U.S. Private Market Opportunities - Shift Your Paradigm

Gregory Beckstrom – American Engineering Testing, Inc.Keven McCook – Dodge Data & Analytics

Don Sherman - ACEC

May 21, 2015

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Purpose and Learning Objectives

The webinar will provide participants with insight, processes, and a toolbox to win Private Sector opportunities through:

· Understanding A/E/C market trends· Determining your firm’s match to private

market client needs· Providing guidance on how to win work

efficiently and effectively.

Headlines Tell the Story of an Unprecedented Market Shift

U.S. Private Sector Construction Spending Exceeds $700 Billion Annually

Private Sector A/E Spending nearly 2.5 x Public sector

Top 500 Design Firms’ Private Sector Revenue Reaches $73 Billion

So, How Do You Shift Your Paradigm to Private Markets?

Does it Feel Like a Puzzle?

https://www.youtube.com/watch?v=UK2Gia8HtE8

How to Shift Your Paradigm to Private Markets

1. Understand the Market Trends2. Determine your firm’s capability to pursue and win

work3. Apply a portfolio approach to prioritizing and

managing opportunities4. Implement “campaign to contract” capture planning5. Be logical and efficient

How to Shift Your Paradigm to Private Markets

1. Understand the Market Trends2. Determine your firm’s capability to pursue and win

work3. Apply a portfolio approach to prioritizing and

managing opportunities4. Implement “campaign to contract” capture planning5. Be logical and efficient

Understanding the Market Shift to the Private Sector

Pub-lic

31%

Pri-vate 69%

Bldgs & Develop.

21%

Power 10%

Water/ Waste 18%

Transport. 21%

Indus-trial & Petro-leum 30%

2015 ENR 500 Firm U.S. Revenue = $92B

Sectors Markets

ACEC Member Firms Post 27% Revenue & 8% Market Share

Growth

2013 2014 2015

62.166

71.2

28.1 26.721.2

ENR 500 Total Revenue Comparison

ACEC Member Firms Non-Member Firms$ Billion

2013 2014 2015

35.538.2

45.1

2426.7

21.2

ENR 500 Top Design Firm Comparison

ACEC Member Firms Non-Member Firms$ Billion

2013 – 2015: ACEC Member Firms Post

27% Revenue & 6% Private Market Growth

Private Market Sector Growth of ACEC Member Firms

Growth0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

Buildings/Land Dev.ManufacturingPowerIndustrial/Petroleum

23%Bldg/

Land Dev.

53%Ind./

Petrol.40%

Power31%Mfg.

U.S. Private vs. Public Construction Spending

($B)

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

PrivatePublic

Billion

Private

Public

U.S. Construction Starts Forecast

A/E Work Precedes Construction by 12-24+ months

U.S. Construction Starts Growth by Project Type: 2015-2019

$ Billion

Project Type

Bldg/

LD (P

ri)

Tran

spor

tatio

n

Power

/Ene

rgy

Bldg/

LD (P

ub)

Mfg

/Indu

st

Resid

(M-F

)

Wat

er/W

aste

0

50

100

150

200

250

20152016201720182019

U.S. Construction Starts by Project Type: 2016-2018

Strongest growth anticipated in buildings/development, P3 transportation, and manufacturing

How to Shift Your Paradigm to Private Markets

1. Understand the Market Trends2. Determine your firm’s capability to pursue and win

work3. Apply a portfolio approach to prioritizing and

managing opportunities4. Implement “campaign to contract” capture planning5. Be logical and efficient

Successful Marketing and Sales Programs Plan the Work, and Work the

Plan

ACEC Offers Tools to Determine Your Firm’s Match to Private Market Client

Needs Business Development Capability – Assess:

Firm’s BD culture Strategic plans and goals Capability to serve target markets Client development and relationship building Marketing management and BD support Opportunity assessment and management Campaigns to contracts – capture planning Skill, resources, and processes gaps

Implement - Plan to fill gaps and maximize marketing and sales efficiency and effectiveness

Private Sector Clients Differ from Public Agencies

Process is not driven by government regulations Rules may be less rigid (or harder to identify) Information may not be public Lead time may be shorter May be easier (or harder) to get in When they trust you access may be easier Cost may be more important (or the only criteria)

But one fact is the same: “When all things are equal, clients hire friendsAnd when they are not equal, they still hire friends”..

How to Shift Your Paradigm to Private Markets

1. Understand the Market Trends2. Determine your firm’s capability to pursue and win

work3. Apply a portfolio approach to prioritizing and

managing opportunities4. Implement “campaign to contract” capture planning5. Be logical and efficient

Templates and guidance are provided for: Market assessment Client identification and profiling Lead and Opportunity identification Opportunity portfolio assessment and

tracking Pursuit plan and resource requirement Decision-maker motivators and

relationship building Activity responsibilities and milestones Revenue and backlog forecasting

ACEC Opportunity Management Toolbox Prioritizes BD Activities

Take a “big picture view” of your world Understand and appreciate the culture and its people Identify universe of potential clients Profile potential clients Understand what business they are in and what

services they may need Know the competition and your differentiators Implement client development plans

Minnesota Example - Market Assessment and Client Development

Take a “Big Picture View" of Your World

Take a “Big Picture View" of Your World -

General Layout of the State

Take a “Big Picture View" of Your World – Minnesota’s Top Export Markets

Take a “Big Picture View" of Your World – Exports by Major Product

Understand and Appreciate the Culture – Minneapolis, City of Lakes

Understand and Appreciate the Culture - Minneapolis at a Glance

Metro population - 3,395,300 Major industries - Financial services, technology,

biomedical, retail Gross metro product - $204.7 B Median household income - $67,976 Median home price - $193,600 Unemployment - 4.4% Job growth (2013) - 2% Cost of living - 1.6% below national average College attainment - 39.5% Net migration (2013) - 2,210

Source: City of Minneapolis / www.minneapolis.org

Understand and Appreciate the Culture - Accolades

The “Miracle of Minneapolis”, Atlantic Magazine Ranked as one the 10 best cities in the USA Ranked as the 6th most attractive city Ranked 3rd among top 50 bike-friendly cities Ranked 3rd as most livable city in the USA Ranked 2nd in American Fitness Index Scored among ‘most innovative cities in America’ Ranked 3rd best city for recent college graduates Ranked 11th for best places to start a business

Understand and Appreciate the Culture - Famous People Born in

Minnesota Andrews Sisters James Arness Warren Burger Bob Dylan F. Scott Fitzgerald Judy Garland J. Paul Getty Josh Hartnett Garrison Keillor Jessica Lang

John Madden Joe Mauer Mayo Brothers Prince Charles Schultz Vince Vaughn Lindsey Vonn Jesse Ventura

Client and Market Information Sources are Readily Available Online

Google Maps Wikipedia City of Minneapolis’s Convention and Visitors Bureau Minneapolis and St. Paul Business Journal Engineering News Record Magazine CBRE Federal Reserve Bank, 9th District Forbes Magazine Fortune Magazine Facebook for the “Who Even Lives Here?” image Greater Minneapolis/St. Paul Chamber of Commerce Minneapolis Chamber of Commerce/Meet Minneapolis City of Minneapolis – Community Planning and Economic Development 50States.com Minnesota Department of Employment and Economic Development Atlantic Magazine

Identify the Universe of Potential Clients - Fortune 500 Companies

United Health* Target* Best Buy* CHS* Supervalu 3M Company* U.S. Bancorp General Mills Medtronic

Land O’ Lakes Ecolab C.H. Robinson Ameriprise Financial Xcel Energy Mosaic Company Hormel Foods Thrivent Financial St. Jude Medical

* = Also on Fortune Global List 2014

Identify the Universe Of Potential Clients - Largest Employers

Mayo Clinic Target Delta Airlines Allina Health Wal-Mart Stores Wells Fargo Fairview Health Services UnitedHealth Best Buy 3M Company

Health Partners U.S. Bancorp Essentia Health Park Nicollet Health

Services Supervalu Hormel Foods Thompson Reuters Medtronic

ENR, November 10, 2014, p 53 - 63

Identify the Universe Of Potential Clients - Top Owners Headquartered in

Minnesota

Xcel Energy (Power) Mosaic Company (Mining) Target (Retail) 3M Company (Diversified

Ind.) General Mills (Food) Medtronic (Medical

Device) Allete Inc. (Power)

Ecolab (Chemicals) Ottertail Power (Power) Life Time Fitness

(Recreation) Fastenal (Industrial) H.B. Fuller (Chemicals) Hormel Foods (Food)

Identify the Universe Of Potential Clients - Minneapolis’s Largest

Employers Target - 13,000 Wells Fargo - 7,000 HCMC - 5,800 Hennepin County - 5,200 Ameriprise Financial - 5,000 U.S. Bancorp - 3,400 City of Minneapolis - 1,800 Xcel Energy - 1,600

RBC Wealth Mgmt. - 1,300 Capella University - 1,200 Star Tribune - 1,100 TCF Bank - 1,100 Federal Reserve Bank -

1,000 Thrivent Financial - 1,000 AT&T - 745

Profile Potential Clients – Top Private Employers

Cargill - $135 B, agribusiness & trading, 143,000 employees Carlson Companies -$4.4 B, hotels, travel, 51,000 employees Holiday Companies - $4.15 B, convenience stores, 6,000

employees Rosen’s Diversified - $3.6 B, agribusiness, 4,000 employees Schwan Food - $3.2 B, food, 15,000 employees Andersen Windows - $2.3 B windows & doors. 9,000

employees MA Mortenson - $2.24 B, construction. 2,500 employees

Maintain Client Profile Summaries for Prospective Clients

ENR, November 10, 2014, p 46 - 50

CONSTRUCTION IN PROGRESS

Mosaic - $1.5B Target - $840m General Mills - $600m 3M Company - $770m Life Time Fitness - $160m

CAPITAL EXPENDITURES

Target Xcel Energy 3M Company United Health Group

Understand What Services They May Need - Construction and Capital Expenditures

Understand Your Competition and Differentiators - MN Engineering Firms

SEH - $43m Barr - $41m Bolton & Menk - $38m AECOM - $32m SRF Consulting - $28m AET - $25m HDR - $25m Amec Foster Wheeler -

$25m TKDA - $25m Stantec - $23m

Wenck - $22m CH2MHill - $21m WSB & Associates - $20m Braun Intertec - $19m Ulteig Engineers - $18m HGA - $18m LHB - $16m Dunham - $16m Machaud Cooley Erickson

- $15m VAA - $12m

In State billings. Total actual billings for some firms is much higher.

Online Services Offer Highly Detailed Market and Opportunity Information

MN Construction Forecast by Dodge Data & Analytics

Minnesota Construction Trends by Project Type: 2016-2018

MN Construction Forecast by Dodge Data & Analytics

Client Development Plans Focus on Building Relationships and Identifying

Opportunities

Typical activities include:• Joining client professional and trade associations• Involvement in community activities – sports, civic,

social, charitable organizations, etc.• Online information gathering from client website,

SEC 10K filings, social media feeds, etc. • Subscribing to online market and business

intelligence services such as Dun & Bradstreet, Hoovers, AiHit, and Dodge Data & Analytics

As Decision-makers and Influencers are Identified, Add Them to the Client

Profile

Dodge Network Offers Early Opportunity and Client Contact Information

Dashboard summarizes opportunity information

Dodge Network Offers Early Opportunity and Client Contact Information

Detailed project and contact information are provided

As Opportunities are Identified, Add Them to the Client Profile

Opportunity Tracking Provides Basis for Prioritizing BD Activities and

Resources

Portfolio “Net Probability” is an indicator of BD program success: ≤ 25% poor; 30-40% ok; ≥ 50% good

54%

How to Shift Your Paradigm to Private Markets

1. Understand the Market Trends2. Determine your firm’s capability to pursue and win

work3. Apply a portfolio approach to prioritizing and

managing opportunities4. Implement “campaign to contract” capture planning5. Be logical and efficient

Capture Planning Provides a Proven “Campaign to Contract”

ProcessWin rates are significantly increased by:• Understanding how you will be

asked to compete• Knowing your client and your

competition• Building relationships and trust• Identifying and communicating

your unique value proposition• Providing an efficient and

effective framework for winning work

Proactive Capture Planning is Key to Winning Clients and

Projects

“Creative” pursuits win. Reactive pursuits lose

Robust Pursuits “Reverse Engineer” the Win

Capture Planning is an Iterative Process

Throughout a Pursuit, Regularly Revisit the “Go/No-Go” Decision

Basic go/no-go questions: Is the opportunity “real”? Do “we” (the firm) want it? Can we win it? If we win it, can we do it? If we do it, can we make a profit, without

significant risk? When we finish, will the client be satisfied?

You must be able to say yes to all questions!

Conclusion - Shift Your Paradigm to Private Markets

By:1. Understanding the Market Trends2. Determining your firm’s capability to pursue and

win work3. Applying a portfolio approach to prioritizing and

managing opportunities4. Implementing “campaign to contract” capture

planning5. Being logical and efficient

Questions? How to Shift Your Paradigm to

Private MarketsBy:1. Understanding the market trends2. Determining your firm’s capability to pursue and

win work3. Applying a portfolio approach to prioritizing and

managing opportunities4. Implementing “campaign to contract” capture

planning5. Being logical and efficient

Thank You!