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E. Pihl & Søn A/S from a management perspective

2015-09-28T18:42:31Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years, since these had a big impact on the downturn of the company. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

Through the 80s, the amount of tenders Pihl was prequalified to rose significantly. In 1987, the turnover was around three quarters of a billion Danish kroner (around 115 million USD), of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in:
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Royal Danish Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depreciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse, and in addition several of the biggest projects abroad were exceeding their budgets. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview of cost overruns and streamline the organization. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. E. Pihl & Søn A/S had claimed substantial claims from third parties as income <ref name="econ1">''http://www.globalbankingandfinance.com/the-pihl-bankruptcy-and-its-impact-on-foreign-investors-and-contractors/'' ''Bardeleben, Kurt and Korterman, Lars (2013); the PIHL bankruptcy – and its impact on foreign investors and contractors. Global Banking and Finance.'' </ref> and severely underestimated the costs of completion of numerous projects. Even the write-downs that were made on these underestimated budgets proved to be insufficient. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough, and the company ended up with an annual report for 2012 showing a loss of 473 million Danish kroner (73 million USD) <ref name="econ2">''http://www.construction-manager.co.uk/news/danish-firm-goes-bust-after-losses-uk-and-overseas/'' ''(2013); Danish firm goes bust after UK and overseas losses. Construction Manager UK.'' </ref>.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business.'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the organization chart). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big success for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in. The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do”.

= Implications =
* The wide-ranging trust in the project managers might in some situations have been too wide-ranging: Newly employed managers were given the authority to make million-kroner decisions, which they did not have the prerequisites to make. Some of the budget overruns on the abroad projects in the last years were possibly a result of this <ref name="personal">''This information comes from personal experience of the author, who was an employee in E. Pihl & Søn A/S until the bankruptcy (2013).'' </ref>.

* The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref name="flat2">''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management. As a side note it should be mentioned that none of the executive managers had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

* The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant masonry company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents. Outside sources also point to that a flat organizational structure is best applicable in smaller companies <ref name="flat1" /> <ref name="flat2" />.

* Not having any written rules and procedures can contribute to more creative solutions, which can be beneficial, but for a company the size of E. Pihl & Søn A/S it leads to chaos instead.

* When E. Pihl & Søn A/S went bankrupt in August 2013 the board of directors gave a statement, trying to explain the reasons for the bankruptcy. With regards to the extensive international expansion it was stated that “The expansion took place without sufficient balance in the contract terms, and without having sufficiently verified the credit quality of the foreign customers and subcontractors, and without making sure that the qualities of the work processes and the risk management procedures were sufficient to support the increase in activity level."<ref name="econ2" />. This statement sums up the reasons in a clear and precise way.

= Conclusion =
Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned out differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-28T18:40:42Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years, since these had a big impact on the downturn of the company. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

Through the 80s, the amount of tenders Pihl was prequalified to rose significantly. In 1987, the turnover was around three quarters of a billion Danish kroner (around 115 million USD), of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in:
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Royal Danish Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depreciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse, and in addition several of the biggest projects abroad were exceeding their budgets. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview of cost overruns and streamline the organization. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. E. Pihl & Søn A/S had claimed substantial claims from third parties as income <ref name="econ1">''http://www.globalbankingandfinance.com/the-pihl-bankruptcy-and-its-impact-on-foreign-investors-and-contractors/'' ''Bardeleben, Kurt and Korterman, Lars (2013); the PIHL bankruptcy – and its impact on foreign investors and contractors. Global Banking and Finance.'' </ref> and severely underestimated the costs of completion of numerous projects. Even the write-downs that were made on these underestimated budgets proved to be insufficient. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough, and the company ended up with an annual report for 2012 showing a loss of 473 million Danish kroner (73 million USD) <ref name="econ2">''http://www.construction-manager.co.uk/news/danish-firm-goes-bust-after-losses-uk-and-overseas/'' ''(2013); Danish firm goes bust after UK and overseas losses. Construction Manager UK.'' </ref>.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business.'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the organization chart). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big success for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in. The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do”.

= Implifications =
* The wide-ranging trust in the project managers might in some situations have been too wide-ranging: Newly employed managers were given the authority to make million-kroner decisions, which they did not have the prerequisites to make. Some of the budget overruns on the abroad projects in the last years were possibly a result of this <ref name="personal">''This information comes from personal experience of the author, who was an employee in E. Pihl & Søn A/S until the bankruptcy (2013).'' </ref>.

* The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref name="flat2">''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management. As a side note it should be mentioned that none of the executive managers had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

* The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant masonry company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents. Outside sources also point to that a flat organizational structure is best applicable in smaller companies <ref name="flat1" /> <ref name="flat2" />.

* Not having any written rules and procedures can contribute to more creative solutions, which can be beneficial, but for a company the size of E. Pihl & Søn A/S it leads to chaos instead.

* When E. Pihl & Søn A/S went bankrupt in August 2013 the board of directors gave a statement, trying to explain the reasons for the bankruptcy. With regards to the extensive international expansion it was stated that “The expansion took place without sufficient balance in the contract terms, and without having sufficiently verified the credit quality of the foreign customers and subcontractors, and without making sure that the qualities of the work processes and the risk management procedures were sufficient to support the increase in activity level."<ref name="econ2" />. This statement sums up the reasons in a clear and precise way.

= Conclusion =
Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned out differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-28T17:45:42Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years, since these had a big impact on the downturn of the company. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

Through the 80s, the amount of tenders Pihl was prequalified to rose significantly. In 1987, the turnover was around three quarters of a billion Danish kroner (around 115 million USD), of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse, and in addition several of the biggest projects abroad were exceeding their budgets. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview of cost overruns and streamline the organization. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. E. Pihl & Søn A/S had claimed substantial claims from third parties as income <ref name="econ1">''http://www.globalbankingandfinance.com/the-pihl-bankruptcy-and-its-impact-on-foreign-investors-and-contractors/'' ''Bardeleben, Kurt and Korterman, Lars (2013); the PIHL bankruptcy – and its impact on foreign investors and contractors. Global Banking and Finance.'' </ref> and severely underestimated the costs of completion of numerous projects. Even the write-downs that were made on these underestimated budgets proved to be insufficient. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough, and the company ended up with an annual report for 2012 showing a loss of 473 million Danish kroner (73 million USD) <ref name="econ2">''http://www.construction-manager.co.uk/news/danish-firm-goes-bust-after-losses-uk-and-overseas/'' ''(2013); Danish firm goes bust after UK and overseas losses. Construction Manager UK.'' </ref>.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business.'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the organization chart). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big succes for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
* The wide-ranging trust in the project managers might in some situations have been too wide-ranging: Newly employed managers were given the authority to make million-kroner decisions, which they did not have the prerequisites to make. Some of the budget overruns on the abroad projects in the last years were possibly a result of this <ref name="personal">''This information comes from personal experience of the author, who was an employee in E. Pihl & Søn A/S until the bankruptcy (2013).'' </ref>.

* The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref name="flat2">''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management. As a side note it should be mentioned that none of the executive managers had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

* The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant masonry company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents. Outside sources also point to that a flat organizational structure is best applicable in smaller companies <ref name="flat1" /> <ref name="flat2" />.

* Not having any written rules and procedures can contribute to more creative solutions, which can be beneficial, but for a company the size of E. Pihl & Søn A/S it leads to chaos instead.

* When E. Pihl & Søn A/S went bankrupt in August 2013 the board of directors gave a statement, trying to explain the reasons for the bankruptcy. With regards to the extensive international expansion it was stated that “The expansion took place without sufficient balance in the contract terms, and without having sufficiently verified the credit quality of the foreign customers and subcontractors, and without making sure that the qualities of the work processes and the risk management procedures were sufficient to support the increase in activity level."<ref name="econ2" />. This statement sums up the reasons in a clear and precise way.

= Conclusion =
Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned out differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-28T17:41:55Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years, since these had a big impact on the downturn of the company. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

Through the 80s, the amount of tenders Pihl was prequalified to rose significantly. In 1987, the turnover was around three quarters of a billion Danish kroner (around 115 million USD), of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse, and in addition several of the biggest projects abroad were exceeding their budgets. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview of cost overruns and streamline the organization. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. E. Pihl & Søn A/S had claimed substantial claims from third parties as income <ref name="econ1">''http://www.globalbankingandfinance.com/the-pihl-bankruptcy-and-its-impact-on-foreign-investors-and-contractors/'' ''Bardeleben, Kurt and Korterman, Lars (2013); the PIHL bankruptcy – and its impact on foreign investors and contractors. Global Banking and Finance.'' </ref> and severely underestimated the costs of completion of numerous projects. Even the write-downs that were made on these underestimated budgets proved to be insufficient. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough, and the company ended up with an annual report for 2012 showing a loss of 473 million Danish kroner (73 million USD) <ref name="econ2">''http://www.construction-manager.co.uk/news/danish-firm-goes-bust-after-losses-uk-and-overseas/'' ''(2013); Danish firm goes bust after UK and overseas losses. Construction Manager UK.'' </ref>.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the organization chart). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big succes for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
* The wide-ranging trust in the project managers might in some situations have been too wide-ranging: Newly employed managers were given the authority to make million-kroner decisions, which they did not have the prerequisites to make. Some of the budget overruns on the abroad projects in the last years were possibly a result of this <ref name="personal">''This information comes from personal experience of the author, who was an employee in E. Pihl & Søn A/S until the bankruptcy (2013)'' </ref>.

* The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref name="flat2">''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management. As a side note it should be mentioned that none of the executive managers had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

* The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant masonry company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents. Outside sources also point to that a flat organizational structure is best applicable in smaller companies <ref name="flat1" /> <ref name="flat2" />.

* Not having any written rules and procedures can contribute to more creative solutions, which can be beneficial, but for a company the size of E. Pihl & Søn A/S it leads to chaos instead.

* When E. Pihl & Søn A/S went bankrupt in August 2013 the board of directors gave a statement, trying to explain the reasons for the bankruptcy. With regards to the extensive international expansion it was stated that “The expansion took place without sufficient balance in the contract terms, and without having sufficiently verified the credit quality of the foreign customers and subcontractors, and without making sure that the qualities of the work processes and the risk management procedures were sufficient to support the increase in activity level."<ref name="econ2" />. This statement sums up the reasons in a clear and precise way.

= Conclusion =
Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned out differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-28T17:15:03Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years, since these had a big impact on the downturn of the company. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

Through the 80s, the amount of tenders Pihl was prequalified to rose significantly. In 1987, the turnover was around three quarters of a billion Danish kroner (around 115 million USD), of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse, and in addition several of the biggest projects abroad were exceeding their budgets. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview of cost overruns and streamline the organization. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. E. Pihl & Søn A/S had claimed substantial claims from third parties as income <ref name="econ1">''http://www.globalbankingandfinance.com/the-pihl-bankruptcy-and-its-impact-on-foreign-investors-and-contractors/'' ''Bardeleben, Kurt and Korterman, Lars (2013); the PIHL bankruptcy – and its impact on foreign investors and contractors. Global Banking and Finance.'' </ref> and severely underestimated the costs of completion of numerous projects. Even the write-downs that were made on these underestimated budgets proved to be insufficient. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough, and the company ended up with an annual report for 2012 showing a loss of 473 million Danish kroner (73 million USD) <ref name="econ2">''http://www.construction-manager.co.uk/news/danish-firm-goes-bust-after-losses-uk-and-overseas/'' ''(2013); Danish firm goes bust after UK and overseas losses. Construction Manager UK.'' </ref>.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the organization chart). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big succes for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
* As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

* The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref name="flat2">''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

* The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant masonry company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents. Outside sources also point to that a flat organizational structure is best applicable in smaller companies <ref name="flat1" /> <ref name="flat2" />.

* When E. Pihl & Søn A/S went bankrupt in August 2013 the board of directors gave a statement, trying to explain the reasons for the bankruptcy. With regards to the extensive international expansion it was stated that “The expansion took place without sufficient balance in the contract terms, and without having sufficiently verified the credit quality of the foreign customers and subcontractors, and without making sure that the qualities of the work processes and the risk management procedures were sufficient to support the increase in activity level."<ref name="econ2" />. This statement sums up the reasons in a clear and precise way.

= Conclusion =
Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-28T17:10:19Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years, since these had a big impact on the downturn of the company. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

Through the 80s, the amount of tenders Pihl was prequalified to rose significantly. In 1987, the turnover was around three quarters of a billion Danish kroner (around 115 million USD), of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse, and in addition several of the biggest projects abroad were exceeding their budgets. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview of cost overruns and streamline the organization. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. E. Pihl & Søn A/S had claimed substantial claims from third parties as income <ref name="econ1">''http://www.globalbankingandfinance.com/the-pihl-bankruptcy-and-its-impact-on-foreign-investors-and-contractors/'' ''Bardeleben, Kurt and Korterman, Lars (2013); the PIHL bankruptcy – and its impact on foreign investors and contractors. Global Banking and Finance.'' </ref> and severely underestimated the costs of completion of numerous projects. Even the write-downs that were made on these underestimated budgets proved to be insufficient. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough, and the company ended up with an annual report for 2012 showing a loss of 473 million Danish kroner (73 million USD) <ref name="econ2">''http://www.construction-manager.co.uk/news/danish-firm-goes-bust-after-losses-uk-and-overseas/'' ''(2013); Danish firm goes bust after UK and overseas losses. Construction Manager UK.'' </ref>.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the organization chart). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big succes for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
* As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref name="flat2">''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents. Outside sources also point to that a flat organizational structure is best applicable in smaller companies <ref name="flat1" /> <ref name="flat2" />.

When E. Pihl & Søn A/S went bankrupt in August 2013 the board of directors gave a statement, trying to explain the reasons for the bankruptcy. With regards to the extensive international expansion it was stated that “The expansion took place without sufficient balance in the contract terms, and without having sufficiently verified the credit quality of the foreign customers and subcontractors, and without making sure that the qualities of the work processes and the risk management procedures were sufficient to support the increase in activity level."<ref name="econ2" />. This statement sums up the reasons in a clear and precise way, but as true as it is, the reality is that these precautions would never have been taken as long as Søren Langvad was the CEO.

= Conclusion =
Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-28T15:29:41Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years, since these had a big impact on the downturn of the company. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

Through the 80s, the amount of tenders Pihl was prequalified to rose significantly. In 1987, the turnover was around three quarters of a billion Danish kroner (around 115 million USD), of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse, and in addition several of the biggest projects abroad were exceeding their budgets. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview of cost overruns and streamline the organization. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. E. Pihl & Søn A/S had claimed substantial claims from third parties as income <ref name="econ1">''http://www.globalbankingandfinance.com/the-pihl-bankruptcy-and-its-impact-on-foreign-investors-and-contractors/'' ''Bardeleben, Kurt and Korterman, Lars (2013); the PIHL bankruptcy – and its impact on foreign investors and contractors. Global Banking and Finance.'' </ref> and severely underestimated the costs of completion of numerous projects. Even the write-downs that were made on these underestimated budgets proved to be insufficient. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough, and the company ended up with an annual report for 2012 showing a loss of 473 million Danish kroner (73 million USD) <ref name="econ2">''http://www.construction-manager.co.uk/news/danish-firm-goes-bust-after-losses-uk-and-overseas/'' ''(2013); Danish firm goes bust after UK and overseas losses. Construction Manager UK.'' </ref>.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big succes for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the previous figure). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref name="flat2">''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents. Outside sources also point to that a flat organizational structure is best applicable in smaller companies <ref name="flat1" /> <ref name="flat2" />.

When E. Pihl & Søn A/S went bankrupt in August 2013 the board of directors gave a statement, trying to explain the reasons for the bankruptcy. With regards to the extensive international expansion it was stated that “The expansion took place without sufficient balance in the contract terms, and without having sufficiently verified the credit quality of the foreign customers and subcontractors, and without making sure that the qualities of the work processes and the risk management procedures were sufficient to support the increase in activity level."<ref name="econ2" />. This statement sums up the reasons in a clear and precise way, but as true as it is, the reality is that these precautions would never have been taken as long as Søren Langvad was the CEO.

= Conclusion =
Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-28T15:24:23Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years, since these had a big impact on the downturn of the company. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

Through the 80s, the amount of tenders Pihl was prequalified to rose significantly. In 1987, the turnover was around three quarters of a billion Danish kroner (around 115 million USD), of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse and in addition, several projects (espacially abroad) were exceeding their budgets. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview of cost overruns and streamline the organization. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. E. Pihl & Søn A/S had claimed substantial claims from third parties as income <ref name="econ1">''http://www.globalbankingandfinance.com/the-pihl-bankruptcy-and-its-impact-on-foreign-investors-and-contractors/'' ''Bardeleben, Kurt and Korterman, Lars (2013); the PIHL bankruptcy – and its impact on foreign investors and contractors. Global Banking and Finance.'' </ref> and severely underestimated the costs of completion of numerous projects. Even the write-downs that were made on these underestimated budgets proved to be insufficient. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough, and the company ended up with an annual report for 2012 showing a loss of 473 million Danish kroner (73 million USD) <ref name="econ2">''http://www.construction-manager.co.uk/news/danish-firm-goes-bust-after-losses-uk-and-overseas/'' ''(2013); Danish firm goes bust after UK and overseas losses. Construction Manager UK.'' </ref>.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big succes for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the previous figure). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref name="flat2">''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents. Outside sources also point to that a flat organizational structure is best applicable in smaller companies <ref name="flat1" /> <ref name="flat2" />.

When E. Pihl & Søn A/S went bankrupt in August 2013 the board of directors gave a statement, trying to explain the reasons for the bankruptcy. With regards to the extensive international expansion it was stated that “The expansion took place without sufficient balance in the contract terms, and without having sufficiently verified the credit quality of the foreign customers and subcontractors, and without making sure that the qualities of the work processes and the risk management procedures were sufficient to support the increase in activity level."<ref name="econ2" />. This statement sums up the reasons in a clear and precise way, but as true as it is, the reality is that these precautions would never have been taken as long as Søren Langvad was the CEO.

= Conclusion =
Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

Talk:E. Pihl & Søn A/S from a management perspective

2015-09-23T15:14:18Z

StephSalling:

UserName:Jejenji - REVIEW 3

* Great intro to describe the whole picture
** Thank you.
* The chapters regarding the history are a bit long. From my point of view it would be useful to make a table or describe the most important events through bullet points.
** I agree and I have tried to shorten the history parts. I however think that the history is an important part in order to understand the problems in the company (especially after 2008), so I am afraid that bullet points will be insufficient.
*Interesting to know which constructions they built in DK
**Good. I have shortened the list a little to make the history parts shorter.
*According to me it would be more important to highlight the MANAGEMENT part instead of the HISTORY. Maybe shorten a bit the history part and expand more the Management paragraph. It could be useful to consult more sources about these part and insert a little bit of theory.
**Again I agree. I have found some additional sources and tried to elaborate the management even more.
*Detailed conclusion that underlines who took decisions
**Thanks.
*Adding a sort of hierarchy picture of the company would help to understand how’s the power distributed
**I have made an organization chart
*It could be useful to divide the conclusions and implications in subchapter to analyse more into details each part (example: leadership,“enlightened despotism”…. )
**Good idea to divide the two.
*Nice point the “enlightened despotism”
**Tanks.
FORMAL ASPECTS
*Overall the article follows the case study structure
**Good.
*Grammar wise is correct
**Good.
*Lack of figures and visual illustrations
**I agree. I hope it helps that I have added the organization chart.
*Formatted Properly
**Good.
CONTENT ASPECTS
*The article is interesting
**Thank you
*It does relate to PPPM
**Good.
*Appropriate length
**Good.
*Logic flow between HISTORY _ MANAGEMENT _ CONCLUSION
**Thanks.
*Reference materials are a bit poor
**The book covers the case quite well I think, but I have added some other references as well.
*Great annotated bibliography
**Thank you.
*The historical part seems poorly re-elaborated
**I am not sure I understand this point?
==Reviewer 2, s121408==
Formal:
*The grammar and flow of the article was correct from my point of view.
**Good.
*Pictures are well allocated.
**Good.
*It is well documented from bibliography from what I have seen.
**Good.
Content:
*Good starting.
**Thank you.
*I understand that to evaluate a case you need to present it. But I think there has been put so much effort in describing the history and situation of the firm (nearly half of the article), something that someone could just read in the book you referred or elsewhere.
**I agree. I have tried to shorten the history parts.
*The flow of the article is very good, but I see the topic away from the concepts used in the course. I do not clearly see how the concepts explained in the slides are implemented in the article. There are some concepts of Project and Portfolio management in the article but it could be enlarged.
**I have tried to elaborate the management part.
* I do not clearly see the personal contribution of the author. I have the impression there is a lot of paraphrase coming from literature but correct if I am wrong. I would recommend to talk with the professor, because the article is very illustrative but maybe he wants something else.
**I believe that the point is to be objective and use statements from literature rather than my personal opinion, so from that point of view I guess your comment is positive?

== Reviewer 1: s141586 ==

Formal: 
• It clearly has a case study structure. 
*Good.
• It is well written. I couldn’t find gramatical errors, just a tipo: Too keep track of the progress -> To keep track of the progress 
*Thank you!
• Who is Carl Bro? Carl’s Brother? 
*And thanks again, I do not know where "Bro" came from, it was supposed to be "Pihl".
• I think it would be good to see some figures representing the structure of the company in a visual way (organigram). 
*I have made an organisation chart.
• I think that you could add more figures describing the different topics you talk about, like a map of the projects carried away by the company, the flat organisational structure… 
*I hope that the organization chart is illustrative enough.
• The article is very well formatted 
*Thank you.

Content: 
• The length of the article is the appropriate. 
*Good.
• I think that the topic is very interesting, however, from a practitioner’s point of view I can’t see a clear utility of the article, since it is mostly talking about the history of the company rather than purely managerial aspects. 
*I agree, I have tried to shorten the history parts and elaborate the management aspects.
• For the first part of the article (History): It is a well-documented article about the history of the company, however It’s difficult for me to find a connection with the course curriculum, maybe is not necessary to explain the whole history of the company (who was the CEO, when,…) but try to focus, for instance, on the governance management strategy of the company. 
*I have shortened the history parts.
• Fort he second part (Management in E. Pihl & Søn A/S): It is very interesting to know about the type of leadership, organisation… but it would be nicer if you could relate it to the theory, maybe explaining why the flat organisational structure is good for motivation, or what do the manager-employees relationships have to do with team performance… try to find some papers that talk about some of the topics you have written about. 
*Great inputs, thank you. I have found some additional sources about the flat organizational structure and incorporated them.
• Following a logical thread, I would put Project management after Portfolio Management. 
*I think both ways make sence, so I am keeping the order I had.

Talk:E. Pihl & Søn A/S from a management perspective

2015-09-23T15:13:36Z

StephSalling:

UserName:Jejenji - REVIEW 3

* Great intro to describe the whole picture
** Thank you.
* The chapters regarding the history are a bit long. From my point of view it would be useful to make a table or describe the most important events through bullet points.
** I agree and I have tried to shorten the history parts. I however think that the history is an important part in order to understand the problems in the company (especially after 2008), so I am afraid that bullet points will be insufficient.
*Interesting to know which constructions they built in DK
**Good. I have shortened the list a little to make the history parts shorter.
*According to me it would be more important to highlight the MANAGEMENT part instead of the HISTORY. Maybe shorten a bit the history part and expand more the Management paragraph. It could be useful to consult more sources about these part and insert a little bit of theory.
**Again I agree. I have found some additional sources and tried to elaborate the management even more.
*Detailed conclusion that underlines who took decisions
**Thanks.
*Adding a sort of hierarchy picture of the company would help to understand how’s the power distributed
**I have made an organization chart
*It could be useful to divide the conclusions and implications in subchapter to analyse more into details each part (example: leadership,“enlightened despotism”…. )
**Good idea to divide the two.
*Nice point the “enlightened despotism”
**Tanks.
FORMAL ASPECTS
*Overall the article follows the case study structure
**Good.
*Grammar wise is correct
**Good.
*Lack of figures and visual illustrations
**I agree. I hope it helps that I have added the organization chart.
*Formatted Properly
**Good.
CONTENT ASPECTS
*The article is interesting
**Thank you
*It does relate to PPPM
**Good.
*Appropriate length
**Good.
*Logic flow between HISTORY _ MANAGEMENT _ CONCLUSION
**Thanks.
*Reference materials are a bit poor
**The book covers the case quite well I think, but I have added some other references as well.
*Great annotated bibliography
**Thank you.
*The historical part seems poorly re-elaborated
**I am not sure I understand this point?
==Reviewer 2, s121408==
Formal:
*The grammar and flow of the article was correct from my point of view.
**Good.
*Pictures are well allocated.
**Good.
*It is well documented from bibliography from what I have seen.
**Good.
Content:
*Good starting.
**Thank you.
*I understand that to evaluate a case you need to present it. But I think there has been put so much effort in describing the history and situation of the firm (nearly half of the article), something that someone could just read in the book you referred or elsewhere.
**I agree. I have tried to shorten the history parts.
*The flow of the article is very good, but I see the topic away from the concepts used in the course. I do not clearly see how the concepts explained in the slides are implemented in the article. There are some concepts of Project and Portfolio management in the article but it could be enlarged.
**I have tried to elaborate the management part.
* I do not clearly see the personal contribution of the author. I have the impression there is a lot of paraphrase coming from literature but correct if I am wrong. I would recommend to talk with the professor, because the article is very illustrative but maybe he wants something else.
**I believe that the point is to be objective and use statements from literature rather than my personal opinion, so from that point of view I guess your comment is positive?

== Reviewer 1: s141586 ==

Formal: 
• It clearly has a case study structure. 
*Good.
• It is well written. I couldn’t find gramatical errors, just a tipo: Too keep track of the progress -> To keep track of the progress 
*Thank you!
• Who is Carl Bro? Carl’s Brother? 
*And thanks again, I do not know where "Bro" came from, it was supposed to be "Pihl".
• I think it would be good to see some figures representing the structure of the company in a visual way (organigram). 
*I have made an organisation chart.
• I think that you could add more figures describing the different topics you talk about, like a map of the projects carried away by the company, the flat organisational structure… 
*I hope that the organization chart is illustrative enough.
• The article is very well formatted 
*Thank you.

Content: 
• The length of the article is the appropriate. 
*Good.
• I think that the topic is very interesting, however, from a practitioner’s point of view I can’t see a clear utility of the article, since it is mostly talking about the history of the company rather than purely managerial aspects. 
*I agree, I have tried to shorten the history parts and elaborate the management aspects.
• For the first part of the article (History): It is a well-documented article about the history of the company, however It’s difficult for me to find a connection with the course curriculum, maybe is not necessary to explain the whole history of the company (who was the CEO, when,…) but try to focus, for instance, on the governance management strategy of the company. 
*I have shortened the history parts.
• Fort he second part (Management in E. Pihl & Søn A/S): It is very interesting to know about the type of leadership, organisation… but it would be nicer if you could relate it to the theory, maybe explaining why the flat organisational structure is good for motivation, or what do the manager-employees relationships have to do with team performance… try to find some papers that talk about some of the topics you have written about. 
*Great inputs, thank you. I have found some additional sources about the flat organizational structure and incorporated them.
• Following a logical thread, I would put Project management after Portfolio Management. 
*I think both ways make sence, so I am keeping the order I had.

Talk:E. Pihl & Søn A/S from a management perspective

2015-09-23T15:11:51Z

StephSalling:

UserName:Jejenji - REVIEW 3

* Great intro to describe the whole picture
** Thank you.
* The chapters regarding the history are a bit long. From my point of view it would be useful to make a table or describe the most important events through bullet points.
** I agree and I have tried to shorten the history parts. I however think that the history is an important part in order to understand the problems in the company (especially after 2008), so I am afraid that bullet points will be insufficient.
*Interesting to know which constructions they built in DK
**Good. I have shortened the list a little to make the history parts shorter.
*According to me it would be more important to highlight the MANAGEMENT part instead of the HISTORY. Maybe shorten a bit the history part and expand more the Management paragraph. It could be useful to consult more sources about these part and insert a little bit of theory.
**Again I agree. I have found some additional sources and tried to elaborate the management even more.
*Detailed conclusion that underlines who took decisions
**Thanks.
*Adding a sort of hierarchy picture of the company would help to understand how’s the power distributed
**I have made an organization chart
*It could be useful to divide the conclusions and implications in subchapter to analyse more into details each part (example: leadership,“enlightened despotism”…. )
**Good idea to divide the two.
*Nice point the “enlightened despotism”
**Tanks.
FORMAL ASPECTS
*Overall the article follows the case study structure
**Good.
*Grammar wise is correct
**Good.
*Lack of figures and visual illustrations
**I agree. I hope it helps that I have added the organization chart.
*Formatted Properly
**Good.
CONTENT ASPECTS
*The article is interesting
**Thank you
*It does relate to PPPM
**Good.
*Appropriate length
**Good.
*Logic flow between HISTORY _ MANAGEMENT _ CONCLUSION
**Thanks.
*Reference materials are a bit poor
**The book covers the case quite well I think, but I have added some other references as well.
*Great annotated bibliography
**Thank you.
*The historical part seems poorly re-elaborated
**I am not sure I understand this point?
==Reviewer 2, s121408==
Formal:
*The grammar and flow of the article was correct from my point of view.
*Good.
*Pictures are well allocated.
**Good.
*It is well documented from bibliography from what I have seen.
**Good.
Content:
*Good starting.
**Thank you.
*I understand that to evaluate a case you need to present it. But I think there has been put so much effort in describing the history and situation of the firm (nearly half of the article), something that someone could just read in the book you referred or elsewhere.
**I agree. I have tried to shorten the history parts.
*The flow of the article is very good, but I see the topic away from the concepts used in the course. I do not clearly see how the concepts explained in the slides are implemented in the article. There are some concepts of Project and Portfolio management in the article but it could be enlarged.
**I have tried to elaborate the management part.
* I do not clearly see the personal contribution of the author. I have the impression there is a lot of paraphrase coming from literature but correct if I am wrong. I would recommend to talk with the professor, because the article is very illustrative but maybe he wants something else.
**I believe that the point is to be objective and use statements from literature rather than my personal opinion, so from that point of view I guess your comment is positive?

== Reviewer 1: s141586 ==

Formal: 
• It clearly has a case study structure. 
**Good.
• It is well written. I couldn’t find gramatical errors, just a tipo: Too keep track of the progress -> To keep track of the progress 
**Thank you!
• Who is Carl Bro? Carl’s Brother? 
**And thanks again, I do not know where "Bro" came from, it was supposed to be "Pihl".
• I think it would be good to see some figures representing the structure of the company in a visual way (organigram). 
**I have made an organisation chart.
• I think that you could add more figures describing the different topics you talk about, like a map of the projects carried away by the company, the flat organisational structure… 
**I hope that the organization chart is illustrative enough.
• The article is very well formatted 
**Thank you.

Content: 
• The length of the article is the appropriate. 
**Good.
• I think that the topic is very interesting, however, from a practitioner’s point of view I can’t see a clear utility of the article, since it is mostly talking about the history of the company rather than purely managerial aspects. 
**I agree, I have tried to shorten the history parts and elaborate the management aspects.
• For the first part of the article (History): It is a well-documented article about the history of the company, however It’s difficult for me to find a connection with the course curriculum, maybe is not necessary to explain the whole history of the company (who was the CEO, when,…) but try to focus, for instance, on the governance management strategy of the company. 
**I have shortened the history parts.
• Fort he second part (Management in E. Pihl & Søn A/S): It is very interesting to know about the type of leadership, organisation… but it would be nicer if you could relate it to the theory, maybe explaining why the flat organisational structure is good for motivation, or what do the manager-employees relationships have to do with team performance… try to find some papers that talk about some of the topics you have written about. 
**Great inputs, thank you. I have found some additional sources about the flat organizational structure and incorporated them.
• Following a logical thread, I would put Project management after Portfolio Management. 
**I think both ways make sence, so I am keeping the order I had.

Talk:E. Pihl & Søn A/S from a management perspective

2015-09-23T14:52:08Z

StephSalling:

UserName:Jejenji - REVIEW 3

* Great intro to describe the whole picture
* The chapters regarding the history are a bit long. From my point of view it would be useful to make a table or describe the most important events through bullet points.
*Interesting to know which constructions they built in DK
*According to me it would be more important to highlight the MANAGEMENT part instead of the HISTORY. Maybe shorten a bit the history part and expand more the Management paragraph. It could be useful to consult more sources about these part and insert a little bit of theory.
*Detailed conclusion that underlines who took decisions
*Adding a sort of hierarchy picture of the company would help to understand how’s the power distributed
*It could be useful to divide the conclusions and implications in subchapter to analyse more into details each part (example: leadership,“enlightened despotism”…. )
*Nice point the “enlightened despotism”
FORMAL ASPECTS
*Overall the article follows the case study structure
*Grammar wise is correct
*Lack of figures and visual illustrations
*Formatted Properly
CONTENT ASPECTS
*The article is interesting
*It does relate to PPPM
*Appropriate length
*Logic flow between HISTORY _ MANAGEMENT _ CONCLUSION
*Reference materials are a bit poor
*Great annotated bibliography
*The historical part seems poorly re-elaborated
==Reviewer 2, s121408==
Formal:
*The grammar and flow of the article was correct from my point of view.
*Pictures are well allocated.
*It is well documented from bibliography from what I have seen.
Content:
*Good starting.
*I understand that to evaluate a case you need to present it. But I think there has been put so much effort in describing the history and situation of the firm (nearly half of the article), something that someone could just read in the book you referred or elsewhere.
*The flow of the article is very good, but I see the topic away from the concepts used in the course. I do not clearly see how the concepts explained in the slides are implemented in the article. There are some concepts of Project and Portfolio management in the article but it could be enlarged.
* I do not clearly see the personal contribution of the author. I have the impression there is a lot of paraphrase coming from literature but correct if I am wrong. I would recommend to talk with the professor, because the article is very illustrative but maybe he wants something else.

== Reviewer 1: s141586 ==

Formal: 
• It clearly has a case study structure. 
• It is well written. I couldn’t find gramatical errors, just a tipo: Too keep track of the progress -> To keep track of the progress 
• Who is Carl Bro? Carl’s Brother? 
• I think it would be good to see some figures representing the structure of the company in a visual way (organigram). 
• I think that you could add more figures describing the different topics you talk about, like a map of the projects carried away by the company, the flat organisational structure… 
• The article is very well formatted 

Content: 
• The length of the article is the appropriate. 
• I think that the topic is very interesting, however, from a practitioner’s point of view I can’t see a clear utility of the article, since it is mostly talking about the history of the company rather than purely managerial aspects. 
• For the first part of the article (History): It is a well-documented article about the history of the company, however It’s difficult for me to find a connection with the course curriculum, maybe is not necessary to explain the whole history of the company (who was the CEO, when,…) but try to focus, for instance, on the governance management strategy of the company. 
• Fort he second part (Management in E. Pihl & Søn A/S): It is very interesting to know about the type of leadership, organisation… but it would be nicer if you could relate it to the theory, maybe explaining why the flat organisational structure is good for motivation, or what do the manager-employees relationships have to do with team performance… try to find some papers that talk about some of the topics you have written about. 
• Following a logical thread, I would put Project management after Portfolio Management.

Talk:E. Pihl & Søn A/S from a management perspective

2015-09-23T14:51:47Z

StephSalling:

UserName:Jejenji - REVIEW 3

* Great intro to describe the whole picture
* Thank you
* The chapters regarding the history are a bit long. From my point of view it would be useful to make a table or describe the most important events through bullet points.
*Interesting to know which constructions they built in DK
*According to me it would be more important to highlight the MANAGEMENT part instead of the HISTORY. Maybe shorten a bit the history part and expand more the Management paragraph. It could be useful to consult more sources about these part and insert a little bit of theory.
*Detailed conclusion that underlines who took decisions
*Adding a sort of hierarchy picture of the company would help to understand how’s the power distributed
*It could be useful to divide the conclusions and implications in subchapter to analyse more into details each part (example: leadership,“enlightened despotism”…. )
*Nice point the “enlightened despotism”
FORMAL ASPECTS
*Overall the article follows the case study structure
*Grammar wise is correct
*Lack of figures and visual illustrations
*Formatted Properly
CONTENT ASPECTS
*The article is interesting
*It does relate to PPPM
*Appropriate length
*Logic flow between HISTORY _ MANAGEMENT _ CONCLUSION
*Reference materials are a bit poor
*Great annotated bibliography
*The historical part seems poorly re-elaborated
==Reviewer 2, s121408==
Formal:
*The grammar and flow of the article was correct from my point of view.
*Pictures are well allocated.
*It is well documented from bibliography from what I have seen.
Content:
*Good starting.
*I understand that to evaluate a case you need to present it. But I think there has been put so much effort in describing the history and situation of the firm (nearly half of the article), something that someone could just read in the book you referred or elsewhere.
*The flow of the article is very good, but I see the topic away from the concepts used in the course. I do not clearly see how the concepts explained in the slides are implemented in the article. There are some concepts of Project and Portfolio management in the article but it could be enlarged.
* I do not clearly see the personal contribution of the author. I have the impression there is a lot of paraphrase coming from literature but correct if I am wrong. I would recommend to talk with the professor, because the article is very illustrative but maybe he wants something else.

== Reviewer 1: s141586 ==

Formal: 
• It clearly has a case study structure. 
• It is well written. I couldn’t find gramatical errors, just a tipo: Too keep track of the progress -> To keep track of the progress 
• Who is Carl Bro? Carl’s Brother? 
• I think it would be good to see some figures representing the structure of the company in a visual way (organigram). 
• I think that you could add more figures describing the different topics you talk about, like a map of the projects carried away by the company, the flat organisational structure… 
• The article is very well formatted 

Content: 
• The length of the article is the appropriate. 
• I think that the topic is very interesting, however, from a practitioner’s point of view I can’t see a clear utility of the article, since it is mostly talking about the history of the company rather than purely managerial aspects. 
• For the first part of the article (History): It is a well-documented article about the history of the company, however It’s difficult for me to find a connection with the course curriculum, maybe is not necessary to explain the whole history of the company (who was the CEO, when,…) but try to focus, for instance, on the governance management strategy of the company. 
• Fort he second part (Management in E. Pihl & Søn A/S): It is very interesting to know about the type of leadership, organisation… but it would be nicer if you could relate it to the theory, maybe explaining why the flat organisational structure is good for motivation, or what do the manager-employees relationships have to do with team performance… try to find some papers that talk about some of the topics you have written about. 
• Following a logical thread, I would put Project management after Portfolio Management.

E. Pihl & Søn A/S from a management perspective

2015-09-23T14:50:42Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

Through the 80s, the amount of tenders Pihl was prequalified to rose significantly. In 1987, the turnover was around three quarters of a billion Danish kroner (around 115 million USD), of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse and in addition, several projects (espacially abroad) were exceeding their budgets. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview of cost overruns and streamline the organization. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. E. Pihl & Søn A/S had claimed substantial claims from third parties as income <ref name="econ1">''http://www.globalbankingandfinance.com/the-pihl-bankruptcy-and-its-impact-on-foreign-investors-and-contractors/'' ''Bardeleben, Kurt and Korterman, Lars (2013); the PIHL bankruptcy – and its impact on foreign investors and contractors. Global Banking and Finance.'' </ref> and severely underestimated the costs of completion of numerous projects. Even the write-downs that were made on these underestimated budgets proved to be insufficient. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough, and the company ended up with an annual report for 2012 showing a loss of 473 million Danish kroner (73 million USD) <ref name="econ2">''http://www.construction-manager.co.uk/news/danish-firm-goes-bust-after-losses-uk-and-overseas/'' ''(2013); Danish firm goes bust after UK and overseas losses. Construction Manager UK.'' </ref>.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big succes for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the previous figure). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref name="flat2">''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents. Outside sources also point to that a flat organizational structure is best applicable in smaller companies <ref name="flat1" /> <ref name="flat2" />.

When E. Pihl & Søn A/S went bankrupt in August 2013 the board of directors gave a statement, trying to explain the reasons for the bankruptcy. With regards to the extensive international expansion it was stated that “The expansion took place without sufficient balance in the contract terms, and without having sufficiently verified the credit quality of the foreign customers and subcontractors, and without making sure that the qualities of the work processes and the risk management procedures were sufficient to support the increase in activity level."<ref name="econ2" />. This statement sums up the reasons in a clear and precise way, but as true as it is, the reality is that these precautions would never have been taken as long as Søren Langvad was the CEO.

= Conclusion =
Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T14:25:26Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

Through the 80s, the amount of tenders Pihl was prequalified to rose significantly. In 1987, the turnover was around three quarters of a billion Danish kroner (around 115 million USD), of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse and in addition, several projects (espacially abroad) were exceeding their budgets. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview of cost overruns and streamline the organization. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. E. Pihl & Søn A/S had claimed substantial claims from third parties as income <ref name="econ1">''http://www.globalbankingandfinance.com/the-pihl-bankruptcy-and-its-impact-on-foreign-investors-and-contractors/'' ''Bardeleben, Kurt and Korterman, Lars (2013); the PIHL bankruptcy – and its impact on foreign investors and contractors. Global Banking and Finance.'' </ref> and severely underestimated the costs of completion of numerous projects. Even the write-downs that were made on these underestimated budgets proved to be insufficient. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough, and the company ended up with an annual report for 2012 showing a loss of 473 million Danish kroner (73 million USD) <ref name="econ2">''http://www.construction-manager.co.uk/news/danish-firm-goes-bust-after-losses-uk-and-overseas/'' ''(2013); Danish firm goes bust after UK and overseas losses. Construction Manager UK.'' </ref>.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big succes for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the previous figure). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref>''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

= Conclusion =
Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T14:22:56Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

Through the 80s, the amount of tenders Pihl was prequalified to rose significantly. In 1987, the turnover was around three quarters of a billion Danish kroner (around 115 million USD), of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse and also several projects (espacially abroad) were exceeding their budgets. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview of cost overruns and streamline the organization. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. E. Pihl & Søn A/S had claimed substantial claims from third parties as income <ref name="econ1">''http://www.globalbankingandfinance.com/the-pihl-bankruptcy-and-its-impact-on-foreign-investors-and-contractors/'' ''Bardeleben, Kurt and Korterman, Lars (2013); the PIHL bankruptcy – and its impact on foreign investors and contractors. Global Banking and Finance.'' </ref> and severely underestimated the costs of completion of numerous projects. Even the write-downs that were made on these underestimated budgets proved to be insufficient. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough, and the company ended up with an annual report for 2012 showing a loss of 473 million Danish kroner (73 million USD) <ref name="econ2">''http://www.construction-manager.co.uk/news/danish-firm-goes-bust-after-losses-uk-and-overseas/'' ''(2013); Danish firm goes bust after UK and overseas losses. Construction Manager UK.'' </ref>.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big succes for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the previous figure). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref>''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

= Conclusion =
Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T13:44:59Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview and streamline the organization in an attempt to turn the bad economic situation around. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated and motivated by the challenges and wide-ranging responsibilities <ref name="flat1">''http://smallbusiness.chron.com/benefits-flat-organizational-structure-281.html'' ''Griffin, Dana; Benefits in a Flat Organizational Structure. Chron.'' </ref>. For decades, this organizational structure was a big succes for the company and did what it was supposed to do; namely to maintain a high level of productivity <ref name="flat1" />. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the previous figure). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref>''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

= Conclusion =
Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T13:35:58Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview and streamline the organization in an attempt to turn the bad economic situation around. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

[[File:Organization_in_Pihl.JPG|1050px|thumb|center|''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the previous figure). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref>''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

= Conclusion =
Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T13:32:33Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress. [[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview and streamline the organization in an attempt to turn the bad economic situation around. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

[[File:Organization_in_Pihl.JPG|1050px| |''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

==== Tuesday meetings ====
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the previous figure). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref>''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

= Conclusion =
Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T13:28:24Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

== Financial crisis and the last years ==
When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. Birgit Nørgaard's purpose in Pihl was to gain an overview and streamline the organization in an attempt to turn the bad economic situation around. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

[[File:Organization_in_Pihl.JPG|1050px| |''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO (as shown in the previous figure). However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. This opinion was created by the way Søren Langvad treated his executive officers and persisted in keeping the organization flat. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. This is the exact opposite of what is supposed to be one of the benefits of having a flat organization <ref>''http://smallbusiness.chron.com/flat-vs-hierarchical-organizational-structure-724.html'' ''L. Meehan, Colette; Flat Vs. Hierarchical Organizational Structure. Chron.'' </ref>.. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T13:02:14Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

[[File:Organization_in_Pihl.JPG|1050px| |''The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.'']]
Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” (284 pages) is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>.

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T12:55:26Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

[[File:Organization_in_Pihl.JPG|1000px| |The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.]]
Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T12:53:56Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

[[File:Organization_in_Pihl.JPG|1100px| The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.]]
Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T12:51:39Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

[[File:Organization_in_Pihl.JPG|900px|thumb|right| The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.]]
Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T12:51:14Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

[[File:Organization_in_Pihl.JPG|1500px|thumb|right| The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.]]
Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T12:50:48Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

[[File:Organization_in_Pihl.JPG|400px|thumb|right| The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.]]
Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T12:50:04Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

[[File:Organization_in_Pihl.jpg|200px|thumb|right| The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.]]
Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T12:48:53Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

[[File:Organization_in_Pihl.jpg|400px|thumb|right| The organizational structure. The Executive Officers did not actually have more power than the Project Managers, despite what the organization indicates.]]
Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

File:Organization in Pihl.JPG

2015-09-23T12:44:39Z

StephSalling:

E. Pihl & Søn A/S from a management perspective

2015-09-23T12:40:56Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry, when they (among other things) had to depriciate half of their equity in Iceland due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article).

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], the company's bank connection, now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T12:34:08Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Organizational structure ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

While this [https://en.wikipedia.org/wiki/Flat_organization flat organization], with the only layers of management being the project managers and the CEO, scared away some employees very fast, the most common reaction from new employees was to embrace the freedom and feel stimulated by the challenges and wide-ranging responsibilities. For decades, this organizational structure was a big succes for the company, and it did what it was supposed to do; namely to maintain a high level of productivity. It also turned both workers and managers into proud and loyal “Pihl-people”, who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T11:18:27Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African and Middle East countries besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson, who had been a trusted employee since the 1980s, as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T11:12:29Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. After [https://en.wikipedia.org/wiki/World_War_II World War II], the business was not going well: Lauritz Emil Pihl was dead, Carl Pihl was seriously ill, and the once extensive client base had dwindled significantly.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn. At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

From 1950 and onwards, Søren Langvad, Kay Langvad’s oldest son, was also working in E. Pihl & Søn.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in several African countries, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article).

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-23T10:56:27Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article).

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
To keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

Talk:Manage Extreme Projects with Rapid Methodology

2015-09-22T18:34:50Z

StephSalling: Created page with "== Review given by StephSalling, review2 == ==== Formal aspects ==== * The article follows the “method” structure very well. * There are some grammatical, spelling and p..."

== Review given by StephSalling, review2 ==
==== Formal aspects ====
* The article follows the “method” structure very well.
* There are some grammatical, spelling and punctuation errors, maybe an extra proofreading would be a good idea (maybe by someone else, it is often helpful having a second pair of eyes read it through).
* The article is written in an engaging style in terms of content, but some sentences are a bit long and hard to follow.
* The figure is very illustrative, but a reference to the source for it might be a good idea. More figures would improve the reading experience, but I do not know if it is possible to find other relevant figures.
* Very nice use of table and bullet points.

==== Content aspects ====
* I think the article is interesting for a practitioner.
* The topic is clear and specific.
* The length of the article seems appropriate.
* There is a red thread through the article, however, the transition from XPM to Rapid Methodology could be smoother.
* The starting summary is sufficient and not too long.
* Your sources seem good and of high quality. You could maybe elaborate some of them (the “annotated bibliography” part).
* The use of the word “we” in some sentences is a bit confusing for me as it mixes up your “own opinion” with statements substantiated by literature.

Talk:Theory of Constraints

2015-09-22T17:33:15Z

StephSalling:

== Review given by StephSalling, review1 ==
The TOC method is very interesting and you are explaining it in a good and simple way. It is really a shame that the last sections are missing.

==== Formal aspects ====
* The “method” structure is being followed very well (apart from the last parts not existing yet).
* Grammar, spelling and punctuation – very good!
* Sentences are short and precise, which make the article easy and engaging to read.
* Adding some illustrations would improve the reading experience.
* The use of different bullet point styles is good. It could be a good idea to link to some other wiki-pages.

==== Content aspects ====
* I would say that the article is very interesting for a practitioner.
* The topic of the article is clear and specific.
* It seems that there is (going to be) a logical flow through the article, but it is of course hard to say when only half of it is written.
* The starting summary of the “big idea” is sufficient and not too long.
* It looks like you have attempted to put in references but not succeeded (yet), which makes it hard to judge the sources and objectivity of the article (although it seems very objective).
* It could maybe be beneficial to link the article to other pages in the APPPM wiki (such as pages with the topic of LEAN?)

Talk:Theory of Constraints

2015-09-22T17:32:49Z

StephSalling: Created page with "== Review given by StephSalling, review1 == The TOC method is very interesting and you are explaining it in a good and simple way. It is really a shame that the last sections ..."

== Review given by StephSalling, review1 ==
The TOC method is very interesting and you are explaining it in a good and simple way. It is really a shame that the last sections are missing.

==== Formal aspects ====
o The “method” structure is being followed very well (apart from the last parts not existing yet).
o Grammar, spelling and punctuation – very good!
o Sentences are short and precise, which make the article easy and engaging to read.
o Adding some illustrations would improve the reading experience.
o The use of different bullet point styles is good. It could be a good idea to link to some other wiki-pages.

==== Content aspects ====
o I would say that the article is very interesting for a practitioner.
o The topic of the article is clear and specific.
o It seems that there is (going to be) a logical flow through the article, but it is of course hard to say when only half of it is written.
o The starting summary of the “big idea” is sufficient and not too long.
o It looks like you have attempted to put in references but not succeeded (yet), which makes it hard to judge the sources and objectivity of the article (although it seems very objective).
o It could maybe be beneficial to link the article to other pages in the APPPM wiki (such as pages with the topic of LEAN?)

Talk:Leadership styles

2015-09-22T16:26:04Z

StephSalling:

Anna: Hi I like the idea, however, I'm afraid that it doesn't really fit into either one of the two article types. This is not really a method, but you could easily choose a method within the topic of leadership.

== Review given by StephSalling, review3 ==
As far as I can tell, this article is not done yet, so I will possibly point out some things you were already planning to change or add.

==== Formal aspects ====
* The different parts in this “method” study are a bit hard to tell apart. The “big idea” is combined with the “application”, but none of them are really adequately described. From my point of view, the “limitations” part in the article is the best part, but it should be substantiated with some literature.
* The grammar, spelling and punctuation in the “introduction” and “conclusion” are generally good: There are only a few singular/plural mistakes. It seems that the “limitations” part has not been proofread as thoroughly as the other sections.
* Even though there are not many fill words in the sentences (which is very good), some of the sentences are a bit long and hard to follow. Maybe some bullet points illustrating the content of the different standards would help make it easier to read. - Or simply dividing the text into more paragraphs.
* Some illustrations of the content of the different standards could be helpful.
* With the many different standards mentioned and technical terms used it would be easy to add some references within the wiki-system.

==== Content aspects ====
* The subject of leadership styles and the different focus areas of a leader is very interesting, but I think the article would be more interesting for a practitioner if it elaborated the content of the standards and made a more clear comparison between them or just focused on one standard.
* The relation to a specific project, program or portfolio management topic is a bit hard to see, since the article contains more of an overview than it deals with a specific problem/method.
* The article is very short. The remaining 2000 words could be put into good use focusing on a specific leadership style or comparing the content of the different standards as mentioned earlier.
* The flow through the article so far is logical.
* References should be given to the sources used.
* It is hard to judge the quality of the sources used for the article as they are not directly given. From the different standards mentioned in the text, it seems that the sources are trustworthy and of high quality.
* The article does not contain an annotated bibliography of any source.
* The article does not link to other relevant pages in the APPPM wiki.
* The “introduction” is very objective and does not leave the reader in doubt of that statements are substantiated by literature and not “own opinion”. The “limitations” part however seems more like “own opinion” statements, but this is not given anywhere.
* The article seems to be free of “copy & paste” plagiarism since the sources of the different statements are mentioned in the text, but as there are no actual references (I can see that an attempt to use citation has been made but not completed) I cannot be sure.

E. Pihl & Søn A/S from a management perspective

2015-09-21T20:46:04Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article).

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs1" />.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
Too keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-21T20:44:00Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen [online] http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html. </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article).

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs" />.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
Too keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-21T20:40:45Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref name="Børs1">''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article).

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref name="Børs" />.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
Too keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-21T20:35:43Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt] <ref>''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article).

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref>''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
Too keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-21T20:31:38Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt].

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

[[File:Tietgenkollegiet.jpg|400px|thumb|right| Tietgenkollegiet.]]In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article).

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref>''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
Too keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-21T20:30:46Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt].

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. [[File:Tietgenkollegiet.jpg|300px|thumb|right| Tietgenkollegiet.]]He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article).

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref>''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
Too keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-21T20:29:21Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt].

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article). [[File:Tietgenkollegiet.jpg|300px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref>''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project. [[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
Too keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-21T20:28:17Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt].

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article). [[File:Tietgenkollegiet.jpg|350px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref>''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project.
[[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
Too keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-21T20:27:45Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt].

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article). [[File:Tietgenkollegiet.jpg|300px|thumb|right| Tietgenkollegiet.]]

Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref>''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project.
[[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
Too keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-21T20:27:01Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt].

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article).

[[File:Tietgenkollegiet.jpg|300px|thumb|right| Tietgenkollegiet.]]
Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref>''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project.
[[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
Too keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
<references />

E. Pihl & Søn A/S from a management perspective

2015-09-21T20:26:45Z

StephSalling:

For many years, [https://da.wikipedia.org/wiki/E._Pihl_%26_S%C3%B8n E. Pihl & Søn A/S] was one of the most international and well-known [https://en.wikipedia.org/wiki/Contractor contractors] in the world. In its 126 years of existence, the company completed projects in more than 60 countries as it developed from being a small masonry company in [https://en.wikipedia.org/wiki/Copenhagen Copenhagen], [https://en.wikipedia.org/wiki/Denmark Denmark] to a multi-national contractor with a turnover of 6.5 billion Danish kroner (1 billion USD). The long history and great productivity of the company were some of the reasons that it took most people in the industry by a surprise, when E. Pihl & Søn A/S on the 26th of August 2013 was declared [https://en.wikipedia.org/wiki/Bankruptcy bankrupt].

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of [https://en.wikipedia.org/wiki/Project_management project] and portfolio management in construction, this study will briefly go through the history of the company, including the great expansions in the later years. The business and management strategies will be elaborated and analyzed to clarify the challenges the company faced through the years and how they were handled, and finally a conclusion summarizing the reasons for E. Pihl & Søn A/S’ bankruptcy will be presented together with implications from the case that can hopefully contribute to other companies not suffering the same fate.

The main source for the information used in this article is the acknowledged book “Sørens Saga” <ref name=Østerg>''Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark. Gyldendal Business.'' </ref> written by journalist Poul Høegh Østergaard and published in 2014.

__TOC__

= History of E. Pihl & Søn A/S =
== Early years ==
In 1887, bricklayer Lauritz Emil Pihl founded his business. In 1918, his son, Carl Pihl, entered the company, and E. Pihl & Søn was established. During the next 20 years, the company took on both concrete and bricklaying tasks in projects by nationally acknowledged clients such as the National Bank, H. N. Andersen and [https://en.wikipedia.org/wiki/Carlsberg_Group Carlsberg], and they built up a solid reputation in the Danish building industry. After [https://en.wikipedia.org/wiki/World_War_II World War II] however, the business was not going well: Lauritz Emil Pihl was dead, Carl Bro was seriously ill, and the once extensive client base had dwindled significantly. The company needed new blood and a change in leadership to survive.

== From Pihl and son to Langvad and son ==
May 23rd 1947 civil engineer Kay Langvad bought his way into E. Pihl & Søn after having left his former employer Højgaard & Schultz (today [https://en.wikipedia.org/wiki/MT_H%C3%B8jgaard MT Højgaard]). At that time the company consisted of 15 people including the owners Kay Langvad and Carl Pihl.

In 1950, the renewed company landed its first big contract in Denmark for the client Carlsberg and also their first contract abroad; construction of a [https://en.wikipedia.org/wiki/Hydroelectricity hydroelectric power plant] in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a [https://en.wikipedia.org/wiki/Joint_venture joint venture] with two Swedish companies, a collaboration form the company would later exercise for numerous other projects.

With the civil works on the hydroelectric power plant in Iceland, the foundation of a new path for E. Pihl & Søn was laid to become a contractor rather than a masonry company. This direction was manifested even further during the following years with more hydroelectric power plant projects on Iceland and many other civil work projects in Denmark.

On January 1st 1963, Søren Langvad, Kay Langvad’s oldest son, became a co-owner of E. Pihl & Søn after having worked in the company for 13 years. During the following few years, Kay Langvad gradually stepped down and left the responsibility of managing the company to his son.

== International development ==
In the beginning of 1971, Søren Langvad officially took over the role as [https://en.wikipedia.org/wiki/Chief_executive_officer CEO] of E. Pihl & Søn from his father. At the same time the company got listed and became E. Pihl & Søn A/S as which it remained until it ceased to exist in 2013. Soon after receiving the title of CEO, Søren Langvad also came to own the majority of the company and later all of it.

In the 1970s, Pihl was typically prequalified to five bigger tenders per year. Through the 80s, the amount rose, and in 1987 the number of prequalifications was 37. The turnover at this time was around three quarters of a billion Danish kroner, of which three quarters was created outside the Danish borders. The equity also grew and approached 50 million Danish kroner (around 7.7 million USD).

By the end of the 1980s, E. Pihl & Søn A/S was represented in Guinea, Mali, Niger, the Central African Republic, Nigeria, Tanzania, Bangladesh, the Maldives and Bermuda, besides the ongoing businesses in Iceland, the Faroe Islands and Greenland. The company reached 1,000 employees stationed around the world. Despite the significant growth in staff, no HR department was established.

The great international expansion continued through the 90s, especially in Africa, where Pihl won projects in Uganda, Mozambique, Lesotho, Botswana, Namibia, Mali and Ghana. Also in Lebanon and Jamaica, E. Pihl & Søn A/S was now represented. When the Danish market began to evolve at the end of the 90s, Pihl managed to land several notable contracts here as well, and by the end of the millennium the company had a turnover of more than 2 billion Danish kroner (around 300 million USD). The profit was not more than a couple of percent, but enough to make the equity grow, and everything pointed towards a continued progress.

In the beginning of the 1980s, Halldór Ragnarsson, who would later become the CEO of the company, joined E. Pihl & Søn A/S. He quickly became a trusted employee and when he was awarded the title of “Director of Danish Activities” in the 90s, he started building a more contemporary organizational culture in his department of Pihl than was otherwise the case (for elaboration see “Management in E. Pihl & Søn A/S” later in this article).

[[File:Tietgenkollegiet.jpg|200px|thumb|right| Tietgenkollegiet.]]
Some of the most well-known Danish projects that Pihl has been involved in :
* [https://en.wikipedia.org/wiki/Royal_Danish_Theatre The Danish Royal Theater]
* [https://en.wikipedia.org/wiki/National_Gallery_of_Denmark The National Gallery of Denmark]
* The big mall [https://en.wikipedia.org/wiki/Field%27s Field's]
* The hotel Crown Plaza
* The significant round dormitory [https://en.wikipedia.org/wiki/Tietgenkollegiet Tietgenkollegiet]
* Several inner harbor bridges in Copenhagen
* [https://en.wikipedia.org/wiki/Great_Belt_Fixed_Link The Great Belt Bridge] (the East Bridge)
* [https://en.wikipedia.org/wiki/%C3%98resund_Bridge The Øresund Bridge] (the tunnel)

== Financial crisis and the last years ==
From 1996 to 2008, E. Pihl & Søn A/S increased their turnover tenfold from 600 million to 6.5 billion Danish kroner (which corresponds roughly to going from 100 million to 1 billion USD) and became the second largest contractor in Denmark. Søren Langvad was not afraid of giving himself credit for this great expansion, but other reasons such as other contractors going bankrupt or being taken over and Pihl delivering satisfying work on time were definitely also part of the considerable success. At this time, the growth of the company seemed natural and healthy in spite of its abnormal scale, and though the great increase in turnover strained the equity of the company, the bank did not have any concern extending the line of credit to the successful company.

When the [https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 financial crisis] stroke in 2008 , E. Pihl & Søn A/S suffered together with the rest of the industry. They had trouble collecting their payments from different giant projects in e.g. Norway and Jamaica, and with the equity in Iceland being written down to half the value due to drastically changing exchange rates (for elaboration see “Portfolio management” later in this article), all account balances went negative. In these times, a willing bank connection was essential, but [https://en.wikipedia.org/wiki/Danske_Bank Danske Bank], who was E. Pihl & Søn A/S’ connection now had enough trouble keeping themselves going, and with a non-existing risk management and organizational structure in Pihl (for elaboration see “Management in E. Pihl & Søn A/S” later in this article), the bank was not alone in being worried.

From 2008, the company’s equity situation only got worse. In 2011, the market was changing and the competition was getting harder. Furthermore the contract terms were undergoing a change as well; more and more often the contract involved designing and calculating the statics for the project as well as the actual construction ([https://en.wikipedia.org/wiki/Design%E2%80%93build Design and build contract]), which made it radically more time demanding and thereby expensive to calculate a bid. Also Danske Bank now wanted to look through and approve all bids that E. Pihl & Søn A/S calculated before they entered the tendering process, which resulted in the company several times using time and money on calculating a bid that was then discarded by the bank.

In the fall of 2011, the economic situation in E. Pihl & Søn A/S continued to heat up. Employees were getting anxious and suspicious, but no one doubted that the 124 years old company would pull through. Søren Langvad finally decided that it was time to pass on the torch, and so he inserted Halldór Ragnarsson as CEO taking effect on the 1st of April, 2012.

In April 2012, Birgit Nørgaard was inserted as chairman of the board in E. Pihl & Søn A/S at the behest of Danske Bank, who had actually had controlling influence in the company since 2010, when Søren Langvad had to give up his shares to extent the line of credit in the bank. At her request, work groups were being set up with the purpose of formulating common procedures within vital areas such as calculation and bidding. The majority of the staff welcomed it when for the first time procedures for working routines were being written down for everyone to follow. In May, the first organization chart was being sent out together with other new regulations.

Through the year 2012, all problematic projects were being investigated, which led to the findings that the economic situation in the company was even worse than predicted. New bank agreements were made and money was transferred from several holding companies to increase the equity of E. Pihl & Søn A/S, but it was not enough. In December 2012, Chairman Birgit Nørgaard stated at a Tuesday meeting that Pihl was in a difficult situation; the company had included profits from claims in their accounts for no legitimate reason and severely underestimated the costs of completion of numerous projects. Furthermore, her opinion was that a calculated margin of 6 %, which had been used for most projects, was not enough to make a profit.

In the beginning of 2013, Birgit Nørgaard fired CEO Halldór Ragnarsson <ref>''http://www.business.dk/ejendom/hun-rydder-op-i-pihl'' ''Vibe Hyltoft, Vibe (2013); Hun rydder op i Pihl. Berlingske Business'' </ref> in a last attempt to save the company. However, despite all the efforts made by her, the executive managers and Danske Bank the bankruptcy was inevitable, and on the 26th of August 2013 it became a reality <ref>''http://borsen.dk/nyheder/generelt/artikel/1/264287/byggegiganten_e_pihl_soen_gaar_konkurs.html'' ''Hansen, Uffe (2013); Byggegiganten E. Pihl & Søn går konkurs. Børsen'' </ref>.

= Management in E. Pihl & Søn A/S =
== Business strategy ==
From the very beginning of Søren Langvad’s leadership in Pihl, the hierarchy was clear and not to be discussed; all correspondence in and out of the office went by him – no exceptions – and he had the last say in all matters regardless if the concerning project was in Denmark or abroad and if it was a harbor, dam, housing building etc.

Besides from the autocratic leadership, the organizational structure in Pihl was always very flat. From the beginning, Kay Langvad gave his employees the freedom to make decisions and take action on their own. When they were in trouble, he would help them, but he expected them to be able to solve most problems themselves. This wide-ranging trust (almost to the extent of anarchy, as some employees have later stated) in project leaders and other employees was maintained by Søren Langvad as a fundamental value in the company. Furthermore, he always showed his trusted employees loyalty and gave them second chances had they made a mistake rather than fired them, which was otherwise quite common in the industry. Many employees found their way into the company through this loyalty, as Søren Langvad often hired people on the ground that they were relatives to other employees.

Another characteristic of the business strategy in E. Pihl & Søn A/S was – up until the last couple of years – that there was no written report to explain the strategy: It was simply to see the possibilities when they occurred and seize them.

The extensive trust and lack of written procedures scared away some employees very fast, while others embraced the freedom and felt stimulated by the challenges and wide-ranging responsibilities, and so became proud and loyal “Pihl-people” who worked in the company for decades. The loyalty was expected from Søren Langvad in exchange for the trust and responsibility, and also he expected every employee to do their utmost and not spare themselves any exertion.

== Project management ==
From the first noteworthy sized projects in the early 1950s, a clear strategy for project execution was laid by both Kay and Søren Langvad. The “Hit & run” strategy as it was called involved careful planning, active leadership and a quick take off to set a tough cadence to be followed throughout the project.
[[File:Søren_Langvad_construction_site.jpg|250px|thumb|right|"There are no obstacles that cannot be overcome by hard work and a strong will. And no excuse to lower the bar". Søren Langvad in the front row, second from the left.]]

As for the staffing, Kay Langvad was of the opinion that it is better to have a project slightly understaffed with stand-by reserves who can be sent in if necessary than to overstaff a construction site from the beginning, arguing that the latter will be used as a measurement for the whole period resulting in people not giving their best and most.

E. Pihl & Søn A/S often did not have the necessary financial power to take on the big projects they wished to themselves, and so they repeatedly formed joint ventures with other, larger companies with a greater equity, who could provide the demanded guarantees.

“He shoots at everything that moves” is an often used comment to describe how Søren Langvad chose the projects for E. Pihl & Søn A/S to get involved in . The economic benefit would always come in second to the constructional challenges he saw in a potential project. This has probably been the key to the initial success of Pihl, who has won numerous contracts by offering a lower price than the competitors and bidding on projects too risky or challenging for anybody else to want to take on. These risky projects – often situated in secluded areas of less developed countries – were carried out by local craftsmen but with engineers, foremen and machine operators from Denmark. The project management team would control the project in close collaboration with the head office back in Lyngby as so to avoid the need for further local representation.

== Portfolio management ==
Risk-taking and decisive are keywords when describing the portfolio management strategy in E. Pihl & Søn A/S.

Ever since Kay and later Søren Langvad took over E. Pihl & Søn, the company has been managed with a tight liquidity. Already in the 1960s, when the expansion of the portfolio of the firm became noticeable, making ends meet in the company’s accounting was a challenge, since the guarantee sums held back by the clients until final deliveries with errors and omissions rectified would often amount to more than the profit. The overdraft facilities E. Pihl & Søn had in the bank did not at all meet the needs, but in spite of this the company continued in taking on bigger contracts that it often did not actually have sufficient funds to carry out.

The international focus in the portfolio management mentioned earlier in this article has saved E. Pihl & Søn A/S more than once. In the 1970s, the company survived the massive oil crisis in Denmark by taking on numerous projects in the Faroe Islands and also starting up business in Africa.

The subsidiary Ístak in Iceland contributed substantially to the earnings of Pihl for around four decades, and due to unfavorable exchange rates a fairly large share of the companies’ equity was tied in Icelandic investments. When the financial crisis hit in 2008, the Icelandic krone went down to about half of its previous value which resulted in a massive loss for E. Pihl & Søn A/S who had to depreciate their equity significantly.

=== Tuesday meetings ===
Too keep track of the progress of all ongoing projects, a meeting was held in the head office every Tuesday with participation of the owners (later owner), directors and senior employees. As the business expanded through time, the meetings would cycle through focusing on projects in Denmark, “Near Abroad” and “Far Abroad” and every fourth week the meeting would be only for the top directors and the owner discussing the overall business. As in every other aspect of managing E. Pihl & Søn A/S, the focus on the Tuesday meetings was on the constructional challenges and details in different projects rather than the financial and schedule-related situation.

The Tuesday meetings did not have an official agenda. Søren Langvad had a pile of paper with subjects he wanted to go through, and as one employee expressed it “You were not discussing with Søren, you were told what to do” .

= Conclusion and implifications =
Up until 2012, the board of directors in E. Pihl & Søn A/S consisted of four people; three equal executive officers with the responsibility for activities in Denmark, “Near Abroad” and “Far Abroad” respectively, and Søren Langvad as the CEO. However, most people were of the opinion that there was only one real executive officer; the CEO, and the others were looked upon more as head project leaders. As a side note, it should be mentioned that none of the directors had a MBA or any other education within management or leadership; they were all practical people who were promoted to directors because they had done well as project leaders for Pihl for many years. This lack of management skills within the board probably contributed to irrational decisions being made and the management of the company being unstable.

The leadership in Pihl was criticized on more points; it was never visionary and did not point out a direction for the future of the company, and also it never communicated its decisions to the employees. Also the opinion was that the members of the board were to detail-orientated and wanted to dig into every aspect of all projects instead of focusing on the big picture and provide general management.

Many people who knew Søren Langvad and worked with him through the years agree on that he was an engineer first and a business man second. His interest in the business aspect of running and managing the company was almost non-existent in comparison to his interest in the construction details and challenges of ongoing and potential projects. The greater the risks, the greater his fascination and desire to land the contract of the project. As previously mentioned, as much as this attitude undoubtedly contributed to the success of E. Pihl & Søn A/S as it was working its way onto the big scene in the construction industry, it also resulted in great losses through the years and especially during and following the financial crisis in the late 00s.

The leadership style of having a combined owner/CEO made it possible to make decisions fast, which probably was another contributing factor in E. Pihl & Søn A/S going from being the insignificant bricklaying company that it was to being a worldwide recognized and large contracting firm. However, as the company grew it became clear that this type of leadership also led to what some have called an “enlightened [https://en.wikipedia.org/wiki/Despotism despotism]” that suppressed any other opinions on the management style than the one of the owner/CEO himself. Since the owner/CEO in this case, Søren Langvad, did not see the need of any changes it was not possible for the board of directors (however much they wanted to) to go through with even the slightest change in management style. And when a company goes from 15 to 1500 employees and increase the turnover more than tenfold in a decade, management changes are necessary, as this case evidents.

Through the last 15-20 years of E. Pihl & Søn A/S’ existence, several leading employees and directors made appeals to Søren Langvad to change and streamline the organization and delegate more responsibility to the other executive officers. But as Søren Langvad did not want to pass on any consequential responsibilities, the changes in the project and portfolio management and business strategy therefore did not happen before the bank intervened and put Birgit Nørgaard as chairman of the board in 2012. Had she been put in that position just five years earlier – or maybe even just two years earlier, before the financial figures went red – things might have turned differently.

= Annotated Bibliography =

[[File:Sørens_saga_cover.jpg|100px|thumb|left|Cover from the Book "Sørens Saga".]]
==== Østergaard, Poul Høegh (2014); Sørens Saga. Copenhagen, Denmark: Gyldendal Business. ====
The book “Sørens Saga” is written by journalist within the construction sector Poul Høegh Østergaard, who since the 1980s has been working as a reporter and communicator in the industry and thus possesses a unique knowledge in this field. “Sørens Saga” was initially meant to be a biography of the owner and CEO of E. Pihl & Søn A/S for 42 years Søren Langvad, but with the crisis in the company and Søren’s death, Poul Høegh Østergaard changed the focus so that it became a more general story about the history and management of Pihl. The book was given good reviews when it was published in 2014. In one review, the reviewer (another journalist in the construction field) is claiming that the book contains enough insights and reflections on the construction industry and the management hereof that it should be mandatory in the curriculum for all civil engineering educations <ref>''http://ing.dk/artikel/anmeldelse-dramaet-om-pihl-boer-vaere-obligatorisk-paa-ingenioerstudiet-167785'' ''Lyngsø-Petersen, Erik (2014); Anmeldelse: Dramaet om Pihl bør være obligatorisk på ingeniørstudiet. Ingeniøren.'' </ref>

= References =
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2015-09-21T20:25:33Z

StephSalling: