Finance transformation
promoting sustainability, Persson argues that he is far closer to being a fully-fledged “strategic advisor” than he could ever have imagined a few decades ago. Not that any of this is straightforward. On the contrary, success in this new financial universe can only come from understanding and leveraging data, from clever departmental management, from having confidence that colleagues know their wheelhouse. Get it right, though, and the opportunities are clear – both for Skanska and the planet at large.
Bricking it
Even before Covid, construction was a low-margin industry. From high labour costs to intense competition for projects, builders have long been used to white knuckle balance sheets. According to one 2019 study, for instance, 44% of UK building schemes actually experienced a loss after adjusting for project overheads. And, as in so many other sectors, the pandemic and its consequences have arguably made the situation even tenser. That’s largely down to the rising cost of construction materials. With the price of concrete soaring by over 7.7% during the second half of 2022 – and steel jumping even higher – it’s easy to see how an industry already predicated on tight returns could be squeezed even further. These constraints, at any rate, arguably begin to explain dramatic changes to the finance function at Skanska. “If you back up 15 or 20 years,” Persson says, “I think what was then considered to be the finance function was more traditional accounting.” But now – especially in light of “cost pressures” across the sector – the CFO is expected to provide deeper insights into the nature of Skanska’s business. “How do you design an incentive system to drive long-term towards our strategic targets?” Persson asks rhetorically. “How do you allocate capital across different business streams to both make use of the business opportunities that are present – and at the same time stick to financial rigour and not overstretch in terms of risk tolerances?” All this sounds great in theory. But how to answer these questions in a way that doesn’t shatter Persson’s brain? As so often in the finance space, digitalisation is vital here. To explain what he means, Persson again evokes the situation a few decades ago. Back then, what digital platforms did exist were “cumbersome” and typically needed to be tailored to specific problems. Nowadays, the SaaS revolution means that finance directors can sharpen procedures at the flick of a switch, and be left over with mountains of valuable data. If nothing else, that’s clear from what Skanska is doing in its internal processes. Over the past few years, to give one example, it worked with software giant Infosys to develop a shared service centre for its finance and accounting processes.
If Persson and his team only untangled Skanska’s financial innards, that would already be impressive. But as our conversation progresses, it becomes clear that
Finance Director Europe /
www.financedirectoreurope.com
he’s more interested in those sweeping existential questions – what he describes as “operational knowledge combined with financial knowledge”. Clearly, that chimes with his employer more generally. Aiming to go completely digital by next year, the firm’s Swedish wing hopes to integrate IT across the business, something that’s true everywhere from supply chains to safety measures to sustainability. The point, Persson reiterates, is less about individual victories – and more about those “strategic targets” that can really transform Skanska over the longer term.
With concrete and steel prices rising, the construction sector is likely to face even tighter margins.
“I think the release of value from this type of data application has the potential to have much more value creation than if we just reduce costs and administrative processes.”
Building tomorrow With their growling engines and looming cabs, industrial lorries are perhaps not where you’d imagine Skanska’s digital future to be forged. But stop by a company construction site and you may soon be surprised. Rather than just relying on their own eyes and ears to navigate, drivers are instead starting to lean on the power of automation. Working with an external partner, Skanska has begun equipping bulldozers and diggers with trackers. As the machines trundle around a construction site, the data is sent up to the cloud, which in turn uses AI to calculate the most efficient route forward. That path is then beamed back to a screen in the driver’s cabin, who can not only see where to go, but also understand where colleagues are on their own trips, thereby avoiding needless traffic jams. Apart from being impressive in its own terms – who could have imagined that Persson’s “yellow machines” could be so dynamic? – the CFO is equally keen to dwell on the project’s broader implications. As he puts
2023
The year that Skanska Sweden hopes to go fully digital.
Redshift 17
Skanska
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