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Looking Forward, A/E/C Trends to 2020By Gina A. Bedoya, FSMPS, CPSM, and Michael McCann, CPSM

In our previous article, we looked back at the last decade to see what forecasted trends occurred and which didn’t and why. What we discovered is the waves that wash over our society and marketplace in general also impact many specific workings of the A/E/C industry. And while our industry, which has best practices established over centuries and millennia, is often slow moving, modern technologies have had a dramatic impact over the past decade causing changes at a much faster pace than in the past.

Now, we tackle the hard part: looking forward. Forecasting is a combination of art and science. There will be events—in politics, the economy, and culture—that we cannot even anticipate and that will throw off all our assumptions. However, forecasting is a critical element to strategic and market planning, and a necessary part of managing a firm and its marketing efforts. For this article, we canvassed members of SMPS for their take on what will influence where we are going over the next 10 years.

editor’s Note: The second of a two-part series that began in the February 2010 issue, this article looks at trends forecast for the next decade.

RESEARch:

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Marketer/June 2010

“China will surpass the United States by 2018 and become the largest construction market.”

thE EconomY And mArkEtplAcEThe Recession and Its AftermathWill the recent recession have a long-term impact? For the most part, our respondents said no. The economy goes through cycles, and this recession will be no different than past recessions, except that it will be a little longer and deeper. But this opinion was not universal among members we surveyed.

Thomas E. Smith, Jr., AICP, FSMPS, CPSM, president of BonnaTerra Consulting and National President of SMPS, believes the recession will make firms more diligent in making sure projects have financing, and more firms will be either merging or acquired by larger organizations. Where the impact will be most obvious is in the mindset of principals and soon-to-be principals who previously had only managed through good times. The lesson that the economy can tank quickly and dramatically will influence future strategies and business planning.

The National MarketplaceCurrently, the industry is focused on three market sectors: healthcare, education, and government. There are some obvi-ous reasons why these markets are the ones to target now. Baby Boomers have an increasing need for senior-age treatment; existing healthcare facilities are looking to expand and/or add new facilities. As David Golab, director of marketing of Superstructures Engi-neers + Architects, points out, “Boomers are still getting older—that is the big market.…” Additionally, healthcare facilities now demand space for a variety of complex functions. In the education market, with outdated facilities, population shifts, and competition among schools including charter schools, communities are making investments in new school buildings. As for the government, projects are on the rise as stimulus funds create opportunities for remodeling and new construction. Government agencies at all levels also are looking to improve their energy consumption, especially in older buildings, thus creating a need to renovate existing facilities. Finally, the government is looking to improve aging water and transportation systems.

The discussions of high-speed rail are starting to take shape through master plans and grassroots movements such as the push given by the High-Speed Rail Association.

Looking further into the future, with an upturn in the economy leading into stabilization, we once again will witness opportunities in what have been dormant markets such as commercial, retail, and residential sectors.

The International MarketplaceGlobally, China and India are forecast to become two of the three major markets, along with the USA. The trend to focus away from the developed nations to the developing nations will continue to grow. According to the “Global Construction 2020” forecast from the Global Construction Perspectives and Oxford Economics of the UK, by 2018 China will surpass the United States to become

the largest construction market. By the end of the decade, India will surpass Japan as the world’s third largest market.

While the United States’ share of the world market is forecast to decline only slightly from 17.4 to 16.9 %, other developed nations (such as Japan, Germany, UK) will see more precipitous drops in their global market share. Brazil, with the boost from the 2014 World Cup and 2016 Olympics, is also forecast to experience dramatic gains.

For A/E/C firms pursuing international work, the impact of these shifts includes the increased importance of diversity and cultural awareness in the composition of staff. As Maribel Castillo, director of corporate communications for T.Y. Lin International, observes, “Most A/E/C firms do not have a plan for working in other countries.” This plan must include marketing, human resources, financial, and technology elements.

thE mArkEting fUnctionTechnology and TechniquesAs technology becomes more sophisticated, it presents new opportunities and challenges for marketing professional services. Maribel Castillo says, “Technology, such as social media tools, is making the marketing of professional services broader and instantaneous. Instead of reaching out to one person at a time, these tools allow you to reach a larger portion of your network more often and more quickly.”

Firm owners are aware of and expect marketers to embrace the opportunities presented by new technologies—or bring in specialists to help. Emily Haughey, director of marketing at ConTech Restoration & Construction, cites her firm as an example: “We’ve made several investments in digital and social media marketing. We created a new company Web site with a blog and share tools. We filmed our progress on a nine-month project where we partnered with our vendors and suppliers to leverage budget and reach for the filming, and we created a project-specific Web site to highlight our partnership on the project. These platforms enable us to create dynamic, branded e-mail campaigns.”

Volunteerism is increasing in popularity in the design and construction community, with firms encouraging and supporting staff participation in the community. Firms raise their visibility in the community when their employees represent them on projects such as Habitat for Humanity, Adopt a Highway, Earth Week, and events to raise money for medical research. Firms also participate by sponsoring events or donating event t-shirts or giveaways that list the firm as an event supporter. These volunteering efforts are captured by the marketer through photos, articles, and recognitions

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and then publicized through online media channels. Volunteerism improves employee morale and positions the firm and its staff as community-oriented good citizens.

Marketers and the Marketing DepartmentWe predict the marketer’s role will expand to include participation in other areas of management. Marketing of the firm will go beyond showcasing projects and senior personnel, to showcasing junior staff, working with human resources to assist in recruiting and hiring employees, and collaborating with all departments to better position the firm through online channels. Marketers will rely more on outside consultants, outsourcing some of the marketing department’s functions and working more in a virtual setting. Skill sets will develop beyond basic research, communication efforts, and proposal submission to encompass a broader understanding of business, positioning marketers to participate in the business planning for their firms.

In larger firms, the marketing department will become diversified in its functions. We will see the development of client care specialists, communication specialists, researchers, writers, and graphic designers, for example.

thE A/E/c indUstrYProject DeliveryThe next decade could reveal dramatic changes in the A/E/C industry if technology and tighter finances can overcome the inertia in normal practices and the public procurement process. Building information modeling (BIM) is expected to continue to grow in popularity and with it the promise of more cooperative and less confrontational project delivery, such as integrated project delivery (IPD). Acceptance and growth of BIM will depend upon the business cultures of the industry and its partners, as well as clients adapting to take advantage of the technology.

Public agencies facing continued demand for new, modernized facilities and infrastructure, along with tight budgets resulting from growing deficits and a resistance to tax increases, will be more open to exploring alternative delivery methods. As Maribel Castillo notes, in comparison to other countries, U.S. government agencies are behind the curve in embracing public-private partnerships, design-build, and design-build-operate-maintain. The need to

do more with less could ultimately result in greater acceptance of these project delivery methods.

SustainabilitySustainability will become an accepted element of all projects and every professional’s day-to-day practice. Systems will be built more seamlessly into the fabric of our buildings. For example, David Golab predicts photovoltaics will become integrated into the membranes or panels of exterior building elements and not just be panels “slapped onto the roof.”

While the green movement will continue to grow, its focus will shift to energy—its production and distribution. Influential factors include the escalating cost of fossil fuels, national security, and the desire to reduce our carbon footprint. While there is tremendous interest in this area, a major stumbling block in the past has been the pay-back period: Capital investments have not usually been justified by ROI. However, this is an area of increased interest among entrepreneurs, particularly in Silicon Valley.

A recent episode of the television newsmagazine “60 Minutes” explored the efforts of several Silicon Valley entrepreneurs who are looking to develop and manufacture cost-effective fuel cells. Will the economies of scale that reduced the price of computing power in the 1990s and HDTVs in the 2000s have the same effect on energy technologies in the 2010s? This is the issue that will ultimately drive the success (or failure) of green energy technology.

Firm ManagementThe emergence of the generation of leaders who grew up in the digital age will make a difference on the practice of professional services in the next 10 years. Karen Compton, principal of A3K Consulting, feels these leaders will be influential because they are less tied to the traditional model of practice. “Within the architectural side of the equation, much can be done ‘virtually.’ The market struggle, I believe, will be between those firms who exist virtually (with less cost and overhead) and those who exist organically (with offices and space) and what clients will consider as the value proposition.” Tom Smith foresees “flatter/leaner orga-nizations, more work flexibility, more mobility between companies by younger workers if their employers don’t meet their needs.”

Interestingly, this flatter, more flexible work environment also is likely to be embraced by Boomers. By 2020, the Baby Boom gen-eration will be in the late-50 to mid-70 age range, and many will be transitioning from careers to retirement. But the line between career and retirement will continue to blur. Many Boomers will continue to work; some for financial reasons and some, particularly those in the creative services, because they enjoy their work. The option to work full time, part time, or in a consulting capacity will appeal to this group of professionals. Firms will be allowed to call upon

“Technology, globalization, fiscal constraints, and inter-generational dynamics will be the factors that shape changes in our industry over the next 10 years.”

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their expertise as they transition leadership to a new generation. By 2020, a four-generation workplace will be seen as the norm.

As the economy makes an upturn, firms that did not develop retention plans for the top-notch employees they held onto during the downturn will lose talent. As projects develop and workloads increase, smart firms will entice talented professionals away from the firms they held steady to during the recession. A need for employee retention plans will come into play. To solve staffing dilemmas, firms will once again look at outsourcing and at the global pool of professionals. Another perspective is offered by Robert Trout, CPSM, business development manager for Merrick & Company. He predicts, “Firms will take a slow approach to adding staff and see more teaming, partnering, and use of subcon-tractors in order to accomplish work without adding employees.”

conclUsionAs we learned from preparing part one of this article for the February edition, a new generation of professionals who grew up with “irresistible” technologies will run smack into the “immovable” object of a highly-established industry where change sometimes seems to occur at a glacial pace. Which will win out over the next decade?

Technology, globalization, fiscal constraints, and inter-generational dynamics will be some of the factors that will shape changes in our industry over the next 10 years. Combined, they will have a dramatic impact on how we practice and how we market. However, many of the core best practices will evolve more gradually, adapting to the changes while maintaining the best of the tried and true.

About the Authors

Gina A. Bedoya, FSMPS, CPSM, is the founder and president of Bedoya Business Strategies, Inc. (www.bedoyabusiness.com). Based in Scotch Plains, NJ, Gina can be reached at 908.518.0179 or gina@bedoyabusiness.com.

Michael McCann, CPSM, is director of business development for DF Gibson Architects (www.dfgibson.com) in New York City. He can be reached at 212.400.6210, x35, or mmccann@dfgibson.com.

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www.smpscareercenter.org

convenience of your desktop. The SMPS Career Center is the only online employment site for professional service marketers in the A/E/C industry. View 1000+ resumes or post an employment ad online in the Career Center

marketers and business developers for their teams. Visit www.smpscareercenter.org today or call 800.292.7677,

Build your bottom line.

www.smpscareercenter.org

CAREER CENTERSociety for Marketing Professional Services