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

For many years, E. Pihl & Søn A/S was one of the most international and well-known 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 Copenhagen, 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 bankrupt.

To provide an insight on the significance of the case of E. Pihl & Søn A/S in the aspect of 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” written by journalist Poul Høegh Østergaard and published in 2014.

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 Carlsberg, and they built up a solid reputation in the Danish building industry. After 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 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 hydroelectric power plant in Iceland. To be able to bid on the latter, E. Pihl & Søn formed a 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 develoment

In the beginning of 1971, Søren Langvad officially took over the role as 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).

Some of the most well-known projects that Pihl has been involved in :

• The Danish Royal Theater
• The National Gallery of Denmark
• The big mall Fields
• The hotel Crown Plaza
• The significant round dormitory Tietgenkollegiet
• Several inner harbor bridges in Copenhagen
• The Great Belt Bridge (the East Bridge)
• The Øresund Bridge (the tunnel)

Annotated Bibliography

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