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April 30, 2008

E&Y establishes global group to co-ordinate infrastructure services

Ernst & Young (E&Y) has launched a global infrastructure services group to co-ordinate and bring more cohesion to existing practices of skills-sharing across the network.

E&Y US partner Mike Lucki has been appointed to lead the group. A 28-year veteran of the Big Four firm, Lucki also heads the E&Y US, Americas and global construction and engineering practices.

The network hopes to use the group to ensure that the network’s best resources are always deployed to the right infrastructure engagements, Lucki told the International Accounting Bulletin. “For example, if we need someone who has a lot of airport experience for a transaction say in Central America, we can find those resources whether they are in Canada, the UK or wherever and bring a global team to bear on the opportunities as they arise,” he said.

The group will be driven mainly by member firms in the UK, Australia and Canada, where there are existing, long-standing infrastructure practices. This expertise will then be utilised in newer markets. “Infrastructure in the UK and Australia has been alive and well for ten plus years with public private partnerships and a lot of interaction of funding from the private sector into the public sector, while the US is basically virgin territory,” Lucki said. “So my role is to take what we do on a global basis and be a lot more co-ordinated around the world as infrastructure funding requirements are requiring more and more private investment.”

A growing marketplace Ernst & Young publishes regular infrastructure reports and Lucki said they indicate the marketplace is moving forward and will grow to be very large. “We will take the skill sets within Ernst & Young, whether it’s in the government sector, or the construction sector, utilities sector and telecommunications sector, and bring our best resources to bear on a lot of different infrastructure needs and projects,” he said.

The multi-disciplinary group will include professionals from across the Big Four network’s range of service lines, combining transaction advisory experts with audit and tax professionals. There will initially be about 500 core personnel consisting of about 300 people in the UK, 100 in Australia, 50 in Canada and 50 in the US. There are also smaller numbers of staff scattered widely across the rest of the global network. Lucki said he hopes to enlist another 5,000 people at different points and he foresees the core group growing quickly.

“We have a lot of people who have a lot of great expertise in tax, municipal financing, leasing, etcetera, which is basically the skills you needed to play in the private public partnership arena or infrastructure arena,” he explained. “It’s [about] just taking those skill sets and retooling them or applying them to a different set of facts. So we have a lot of resources around, it’s just trying to identify the people and have them specialise in this area.”

In addition to the US, other areas of growth are developing markets. “Clearly the BRIC [Brazil, Russia, India and China] countries will have a tremendous need and tremendous opportunity,” Lucki said. “If you look at spending globally, the US is probably spending less than half a percent of its GDP on infrastructure, the European nations are probably at 2.5 percent, while China’s spending 8 to 9 percent of its GDP on infrastructure.”

Development is vital Lucki is an advocate for infrastructure in general and describes himself as a missionary in this field. “We believe there is a big need for future investment in the US and around the world as infrastructure is key to the economic development of any country and the survival of that country from an economic perspective,” he said.

“Our tag-line is we need to create the will to build. I think a lot of governments have gotten gridlocked or frozen and don’t have the political will to build anymore. We see that in the US and that’s really impairing the economic development of many countries and cities and states so it’s really trying to bring back that will to build.”

The most significant challenge will be choosing the right opportunities to pursue. Lucki said: “There are so many opportunities out there right now, it’s [a matter of] trying to find and dedicate the right resources to the most important opportunities out there. You can’t be everything to everybody so we need to streamline and figure out where we can best provide a real benefit out there and make a difference.”

Carolyn Canham

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