[00:00:12] Shayne Gaffney: Hi everybody. Welcome to Beyond Prequalification. I'm joined by my, uh, guest today, Chris Hillyer, who is the senior Vice president and also regional director of Pre-Construction services.

Can you share a little bit about your career at Skanska? You know, how you came into the role as Senior VP, and I know you've been there for like a couple of days now. You're kind of new to the company, as far as I remember.

[00:00:35] Chris Hillyer: Yeah. I'm just getting started.

As I was reflecting on my career, I go back, and I never thought about construction growing up. Wasn't on my radar. It wasn't something that I knew could be a career, and I actually started off as a temporary assignment, and it was a career opportunity that, um. Saw it on a paper, I answered an ad. And, here we are, nearly 30 years later, and it, it, it is been super rewarding. I keep coming back for more. Most of that time has been in the pre-construction space. I did have a stint where I was in operations kind of early on to learn boots on the ground, and how we do things, but I started my career up in the Midwest.

And um, I followed an opportunity down to Texas around 15 years ago. At that time, I kind of expanded my region, my role, and that included now overseeing our projects for our project planning teams in Texas. All of our three offices here, as well as Tennessee and Ohio.

My home office is in San Antonio. I do have kinda leaders in those other offices, but my role is really to provide guidance for my teams. Clear roadblocks. Look for ways on how we can be a little different from our competitors, and, you know, every day it's different.

That's what keeps me coming back for the 30 years. Right? It's like some days I'm dealing with budget or design challenges. Other days it's capacity. So, I think that I found success through my teams and, really, being able to rely on me, to be flexible in that regard.

[00:02:06] Shayne Gaffney: That's great. From my job, I never expected to work in construction either. Obviously I work in the very opposite end of construction than you do from the software side, but I also reflect on that too, where, i'm really lucky to be able to do the full end-to-end software development spectrum from, you know, talking to customers like yourself as well as, you know, getting my hands dirty, maybe in the code or maybe in other things that we're working on.

So I love that end-to-end experience and being able to really interact with every bit and piece of the full lifecycle of the product. I'm sure you do with your construction sites, too, so that's great. From Skanska itself, um, you mentioned Texas, you mentioned, uh, Tennessee. Can you give us an overview of the work in those regions?

You know, what types of projects are you doing? Uh, what types of clients you work for, industries you're active in, things like that?

[00:02:57] Chris Hillyer: Yeah, sure. So as I mentioned, kind of my region is the central US. In all of my offices that higher education is, is, uh, both public and private is, uh, is is a big sector, uh, clients that we work for. For example, University of Cincinnati, Vanderbilt, um, UT of Texas at Austin, um, Rice University. I think healthcare is a big part of what we do in the region. In both Texas and in Ohio, an important part of our business is K-12.

Specific to Tennessee, we've actually seen success in high-rise multifamily. We've done some great projects there. Uh, we did a really great project a few years ago on Fifth and Broadway, which was a multi, multi-use residential, and we are working through a development right now, which includes both a hotel and a multi-family component that will be starting construction here, too.

Additionally, there we've actually seen a lot of success on, um, some cool projects on historical renovations, particularly for the state of Tennessee, where you, you really get to hone in on the details and how we can get creative to bring back what it once was and be authentic.

So that's some exciting stuff. In Cincinnati, we're actually getting ready to be constructing a new, roughly 700-room convention center hotel. So we're working through the pre-construction phase on it, and we're also working on a large terminal renovation at the CBG airport.

So those are some of the things that we're doing. Um, one thing to point out over in Houston is I'm lucky in that we actually have a few locations across the country where we are the developer, and so we secure the land, and finance it, and then our construction team, and my team gets to do the pre-construction on it.

Those projects are primarily focused on highly sustainable office space. But there's some multifamily in there as well. And we've done some really great projects there in Houston, in the other locations that have shaped the skyline. And we're working towards a multifamily there in the Montrose neighborhood on the west side that is slated to get started early next year.

So that kind of covers the gamut of some of the things that we're, we've seen, have seen.

[00:05:10] Shayne Gaffney: So obviously from terminals to schools, to historical projects. It's a pretty incredible, diverse range of projects that you are covering at the moment. Are you seeing any types of trends or anything that stands out overall in, you know, really any of those markets, or just in general today?

[00:05:31] Chris Hillyer: Yeah, a few things I mentioned around higher education being a big thing for all of the markets, and flexibility is really changing the way those are designed. And creating a hybrid environment where, I think, there's a lot of flexibility being designed in the classrooms so that they can accommodate, learn different learning ways, for example, in-person versus remote students.

And so we're seeing a lot of change in the design that allows for the flexibility of both of those. That impacts the project, of course. There's a heavy emphasis these days on research and on tech. Another thing that is pretty significant, especially here in San Antonio cybersecurity and the design around how we can prepare our students to help deal with all that is involved in that. Um, another thing that I think about, actually, is as it relates to keeping on the higher education theme, is the student life amenities.

The importance of making sure that the college can connect with the students and there's interesting things for them to do. More fresh food offerings, better student housing, more places for them to relax, more places for them to collaborate.

We've even seen some student housing where they're testing out the ability for the students to have pets, which is kind of wild. And, um, just new and exciting things in that regard are some of the things we've seen. You know, mission critical, I mentioned earlier, for that like the, the trend is speed to market.

How quickly can we build? Money is no object. So when you add acceleration, they can, uh, be let's, let's just say exciting.

[00:07:11] Shayne Gaffney: That's great. So, if we kind of flip a little bit, so you had mentioned that there's all sorts of, well, capital is no, you know, object at this point.

It's accelerating, but there are things like, you know, volatility, so things like tariffs, things like labor, shortages of that nature. So no matter how much capital you put into a project, you're always gonna hit some ceiling at some point. Do you have any impacts or anything where those external factors are kind of contributing to either how you plan a project or how you execute those projects?

[00:07:45] Chris Hillyer: It's interesting because, if I can rewind a little bit.

We learned a lot during the pandemic. And I think we in the entire globe got really caught in this spiral of increasing cost and material challenges. And that was due to a number of reasons, of course, but among them, manufacturing shut down labor shortages. So there was a lot of investment from organizations to increase capacities. Look at how they were supplying and getting their materials from different suppliers, really diversifying that.

Finding ways to reach deeper into the supply chain so that they were able to have more touch points and know what was going on. And you know, everyone's been thinking more about how to analyze risk and the contingency planning. And so, the reason I mention that is because as we sit here today, and we think about what is the market doing?

The big word of the day, as it has been, is tariffs. And I can be reminded of what happened during the pandemic, but it is a different situation because it's not a supply chain issue anymore. I think that there, there's been some capacity built up to help with that. Really. It's, it's a cost issue, and we've learned a lot.

So we're more prepared on how to deal with it. Earlier this year, things were, were wild. Every day you pick up a paper, you read in the news what's happening with the market. The tariffs are in, they're out. There's reciprocal tariffs. They're in, they're out. There's cost being added because they think they're gonna get a tariff and six years from now on a Sunday.

It has settled down a little bit. Those costs are real. They're still out there. But we're starting to figure out how to deal with them a little more. And the reality is, is that there's been some impact on some of those costs. But it's actually led to probably not as big of an impact, at least not yet. That, that we will have seen because the uncertainty, the back and the forth has led to the world, the suppliers, wanting to make sure that they have created a backlog for themselves.

So, we think that what's happening is they're, they're absorbing some of those costs, and they're saying, you know what? We wanna make sure that we're in business next year. We're not gonna pass everything down to the end users, and in our case, to the general contractors.

And so we might not have seen what we might have and beyond because they're trying to wanna make sure that, that, uh, they're good on 26 and beyond. But, you know, what we are doing specifically is making sure that we have an emphasis on the procurement phase. When we go, when we decide our clients, when we go to market, what we buy, how we buy it, and how we advise them as to doing that, so that we can kind of minimize challenges related to that.

And there's a number of different influences around that, but. We've also gotten really good at, I hate to say this, but giving bad news, and we could be more candid with clients because, through the pandemic, it unfortunately was, uh, we were just dealing with so many things that we can have open conversations. They're used to; they're more used to hearing these things.

Like, Hey, this risk is out there. Let's talk about what we can do to manage it, whether it is specific contingencies, or how about this? How about we don't push all the risk to our subcontractors? As a team, talk about how we really handle it.

Therefore, they're not accepting all of that and putting the cost in there. So those, those are some of the things, Shayne, that again. You know, the pandemic was tough, but there was some strategies coming out of that that prepared us for some of what the climate is. And we, we don't know what's yet to come, but, I think we're, I think we're in not a bad place.

[00:11:35] Shayne Gaffney: That's great.

So talked a lot about supplies, things like that. Procurement. What about the actual labor and workforce? Something I hear a lot is, you know, we have a shrinking labor, a shrinking workforce, a dwindling workforce. Have you seen those same trends in your markets and the regions that you also serve?

[00:11:55] Chris Hillyer: The labor is a challenge, no matter where you go. My region, any, any region. It's just construction is, is a big challenge to get people. And, I wanna say there's something like 500 to 750,000 deficit for construction labor, and that's on top of the yearly need to hire new people. And, I would say over the next five years, that's gonna get worse because we're on where the boomers are in their sixties now. You're gonna see that deficit start to really increase. And so yeah, it's a, it is a challenge. And it's a challenge because we're, we're, we're losing people to other industries.

It's a challenge for the simple fact that. People think about construction, maybe not in a, in a positive manner. The myths are, hey, construction's a dirty job. Construction might not pay well, it's not safe. It's only for men. Like you can't learn new things for construction.

Uh, it's, it's an out if I, if I don't go to college. These myths that are out there that make it a challenge. So, so yeah, it's, it is tough to generate interest from labor. And, I think we've gotta be more proactive about how we manage that and, and get to the, get to the high school kids.

Explore how we can connect. When you asked me about where I had been, that I didn't know that construction was an avenue, and I hadn't thought about it, and it's because I wasn't educated that construction could really be a real career. With real opportunities that pay well and that allow flexibility and really exciting work to be done.

And that's probably not out there enough as it should be. I think that's all part of it. But yeah, construction is, is, it is a challenge. Labor is a challenge, and we have to be proactive in our projects on making sure that there's available labor pools where we need them.

When we need them and that we have the right people. And I think that the specialized trades are even more of a challenge. And what I mean by that is the HVAC, uh, you know, the mechanical trades, plumbing, and of course, electrical. Those are very in demand. And, they will be more demand, as we continue.

So, yeah.

[00:14:00] Shayne Gaffney: Why are, are those trades typically in demand more, just 'cause of the types of projects or just 'cause they're always needed on every project you go to?

[00:14:08] Chris Hillyer: Yeah. It is the latter. Every single project generally is gonna have those trades, right? You get, you have to have functioning air conditioning and heating.

You have to have lights, and that's always going to be there.

[00:14:21] Shayne Gaffney: That's great. So, shifting gears a little bit, obviously, you are the guy to talk to at Skanska as far as pre-construction goes. So once a sub is pre-qualified, how do you determine which contractors are appropriate for this project, as an example, or what kind of subjective or maybe more qualitative factors do you use to make that decision?

[00:14:44] Chris Hillyer: Yeah. The prequalification piece for us is it, I don't wanna say to check the box, but it is, you know, we need, we need to make sure that we can work with them, but then it really does go into how are they the right fit, and why? And the easy stuff to say is, the right team, the right experience, the capacity, and of course, competitiveness.

Those, those are all important, of course. And those are all evaluations in what we do. Right? But, but there are intangibles when we're evaluating subcontractors, right? If we're going through a normal bid process and a subcontractor is competitive, normally, what our teams will do is we'll have a sit-down interview with them. We detail the projects, the details of the project, and we go through a lot of different discussions around how and why they're the best fit, and they can put themselves in a really good position by demonstrating their knowledge of the project during that meeting.

If they're bringing up potential issues to us, bringing 'em to our attention, and making suggestions on how we might address them. If they're talking about their understanding of the document and how to approach it, how they're gonna build it, who they're gonna bring to, to build, if they're walking us through their safety approach, if they are looking at the materials that are specified and providing different material options, or looking at better and efficient ways to construct it.

And the other thing is, as we're evaluating subcontractors are industry in general, and of course our deliverables are, very, very date driven. So we have timelines, we have to back in against things. And so many times we're evaluating 90 to 150 different bids on a, on a given period of time over a, a short few weeks. So responsiveness and how subcontractors, how quickly they turn things around, so that we can keep that going.

That, that does matter. If we, if we sit back and say, Hey, you know what? We've been asking for a week or so, and we haven't gotten anything. If they're not responsive for a, for this level, how are they gonna be when we get to the field? That plays a big role. And I, I will tell you, Shayne, as we stand back and we're doing an evaluation on who do we wanna choose, the first question that we will ask in the room is how well did they do in the interview?

Because we wanna know that they have demonstrated that they know the project.

[00:17:10] Shayne Gaffney: That's really interesting.

So does your team look at any of the prequalification data at all, or do you basically say, prequalification already happened, we're good, let's make sure these guys are the right fit from a qualitative and uh, subjective perspective.

[00:17:25] Chris Hillyer: Yeah. So we've got a dedicated team that analyzes all of the financials that gets us to a pre-qual amount, right? So that becomes our starting point as a project team is, hey, we know that they're pre-qualified to this amount. Let's find out, knowing that information in hand, are they the right fit? Can we work with this team for the next 16 to 18 months?

[00:17:47] Shayne Gaffney: That's really interesting. Does, does, does AI have a role for what your team and you do? You know, making decisions or, um, generating documents, anything like that?

[00:17:56] Chris Hillyer: Yeah, yeah. AI is, everyone's talking about it, right? We're using it, really, every day for me in some form or fashion. AI's really good at what it is; it can enhance an email or a response to an RFI, or you know, synthesize meeting minutes. So I think we'd be silly not to be using those things. We're starting to see a lot more people that aren't holdouts to really adopt it. We'll see more, but I think in what I do in the pre-construction, our teams have to do a lot of research as well. Like we, we'll encounter something that we see, and we don't know what it is.

Or we don't know how to construct it, or we need to look for alternatives, or, you know, how, how might we do this? And AI has become really a tool in our belt to help us look at what are some things that are out there? And it's important. So yeah, we're, we're using it for simple things like that, but, but we also, we're exploring some cooler uses too.

We've got a data scientist, one that specifically works for our data group. And we've created, kind of, a beta test version of a generative AI cost model. I think that's what it is. But basically what it's doing is it's grabbing data on our past projects, like a whole lot of data that we're gathering, and it's using that as a starting point for a conceptual-level estimates, which we have to do a lot of.

And then, and then layered on top of that, we have, you know, some, some knobs and levers, if you would, that, depending on how much information we have or not, we can, we can customize that, that starting point. If we don't have it, then it, it kind of defaults to some of those historical values. And so what that allows us to do is potentially pull off a, a kind of a high-level, clear estimate in a few hours. That used to take a few hours anyway, and we, we can do it in a few minutes, right? So things like that, we're gonna continue to explore. But, we're starting to use it now, so.

[00:20:02] Shayne Gaffney: Really interesting. Do you see any other technologies that are coming into the fold, aside from AI that may impact pre-construction or really the kind of the, the next gen of pre-construction?

[00:20:14] Chris Hillyer: There's a couple of things that come to mind, you know, and, and there's a, there's a few tools that have been around for a bit as well. Like, just yesterday I was sitting with one, one of my folks here, and we were looking at a laser scan of an existing office building. High-rise that, that we've gotta renovate, and we were taking the laser scan and overlaying it versus the new plan, and looking at a heat map of the elevations to determine how much floor patching we needed.

You could see the different colors that could tell us, um, you know, anywhere from, from, you know, at 16th of an inch up to an inch. And so you know, that's out there now. We've got drones now that have thermal imaging components to 'em.

So if we go into existing facilities, we can see like what might the issues be and how might we manage that. Some of the roof and things like that are kind of cool. And then the AI, the cloud-based and AI-type stuff, is changing how we do things. Everything these days is moving to this cloud collaborative environment.

Everyone can work in the same place at the same time. It's more efficient, and then, we can spend time doing the things that matter, not the small nuances that are necessary. Those are things that we're starting to use more and more. Many of those tools have been out there now, but some technologies that are gaining more traction that are helping us really shape the way that we do pre-construction in the industry, too.

[00:21:37] Shayne Gaffney: That's amazing. Yeah. I was at, uh, Groundbreak, I think two years ago now, this point, and the drone thing was just starting to come to the fold, and I thought that was so cool to see just a drone fly around Groundbreak, taking photos and then being able to basically get down to the millimeter of like the exact specifications of the room, where the different booths were.

Any potential issues with also inspections. I've seen it used to where the drone will take a photo, upload it, and then say, you know, here are some potential danger areas based on this inspection by the drone. Have an inspector go and look at this area. Like tomorrow or something like that. So it's really interesting to see the drones come into the fold.

Um, what excites you most about where pre-construction is headed? It could be, you know, either at Skanska or just in the preconstruction industry as a whole.

[00:22:31] Chris Hillyer: Yeah. The, the word of the moment I mentioned a minute ago is data. So pre-construction, construction, general data, data, data. Everyone is how do, How do we get the data, How do we use it? And it, it is about time, right? We, for so many years, we've had all these different projects and, and all of this useful information at our fingertips.

I would say for our group, a few years ago, we took the initiative to say, you know what, we, across our projects on any given year, we've got so many pieces of information. How do we use that to develop, um, a tool that can make us be more efficient from a, from a cost perspective and from a being efficient during the pre-construction and design phase.

We spent the time and effort to develop a benchmarking tool. And what really it does is it captures, I wanna say, over 400 different data points on, on, on all of our projects that could range from cost, but also, and more importantly, program and system data points. And then it, it doesn't matter where the project is because we can normalize between location and time as well.

And it's become kind of this really robust platform that we can use to identify when something doesn't make sense on the high or the low. And also really how we can be more efficient and work with our design team? So I think that's one way that we're using it. And I would say even from a smaller scale.

I think from a data perspective, like subcontractors. The investment is, is going to be worth it. How do we gather what, what is important to us? How do we evolve that and use it? And that, that's good stuff, and where the industry is heading. I've been told from our data analytics people that there's this thing out there called predictive analytics.

Where you take the actual data and and you overlay it with AI, and you can make these predictions of where things might go in the absence of hard factual data.

Right. And, and as I think about kind of use cases for us. And, and estimating, and construction. You know, we're, we're constantly doing, doing estimates, and I enter a concrete frame into our estimating system, and AI kicks back. You know what I see that your production rate is, is X, but on the last 50 Skanska projects, it was X plus three.

Would you like to make that adjustment? Or, Hey, you know what, I see that you've entered this concrete frame into, into the estimate. But I also noticed that you have this specific engineer, and we would expect the rebar to be this fraction or this more per cubic yard. Would you like to make that adjustment?

And so those are the, the kind of things that will change how we do business, and how we can be more efficient and, and it's exciting, right? I mean, I've been doing this for a while. I, I certainly haven't seen this level of technology playing a role in, in our day-to-day. And, I'm trying to embrace it.

But I appreciate pushing the, the bar up with my teams, and if this can help us do that, giddy up.

[00:25:38] Shayne Gaffney: That's great. I live in data day in and day out. I live and breathe it as obviously a, a, a software professional. And yeah, when I first came to this industry, I was always, I am so amazed that the amount of data that this industry generates, both in terms of like the breadth, but also the depth of data, it's absolutely incredible how much data construction can generate.

And what we've tried to do is be able to collect that data from contractors in as least frictiony way as possible. So instead of doing a bunch of manual entered data, maybe do some more document scanning, like we see document scanning being a huge thing in the future, where we have an OCR reader or maybe an AI reader who can basically take that document, extract the relevant data points from it.

And do the the data entry for the contractor. And so the contractor having to do all that manually. Those things I think are really exciting too, from an efficiency perspective, but also just getting more data, but also getting that data that's typically more accurate, but also backed by some, you know, form or function.

So looking forward in the future, how do you see your portfolio, either across the regions, either developing or also changing over time? I know data centers have been kind of the hot new thing recently, but what else do you see in terms of things changing over time?

[00:27:02] Chris Hillyer: I mean, I'll be honest with Shayne, I don't know that I really do. I think we know what we do well. I see us continuing to leverage what it is that we do well and grow our market share in those sectors. We're not, we're not looking to make a, a big shift. We wanna diversify, look for new emerging technologies and markets where it makes sense, but we won't see our identity changing.

Mission critical is something that we are heavily invested in, and we certainly are making a bigger push for a bigger market share piece of that. But we're not going to completely just abandon the work that the great work that we're doing in our offices.

[00:27:44] Shayne Gaffney: Really fair. Well, I thought this was really interesting. I love the discussion about pre-construction technology, how these things are really kind of coming together. So thank you for your time today. Where can people get in touch with you for more?

[00:27:59] Chris Hillyer: Yeah, absolutely. Um, my email it is, uh, Chris dot Hillyer at H-I-L-L-Y-E-R@skanska.com.

Love to hear from you.

[00:28:07] Shayne Gaffney: Yeah. And I'm shayne@highwire.com. Chris, thanks for your time.

[00:28:11] Chris Hillyer: Of course. Thanks for having me.