Why AEC Is Failing (And Who Can Fix It)

I head up the Mastermind program and the startup incubator for KP Ready Co , and I also host this podcast . If you're a regular listener maybe it's your first time Maybe you watch it on YouTube or maybe you listen to the audio version only , but you're probably used to seeing me , used to hearing my voice

. Many times I am joined by KP Reddy , our CEO and founder . If you're looking at the screen right now , you're going . That's not KP and it is not . I am joined today by Hope Alexander . She is a senior advisor here at KP Reddy Co , and this is part of a special series that I'm doing with our entire research team . We've launched a new project .

I think it's really interesting , I think it's really valuable and I wanted to talk with each member of our research team to see what their background is , what they're bringing to the research , what their research is about , what they hope to find out , and then the importance of it , what you should know you , the listener , should know about what we're doing here

at KP Ready Co . So I'm not joined by KP today Many times , in fact , later today , you know , as we record this , here's a little inside baseball for you . Later today I will be joined by KP Redding . We will unpack one of his LinkedIn posts , which is how this podcast started .

But today , hope Alexander and I are going to talk about the research that she and the rest of the research team are doing . So , hope , first of all , welcome , I'm glad you're here . Thanks for joining me today .

Hope and I , um , we met almost a year ago , I think at this point , uh , in Chicago , at a , uh , um , one day mastermind event in Chicago . We've gotten to know each other a bit over the past year or so and we're kindred souls .

We come from the AEC world , specifically the AE world mainly , and we both have some business development background , some marketing background , and I really appreciate the fact that Hope brings the perspective of her clients , which I'm going to ask her to talk about here in a second .

But I appreciate the fact that Hope is very concerned with and brings the perspective of her clients to everything that we do here at KP ReadyCo . So , hope , tell us a little bit about your background . You know , I didn't I let a little bit of the cat out of the bag , just , you know , furry piece of the tail . Maybe Fill us in on your background .

How did you get to this point ? What's your ? Where did you come from , where did you work , who'd you work with and how'd you get to here ?

So I was in both of those arenas and development real estate development for the greater part of maybe 10 years . And then I met some guys who were starting a design build firm , and Grant McCullough and Frank Cavalier . They came to call on me at Trammell Crow and they were starting a design build firm . They wanted to call it McClure the combination of their two

names and lo and behold they . They . They wanted to to call , like Trammell Crow , to bring a bring business to them to do design build work for Trammell Crow , and I ended up joining them . I said you guys are way too fun and so this is the route I want and consequently I joined them .

We were maybe four or five people when I joined and we became several thousand people and then we were purchased by AECOM and we were bought by AECOM in 2005 . So we were again in market in the . It was 1989 . The market had tanked in 87 .

As you know , when the market tanks as hard as it is , it's also a great opportunity for a lot of people and consequently we asked people to come , all the AE firms and the construction companies around the Chicago area that were laying off . We said you can come join us and bring work with you , and so we ended up designing silos of work .

So we had aviation and aerospace , we had food and beverage , we had pharmaceutical . At the time , printing and publishing was a huge market . We had printing and publishing , we had commercial , which included historic restoration , and the rest is history . So we were bought by AECOM in 2005 . And we remained there for a few years .

But , quite honestly , it was difficult to go from an entrepreneurial environment to AECOM and AECOM at that stage was just in the process of buying DMJM . They bought Daniel Mann , johnson and Mendenhall , they bought Earth Tech . I mean , they were buying all of these companies , both A&E and construction around the United States .

And pretty soon it was just for me and for those of us that had started at McLear it was like moving an elephant . We were this , we were out of fish , out of water .

Maclear and I went off and he started to work with different venture capital companies that bought private equity firms and so forth that bought architecture , engineering and construction firms and I would go in and help turn the sales around or help enhance sales .

And so , as a result , I was involved and have been involved in the business development side of A&E , construction management , design , build material handling and logistics , and also innovation and emerging technology . So how I got here was and in the companies I've worked for just the last few years I've been maybe 10 years in the pharmaceutical side .

So I was with Burns and McDonald for the last two years helping them start up a life science and pharmaceutical group and then , previous to that , b , e and K building group out of Raleigh , durham . So and they are a construction management company that really it's big in the pharmaceutical and life sciences business as well as aerospace and some other markets .

So those are the last couple . But in 2009 , my friend , kp Reddy , called me and said I got a call from the architect , frank Gehry in Los Angeles . In Los Angeles and he is hoping to start a company called Gary Technologies and it's going to be around building information modeling and I was like what , what's that ?

And he said you and I are going to go there and I'm going to help him develop this concept and you're going to sell it . So , jeff , to answer your question how I got here and kind of where we're going with KP ReadyCo is that we did . We built this company .

We had many , many unbelievably talented , smart people with us . So don't get me wrong , but we did create this company , gary Technologies . It was the very first time I had ever heard of cloud . We were using cloud . I was like what ?

But the bottom line is it was a relatively easy sell in the sense that all the clients were fascinated with the idea of doing 3D and 4D and 5D design and estimating and scheduling . But what happened is that once they got and they loved it , once they worked with it , they loved it . But they were constantly asking us well , who's going to pay for this ?

I mean , how do we incorporate the costs of this into ? And they were kind of dipping their toe in the deep end of the swimming pool , if you know what I mean in terms of use of it . And so this time , when I recently July of 24 , retired from , semi-retired from Burns and Mack , and KP said you know , we're going to do this again .

You're going to come work with me again because we've had so much fun and so much success . You're going to come work with me again because we've had so much fun and so much success . And so I said , well , the one thing that we really need to do , as you know is and he agreed is we've got to incorporate owners .

We cannot go off and create something without the owner input and without the owners advising us , because they're the ones that are going to have to use it . And that's where that's kind of the long story of how we ended up , how I ended up here with KP and how we began to formulate this integrated owner's forum is what we're calling it .

You were talking about when you were at Gary Technologies and , for those that may not be familiar with , gary Technologies eventually purchased by Trimble right , you mentioned that , as you're developing the building information modeling , the 3D to 4D to 5D , et cetera , clients were fascinated , but who's going to pay for this ?

Are those clients that you're talking about , are they owner or are they AE ?

They were all receptive , they were all interested . It was the owner side that I called on that were receptive , but and maybe even more so than the A&E side , to be honest , I think they really wanted to jump in , but it was again it was the cost . So I don't know if I'm answering your question well .

I spent 20 some odd years in A and AE firms and if any of us from the A side or the AE side are honest , we know that the majority of our , or much of our I think this is maybe changing a little bit , but much of our tech adoption is driven by the owner's request . Yes , so that makes sense to me .

Right , it's the owners that are saying , hey , this is intriguing , but who's going to pay for this ? So we fast forward to today , integrated owners forum , and I think everybody knows this . I think I imagine that everybody that listens to this podcast or watches the YouTube version of this , I imagine everybody is well-educated in the AEC world .

So they understand that when we're talking about the owners , we're talking about the building owners , we're talking about the clients , et cetera . Talking about the owners , we're talking about the building owners , we're talking about the clients , et cetera .

And they also understand the fact that when you're in business development as you have been , for you know the vast majority of your career you're you're on the A side or the E side or the C side or whatever , but but you're the conduit really , especially the beginning conduit to the owner side , which is a very unique position to be in in the industry .

And so , when I look across the table at our research team , we've got Ted that comes from a building product manufacturer background , We've got David who comes from the construction background , and Frank that comes from a building product manufacturer background , We've got David who comes from the construction background and Frank that comes from the engineering background ,

and Zig is coming from architecture and you're coming , yes , from the AE side , but really the conduit to the owner side , which is obviously a really great segue to the integrated owners forum . You said something a minute ago about understanding the needs for the owner .

So a lot of the research that's going to happen is around the problems , the needs , the desires , the value proposition or the value perception , maybe , of the owners , or the value perception , maybe , of the owners . So what , what is the work that that you're hoping to do as part of this research team ?

As we look at , you know , let's towards the end of 2025 and into 26 .

So , as a result , as we begin to

look at ways to enhance the design and construction industry , we're going to have to also understand how those unique , how they differentiate between each of the industries I really think that's going to be critical to this .

So the aviation and aerospace , or the guys that are building airports and that are building heavy maintenance facilities , are going to have different requirements than somebody who's building a hospital or somebody who's building a cell and gene therapy facility . I mean , they're vastly different .

And so what I'm hoping to get out of this is maybe I don't know if we can do this , but I'm hoping that we can begin to standardize some of the front end data collection , decision making .

We can expedite some of that , that some of the technology that we're looking at and methodologies that we're looking at can help these owners , because , you know , there's so much to so many decisions to to make at the beginning of a project number one and number two .

As you and I both know , there's very few people left anymore who are good big project managers who can actually manage and coordinate all of this information . And the owner ? They don't . They're even worse , they don't have the capabilities in-house either . So we are . I mean the big labor shortage , brain power shortage right now on this in this business is huge .

Aspect of what's driving my desire to help is getting things organized , getting things standardized , getting help for that centroid . You know project manager who's going to have to work , you know conduct the orchestra and it's going to be tough , it's not easy and feel that we're meeting all of the individual client requirements .

You know all those special , unique things about their projects and they're responsible to most of these guys , are responsible to their boards and you know these are just human beings who are on the line for sometimes billions of dollars worth of work . I mean that's a little bit of pressure there .

I'm not sure that everybody understands this , but in order to be the best architect , the best engineer , the best contractor , to have the best business , to be the best business development person , you do have to understand your client's business , maybe even better than they do . Right , that's what I see when I look out across the landscape .

I look at you and I know you know the business of your clients , you know your your owners that you worked with in the past . You know their business as well or better than they do .

You you , you understand it , you can predict you , you can see the trends , right , and so that's a necessity and I and I think that's that's to me , that's one of the important things about this research work is is understanding that , and then you know the way that I have always viewed owners or clients , depending on what you call them , depending on your

perspective , from your little role in the industry . There's a spectrum , right , and I say I don't mean this to be demeaning in any way , but I say there's a spectrum between sophisticated and not sophisticated clients , so or not sophisticated and sophisticated .

So maybe you're hiring someone to design your dream home and you've never worked with an architect or an engineer , you've never gone through a construction process . You don't , you don't know what , you don't know . Nothing wrong with that . You're in the camp of the unsophisticated client , right , you're not a part of this , you haven't been a part of this process .

You don't know the process . Then you get to the other end of the spectrum and you've got a college , university , healthcare system , um , uh , pharmaceutical . You know all those that you named off . Right , they're sophisticated , they've been through this process , they go through this process , they have teams , etc .

And you said something a minute ago that I think is really important that even at the sophisticated end of the spectrum there's still gaps .

You know everything that we're doing , so that whether you are a young person kind of trying to move up the ladder in the global engineering group of your company , or whether you're a very sophisticated owner , you know we at least have some means . And then how we proceed is in what kind of innovation we use is that's yet to be determined .

But , yeah , but I think , I think that bridging the gap is important .

I used to say North America , but we spread over to Europe now , so all across , you know at least half the globe .

We literally have the innovation leaders , the AEC world in our mastermind groups , and and so I I sit with them , meeting after meeting after meeting , and hear what they're doing on their side , Right , and a lot , of , a lot of that has to do with owner needs and things , but of course they're focused on their organization , innovating inside their organization ,

serving their clients better , et cetera . And of course , much of the conversation there has to do with data and standardization and these things that you're saying .

So I'll be curious to see what the research reflects after you know , as I've said over and over and you've mentioned , we've got a whole team of people that are going to be bringing their own perspective or they're going to come to this research looking through their own lens , just like you will , from the owner , ted will from the building product manufacturer , et

cetera . So I'll be . I'll be curious to see what what comes out of it .

out there I'm thinking from the design and construction side but there are many firms out there that specialize in XYZ . Maybe it is aviation . If you're AECOM and you've assimilated , you know like three quarters of the AEC industry , you've got lots of verticals . But there are plenty .

I'm based here in Indianapolis , I'm just two hours away from you in Chicago , and here in Indianapolis we have lots of people , lots of firms that specialize in K-12 . We have healthcare specialists , library specialists just kind of off the top of my head , what some of the firms here specialize in .

They are specialists and they have a view of libraries or whatever that is , whatever their vertical is , whatever their project type is , and maybe they've got multiples . Um , back in the day when I was in Chicago , I uh , I started out working at Epstein , oh I didn't know that I love those guys . So small . World right Um , and world right um , and .

And so we , we had um specialties in museums and also in distribution plants , which was , you know , sort of schizophrenic in a way . But you know that was that , was it right ? Here's a vertical , there's a vertical project type , project type . We've got a view into this type of owner and a view into that type of owner .

But there's lots , you know , you , you rattled off earlier aviation and pharmaceutical and others , and I , I think you're exactly right . It's it's going to take , it's going to be a big task . It's like how do , how do I look at all of these verticals ? And I'm sure there's going to be a scorecard or something right .

We , we're not going to be looking at at custom residential , maybe single family , but maybe we're looking at data centers or something like that . How do we , how do we parse all of this information ? But but I think your , your point is is right on and it highlights the complexity of the task at hand .

But yeah , and some of those silos went away . Printing and publishing kind of went away .

I equate what you all are doing and will be doing to what we do in our incubator , which is , in the incubator , we focus on early stage , usually pre-revenue startups , and we focus very heavily , if not solely , on customer discovery . So it's having these conversations you know , what's the problem ? What's the solution problem what would ?

What would these people pay for ? What would they value , et cetera ? So as , as you start to think about the research at hand , what's that methodology from from your point of view and from your work ? What's that methodology look like ? What are you ? What does that mean in your day-to-day in terms of finding out what these owners need and value , et cetera ?

We're going to be asking a bunch of questions , they're going to be voicing concerns and hopefully beginning to funnel some of that into commonalities , if you will , common problems and so forth .

So we've got the others , other research colleagues of mine , all you know and of course , we have AI taking notes and keeping track of everything as we begin to funnel it into some data that we can begin to siphon through .

So it's going to be it's really starting with the conversation and this group of people these are all former clients of mine who are predominantly CapEx or global engineering Yep . So they deal with both the design and construction side , and most of them are large project people .

So they've been dealing with all aspects , very large project teams , and they seem to have all , as I mentioned earlier , the same problems lack of lack of labor , lack of experience , lack of you know , Lack of experience , lack of you know . And then the other aspect of this , Jeff , is that the a lot of these big clients are not able to find enough firms .

The AEC firms don't have the experience , don't have , and how to automate that and how , to you know , take the risk off the owner's table is is really going to be critical .

It's also evolving that quickly on the design and construction and the the building material side as well . So it's , it's everybody , it's all hands on deck at this point . Yeah right and and you , you , just you just brought it up and thank you for bringing it up , but we will be our next one day Um mastermind event will be in Atlanta on May 20th .

Um , that's , that's an opportunity for people to uh get a peek at what the integrated owners forum is , to get a peek at , um , what our mastermind program is , and participate in those those conversations on that day in Atlanta . It's a Tuesday , I believe , if I'm remembering the calendar correctly .

Um and as , and and I also realize right hope , and I've been talking , we've been mentioning a lot of things . We've talked about mastermind groups , we talk about incubators , we talk about integrated owners forum , the one day mastermind event .

Don't worry about any of that . Just go down to the show notes below . Whether you're looking , watching this on YouTube or listening to this on on one of the podcast platforms , our production team puts the links to all of these things that we talk about . You know things that need links . They're down below , so just go down there and click on it .

And then also , I would say that if you have questions about what we're talking about , you know when I'm , when I'm recording with KP , I say hey , you need to follow KP ready on on LinkedIn . So the letter K , the letter P ready . You can't connect with him he's maxed out his LinkedIn connections but you can follow him , hope and I .

We have lots of friends , but we're not KP ready . So we're a little bit more accessible on LinkedIn . Dm us or send us a connection request on LinkedIn and we'll help you find things as well . We'll point you in the right direction .

But reach out to one of us , go down to the show notes , find the links and you'll go to the landing pages that are appropriate for the things that we're talking about . So don't worry about taking notes or anything right now . All right , hope , I've done this with everybody I'm doing this with the entire research team .

I'm going to put you on the spot , Okay , and I'm going to test you , because we're going to come back in a couple of months or so and we're going to record a follow-up episode . So my question right now is what's a hot take ? What do you think is ? Just , it could be just one thing , what do you think is going to come out of this research ?

And then we'll come back in a couple of months or whatever , and I'll say hey hope you know . When we were recording this , you said you thought this is what was going to , what was going to happen , what we're going to learn , et cetera . How's that going ? So what's a hot take that you have ?

I really do think that they're going to begin to see that they're not alone , that this is coming , and I think they're going to be more willing to embrace it .

One , one final angle for this conversation , I think , and that is we have people watching and listening to this episode at some point in the future , from when we're recording it now .

What is the most important thing for them to understand or take away from this conversation and to watch out for , as the KP ReadyCo research team does their work and the Integrated Owners Forum unfolds concurrently , what's , what's the thing that jane smith , the listener , right now needs , should , should be paying attention to and should be taking away from this

conversation well , I I genuinely believe that everyone should have a seat at the table .

, they'll develop a level of comfort , begin to enhance the way we design and engineer and implement projects . You have to have a seat at the table . Your input is going to be critical and your understanding is going to be critical . So , whatever you are your owners or AEC executives or emerging tech companies you all need to come .

I understand that that may not technically be accurate Using that term may not technically be accurate , but we have represented in our research team the design side , the material side , the construction side , the operation side , everything that's necessary to design , to build , to operate built environment where people live , work , play , worship , whatever it is that they

do . And so I agree , everybody needs a seat at the table and I'm really happy about the fact that our research team represents a lens of everybody having a seat at the table and that's how the research will be conducted . So I love that . I love that we have that alignment .

Hope thanks a lot for joining me for this and sitting down with me and you know , I hope you have a great foot massage and I agree that that will be better .

We call it a panel discussion , but that sounds very stodgy to me . We're going to pull everybody together in the same room and we're going to kick it all around and we're going to see what we're learning . We're going to hear how the research is going , what's coming out of it and what could turn into a pretty raucous discussion , but we'll see how it goes .

But I think that'll be a lot of fun is getting the team together and say , okay , where are we right , what's the progress and what are we learning here . So , as you're listening , some things to look forward to in the future . And , as always , you know we've got the other versions of of uh the .

KP uh , kp unpacked podcast as well KP and I unpacking his LinkedIn post , frank Lazaro , another one of my teammates , and I unpacking AI for AEC and um , some of our mastermind members and speakers and things as well . So thank you for joining us . This is KP Unpacked . It is where the biggest ideas in AEC and AI and innovation all collide in one podcast .

It's powered by KP ReadyCo . This is where we break down the trends , the technology , the discussions and the strategies that are shaping where you live and where you work and where you play , and where you live and where you work and where you play and

where you worship and where you eat and all of those things in the built environment . So thanks for joining us . We'll be back again next week and hope to see you , or hope you see us and hear us again next week . Thanks everybody , thanks , hope , thanks .