By Tom Knight & Bruce Toro, P.E.
Canadian engineering firms are faced with a need to offer a broad range of skills to clients, skills that are possibly beyond their in-house capabilities. At the same time, to retain and develop their...
Canadian engineering firms are faced with a need to offer a broad range of skills to clients, skills that are possibly beyond their in-house capabilities. At the same time, to retain and develop their employees, they must offer their staff challenging and interesting work, and the ability to build their skills. A joint venture with a U.S. firm may be part of the answer.
An example of a successful joint venture has been UMA’s partnership with California-based Holmes & Narver (a member of the AECOM group of companies) on part of Toronto’s Lester B. Pearson International Airport Terminal Development Project.
The joint venture, called the Greater Toronto Airport Groundside Association (GTAGA), has been operating since 1998.
As lead engineer, GTAGA is responsible directly to the Greater Toronto Airport Authority for the design of all groundside facilities and infrastructure, other than the new terminal building. The work involves transportation matters outside the areas used by the aircraft, and includes roads, bridges and a large parking structure. It also involves designing utilities related to the groundside work such as sewer, water and gas infrastructure, power and communications, and roadway lighting and signals.
Although UMA (the head office is in Vancouver) had many of the skills needed for this project, it lacked experience in projects of this magnitude, and of this specific type. Due in part to the enormous size of the American marketplace, more U.S. firms have experience in such large, complex projects. Therefore, for UMA, forming an alliance with a partner which had these complementary skills was the best strategy to help it win the business.
Holmes & Narver of California had experience in airports, particularly in the recent expansion of the San Francisco International Airport. UMA provided the partnership with road, bridge and utility engineering skills and the necessary local knowledge.
This article talks about the advantages of cross-border partnerships, pitfalls to avoid, and some success factors based on this real-world example.
Advantages of joining forces
Some of the advantages with regards to international partnerships include:
The Canadian firm can confidently bid for projects for which it may have limited direct experience.
When the project is completed, the firm can use this experience as leverage to gain similar business in Canada and elsewhere.
The U.S. firm can be more competitive in the Canadian marketplace because it does not need to send a large number of staff to work on the project; it can rely on the Canadian firm for many of the staff requirements. In this case, the U.S. firm sent only a handful of consultants with specific aviation experience.
Partnerships add value to clients. The clients receive superior engineering expertise and only have one point of contact who accepts responsibility for the process, rather than having to deal with two or more firms individually.
Cultural and procedural differences between any two groups can lead to conflict and slow down the work. In this case, UMA and Holmes & Narver set up a completely separate office that has its own management, and has developed its own culture and ways of working.
Compensation issues. Having two people doing the same work, for different pay, could cause conflict. It was important to address these issues early in the process, and the decision was made to default to UMA’s usual compensation package for work done on the airport project.
Communications issues. It is also important to agree on communication practices and reporting structures. These were decided upon in agreements made early in the process.
Laying the foundations
One of the first questions a firm’s management should ask when evaluating a potential strategic alliance partner is: “Will they help us win the business?” Considerations include whether the potential partner is known to the client and has a good reputation in the industry. In the Pearson Airport project, UMA knew that Holmes & Narver’s experience in similar airport projects would be attractive to the client. The next step is determining whether there is a good fit between the two firms. This is important because a major part of success will be due to positive chemistry between the partners. Senior management and all members of the alliance team will have to work closely together, so having common business values and corporate cultures is vital.
To find out if this shared culture was the case, senior management at UMA and Holmes & Narver discussed what, for them, defined business success. They agreed that the highest measure of success is a satisfied client. Both firms wanted to make a profit on the work, but understood that it should not come at the expense of client satisfaction. This may seem obvious, but this measure of success can be hard to maintain on a project that is so long-term.
Establishing ground rules early in the process is vital, and should be captured in a legally binding alliance agreement. The document should include standard legal boilerplate clauses common to such agreements, but the bulk of it should be made up of guidelines on how the two parties will conduct business and be accountable to the client. Because employees tend to look for senior management to set the tone for the organization’s culture, our agreement included a “charter” that management must “walk the talk” to create a harmonious and successful business environment.
Having a professional facilitator is a good way to develop an agreement that benefits both parties. As part of this process, UMA and Holmes & Narver brought their key management members together for a two-day team-building session, led by the facilitator. This was valuable because even though the two management groups worked well together from the beginning, third-party involvement added a professional perspective that would not be perceived as favouring one firm over the other.
Moulding a team
Ongoing sessions with the facilitator helped deal with any conflicts or problems in the early stages of the relationship before they became serious. Facilitated sessions involving a wider range of employees urged all of the staff to take any concerns and problems to their supervisors, rather than to complain to colleagues. These sessions supported the goal of focusing on expected behaviours, rather than on individual personalities.
Past experience with long-term strategic alliances has shown that when people can work together in a single workplace, the project moves along better. For this project, we set up a separate GTAGA office that could house all the employees involved. In a shared space any conflicts that occur are just those common to any similar work environment — without the added burden of having to deal as much with inter-firm issues. And by creating a separate work environment and culture, we ensured that the project became the main focus of attention. During the lifetime of the project, alliance members have come to align themselves more closely with the project team than they do with the parent firm they come from.
Working under one roof has meant that it is both easier, and more appropriate, to have one computer system. Today’s technology standardization has meant that this is now a relatively straightforward process, with most engineering firms now using AutoCAD or Microstation, and the same scheduling and planning tools. From a practical point of view, with engineering software specified by the client, technology issues facing a joint venture are really no different from those presented by any new client.
Having a single combined workspace has facilitated one of the goals of the strategic alliance — knowledge transfer. Alliances such as this offer professionals a chance to work with very senior practitioners with skills in a highly specific area. They can learn from the best. This project, for example, allowed UMA’s people a chance to gain significant experience in aviation matters, including groundside master planning and facilities.
Projects such as the Pearson airport co
me along only rarely in any one person’s career, so this has been a wonderful opportunity for all professionals involved. Knowledge transfer that is cross-border also allows for exposure to different methodologies, legal systems and professional standards. Moreover, UMA has found that offering the chance to work with a well-known U.S. firm has been an advantage in recruiting highly skilled engineers from the limited pool available.
Meeting employee career aspirations was a major consideration in setting up the alliance. Because the joint venture office is operated virtually as a stand-alone operation, equal treatment is given to both firms’ employees when vacancies occur. By drawing up an agreement that provided opportunities to employees on a non-preferential basis, the two firms were able to retain key people on the project and reduce the potential for conflicts that can come from a joint project. GTAGA’s parent firms also encourage employees to pursue further opportunities within either firm after a position’s requirements are fulfilled.
Canadian engineers are increasingly interested in competing on a global scale. To some extent, they are being pushed into competing worldwide by international firms competing for the existing business here in Canada. An international alliance can give Canadian firms the leverage they need to bid on larger projects in other countries, either as an individual firm, or as part of another joint venture.CCE
Tom Knight is vice president and manager of UMA’s Ontario region, based in Mississauga, Ont. Bruce Toro, P.E., is vice president of Holmes & Narver Infrastructure, based in Los Angeles, California.
Editor’s footnote: a recent survey of 86 architectural and engineering firms by PSMJ Resources in Newton, MA found that 14% were currently in strategic alliances. Of these, 81% were pursuing work of a specific type, 63% were pursuing specific clients, 63% were pursuing individual projects, and 56% were pursuing work in a particular geographic region.
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