will be better positioned to both win work and execute on it.

EBJ: What do you believe is the con-sensus in our industry for the potential of advanced information technology, machine learning, artificial intelligence and similar developments in reducing employment costs, increasing produc-tivity, or even improving metrics like revenue per employee in a consulting & engineering or project management company?

Churman: There is no question tech-nology is already reshaping the space and could add efficiencies. I think about some of the repetitive tasks common in environmental firms – preparing permit documentation, submitting quarterly test-ing reports, working through samples and checking chain of custody. These are all tasks where there are already emerging so-lutions with technologies like robotic pro-cess automation and blockchain to help make these processes more efficient. There still needs to be a high degree of human interface and technical experience behind it, but I think firms that fail to embrace technology will fall behind.

cent divestiture of the legacy MWH Con-structors division. NV5 remains active on the acquisition front, as well. I think there is something to be said for integration and strategy formulation to take a little time to play out. I also think that in both the oil & gas and Federal environments, there is a combination of competition and margin pressures that are real. I believe that firms that are able to build long-standing repeat customer relationships, as well as get out of the model of just “selling hours” will win the profitability game in the long-run.

EBJ: Retention rates and employee turnover have been key statistics in re-cent years. Is there a meaningful trend?

Churman: The market has generally been good and as a result, a lot of folks have hopped around between firms. There is probably little more turnover than most firms would like and I know with our clients, they are generally unhappy when one of their team members leaves for sup-posedly greener pastures. I’d suggest that firms should keep tabs on their average employee tenure to see if there is a mean-ingful decline there. It’s longer-term view and if your more critical senior people are sticking around as opposed to less critical positions, then it’s less of a concern.

EBJ: We have seen some engineering consulting and construction firms acquiring information technology or software to either broaden their service platform or to make it more efficient. Do we see acquiring or owning specific information technologies as increas-ingly a differentiator and increasing an acquisition strategy in our industry?

Churman: Technology as a differen-tiator is only going to continue to become

to downturn, and what are safer than others?

Churman: Certainly, regions that lack diversification are subject to the negative impact of a downturn more than oth-ers. Being based in Houston, our region definitely feels the impact of swings in oil prices more than most, but the city has grown substantially in healthcare, manu-facturing, and technology, among others, which alleviates the impact of a downturn to a degree.

Other areas that may feel the next downturn more than others are areas that experience boom-bust cycles in their devel-opment or ones that have grown rapidly, but unsustainably.

EBJ: Management consultants have of-ten counseled firms to plan and staff for slower growth scenarios and then use contract employment to fill the gap if growth is at or above average. Does this still hold true and does the still persis-tent challenge to find qualified person-nel render this approach too difficult?

Churman: Personally, I think that con-tractors are a tool in the toolbox, but not one to be overly relied upon. At the end of the day, the most important assets in most environmental firms are their people and building a bench of strong performers is what builds long-term value.

My recommendation is that contrac-tors can make sense for non-core personnel gaps, but for critical functions and roles where long-term institutional knowledge is key, firms need to be looking at perma-nent hires.

EBJ: Larger firms seemed to be back on the growth path a little bit more than the last couple of years, but they seem to be challenged by margins and profit-ability. What are your thoughts on this?

Churman: I think some of the larger firms have been pretty ambitious in their strategies and are finally having a chance to digest some of the major acquisitions over the last few years. Jacobs has all but trans-formed between the CH2M acquisition and the divestiture of their ECR group. Stantec is still working through their ad-dition of MWH, as shown through the re-

The market has generally been good and as a result, a lot of folks have hopped around between firms. There is probably little more turnover than most firms would like and I know with our clients,

they are generally unhappy when one of their team members leaves for supposedly greener pastures.



SMALL COMPANIES REMAIN OPTIMISTIC KNOWING SOME UNCERTAINTIES ARE AHEAD

Frequent EBJ contributor Steve Gido of Rusk O’Brien Gido + Partners connected with CEOs to get their pulse on 2018. A robust national economy and strong industry fundamentals have made executives as confident as Gido can remember, but challenges loom as we enter a mature cycle phase. Respondents touched on a wide range of subjects such as how they are coping with talent shortages, sectors with the best growth prospects and guidelines on making sensible acquisitions. Rusk O’Brien Gido + Partners performs M&A and valuation services and pro-duces its own Growth & Ownership Strategies Conference every year in November in Florida.

John Brusa, Jr., P.E., President & CEO, Barton & Loguidice, Syracuse, NYGido: How has B&L’s performance fared so far in 2018?

Brusa: Performance for 2018 has been strong to date. With this trend, we are op-timistic we will meet or exceed our 2018 goals for revenue and staffing. We are defi-nitely seeing workload pick up in all mar-kets as our backlog is up more than 21% year-to-date. Many opportunities are available, but competition remains high. We continue to service our core clientele while making smart go/no-go decisions to make the best use of our resources in ex-panding markets.

Given tight labor markets for A/E pro-fessionals, have you had to change your ap-proach to hiring and retaining talent?

Like most firms, we definitely have be-come more aggressive in both the recruit-ing and retention of talent. For recruiting, we continue to advance our efforts on many different fronts including, increased internal recruiting incentives, retaining a search firm, launching a new website, and pursuit of a dedicated talent acquisi-tion position. Retention efforts have come from promoting our family culture and core values, accommodating flexible work schedules when possible, enhanced train-ing programs, and ensuring our benefit packages are competitive.

You became B&L’s President and CEO in 2017. Have there been new policies or initiatives you’ve chosen to pursue?

Brusa: In my short time as President and CEO, the focus has been on reinvest-ing in our most valuable asset, our employ-

ees. In 2017, we made significant improve-ments to our benefits package to make it more competitive in today’s market. These improvements include providing a more robust retirement savings to our employ-ees, converting to a PTO policy, and add-ing a holiday. We also invested in our fleet vehicles, which has helped with efficien-cies, and overall program savings. As we grow, we continue to look at options for the overall company structure to improve on our already high client satisfaction and allow for efficient integration of acquisi-tions.

You recently launched a brand new website look and layout. What were your goals in how you present the com-pany online?

Brusa: Since it was more than 10 years since our last website update, it was defi-nitely time for a website overhaul. The main goal was to provide a clean looking responsive website design that incorpo-rates new technology and videos to high-light B&L’s family culture, core values and technical expertise. The new site allows a simpler user experience and helps recruit top talent to the company.

B&L has made select niche acquisitions of design firms as means of growth.What do you typically look for in target firms?

Brusa: Once you analyze the initial key indicators of size, financials and market ar-eas, it really comes down to focusing on personnel, synergies, and culture. At the end of the day, both firms need to come out stronger with the merger, leading to synergistic long term growth and stability. If the overall culture and core values do not align, then the chances for long term

success are diminished. Supporting talent and resources are also considered, includ-ing how they can adapt into the team over the long term.

Al Barkouli, Ph.D., P.E. Chairman and CEO David Evans and Associates Portland, ORGido: How has DEA’s performance fared so far in 2018?

Barkouli: We are seeing very robust, organic growth and our overall perfor-mance is better than last year. Given tight labor markets for A/E professionals, have you had to change your approach to hiring and retaining talent?

Our first priority is to retain our talent. We give close attention to retention factors such as employee appreciation/recognition and sharing news of the firm’s performance and projections. As we grow, there are new opportunities for our people to develop their careers and make a difference. On the hiring side, we recently implemented an employee referral program to encour-age employees to recruit for us. Hiring has been challenging, but our in-house recruit-ing team has done a fantastic job of finding talent.

DEA works in various markets from transportation to energy to land devel-opment across offices nationally. Where have you seen the most promising op-portunities for growth?

Barkouli: Geographically, all of the markets in the western U.S. are hot. For DEA, the greatest opportunities are in the transportation market.

DEA has acquired several engineering firms over the last 5 years as a means of strategic growth. What do you typically look for in target firms?

Barkouli: The number one factor for us is cultural fit. We believe that cultural fit is essential to subsequent integration and a merger’s success. We begin by assessing whether the outlook of a firm’s top leader-ship aligns with our values and core ideolo-gy. After that, we look for a strategic fit and how a firm fits into our overall strategy.



You have been with DEA since 1988. What advice would you give young engineering professionals starting their careers today?

Barkouli: Think about how you can make a positive difference from day one. When you do something that you are pas-sionate about, it will help you enjoy life.

Chad Surprenant, P.E. President & CEO, ISG, Mankato, MNGido: How has ISG’s performance fared so far in 2018?

Surprenant: To date, 2018 is shaping up to be a fantastic year for ISG. We are up approximately 27% in revenue from 2017 year on year to date. In general, the markets we serve are trending positively. Being busy, I think we lost a little focus and tried to stretch a little on some pro-posal work early in the year. We could have fared better in that timeframe, but a market leader retreat helped right that be-fore any pain was felt, and we are back on a nice winning streak.

Given tight labor markets for A/E pro-fessionals, have you had to change your approach to hiring and retaining talent?

Surprenant: We are constantly chang-ing and evolving our hiring. We have developed a very attractive firm, strong culture, and invested heavily in market-ing and talent to tell our story better through multiple means; personal, social media, and videography to name a few. It is working. Our Talent Engagement team has a marketing background, and from that we focus heavily on staff referrals and building personal relationships. Our Hu-man Resources group is somewhat separate from Talent Engagement. The Human Resources team maintains competitive benefits and other employee welfare focus.

As a multidiscipline firm working across many services and markets, where have you seen the most promis-ing opportunities for growth?

Surprenant: ISG is located in the up-per Midwest, but we perform work na-tionwide. As a true multidiscipline firm serving many markets, we believe it is very

important to understand our geography’s core economy. From there, we provide service to those markets which keep that economic engine humming, such as food & beverage, industry, K-12 education, and agricultural drainage and then the mar-kets that are needed (public works, civic/culture, residential, etc.) to support those primary economies. Fortunately, our core economy is generally food and agriculture based, and those are always necessary.

ISG is 100% employee-owned through an ESOP. How has that been a competi-tive advantage?

Surprenant: The ESOP culture is one that we had prior to becoming one, so the transition has been very easy. Being an ESOP, and wanting to communicate its virtue has been focal in our commu-nications with current staff, prospective employees, and acquisition targets. In all three of those camps, it has been advan-tageous; current staff have great pride in what they have grown and want to stay to see where it goes, prospective employees see it as a very real retirement plan option, and acquisition targets recognize that they are going from one ownership position to another. We have been told that becoming an ESOP will amplify the current culture you have, and we believe that to be true.

You have made select acquisitions of architecture and engineering firms as means of growth? What do you typi-cally look for in target firms?

Surprenant: Since our first acquisi-tion in 2012, only 25% of our growth in staff has been through acquisition. The primary factors we look at when consider-ing an acquisition are; geography, specialty service, strength of clients, and strength of staff. We function as a single profit cen-ter firm with a decent sized geographical footprint. For example, if we are consider-ing a firm who has a specialty service and a geographic-centric business model, we know that we can take their specialty ex-pertise out to the market over a consider-ably larger footprint which allows us to in-crease their business line while being more selective in choosing the client and thus more profitable than the acquisition target was before. Just recently, we executed our first acquisition with the primary intent of

human resources. The acquisition target was a subconsultant service provider, and with ISG being a multidiscipline firm, we knew we would likely not retain their cli-ent base, but we wanted the people. Most of our growth is organic, and expansion geographically and/or acquisition is often to provide aspirational opportunities for our emerging leaders.

Jared Loos, P.E., AIA CEO, EwingCole Philadelphia, PAGido: How has EwingCole’s perfor-mance fared so far in 2018?

Loos: We have experienced a great first half of 2018 and are extremely busy and have been growing in almost every office location and market. We are experienc-ing our second year in a row of double-digit growth. We continue to see excellent project opportunities and expect to remain busy well into 2019.

Given tight labor markets for A/E pro-fessionals, have you had to change your approach to hiring and retaining talent?

Loos: We have implemented several new methods for identifying new candi-dates and some have proven to be very ef-fective. Our retention strategies continue to evolve; however, we historically main-tain very good retention metrics. We have always placed a high value on professional development and employee benefits. We have expanded our human resources team and continue to evolve this to meet the expectations of the newer (younger) work-force.

As a multi-studio design organization working across offices nationally, where have you seen the most promising op-portunities for growth?

Loos: For EwingCole, we see the most growth opportunities in the southern and western US. Nationally, our most signifi-cant growth is in the Science and Technol-ogy market, although we have also seen regional growth in our other core sectors such as Healthcare and Academics. We are continually assessing these opportunities; however, it comes down to servicing our national clients in the locations and the in-dustries they require.



What are the biggest concerns your clients face today?

Loos: This varies widely by market sec-tor and by client. One consistent theme is prioritizing needs, so they make the right long-term decisions for their facilities while limiting upfront expenditures. This decision-making process can be somewhat paralyzing for some organizations.

How can the architecture profession better convey its value in terms of dif-ferentiation, acumen and fees?

Loos: First, I think as an industry, we need to exercise a bit more self-control and discipline. We are all too quick to adjust fees, or pursue opportunities with selec-tion processes that may not be in our over-all best interest. We have seen that turning down certain opportunities has focused the attention of some of our clients in a positive way. It also creates an opening for a candid dialogue of where we can provide the most value. It’s simpler than anyone wants to make it. Find clients who value quality of service – and then provide it – consistently.

Chris Solomon, PLS President & CEO SAM LLC, Austin, TXGido: How has SAM’s performance fared so far in 2018?

Solomon: I am pleased to note that our performance to date is very positive. We have surpassed our revenue plan for the first half of the year by 10% and compared to the same period in 2017, we experi-enced year-over-year growth by 30%. Our strong performance is driven by the de-velopment and expansion of our core end markets. We currently have the best bal-ance of market diversification in the com-pany’s history. We remain optimistic we will meet or exceed our 2018 revenue goals and continue to see strengthening of the business through the successful execution of our strategic initiatives.

Given tight labor markets for surveying and engineering professionals, have you had to change your approach to hiring and retaining talent?

Solomon: The unemployment rate has

been low for quite some time, so we have had to get creative and explore new ways to attract and build our talent pipeline. Our social media campaign allows us to share our company’s culture, core values and branding to prospective candidates. Through this initiative, our employees are more engaged, and we continue to build brand ambassadors internally, while gain-ing brand recognition, externally. We have also implemented new programs such as SAM’s Veteran Hiring Program, to share our career opportunities with Veterans who are transitioning to civilian roles. We expanded our University Relations & Internship program, along with our high school STEM initiative; giving the next generation of engineering and surveying professionals the opportunity to explore jobs and roles within our firm and indus-try. Our people are what make us success-ful, so it is important to retain them by continuing to provide best-in-class benefit programs and more importantly, opportu-nities to grow in their careers. This year, we invested in our learning and develop-ment program by hiring an L&D Manager whose primary focus is to build internal training programs so that employees de-velop the necessary skills and competencies needed to be successful in the career paths they wish to pursue.

As a multidiscipline organization work-ing across various client sectors and offices nationally, where have you seen the most promising opportunities for growth?

Solomon: In late 2016, we acquired So-Deep, Inc. to advance our east coast ex-pansion as part of our three-year strategic plan. This move provided an extended ser-vice offering (SUE), geographic footprint and client base; through which we have been able to leverage our complete suite of services in this region. Last month we acquired Nobles Consulting Group, Inc. (NCG). The acquisition of talent and ser-vice capability across both of these organi-zations is unparalleled, and is allowing us the opportunity to meet our clients’ needs like never before.

New technologies have radically changed surveying tools and techniques over the last 5 years. How does SAM

stay on the forefront of these develop-ments?

Solomon: Providing best-in-class de-liverables as efficiently as possible to our clients is one of the keys to our success, and staying on the forefront of technology advancements is central in achieving this. We also believe that putting the most ad-vanced tools in the hands of our employees enables them to find more efficient ways of performing their tasks, and the approach also fosters a higher level of employee en-gagement. We continually work to build deep relationships with technology pro-viders in our industry in order to try and understand what the next generation of technology might look like and when it will be available.

We also attend industry and technol-ogy related conferences and perform large amounts of research to understand what new advancements are being developed and how we can best implement them. Ad-ditionally, we have a group of great em-ployees in our Applied Technology De-partment who work and partner with the rest of the company to find, develop, and deploy the latest in hardware and software solutions along with improved workflows in order to maintain our position as a tech-nology leader in our industry.

You mentioned your acquisition of NGC, a surveying and mapping firm in Florida – how does their team help ad-vance SAM’s strategic expansion goals?

Solomon: We are very excited about the career and business opportunities this relationship brings for both the NCG and SAM Teams. NCG’s reputation in the Southeast is second to none, and Allen Nobles’ investment in industry education, staff, and technology has set the bar high. NCG’s team is well- respected and consid-ered by the land surveying profession to be one of the best in the State of Florida. Their great reputation will be leveraged to deliver our full suite of services to their existing client base, and expand our geographical presence through the many untapped and under-marketed clients/opportunities that exist in the Southeast. Both firms share similar core values and cultures, and we look forward to what the future holds for the team.

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Mile Advisors (7MA) 37

Advisian Digital 31

Arcadis 31

Atkins 24

Atonix Digital 31

Aurecon 31

Barton & Loguidice 39

Bridgenet International Inc 20

Civil Dynamics 23

Data Transfer Solutions LLC 25

David Evans and Associates 39

E2 ManageTech 31

Emery & Garrett Groundwater Investigations 23

Environmental Financial Consulting Group (EFCG) 30, 34

ERM 28

EwingCole 40

Geosyntec 31

GHD 17, 31

GZA 22

ISG 40

J. Doehring & Co. 35

KCI 14

LandAir Surveying 15

Lawly 31

Melick-Tully and Associates: 23

NDY 20

Norman Disney & Young 21

NV5 Global Inc. 11

OptiRTC 31

Poyry 31

Ramboll 31

Rusk O’Brien Gido + Partners 39

SAM LLC 41

SEAMS 31

Skyscene LLC 11

SNC-Lavalin 24, 25, 31

Studio Magnified 31

Tetra Tech Inc. 20

WorleyParsons 31

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