Strategic Planning in Construction Engineering

CE 559 SYLABUS STRATEGIC PLANNING IN CONSTRUCTION ENGINEERING Section 29744 Section 29746 (DEN)

Thursdays, 7:00-9:40 PM, Classroom OHE 136

Instructor: David W. Crain, Ph.D. 626-991-7773 [email protected]

Course Description: With the aid of software analysis tools, this course studies elements and techniques of corporate strategic planning and applies them to the engineering and construction industry. Emphasis is placed on strategic management of the engineering minded firm in its business context: competitors, clients (customers), services (products), financial performance and the like. Finance, human resources, information technology, product, and customer strategies are all analyzed, understood and developed. Taught in seminar style, the class begins by learning the basics of corporate strategic planning with the strategic analysis of a leading engineering firm, AECOM. The course proceeds through a term-project strategic assessment of an engineering management company of each student's choosing.

Texts: Stanley C. Abraham, Strategic Planning: A Practical Guide for Competitive Success, Second Edition, Emerald Publishing, London (2012) ISBN 978-1-78052-520-4

References: AECOM 10-K and Self Published Annual Reports, 2013—2017 (available on line, through the Wall Street Journal or EDGAR, among others)

IBIS World Industry Reports (Electronic Data Bases), Available from USC’s Marshall Business Library: 23799, US Heavy Engineering Construction, November 2017 54133, US Engineering Services in the US, August 2017 L6722-GL, Global Engineering Services, July 2017

Student subscription to the Wall Street Journal (recommended). Go to: wsj . com /class for a $1/week subscription rate for the Spring Semester

Tool: S.C. Abraham and Tiffani A. Argandona, Strategic Analysis ModelTM software, December 2011 (Revised January 2017), Provided by Your Professor The required text is by Prof. Stan Abraham of Cal Poly’s Business School, who also wrote the SAMTM software. This text is strong on the fundamentals and basics of business strategic planning. It provides essential definitions of terminology and the analytical frameworks you will need to conduct objective and complete strategic analyses of corporations, businesses and industries. Along these lines, SAM provides an outstanding Excel-Based financial analysis package which takes basic financial inputs and automatically generates financial analyses and managerial accounting reports for up to 5 years running.

It has been your instructor’s experience that strategists and market researchers do their best work when grounded in objective data and fact-based decision making. Engaging in high-sounding platitudes (ala the Dilbert cartoons) without such grounding is a prescription for charlatanism, at best, and corporate strategic failure if such platitudes are taken seriously in the practical business world. Use of SAM and its fact/data-based approach appeals to engineers and provides a solid foundation for analyzing and managing corporations and businesses at the strategic level.

Course Outline

Class Topic Class Deliverables Jan 11 Class introduction and Read through Abraham’s Chapters 1 administrative matters. The & 2, and Appendix A for “Some [77] Strategic Analysis ModuleTM Excel Definitions of Strategy”. Pick a Spreadsheet program as a tool. definition you find instructive and be Read Abraham Chapter 4.1 prepared to discuss in class.

What is Strategy?

Jan 18 AECOM financial analysis (SAM Plug 2013 thru 2017 AECOM Steps 1 through 7). Critical financial data into the Income Success Factors. Statement and Balance Sheet of the Read Abraham Chapters 1 and 2. SAM Financial Analysis EXCEL Workbook. The rest of the workbook will self populate. Feel free to draw on your CE 505 AECOM financial analysis for data. Bring printout of the AECOM Financial Analysis Excel Workbook to class. DEN Students: E-Mail your workbooks to your instructor and our class TA.

Jan 25 Analysis of AECOM’s 5-year Bring final AECOM 2013 thru 2017 financial statements, including financial analysis to class. We will discussion boxes, critical success complete our analysis of years 2013- factors and last page “Summary”. 2017 in class.

Introduction to Engineering & Construction industry analysis. Read Abraham Chapter 3.1 and IBIS 23799 US Heavy Engineering Construction. Class Topic Class Deliverables

Feb 1 Engineering Construction Industry Bring AECOM Industry and Porter Analysis and Porter’s 5 Forces SAM Tabs printouts to class. Analysis.

Introduction to Engineering and Construction Marketing Analysis. Read Abraham Chapter 3.3

Feb 8 AECOM competitor analysis. Bring AECOM Partially Completed Competitor SAM Tab (i.e. Market Introduction to Engineering and Share Analysis) and printout to class. Construction Competitor Analysis. Read Abraham Chapter 3.2

Feb 15 AECOM Competitor Analysis Bring AECOM Completed Competitor SAM Tab and printout to class. Introduction to Environmental Trend Analysis. Read Abraham Chapter 3.4

Feb 22 AECOM Environment Analysis Bring AECOM Completed Environment SAM Tab and printout Introduction to Internal Analysis. to Class Read Abraham Chapters 4.5 thru 4.6 and Chapter 6.4

Mar 1 AECOM Internal Analysis (including Bring AECOM Internal SAM Tab aspects of mission and vision) printout to class.

Introduction to other analytical tools. Read Abraham Chapter 4.4.

Mar 8 AECOM GE Matrix and SPACE Bring AECOM GE Matrix and SPACE Analysis Analysis SAM Tab printout to class.

Introduction to Strengths, Weaknesses, Opportunities, & Threats Analysis. Read Abraham Chapter 4.2.

By this class, you should have selected the E&C company that is targeted for your final project.

Mar 15 Spring Break Begin Financial and SAM Analysis of your final project’s target company.

Mar 22 Synthesis of a proposed business Bring AECOM SWOT TOWS and strategy for AECOM, walking Key Strategic Issues to class. Class Topic Class Deliverables through the bundles methodology of SAM and demonstrated in class. Read Abraham Chapter 5.

Mar 29 In-depth analysis of E&C market positioning strategy and branding.

Apr 5 E&C Integrated Sales and SAM printout pertaining to AECOM Marketing —all SAM class deliverables, revised and reprinted per our class discussion.

575-word cover report summarizing AECOM’s A. Situation Analysis: Internal (Including finances) and External. B. Strategy Synthesis 1. Identification of Key Strategic Issues 2. Development of Strategic Alternatives 3. Selection of Strategy and Rationale

Apr 12 Long-term E&C company strategy: meeting E&C challenges of the 21st Century. Read Resource Revolution, Introduction, Chapter 1 and Chapter 4

Apr 19 Long Term Company Strategy: Bring your target company’s Mission, Vision, Corporate Values statements of mission, vision, values, taglines and other corporate statements that reveal strategy to class.

Apr 26 In-class time for review of selected E&C companies and individual projects. Course Evaluations

May 9 Term project: Strategic assessment and plan for student selected E&C industry firm. You may bring your project our classroom or mail it to your instructor postmarked this date.

Communication and Feedback Feedback is a critical part of any learning experience, both for the student and the instructor. You may communicate with your instructor in a number of ways--before and after class, and by appointment—to talk about any aspect of your work, either individually or in groups. Like many of you, your instructor is committed during business hours and is not available on campus. Your instructor is usually on campus Thursday evenings only, when arrangements for a dinner meeting prior to the 7:00 hour may be made. You are also welcome to call your instructor during the day, leave a voice mail message, or make an appointment for another time. One sure way to make contact is via e-mail.

Coursework and Grading

Students develop Computer Assisted Strategic Analyses of businesses in general and of engineering and construction firms in particular. Students participate in class discussions of these analyses applied to case studies and real world situations. Resources include the SAM software, the accompanying text book, and access to company annual reports and on-line data sources related to business and the global economy.

Course grades will be determined by students’ relative performance on the following course components.

Class Participation 20% Homework (AECOM progress 20% deliverables from SAM) AECOM Project 20% Term Project 40%

Participation. Participation will be comprised of two components: attendance and attention paid to in-class discussions of course material. Class attendance is mandatory. Excused absences will count less heavily against participation than unexcused absences. In order for an absence to be considered excused (or not), the student must notify the instructor in advance of the expected absence.

Success in life, if not in education, depends upon one’s level of participation. Opportunities to advance in business are directly correlated to the degree to which you are judged to be participating. Participation in this class will be assessed by the thoughtfulness of questions asked, the quality of comments made and materials from your work or profession brought into class that contribute materially to class discussions and learning. Students may be called on, at random, to take the lead in various aspects of class discussions. The quality of the contributions made during these periods will weigh heavily on a student’s overall participation grade. Factual misstatements, comments that demonstrate a lack of adequate preparation, or comments that come late in a discussion that distract the class and indicate that the student has not been actively paying attention will be noted as “negative” course participation.

Homework. Bring your printouts as indicated in the class outline and turn them in to your instructor. Those not attending class in person can submit their printouts through e- mail to the instructor. The homework will not be graded in detail, but it will be reviewed to make sure you are keeping up with our class and its lessons. Your printouts and accompanying SAM charts may be done in collaboration with one other student in our class.

AECOM Project. The deliverables are described in the Course Outline. Further details will be provided in class as it develops. This write-up and accompanying SAM charts may be done in collaboration with one other student in our class.

Term Project . The term project will serve as the final exam. Following the methods we learned in class and applied to AECOM Corp, the term project will be a complete strategic analysis with recommended long-term strategies, mission and vision statements for an engineering and construction firm selected by the student and approved by the instructor. Past projects have covered companies like TetraTech, Kellogg Brown & Root, CH2M Hill and Jacobs as well as major E&C firms based in countries like Korea, China and Turkey. You may do the term project by yourself or in collaboration with one other student—your choice. Joint collaborations have the advantage of sharing the workload, which usually results in a superior product and learning experience. Be aware that the grade earned on all joint papers will apply equally to each collaborator.

Term Project Outline

Table of Contents

Summary Introduction

A. Situation Analysis 1. Company External Environment a. Industry Analysis (including Porter’s 5 Forces) b. Competitor Analysis c. Market Analysis d. Environmental Trends Analysis

2. Company Internal Analysis a. Financial Performance and Condition b. Critical Success Factors (e.g. for retail businesses, CSF’s include inventory turns and revenue/square foot) c. Other Analyses Including SPACE (Strategic Position and Action Evaluation) Analysis and GE Matrix d. Internal culture and human resources analysis e. SWOT Analysis

B. Strategy Synthesis 1. Identification of Key Strategic Issues 2. Development of Strategic Alternatives 3. Selection of Strategy and Rationale

C. Strategy Implementation 1. Proposed company Mission and Vision 2. Company Strategy a. Strategic Initiatives b. Objectives Summary Conclusion

References

Appendix (Strategic Analysis Model, SAM Financials, Other Data) Supporting analysis, tables and charts derived from the SAM Excel analysis tools should be included to the extent they materially impact the value of your project.

While your professor has seen projects vary in length from 30 to 190 pages, they nominally run 50-60 pages. The completeness of the SAM Appendix and it’s integration into your narrative report will constitute half of your final project grade.

About Your Instructor

David W. Crain has more than 25 years’ experience managing the marketing, strategy, and engineering functions in a corporate setting. He was Director of Markets and Strategies for Fluor Corporation which, at $18 billion in revenues, is one of the largest engineering and construction firms in the world. While at Fluor, Dr. Crain managed a staff of 6 MBA market researchers performing analysis of the engineering & construction industry: the marketplace, competitors, partners, merger-and-acquisition targets, and related economic, business and geo-political conditions. He advised Fluor on strategy issues such as branding, mission/vision formulation, market research and segmentation, and geographical positioning and marketing strategies.

Prior to joining Fluor, Dr. Crain managed competitive analysis and strategic planning for the Southern California Gas Company (now Sempra Energy), a $10 billion energy- services conglomerate. There, he helped shape Sempra’s international diversification objectives, and established that organization's competitive-intelligence function. Earlier he managed the engineering-design department for the Southern California Gas Company, progressing to manager of a staff of 60 professionals and an annual budget of $50 million.

In earlier professional activities, Dr. Crain was with the United States Naval Research Center in San Diego where he was responsible for development of microelectronics for anti-submarine-warfare systems. It was there, while working on undersea television exploration technology, he conceived and received the first patent (see US #4084184) on what became the “1st and Ten” concept introduced on ESPN football telecasts in 1998, now widely used in network sports broadcasts and the foundation technology for augmented reality (AR) video applications. Time permitting, development and marketing of this technology will be presented some time in class.

For more than 20 years, David Crain was a Lecturer and Adjunct Professor at Cal Poly Pomona and instructed graduate and undergraduate students in electronics and computer sciences. More recently, Dr. Crain served as adjunct lecturer at Pepperdine’s Graziadio School of Business and Management—both Los Angeles and Silicon Valley Campuses--where he taught business strategy to Executive MBA students for 10 years. Dr. Crain is past President of the California Chapter of the Strategic Leadership Forum— an international organization dedicated to fostering the art and discipline of strategic planning in business—and he subsequently co-founded a national organization, the Association for Strategic Planning, for which he served as its first president (1999-05).

David Crain presently consults to large corporations in marketing and business strategy. He received his Ph.D. in Engineering from USC where his dissertation focused on semiconductor materials development for flash memory applications some 25 years before commercialization of the technology. His interests are varied and include video technology and movie-making, collecting motion-picture soundtracks, fitness, hiking, and golf. He has two grown children and resides with his wife Sheila in Hacienda Heights.