201 - TZL - Raouf Ghali

201 - TZL - Raouf Ghali

TZL - Hill International

Randy Wilburn [17:53] Hey, folks, and welcome to another episode of The Zweig Letter Podcast. I'm your host, Randy Wilburn and I'm excited to be with you today. I am sitting here, not physically sitting here because he's where he is and I am where I am, but I'm here with Raouf Ghali, who is the CEO of Hill International. For the uninitiated, Hill International is one of the largest construction management firms in the world, and Raouf was kind enough to join us today on The Zweig Letter Podcast to talk about his background and experience and also a little bit about what Hill is up to and how they have survived the pandemic as most firms in the design industry space are figuring out ways to make it through these last 20 plus months that we've experienced since the beginning of the pandemic in 2020. So, without further ado, Raouf Ghali from Hill International. How are you doing?

Raouf Ghali [18:52] Good morning, Randy. I'm doing great. How about you?

Randy Wilburn [18:55] I'm doing good. Thank you so much for taking time out of your schedule to connect with us today. One of the things that we like to do just at the onset of these conversations for our Zweig Letter Podcast listeners is for you to share your superhero origin story, which is just a little bit about you. Who is Raouf Ghali? So I'd love for you to give us the cliff note version of you and then we'll go from there because I've got some interesting questions to ask you today. Raouf Ghali [19:26] All right, Randy, I'll just make it brief- give you a brief background. I joined Hill in September 1993. Since then, I came here to help them start up what was a very small international organization. They had just received a new contract in Armenia, which is in Asia. One of the first, if not the first, loans that were given by the European Bank for reconstruction and development was for a power station. So I went out there really on a project to realize it. And it was the first of its kind where they had Russian technology being coupled with Western technology to generate power in Armenia. It was when there was a conflict between them and Karabakh, in Karabakh with Azerbaijan. So they were peculiar times, but it was fun. We completed the project, and from then on, we started looking at how do we grow the International through the international, and the rest is history, as they say.

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Randy Wilburn [20:52] Yeah, it is. I looked at the arc of your career, and you have just basically risen through the ranks. Most recently, you were President and COO of Hill International before you ascended into the CEO role. Did you imagine being at this position at this point in your career with Hill?

Raouf Ghali [21:16] No, you need to understand that the company was a family business. It started as a family business and the founding family was always at the helm. I was close to them. We grew the company from a small, local US company of probably 250 people strong when I first joined them to what it is today. A lot of the growth and organic growth came out of the International and then we did a lot of acquisitions in the US. So while I was President and COO, the founding family was still in the company. They have since exited. We divested some parts of the company because we had gotten into some debts. We divested the Claims Group, which was really the founding portion of our firm. Paid down our debts, reorganized the company, and went through a fearless Profit Improvement Plan, which is downsizing our overhead and general administrative expenses. And then I was appointed by the Board as the CEO and took over in October 2018.

Randy Wilburn [22:41] That's a tremendous story and you guys have grown? How many people are you currently staff-wise around the world?

Raouf Ghali [22:49] We're 3,000 plus strong right now. Before we divested, we had peaked around four and a half thousand and we intend to get there and exceed that number very soon.

Randy Wilburn [23:00] Yeah, I would imagine with all the work that's coming down the pipeline. Raouf, I would be remiss if I didn't talk about the elephant in the room and I find myself talking about this everywhere I go. For the design industry, the pandemic has created some unique opportunities and unique obstacles, right, and so I would be curious to know, how you and Hill have come out of the pandemic in the global space and where are you guys standing right now in terms of how excited you are about the future and some of the challenges that may lay ahead. So, I'd love to get your perspective on the pandemic and how has it impacted Hill?

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Raouf Ghali [23:47] Sure, Randy. Randy, the good part is that we as an organization went through a lot right before the pandemic. I talked a little bit about selling off the Claims Group, going through a restructuring and tightening the belts and really cutting down on a lot of our overheads. In 2019, we had a record year of new bookings, and as we thought we were about to take off the pandemic hit us and hit us, like everybody else, with a complete surprise of how fast things turned out to be. But luckily enough, we had endured a lot of difficulties a year and a half ago, so we were pretty lean on our overhead. We also were very fortunate on the fact that probably Ninety percent of our construction was deemed as necessary construction so it did not stop. We had about Ninety percent of our workforce secured and stayed on. We did certain cuts. We tightened the belt on a lot of things that we could do without. And by doing that, we looked at very efficient ways of how we can continue working. We couldn't go back to the office. Our IT was very, very fast in adapting to the times, and we created hubs where we could work from home much faster than anybody else could do. We actually closed down all our offices. I think we were one of the first firms. If you remember, the pandemic hit around March 15, 2020. I think by March 20/22 the following week, I had closed offices all around the world to keep ourselves safe. Unfortunately, one of our colleagues died very early on during the pandemic, which saddens us, so we were happy that we took all the measures, but we have come out much stronger. We kept our cost very lean and we substituted some of the losses that we got because of the pandemic with finding new ways, new services, new ways to be able to support existing and new clients, and we've come up pretty strong on all those.

Randy Wilburn [26:44] So, a couple of questions that I have for you then based on this. Has anything changed based on how you're going to work at Hill moving forward in terms of your workforce? Will you allow more remote work? Again, as you said, you haven't really missed a beat? Are there things that you've implemented during the pandemic that you're going to continue to do post-pandemic?

Raouf Ghali [27:12] Definitely, we will allow people to be working more from home for two reasons. One, I feel it's a more efficient way of working. We've learned that there is efficiency by allowing people to control their time more when they can work and how they can juggle their private life and personal life with work. We created an environment where we're saying Fifty percent on average we'll be working from home and Fifty percent in the office. You need some office time because you need team building. You need to be able to mentor some of your colleagues and employees as they come up in the ranks. And having One Hundred percent just from home I don't think is a very good workable environment. Having one hundred percent only in the office is also something that I think the millenniums would not really like and we want to attract the best talent

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there is in our industry and therefore we have to adapt. There's also an advantage of doing all this and that is it's an opportunity for us to look at the office space requirement that we have. So we're going to have some shrinkage in real estate that we do and we're going to invest it in our business.

Randy Wilburn [28:41] Yeah, that makes perfect sense. You know, Raouf, I hear design firm leaders saying that all the time here in the United States. I mean, they all are rethinking how they do work, where they work, and ultimately, what are their real estate needs to look like in the future. So I think it's going to be interesting for everybody moving forward. They’re going to be opportunities to pare expenses. They're going to be opportunities to increase things like personal and professional development for their employees. All the way around, there are upside opportunities here. Were you going to say something?

Raouf Ghali [29:22] No, I agree with you, Randy.

Randy Wilburn [29:24] So let me ask you on the business practice side, from the pandemic itself from a project management perspective at Hill, what were some of the most important lessons you learned about this pandemic, something that created awareness for you around how Hill was doing business that you were able to modify outside of the whole remote work and all that. We get all that but were there any other practices from a construction management standpoint, from a project management standpoint that you've been able to modify that you've benefited from? Raouf Ghali [30:02] Yeah, we use a lot more technology and not just from working from home, but for example, inspection services. Instead of actually having to go out and inspect some things in person, we use drones. Drones, that would be able to fly over, and we've hired some pilots for drones. For example, a highway, we go through and take videos, and once we look at it and our engineers look at it and would like to see some more details on it, we can send the drone down, and magnify it; the technology is there to be able to do it. Once there are defects detected from the videos, then the engineers can actually go out there and focus only on the ones where there are defects to inspect them personally - physical inspection, as we say. So we've used technology more efficiently to really streamline our work and change a bit the best practices that we do in certain things. So that's one modification that we've been able to see. And we did the same things, not just on highways, or horizontal, we are also on the vertical as well.

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We were able to use certain technologies that help us be more efficient and provide the services to our clients in a more streamlined way.

Randy Wilburn [31:40] It is becoming amazing how impactful drone technology has been to the design industry. I just saw on the news last night that Walmart is going to deliver its first package via drone this weekend. Based in Fayetteville, Arkansas, that's where Zweig Group is based and right up the street is this little company called Walmart, and they're adopting technology for retail, but on the design industry side, on the construction side, drone technology is playing a major role in things that you can do. I mean, the way you can scan a building with a drone. There's just stuff that even 5, 10 years ago, I don't think anybody thought it was possible.

Raouf Ghali [32:30] I couldn't agree with you more. And I think it's just the beginning of it. And the pandemic, from every bad situation, good things do come out of it. And I think the use of technology within our industry, in particular project management and supervision, we really were using limited technology, it was all really hands-on. But this has accelerated the use of technology and looking at new best practices.

Randy Wilburn [33:06] So I'd love to ask because, again, you guys are not siloed into one specific area. How do you juggle being on multiple continents? You have offices all over the place? I understand that you operate between your Athens office and also Philadelphia. I mean, you're here, there and everywhere. How do you manage that?

Raouf Ghali [33:29] Very simple. I have a great team. I have the best team in the world. Our organization is actually flat. We have a very flat organization. It's mainly regional, organized with some special sector management, or end market management as well. And these regional managers have access to me at any time and their direct reports are very easily accessible so we can make decisions really fast. Every month, we have a review of the entire company's portfolio. It takes us probably a day to go through all the projects worldwide and we look at where the important parts are because at the end of the day if you manage your weakest link, it just makes you strong. We just focus on where the issues are, where the challenges are on a monthly basis worldwide and all management is around the table and we help each other just get over any challenges that they're looking for and we go forward on that. And these decisions are made instantaneously, with as little bureaucracy as possible. Now, having said that we're a

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publicly held company so we have a lot of control and we let the controls do their thing, and there are checks and balances.

Randy Wilburn [35:17] I was, I was reading some of your financial documents and I would imagine that a lot of that gets systematized so that you just plug and play. You're able to update that information as you gain new >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12

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