The global Design & Consultancy firm Arcadis belongs, with its 27,000 employees and representation in 70 countries throughout the world, to the largest in their business segment.
As in previous years, we asked, at the beginning of the year, for an interview the long-term CEO of Arcadis Czech Republic s.r.o., Pavel Čermák, who this time also invited Jakub Pavelka, Head of the Project Management Team.
How was Arcadis doing in the past year?
P. Č.: All in all, one can say that 2019 was a successful year, from both global and regional perspective. The global background of our company opens us a door to many projects across segments and regions. Not only because of this, had the company shares grown by almost 20% in the last two months. Speaking of the Czech Republic and Slovakia, we have significantly exceeded the annual plan. We have secured new, mostly long-term income from both Arcadis’ local and multinational clients and have thus assured ourselves of our brand’s high reputation based on our expertise and our employees’ moral level. Project management remains our major business, complemented by two other services, in which we have been leaders on the market for years: Technical Due Diligence and Green Certifications, especially BREEAM and LEED. Apart from these, we also provide other services such as Contract Solutions or Programme Management. The portfolio of services provided is so diversified that none of the services predominates significantly. This gives us an advantage in the case of a slowdown or failure of any segment, where we can orient the activities in a different direction. For instance, it affected first half of the last year, when transactions accelerated a bit slower than in other years, so we replaced them with increased exposure to multinational projects or certifications. The fact that we are perceived well in the market proves to be true, thanks to our intensive work on projects and clients’ strong support. As we do annually, we also participated at events where Arcadis was presented successfully this year – whether it was MIPIM where Arcadis received three awards, EXPO REAL, or Best of Realty held under the auspices of ARTN, where we supported our clients who received awards in the fields of their business. Lenka Matějíčková, Head of Sustainability, also represented us at the CEEQA Awards in Poland, where we received an award in the Development Services Company of the Year category for Central and Eastern Europe.
What were the last year’s highlights?
P. Č.: As I have already mentioned, we have another two principal services. One of them is certification, which has been experiencing a boom in recent years. We started to provide the service ten years ago and today we are the best on the market, and we have a considerable number of orders in this area. Department of Sustainability led by Lenka Matějíčková is thus growing very dynamically and is now a significant part of our company’s turnover. This and next year’s trend is the certification of whole logistics portfolios and not just of individual buildings. The common practice is to prepare the certification of all new logistics and industrial buildings for all the major players on the market – new buildings are therefore designed to receive certification directly. The thing is that the clients’ portfolios include dozens or hundreds of older buildings that need to be now certified additionally. CTP is the leader in this area and would like to have all their buildings certified with BREEAM In-Use by June, but at the same time, we are also processing other certifications. It is a huge contract comprising hundreds of buildings in Central and Eastern Europe. In the green certification sector, we are also introducing a new service to reduce carbon footprint. In our country it is a novelty, so far it has shown interest in leading developers, however Arcadis already supplies these services as standard in Western Europe. These are two trends in green certifications that are of immediate concern to us.
Could you also specify your success in the other major sector, which
is the area of transactional services?
P. Č.: The worldwide results of Arcadis’ activities copy the ongoing positive trend in investment markets, and we expect that 2020 will also be a year of growth. That also applies to the development in the Czech Republic and Slovakia where Arcadis is already traditionally contributing to investment and financial transactions that belong to the TOP 10 in both markets. We follow this positive wave and intensively work on keeping the position of the market leader. In just the last two years have experts of our Czech team been behind transactions whose value exceeds a total of several billion Euros. Last year it was, for instance, the acquisition of the Prague buildings Main Point Pankrác (EUR 130 million) by the Korean Hana Financial Group, DRN (EUR 100 million) by the German fund KGAL or the Twin City Tower (EUR 120 million) in Bratislava by the British Valesco Group. The largest transaction last year was Arcadis’s CTP advisory and a consortium of six banks that signed a syndicated loan of EUR 1.9 billion for the Czech industrial CTP portfolio. The loan agreement involves financing 200 buildings and we are talking about the largest transaction of its kind in the real estate market in Central and Eastern Europe. The first weeks of 2020 allow us to conclude that this year can also be very successful in terms of the transaction.
Project Management, however, remains the focal point of your
J. P.: Yes, and also in this sector, we can confidently follow new trends, mainly because of some uncertainty of clients due to the increase in construction work costs. Many clients have begun to shift from standard Project Management and general contractor to Construction Management, ie to manage the project without using a general contractor and to directly coordinate several subcontractors – if the client is interested, we also deliver services in this format. We also work well with sharing “big data” with colleagues from all Arcadis offices whereby we are able to secure information about projects and clients throughout the world in a few seconds. Working with big data allows us to participate in projects abroad and even manage them from Prague. Moreover, we can apply knowledge from all over the world in our local conditions – if we are approached by a multinational company that wants to operate on the Czech market, we are aware of their way of working and standards, which gives us a considerable advantage.
P. Č.: Internal collaboration within Arcadis brings additional benefits – we co-operate on projects that are contracted at a European or global level and our colleagues are thus involved in international projects. For example, in previous years, our geo-technicians have been involved in giant groundwork and infrastructure work during the preparation of a new airport in Istanbul. Colleagues from the Prague office have a very good reputation in Arcadis and are welcomed and recognized abroad. In project management, we support our corporate clients from Prague for the entire SEE region, where Arcadis does not plan to open new branches. Nevertheless, the global clients that Arcadis works with abroad expand to South-East Europe and that is why we are now expanding the area of our operations from Prague and already have several very interesting investment and financial market projects within the region of South-East Europe such as Hungary, Romania, Bulgaria, Croatia and Slovenia. We assume that more than 20% of the Prague office total revenue will come from this region. In short, we send our employees abroad to work on interesting projects, we manage international projects from Prague and we also utilize our abroad experience when servicing our local clients.
What is your outlook for 2020?
P. Č.: Apart from new trends in the area of Project Management and Certifications, we would also like to deepen our knowledge in the area of Environmental Due Diligence. Besides the Construction Management, we have also stared, due to clients’ interest, with Office Design and are also considering disposing of environmental issues. One of the innovations we will focus on in the future is electromobility, which is already developed in the West. Especially from the prospective of production in the automotive sector as the standard combustion engines are slowly moving to hybrid engines or electric motors, which are much easier to manufacture, but also in terms of operation, where we are talking about building the necessary infrastructure in the form of sufficient public and private stations. This applies to developers of residential complexes and administrative, retail and industrial real properties. Arcadis also annually publishes the International Construction Cost Index, where they compare costs of construction works across markets worldwide, which represents a very useful overview for the clients.
J. P.: As I have already mentioned that the big trend is the digitization
and use of “big data”. Arcadis has its software systems to share this data.
In Manila, there is a global center with hundreds of employees who assess sent
data and utilize them when necessary. One day we gather the information we need
and the next morning we get it out of Manila in the form we need, thanks to the
time delay. Digitization mainly represents an increased efficiency of work for
us. We also have our first projects in BIM. We work within this software
according to clients’ interests – there are companies, especially
multinational ones, with dozens of projects that directly require this approach.
We perceive BIM not only as a tool for the creation of drawing documentation but
as a whole set of activities. Several projects work on the whole Project
Management and management of all BIM-based documentation – in this case, BIM
makes sense to us and we try to work with clients in this spirit. We also
strongly support the principle of incorporating social and environmental
considerations into our company’s strategy, whether through a financial
contribution or the physical participation of our employees at associated
events. For example, we participated in last year’s Goodwill Run, the
challenge Bike to work, or planted trees as part of the nationwide event Day for
forest recovery. And we intend to continue with these activities in the