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 data points as you gain new financial information, and then certainly as you update projects on a case by case basis. So that is the beauty of technology these days is that we're able to do things within keystrokes; it's so simple nowadays.

Raouf Ghali [35:47] That's correct. At the end of the day, we make things more complicated sometimes. Sometimes if you simplify matters, even in larger organizations, it becomes very simple. You bring it down to simple steps and simple questions and things resolve themselves.

Randy Wilburn [36:05] So it sounds like for you as a leader, not that you're hands-off, but you allow people to do their job and there's not a lot of micromanaging going on. I mean, you certainly inspect what's happening, but it sounds like you give people the latitude and the discretion to do their best work.

Raouf Ghali [36:32] To me my job is to find the best people, and then allow them to do their job and for me to support them.

Randy Wilburn [36:42] I love that. So let's just talk about this whole issue about working in an organization that is on multiple continents. You have to be aware of local situations everywhere that you have an office. You work in the US, the Eurozone, the Middle East, and Asia. So how do you view each of those different areas? Are you bullish about just growth overall happening across the board, or do you just closely monitor each area and you adjust accordingly, depending on where you're doing business?

Raouf Ghali [37:28] Each area and you forgot one area, which is Africa?

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Randy Wilburn [37:34] Oh, I'm sorry.

Raouf Ghali [37:35] I’ll probably say it in case they hear they don’t think I'm ignoring them? Everybody’s got to be cheered.

Randy Wilburn [37:41] I apologize about that? How did I forget the continents?

Raouf Ghali [37:44] And we're very proud of the work they're doing there as well. We're proud of every region that we're working in. But to answer your question, simply since we've started working the foundation and our foundation, and real perception of how we do business, is we go into the different regions, and we adapt to the culture of that region. We do not impose our culture. We adapt to their culture, but we bring in best practices. And our job is to come in and provide that service to our clients, bring in the best practices, train locals, and have the locals grow within our organization, make them understand the Hill way of doing things within the culture by adopting within the norms and how business is conducted in those regions. And that is the formula that has worked and why we are successful in being able to work in all these different cultures. Every region and sub-region has its tailor-made strategy for implementation and growth. One strive and one size don’t fit all. How you handle business in the US is completely different from how you handle business in the Eurozone, or Africa, or in Asia.

Randy Wilburn [39:21] Again, I don't want to put you on the spot. Do you feel pretty good as we're slowly coming out of this pandemic? I think we are all pandemic fatigued. But as we slowly come out of this pandemic, are you feeling pretty good about all of those areas that you serve- those marketplaces?

Raouf Ghali [39:43] We are excited in every location we're doing business right now. In the US, I think the infrastructure stimulus bill is just an addition to what we were expecting as far as infrastructure spending. Seventy percent of our businesses are in infrastructure. So we were well-positioned for a lot of the infrastructure spending any way that needed to be done so that adding on the 1.2 trillion that the President has just signed a few days ago, really adds to the opportunities that we foresee ahead. So we are very excited about the times to come. I think the entire world is very tired of being

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dragged down because of the pandemic, but I see a lot of light in the tunnel and I think we're doing it. We have a similar situation in Europe. The European Union approved probably the largest stimulus package ever, with $870 billion, that's going to be spread throughout the Eurozone countries mainly and even the [inaudible 41:04] countries. In most of those countries, we have an operation, so that's another addition to us so we're very bullish on this. Africa and North Africa, where we're doing business, the business climate in the last two to three years has been very positive. Even with the pandemic, there has been a lot of activity going on. And the Middle East, given the oil prices, I think with the pandemic now recessing with vaccinations, and most of the populations have been vaccinated in the Middle East. And when I say the Middle East, I’m referring to the Arabian Gulf countries, because they were closed for a lot of the time because they were very, very careful because of the pandemic. It's opening up. You've got oil prices that have rebounded, and you've got the local conflicts that were there that have been settled. So whichever region I'm looking at, I only see positive, rather than any negativity right now.

Randy Wilburn [42:21] And are you guys doing any work in Mainland China at all?

Raouf Ghali [42:25] Yes, we are. We're doing work in Shanghai on an industrial project. Unfortunately, I can't speak to which one exactly, because it was just a [inaudible 42:38] , but we're doing a major industrial investment for one of the Fortune 100 US companies there.

Randy Wilburn [42:49] So, let's talk about this because, Raouf I know that there are a number of construction management firms out there, and some other firms that have similar footprints to yours. In essence, what do you think is the true separator between you, and a lot of your peer competitors out there? What's the secret sauce of Hill International?

Raouf Ghali [43:18] Well, the real secret sauces are our people. We take that apart. Now that we know we have the best people, what really is our biggest differentiator between us and our competitors, and I like to divide our competitors into two areas. One is the global and international players like us and domestic players. With domestic players, they have limitations to how much they can take on within the markets that they're in and once we come in as an international player, we usually partner up with them. We usually do other things to augment both the local content as well as the

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understanding and knowledge of the culture that we talked about. What differentiates us between the international and global players and us, we are the only pure-play project management company that has a global reach. All our competitors come in from the architectural and engineering world and some come from the construction world. And they're great players in the project management field as well but it's a small part of their business. The major part of their business is engineering, design, and construction; we don't do any of that. So there's a lot of conflicts that come from that because as they get on to large programs and let's launch projects, there's a need for a technical issue that comes up, either technical or technology issue. They will immediately look at internal resources to satisfy that need, versus us looking at who is the best in this industry globally to be able to come in and approach the challenge that we have on this project and resolve it. Because we're completely independent and we have no resources to be able to offer. We want to bring in the best of the industry to come in with the team, represent us, and get over the hump that the project may have on behalf of our clients. So that's one of the biggest differentiators that we have with our competitors. And I think that's been recognized by many of our clients and sometimes I hear that Hill usually punches above its weight in a lot of these projects, because we get a lot of megaprojects. And I think partly is because of that, and the other part is because we're a much-focused company and if you're a project manager, and you want to grow in project management, where would you like to be? Would you like to be in a company that ten percent of its business does project management, or one percent of its business does project management and your career will take upward? Randy Wilburn [46:45] So, yeah, that makes a lot of sense. A lot of times firms enjoy the ability to be able to say we have it all in-house, but sometimes that all in-house that they refer to isn't always up to the same level in terms of standards and quality. And what I hear you saying is that, while you operate from a project management standpoint at the highest level possible, you also look for some of these other peer firms that are out there, that can be part of the projects that you're working on, to bring their A-game, and together, you guys can create a really strong front in terms of how you serve the needs of the clients.

Raouf Ghali [47:35] That is exactly correct. You said it probably much better than I did.

Randy Wilburn [47:38] No, that makes perfect sense. But I just want our listeners to understand how you operate. Because I think sometimes, especially our audience, primarily are design firms, but when you think about project management, when you

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think about construction management, and what that looks like, sometimes it's nebulous, and it's hard to get your arms around the capabilities of the firms that you work with. But it's clear to understand that you have a strength and then what you do is unify other organizations that have similar strengths in different areas of the project. As you come together, you guys are like the Justice League, it's like you got Superman, and you got Batman. If I can use a superhero analogy, you've got all these top individuals that individually they're strong, but collectively they're almost unbeatable,

Raouf Ghali [48:30] That is correct. And sometimes some of these firms are our competitors. It doesn't matter on that assignment, we need that part of their organization to really overcome and do the best service for our client. And that's what we do.

Randy Wilburn [48:46] So that means you just really walk the walk of putting the client first in every situation to serve their need.

Raouf Ghali [48:53] We'd rather say we put the project interest first because we all work on one principle. If the project is successful, everybody else succeeds.

Randy Wilburn [49:07] Outside of everything that we've talked about, and as you've been in the CEO role now for a couple of years, and of course, you ascended to the CEO role right before the pandemic started. So you've only been trying to put out fires as a CEO as the leader of a growing company. What are one or two of your biggest hopes for the future, for Hill and the industry?

Raouf Ghali [49:39] Like I said, the construction never stopped, it got delayed. The pandemic created a lot of unfortunate delays in a lot of things. I think these are all going away. What I'm hoping for is we go back to being aggressive. There's a lot of construction that has been put on hold that has been delayed. We know that the supply chain is being challenged right now because of production and because the pandemic has slowed down a lot, and you have a peak in demand on certain things. But I think, again, I believe production is going to catch up within the next, if I was guessing, probably by mid-22. You're going to start seeing the production is catching up with demands and things are going to come down. A lot of these inflationary issues will start coming back down. We've all read a lot of things on this, and I'm a firm believer that it

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will be. But I think that there's a big need worldwide for growth, and for getting back to a life that is a new normal life, but one that has a future and I believe the planet has a lot of future. We're looking at not just the infrastructure works but we're going off with new technologies, with electrical vehicles with alternative power sources, with environmental issues that create the need for more construction, puts a lot of people at work, so that we can also protect our planet for the future. Randy Wilburn [51:37] So 2021 is, as we wind up here, the 45th year of Hill International. As you shared over the past thirty minutes, that it's been a unique and remarkable journey that you've experienced. If I could pin you into the corner and say, what's the one thing in the next five years between this 45th year in business and the 50th year that you guys will celebrate in 2026? What's the one thing that you'd like to see come to pass in that short timeframe? Because 2026 will be here before you know it, Raouf, you know that right?

Raouf Ghali [52:19] Unfortunately, yes, [inaudible 52:22] goes by so fast.

Randy Wilburn [52:25] Time waits for no man or woman, that's for sure.

Raouf Ghali [52:30] That is true. The one thing I want Hill to be is the employer of choice for the project management and construction management services on a worldwide and global level. Because if we are that, we know that we're just going to continue to have a future for all our people and all our clients, and we are serving them correctly.

Randy Wilburn [53:02] Well, it certainly seems and appears that you have a heart for your people, which I'm sure translates into the overall job satisfaction that a lot of people find there at Hill International, so I certainly want to applaud you for that. I've always been taught, especially in this industry, but I think it bears repeating in any industry in any business. If you take care of your people, your people will take care of your clients, and that that goes without saying. And so Raouf Ghali, it sounds like you're taking care of your people and that you continue to do that and that by the time 2026 rolls around you guys are celebrating your 50th anniversary, you'll have some higher plateaus that you will have reached and that you guys are going to continue to grow. So thank you so

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much for sharing your story and sharing what Hill International is all about. We really appreciate you taking time out of your schedule to do this.

Raouf Ghali [53:57] Thank you very much. Thank you for having me and happy Thanksgiving as well.

Randy Wilburn [54:02] Well folks, that's another episode of The Zweig Letter Podcast. To learn more about one of the oldest newsletters in the Design Industry, you can visit thezweigletter.com. You can also visit them at zweiggroup.com. You can read articles online, listen to this podcast and sign up for a free subscription to the newsletter and have it delivered right into your email inbox every Monday morning. Sign up today. For more info about Zweig Group's advisory services or any Zweig Group publications, visit zweiggroup.com. Follow the Zweig Letter Podcast wherever you listen to it. Apple, Spotify, Google Play, it doesn't matter, we are everywhere. Consider rating and reviewing us on Apple podcasts if you have the chance. I'm your host Randy Wilburn, and we'll see you with a new episode very soon. Peace.

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