002 MARCH 2014 INSIGHT AND ANALYSIS FOR CONSTRUCTION SPECIALISTS PROFILE Façade and fire testing company Thomas Bell-Wright P.16 FEATURE When should consultants get involved in a project? P.24 PUBLICATION LICENSED BY IMPZ TOP OF THE HILL Irvin and David Richter discuss Hill International s ever-growing global empire
THE RICHTER SCALE Middle East Consultant meets Irvin and David Richter, the founding father and spearheading son behind Hill International 20
How important is the Middle East to us? It s kind of like saying, how important is your heart? I need that little baby there, ticking away every day! IRVIN RICHTER, On paper, a meeting with the two most senior figures at Hill International a ubiquitous force in the global construction industry would be highly formal, serious and perfunctory. Yet as soon as Irvin Richter and his son David enter the meeting room at The Address Dubai Marina, it is clear that this won t be the case. With a beaming smile, Irvin cracks jokes from 80s movies while David asks intently about our fledgling magazine. On this evidence, it would seem that the duo s charm and personality have played a big part in their success. Irvin recalls how the journey started when working for a CPM scheduling consultant as a young man in New Jersey, USA. Quite fortuitously, Irvin was lumbered with helping a client with a claims case because no one in that com- pany wanted to. Although neither an engineer nor an architect by training, Irvin almost immediately grasped the claims process and helped the client get what he wanted. As more and more work was thrown his way, Irvin decided to set up his own company at his home in New Jersey with a business partner. We started in my younger son s bedroom. About nine months later we got an office. My first client was hoping to get $500,000 and he got $999,000 the opposing side didn t want any headlines with Million Dollar Settlement and he was tickled pink. My second client was the City of Niagara Falls. It grew very quickly and it was fun. We were constantly in a growth mode and it was all new for us. Fast forward nearly forty years and Hill International is now a giant in both claims and project management services, with 4,000 employees worldwide. On 1 January 2015, David 21
will officially take the reins as CEO and dayto-day decision maker, with Irvin remaining as chairman. For David, it s the natural time to step up. He remarks: My dad hitting 70-years-old is a transition for him personally. We expect a smooth process I ve been president of the company for 10 years and been there for 19 in total. We work together very well there s a strategy in place that s working and the company is growing tremendously. I don t expect much is going to change. An integral task for David will be retaining the unique company culture that has remarkably endured the growth from small consulting firm to a global behemoth. He says that this is due to his father s lack of an ego when building the firm. We at Hill have the best and the brightest in this industry it s not about me, or him we are a collection of 4,000 extraordinary people. There are plenty of firms, especially in architecture, where the founder of the firm makes it all about him and surrounds himself with less talented underlings. My dad is a great businessman but he s not an architect or engineer and wasn t a lawyer until later he had to surround himself with the best technical people he could possibly find. It wasn t about him being the starchitect or the guy that was doing everything. That mentality has continued all the way through to today, four decades later. Another remarkable aspect of the company s modus operandi is that it rarely offers contracts for employees. Irvin explains: Usually the only time we wind up with contracts is when we buy a company we have to tie those people in. I ve only had a contract since we went public, but for many years most of our people did not have a contract. I don t see any reason to tie them in. If they don t want to be here, good luck. David continues: We try to create an environment where everyone wants to work for our company. If you don t want to work at Hill goodbye. Get out, so you don t spread that unhappiness to other employees. In business, culture is often talked about but morale rarely 22 The Abu Dhabi office was set up in 1987 it was our first overseas office. Since then we ve proved how we can manage and fix projects. IRVIN RICHTER, is. Morale at a company is as important if not more important than culture. This unorthodox approach has helped to build a loyal workforce, with high staff retention rates, yet it is certainly not watertight according to Irvin. The bigger problem today is that our people are so successful and well-known that they are constantly barraged with offers. When you don t have contracts with people [they are not tied]. We have a meeting after this interview and I think it s going to be about some of our people from the Middle East. When asked about the importance of the Middle East region to Hill, Irvin replies: It s kind of like saying, how important is your heart? I need that little baby there, ticking away every day! The Middle East is part of what makes us strong. We were a baby in project management when we first came to the Middle East we came to do claims. The Abu Dhabi office was set up in 1987 it was our first overseas office. Since then we ve proved how we can manage and fix projects. Project management currently constitutes 75% of Hill s global revenue with claims making up the remaining 25%. Irvin likens the claims business to a hospital. We might not know what was wrong with you when you come to us, but we have a specialist that you can go and see. After that you want to get out as soon as you can. Our clients don t want to pay us, or their lawyers, for the next five years. They want to get it over, out, done. We help them do that quickly
We at Hill have the best and the brightest in this industry it s not about me, or him we are a collection of 4,000 extraordinary people." DAVID RICHTER, we know what they want. They don t want to spend money on something that goes down the drain on pain and suffering. It s not like paying an architect or an engineer. Hill International s project management capabilities have grown exponentially in recent years. David continues: One of the beauties of project management is that it s essentially a consulting business. We don t have the kind of risk that a designer or a contractor has on a project. We re acting in an advisory role on our client s behalf, but it s not the short term, small personnel work typically, it is long term contracts with very high staffing. We have the best of both worlds. According to David, the Middle East region is even further weighted towards project management ahead of claims. He reveals that a key market of late has been Oman, while he also predicts a comeback in Libya. From having no presence in Oman two years ago we are now managing one of the biggest projects in the region the construction of the new Muscat International Airport. We have some other projects there and it has become a big market for us. Libya was a big market for us, and obviously for the last three years it hasn t been, but we see 2014 as the year that we get back to Libya in a big way, he says. With projects like Muscat International Airport, the Middle East is driving Hill International s burgeoning transportation portfolio. Five years ago the sector accounted for under 10% of the business; now it constitutes more than 30%. David continues: Our transportation portfolio is across the board rail, highways, bridges, airports, ports. It s a great market for us to grow in the Middle East. Before the recession, most of our business was private sector work for developers but now it is a lot of public sector work for government agencies. Like many, he believes that Expo 2020 will help maintain an upwards trajectory for Dubai. It s always surprised me how billions of dollars are invested in connection with a [temporary] event. But governments tend to use them to spur development that they would have done anyway. Dubai is coming back and the expo is going to spur that even further. We ve seen a lot our growth outside and around Dubai. The next five to six years should see a very strong construction market for Dubai in the lead up to the event. He points out how Hill International has a huge amount of experience in large scale events. The Olympics are a particularly good market for us. We have been involved in several from the claims side. Construction on Olympics always overruns there s a 100% track record of that happening. At the moment we are hoping to be the project manager for the entire 2018 Winter Olympics in South Korea. With its growing influence and prestige across the world, Hill International has come a long way since its humble beginnings. But did Irvin have a global empire in mind when he set up the firm in his house in 1976? Oh sure, he replies, before breaking back into his trademark smile. Not for one second. I was just trying to feed my children and my wife. I wasn t thinking about building a giant enterprise. I never expected, ever, that we would be this big. I thought we would be a small firm. Sometimes I wish we still were! 23