Can you give an example?
We always strive to execute our projects well, and whatever state the economy is in does not change that. As for operational efficiency, that goes all the way from leveraging our resources around the globe through to our integrated global workforce, and through to gaining efficiencies through technology. We are in a continuous improvement mode, despite the economic conditions, and that really has allowed us to continue being profitable.
To capture operational efficiencies, how is your finance department structured?
We have what we call a decentralized finance organization that works hand-in-hand with corporate finance. There are five business lines — energy, water, telecomm, government, and enterprise management solutions, which is our consulting division. Each of those operating units has a senior finance officer who has a dual reporting relationship to the [corporate] CFO and their division president. When it’s most efficient and effective for work to be done at the corporate level, we do all of that. For example, tax and treasury is all done in the corporate finance group. But the activities where it’s important for us to be close to our projects are handled by the unit CFOs, such as project accounting support and certain planning and budgeting activities.
Where does your internal audit function report?
It has dual reporting responsibilities as well. Internal audit reports to me as [corporate] CFO for administrative purposes and to the chair of our audit committee [for functional purposes.] Our board is comprised primarily of independent directors as defined by the Securities and Exchange Commission. The audit committee is comprised solely of the independent directors
As a private company, the independent board makeup and internal audit structure are voluntary measures. Why do it?
It’s a really important model for us. We are employee owned and promote best practices. In this case, we think the best practice is to have independent directors making up the majority of our board. The board also includes executive directors — myself, the presidents and CEOs of our largest businesses, energy and water, plus our CEO, who is our chairman and president. We also ask for quarterly certification of financial results from our operating units, which publicly-traded companies are required to do under the Sarbanes-Oxley Act. All of our certifications are passed to our audit committee for review. We feel like it’s an additional means of engaging our leadership … and as an employee-owned company we think [that type of governance] is really part of the company’s fiduciary responsibilities.
I know you work with a bank consortium. Did the credit crisis change your banking relationships in anyway?
No, we have a credit-facility arrangement that covers an extended period of time, so we have not really had any significant issues with our banks. We typically do not use our credit facility for borrowing, so there haven’t been any issues in that regard. There are 10 banks in the group and we have a lead bank that facilitates and coordinates, but we have individual relationships with each of the banks. Our disbursements — payroll, accounts payable, for example — are negotiated or arranged separately from the consortium — although with members of the group. The consortium’s primary function is to provide us with a credit facility — which really gives us the ability to borrow — and letters of credit, that we use to provide support our projects.