Excellence in project-specific R&D for unique contracts
Joint innovation projects
New ideas management system successfully implemented
Numerous R&D projects transferred into practice

Achieving the unique takes strong innovating capacity

Every construction contract we do is unique. And being among the market leaders, HOCHTIEF tackles some huge and challenging projects. This means almost every contract involves project-specific research and development (R&D). The focus in this R&D work is always on the contract in hand rather than on generating patentable ideas.

Innovation as a driver of growth

HOCHTIEF is an established trailblazer in the national and international construction sectors. Key to this leading position is systematic innovation management across the board. Innovation not only makes for advanced solutions, creates new business openings and differentiates the Group from its rivals. It also enables us to enhance business processes and hone our competitive edge.

Three levels of innovation

HOCHTIEF's innovation management operates at three levels:

The first level, central innovation management, addresses cross-cutting issues with impact on the operating business. Our global network and international knowledge transfer allow us to tackle joint innovation projects that show the way forward. Central Corporate Development coordinates integrated innovation management, picks out viable innovation projects and sees to it that they are implemented efficiently. Our Innovation Committee is made up of members from all divisions and the Executive Board. It is this committee which decides whether an R&D project goes ahead. Implementation is supported by Corporate Development and efficiency is ensured by continuous monitoring and control. More than EUR 5 million was spent on Group-wide R&D projects relating to central innovation management in the year under review. Notable thematic focuses

included inHaus2 and green building certification. Some 65 employees worked on 43 Group-wide projects in 2008. Ten new projects commenced and 15 projects were completed.

The second level of innovation management at HOCHTIEF targets market-driven innovation financed by HOCHTIEF divisions and Group companies. Projects in fiscal 2008 centered among other things on geothermal energy and offshore wind energy*.

The third level consists of project-specific innovation – for the most part, R&D work done right on site or in design departments. Many of our complex, unique projects require us to develop custom solutions spanning many disciplines from technology to materials and logistics. Project-specific development expenditure is accounted for with the contract rather than as part of corporate R&D. Examples include the elaborate design and construction of Southern Cross Station in Melbourne and the innovative bridge building technique applied on the Washington Bypass. Project-specific innovation accounts for the majority of our R&D work.

Level 1: Central innovation management

Ideas management online

We launched a new ideas management system in 2008 to replace the in-house suggestion scheme in Germany. The new system features a virtual "Ideas Room" on the corporate intranet where any employee can post suggestions for improvement. Other users can add comments and take ideas further. "Idea mentors" rate the suggestions and see about putting them into practice if feasible. In only a few months, the Ideas Room has proven a highly effective and successful innovation and knowledge management tool. Employees entered 350 ideas from March to December in the year under review. HOCHTIEF implemented or began implementing 130 of these suggestions during 2008.

Broader base for sustainable construction

Sustainable construction has a long tradition at HOCHTIEF. We are working hard within the German Sustainable Building Council to promote adoption of a binding standard. We

The inHaus2 research project: At this commercial property in Duisburg, Germany, HOCHTIEF tests ideas for innovative building information and management systems.

have also now launched an in-house innovation project to prepare for the coming certification requirements. HOCHTIEF is now systematically building consulting capacity for sustainable construction throughout the Group. At Turner, some 600 employees have qualified to carry out work in accordance with the Leadership in Energy and Environmental Design (LEED) Certification of the United States Green Building Council.

inHaus2 project update

The inHaus2* research building in Duisburg, Germany, was erected by HOCHTIEF and opened in 2008. We use the building alongside various partners to test innovative ideas for smart building systems. HOCHTIEF continued its inHaus2 R&D work during the year under review. State-of-the- art features include twelve geothermal probes extending 120 meters into the ground and thermoactive component systems. We also began taking care of facility management for the building in 2008. In a research project, HOCHTIEF Facility Management and three Fraunhofer institutes are developing and testing ideas for innovative building information and management systems. The outcomes are to be used in future facility management projects and will secure us a further competitive edge. We will continue participating in inHaus2 research projects into the future.

Level 2: Market-driven innovation

Expertise in offshore wind energy

HOCHTIEF further enhanced its position in the rapidly expanding offshore wind energy segment during the year

Employee suggestion from our new Ideas Room:Use of a timer considerably shortens the operatingtime of the stirrer for the bentonite suspension used as a support medium in shield tunneling, cutting energy costs by some EUR 100,000 a year.

under review. Our work focuses among other things on designing, building and anchoring the necessary concrete components: Offshore wind turbines need gravity foundations seated directly on the sea floor. HOCHTIEF has performed work of this kind for various projects, including Sweden's Lillgrund offshore wind farm with 49 bases each weighing some 1,450 metric tons.

We also conduct subsurface investigations and install, maintain and disassemble met masts and wind turbines. Taking an example from the year under review, September 2008 saw work commence on "alpha ventus," Germany's first open-sea offshore wind farm. R&D findings from this pilot project will go into the design, construction and operation of future offshore wind farms. HOCHTIEF aims to expand its activities in this segment and is appraising the possibilities and commercial viability of operating its own wind farms as a business model.

Progress in geothermal energy

HOCHTIEF is also in the growth market for geothermal energy. Work began in September 2008 on building a second geothermal power plant in Kirchstockach, Bavaria. We are able to profit during construction from experience gained on building the first geothermal power plant in nearby Dürrnhaar**. The new power plant in Kirchstockach is the first for which HOCHTIEF performs the drilling with its own equipment and its own team. The plant will supply electricity from the beginning of 2010. Electricity generation from geothermal energy is largely carbon-neutral.

Level 3: Project-specific innovation

Unique station roofscape

Our Australian subsidiary Leighton created a sensation with the undulating roof on Melbourne's Southern Cross Station. The structure is waterproof to the outside but "breathes" internally, filtering out smoke, diesel particulates and other pollutants. The project called for numerous innovations, and not just for fabrication and assembly of the many differently shaped roof parts. A requirement that the station should be naturally ventilated also confronted us with major challenges. The project was rendered more difficult still by the use of a wide range of materials and construction elements not previously deployed in Australia. Leighton took the challenges in its stride and won the Australian Construction Achievement Award for the project.

Innovative materials and products in action

Our US subsidiary Turner is No. 1 in the American green building segment by a comfortable margin. The company demonstrated this experience in construction of the new Experimental Media and Performing Arts Center in Troy, NY. The project has many innovative features. Special acoustic insulation, for example, allows all of the Center's two dozen performance spaces to be used at the same time. Turner fitted the building with the first of a special kind of glass curtain wall in the USA. The curtain wall incorporates steel mullions that carry heated water, insulating the interior from the winter. The virtually silent HVAC system uses displacement ventilation to push air through registers under the seats for enhanced audience comfort. In a fire safety innovation, we installed a fabric for the acoustic ceiling panels that is normally used in firefighters' clothing. Turner also worked on a compelling solution for the main structure of the building, providing a means of anchoring it into a 45-degree slope.

Minimally invasive bridge building

HOCHTIEF's US subsidiary Flatiron has developed a bridge building technique that causes minimum disturbance to the surrounding environment. The company's specially developed gantry allows all bridge construction tasks to be performed from the structure above as it is built, including pile driving, laying precast pier caps and erecting girders. When a span is complete, the gantry travels forward along

the bridge to work on the next span. This eliminates the need for heavy construction cranes. The unique machine is capable of constructing the whole bridge in an assembly line process. Flatiron applied the method for the first time on the Highway 17 Bypass road building project near Washington, which traverses environmentally sensitive wetlands. We secured the contract in a competitive bidding procedure that took into account the environmental impact of proposed techniques as well as their cost.

Innovative planning method adopted

HOCHTIEF AirPort has introduced an innovative scenario planning method in airport management. The method charts realistic scenarios for a relatively distant future and subject to relatively large uncertainty in specific external variables. Our subsidiary has adapted the method to its specific needs and is now applying it for the first time on Budapest Airport. One early success is the new organizational structure, which HOCHTIEF AirPort developed by working together with local management to identify all events and developments important to the future of the airport. The organizational structure was then fine-tuned to the resulting range of scenarios. Adopted changes included the creation of an Aviation Unit with central oversight over the development and implementation of services for airlines. In conventionally managed airports these two areas are looked after separately, which is less customer-centric than the new approach.

Extending HOCHTIEF's lead in virtual planning

3D clash detection makes it possible to tell right back at the design stage if the various types of conduit laid through a building cross and obstruct each other. This is done by combining the plans for the different work packages in a digital model. Conflicts can thus be spotted early on and avoided, thus reducing costs. HOCHTIEF mainly uses 3D clash detection on large contracts such as the construction of Hamburg's Elbe Philharmonic Hall.

The new service is part of HOCHTIEF ViCon's capability portfolio. HOCHTIEF ViCon established its position during 2008 in the growing virtual design and construction (ViCon)* market. The virtual 3D clash detection system is the latest in a series of HOCHTIEF successes in translating R&D into

Sustainable construction by HOCHTIEF subsidiary Flatiron: Bridge building with minimal disturbance of the environment – here seen on the Highway 17 Bypass.

practice. We have consequently been able to strengthen and extend our leading role in the ViCon segment. The technology is also deployed internationally by ViCon units at HOCHTIEF companies Turner and Thiess.

Deploying HOCHTIEF tunneling technology

In constructing the Neuer Schlüchterner Tunnel between Hanau and Fulda in Germany, HOCHTIEF used two innovations from its InTun (Innovative Modules for Tunneling) R&D activities. The hydraulic TBM launching rig method removes the previous need to provide an elaborate steel structure to guide the shield into the ground. Under the time and money-saving method developed by HOCHTIEF, the tunnel-boring machine (TBM) jacks itself in under its own power. We have since applied the method on a number of projects. The development cost has thus been quickly recouped through in-process savings.

To connect the new tunnel with the old and provide escape routes, we incorporated seven cross tunnels in the project. Here, too, HOCHTIEF made use of a method that was developed in-house and is significantly more cost-effective and simpler to apply than the conventional approach. The savings again soon exceeded the R&D costs.

Every project powered by R&D

The projects outlined above constitute only a small selection illustrating the importance of R&D. A major role is played in this connection by HOCHTIEF Consult, an ideas factory that ranks among Germany's largest engineering consultants. Technological or process innovations feature in

Breathing roof: Among the sights of Melbourne, Southern Cross Station was built by Leighton, our Australian subsidiary.

every HOCHTIEF project, and it would be impossible to list them all. Many of our innovations are also subject to confidentiality.

Collaborative network boosts R&D

Close collaboration with universities, scientists and industry associations has a key role in the development and implementation of innovative ideas. Among other things, HOCHTIEF has launched a doctoral program allowing Group employees to be released while they complete a doctorate. The doctoral students represent an interface between the Group and the university concerned, further deepening our already close cooperation with institutes of higher education. Equal weight is thus given to advancing R&D in both theory and practice. The Group also cooperates closely with major universities at international level.

As a member of the European Construction Technology Platform (ECTP), we play our part in maintaining a high level of research in the European construction industry. HOCHTIEF is also in ENCORD, the European Network of Construction Companies for Research and Development.