Strategy update

The foundations for growth have been laid

2019 was a year of renewal for Implenia. The operating model and organisational structure introduced in the second quarter quickly proved their worth, thanks to the clear roles and responsibilities established. In addition, the operating model encouraged rapid and effective implementation of numerous Group-wide strategic initiatives. These include measures in various business areas, an improved Value Assurance approach, Procurement Excellence and the ERP transformation program INSPIRE. The five corporate values defined in the new strategy (Excellence, Integrity, Agility, Collaboration and Sustainability) are already being put into practice and are helping to create a culture in which our employees can develop their talents to the full. We have, then, laid the foundations for growth, and Implenia is now ready to realise its potential – profitably and for the long term.

With our new operating model, we have organised ourselves into four different business divisions, each with its own profit and loss and balance sheet responsibility. All four divisions refined their plans for organic and inorganic growth, both geographically and along the value chain, in 2019. As a result, the divisions are now in a position to plan specific portfolio alterations that will allow them to grow profitably and help shape the changes that the construction industry will face in future.

We made particularly good progress in Division Development: Implenia’s integrated project development unit manages an attractive pipeline of projects that create space to live, work and do business, mainly in the Zurich and Geneva metropolitan regions. Implenia plans to expand the current value chain in order to turn Division Development into a leading real estate business. Alongside the existing “trader developer” model, the aim is for Implenia to generate continuous earnings in the medium term instead of always selling its ready to build, approved development projects as it has done previously. To facilitate this, Implenia intends to create a new investment vehicle with attractive projects from its own development portfolio, and to open this up to Implenia shareholders and investors. The vehicle will make financing, whether with equity or debt, more flexible, which will in turn allow stronger growth for Implenia’s existing development platform.

Implenia intends to establish the investment vehicle as a pure real estate company, called Ina Invest Ltd. Approximately half the development portfolio, valued at current market prices, will be transferred to the newly created company. Ina Invest Ltd.’s parent company, Ina Invest Holding Ltd., will be listed. Existing Implenia shareholders will participate in Ina Invest Holding Ltd. in the form of new shares (dividend in kind). Implenia will retain a stake in Ina Invest Ltd. as a significant minority shareholder. The Implenia shareholders will vote on this transaction at the upcoming Annual General Meeting. The other half of the attractive development portfolio will remain at Implenia, which will continue to develop it. A real estate management unit at Implenia will handle project, portfolio and property management for Ina Invest Ltd. All of Implenia’s divisions will provide their services for the development and execution of real estate projects at standard market conditions (arm’s length). The new real estate company will allow Implenia to generate significant added value from its development portfolio.

The “Operational Excellence” programme was an important focus and integral component of the strategy in 2019, laying a foundation for profitable growth. Implenia carried out various initiatives within the comprehensive “Operational Excellence” programme:

  • Value Assurance (formerly Risk Management) A comprehensive and enhanced approach – consisting of standards, processes and governance – was implemented to improve project performance. An appropriate organisation has been set up to ensure implementation is properly supported and monitored. Implenia divides projects into four classes according to their risk profile. Decisions about the projects are made by committees at different hierarchical levels depending on the class. The Value Assurance approach has been applied to complex projects since summer 2019. Since December, Value Assurance has been used systematically for all projects, including less complex ones. The operational phase is accompanied by review milestones, and there are plans to introduce analytics-based support tools. There is a Group-wide organisation for Value Assurance with specific capacities established in each division.
  • Procurement Excellence This initiative encourages closer partnerships with suppliers and subcontractors and generates short- and long-term savings in purchasing. Implenia organised numerous supplier summits and one-to-one negotiations with key suppliers in 2019 in order to start a dialogue, identify potential savings and define measures that would have a rapid effect. These activities are continuing and are gradually being integrated into medium and long-term purchasing strategies for the top categories so that the full potential can be realised.
  • Lean Construction Lean methods and tools are increasingly used in the construction industry. They help to reduce construction time and costs, and improve quality. Implenia has, therefore, standardised the principles of Lean Construction and collated them into a toolbox. This was launched in 2019 and is now being used on a growing number of projects in all divisions. An internal Lean Academy has been established to ensure that those working on the projects acquire the necessary skills and retain them for the long term. As the systematic roll-out continues, Lean Construction is becoming the standard for Implenia’s project work.
  • Digitalization INSPIRE, the transformation programme which is harmonising procedures and the ERP systems for core and support processes, is now in the implementation phase. It is being coordinated with the ongoing development of BIM (Building Information Modelling) within Implenia. Further BIM projects were rolled out in 2019 as part of the Group-wide BIM-strategy. Model-based core processes and skilled employees are helping to turn BIM into a clear competitive advantage for Implenia.

The “Innovation Hub”, Implenia’s internal innovation management programme, was launched in September. Since then, all employees have been invited to submit their ideas via a digital platform. These ideas are then put through a three-stage process that takes the successful ones right through to implementation. Through the various phases, employees are given time to work on their ideas, as well as support, coaching and a financial budget. The following five areas are prioritised: services, products, production methods, sustainable solutions, process optimisation. By the end of 2019, around 40 ideas had been submitted. Some of them have already passed the initial hurdles and are now being developed further. A few months ago we also started a new programme aimed at industrialising appropriate processes. This is allowing us to exploit the opportunities created by new technologies and increase productivity.

Talent and organisation - Organisational structure and management team in place and working productively

The new organisational structure was implemented quickly and effectively. It is now well embedded; employees understand their roles and are carrying them out effectively. The new structure is based on four divisions (Development, Buildings, Civil Engineering, Specialties), several global functions (Finance/Procurement, HR, Legal, Strategy, Group IT, Marketing/Communications), the “Project Excellence & Services” Competence Centre, and the country organisations. This simplifies cross-disciplinary cooperation on complex projects, promotes entrepreneurship in the divisions and – thanks to the country organisations led by Country Presidents – helps to strengthen local relations with customers and other stakeholders. International cooperation is also being improved as a result.

The following personnel changes occurred in the management team: Christelle Beneteau began work as Chief Human Resources Officer on 1 May 2019; Marco Dirren started as Chief Financial Officer on the same date. Anita Eckardt, an experienced and proven leader in the construction industry, took over as Head of Division Specialties on 1 September 2019. This completed the line-up of the top operational management team, the Implenia Executive Committee. There was another change in the leadership team on 1 January 2020: Christian Späth succeeded René Kotacka as Head of Division Civil Engineering. Christian Späth is an experienced construction engineer who has worked for many years in all areas of civil engineering. His career at Implenia has taken him through various leadership roles. Further key positions within the Group were successfully filled during the year under review.