Wednesday, 11 March 2015

Mediocrity is good enough.

In construction it is amazing what we will accept. Our
industry moves from boom to bust and then back to boom again with unbelievable pace. During boom businesses grow and make profit. In recession businesses cease trading whilst others burn cash, bidding jobs at less than cost to survive.  
We then move into growth again and more companies go out of businesses as costs increase as trades try to recover losses from the past.  
We have very short memories and very quickly forget the pain of recession. During recession we don't invest in the future due to lack of resource and in the boom times we still don't invest as we are too busy making money. 
The same issues are raised periodically as we move across the boom and bust cycle. “We don't train enough apprentices, there is a skills shortage. Trades people are in short supply. We can’t get bricks because we closed the plants” etc etc 
What I find exasperating is that this has been happening for 50 years and we never seem to change anything. We do like to moan about things but never do anything about it. 
If you want to change something you have change something! Doing the same thing will always give you the same outcome. 
The challenge we have is companies are making money again and it is difficult to break the cycle. House builders are making profits in excess of £350 million per year so why would they want to change the system. Their shareholders are more than happy with current returns. 
At Space Group we are doing everything we can to break this cycle and look at different approaches in construction which will allow us to invest in skills and products for the long term. We want to make construction an industry which is exciting and where the best talent wants to be part of it. 
Spacehus is an example of how we can improve outcomes by rethinking the entire design and construction process. The result is a high quality house which costs £80,000 and by offsetting solar energy generation there are no net energy costs. 
The house was designed digitally, so it could be prototyped and tested virtually. We then manufactured the components offsite and assembled onsite site. We minimised preliminaries and waste during construction so that additional value could be invested in the product. 
If we generated a pipeline profit would grow and we could invest in training and continuous improvement of the process and product. 
We can only achieve these outcomes by rethinking the entire construction process from start to finish.  
However we must want to change. From experience I find we have very short memories and much of our industry is happy with the status quo and mediocrity. At Space Group we are not. We will continue to challenge and be disruptive as we believe there is a better way. 

Monday, 29 December 2014

Reflections on 2014...

The Christmas break is alway a good time to reflect on the previous year and to see what progress we have made and what has changed in 12 months.

We entered the year with the recession still very much in everyone's minds. The market was cautious particularly in the regions. London remained largely unaffected with concerns around costs and resource being talked up.

2014 was a really tough year for tier one contractors with their cash positions being eroded, balance sheets weakened and margins challenged. To survive the recession some tier one contractors had taking on work at low margin only to find subcontract costs increasing. They were also more gun ho when it came to risk during recession only to find things unravel during construction.

A number of Chief Executives unfortunatley lost their jobs as shareholders looked for scapegoats.

During the keynote at BIM Show Live I mischievously suggested there was a revelution looming and that baby boomers should take note. This was all a bit of fun to stimulate discussion however in some ways this has become a reality. Some of these Chief Executives were undoubtedlybaby boomers and who paid for decisions made during recession. At the time I commented that these senior figures can't have all have made mistakes and we should look more at the culture of our industry to find long term answers.

Not only have there been job losses at a senior level there has been a move in attitude. Digital construction is increasingly accepted with clients want to see objective risk management tools.there has also been an increase in the linkages between construction, albeit small steps at this stage.

 Consultants are now adopting digital tools as a matter of course and main contractors are looking at how new technology effects their workflow.

Subcontractors have been effected by delayed payments throughout the year from tier one contractors which has, in some cases, prevented long term investment. Manufacturers are also considering their investments but remain cautious.

Yet again as our industry has moved back into growth the skills issue has risen its head. I've been in the industry for over 20 years now and this just keeps recurring. Not enough bricklayers...not enough bricks! The discussion raised momentum towards the back end of the year so hopefully this can build during 2015.

In the regional market fee levels remained very tight. This suggests that work has not reached the levels of pre recession and companies are still looking for revenue.

On balance 2014 was not a bad year for construction but neither was it great. There were no big winners but a few losers. It was a year of transition but fortunately the momentum is upward.

Here's to 2015...

What will 2015 bring?

Having reflected on 2014 the next thing to do is predict what will happen in 2015...

Slowing of market due to election.
A huge part of 2015 is undoubtably going to be the general election. Not only will we be tired of hearing about it this year it will effect our industry. Public sector projects will slow due to perda  followed by ministerial uncertainty afterwards.mIn the private sector this will lead to some uncertainly which will generate a slowing effect.

For what it's worth at this stage My prediction is we will have a Conservative Government again in a coalition arrangement. Even if I'm wrong it is unlikely there will be any change in public spending.

Continued skills and resource issues.
The skills debate will continue throughout the year. Unfortunatley there is no quick fix so we will see salaries increase in some areas where skills are short.

Increasing momentum of digital construction.
The move towards digital construction will continue right across the project lifecycle. We will see not only clients, designers and constructors adopt new methodologies but also manufacturers, subcontractors and maintence providers.

The long awaited digital plan of work will be released in 2015 providing clarity across industry. This will encourage innovation and new thinking. 

Growing interelationship between capital and revenue investment.
As our connection between data improves we will be able to consider the relationship between capital and revenue and how they effect one another. Energy use and carbon are no longer only the demise of specialists and campaigners. These issues are real and are important to emerging generations. Solutions and responses to these issues will need to become mainstream.

New Methods of Construction.
Offsite construction has very skilfully been repositioned as new methods of construction. Off site suggests temporary or of a lesser quality. Portiacabin or McDonalds spring to mind to the majority of people. 

During 2015 we will see a growing percentage of new buildings being delivered using the componetisation of materials. Already a large percentage of M and E installations are deliver in this way and we will see an increasing percentage of building components being developed this way.

Continued competition in the regions.
Traditionally a large percentage of regional work was generated from the public sector. This gap has not been filled by the private sector meaning companies are still hungry for work which ultimately means fee levels are very low. This will continue through 2015 not helped by the slowing of what public sector projects due to the election.

In London the issue will be a lack of the right resource. A large percentage of new build commercial projects in the capital are being delivered in BIM. These resources are not available in design practices meaning alternative approaches will develop. This may include outsourcing or large recruitment drives. It is likely therefore that salary levels in London will increase as demand grows.

Monday, 8 December 2014

The Power of Procurement

I had a really interesting discussion with a client over the weekend around procurement. Many procurment departments rely on cost beings a good metric of value. Particularly when appointing a main contractor for works.

In the north of England in particular many clients and procurment department are still keen to use single stage tendering. In London, it seems there is now a greater use of a two stage approach. What is not known however, is whether two stage is preferred in London because the market is busier or that cleints believe it offers better value.

This particular client I was talking to had been forced into a single stage tender from his procurement department. The projects was hugely over budget largely because the constructors had priced the risk.

A two stage and open approach would allow the risk to be clearly visable to all and to be managed and costed appropriately. The easy and expensive way is to just pass the risk to the constructor. This can be expensive in a rising market.

The clients procurment team does not wish to move from a single stage approach and therefore has limited options. The reality is the contractors can look at some cost reductions but with most of the additional cost being in risk if he wants his building as designed he is going to have to find the additional money. Whilst the procurment department will believe this provides value in reality they are paying way over the true cost.

In a retracting market clients can win when risk is priced too tightly by the contractor. However over an extended period which includes boom and recession I would suspect it balances out.

It would be far better if our industry was built on trust and a long term open book arrangement. Over several years I would anticipate that everyone would come out winning. We would however have the added benefit that with a steady profit we could all invest in continuous improvement.

Wednesday, 15 October 2014

My top 10 Business Books

I am an avid reader of business books and in particular business biographies. I have been asked several times for my recommendations. Recently one of the team specifically asked for my top ten so I spent a little time going over my library to find the books which I had found most useful and had influenced me.

The following is my top ten.Not all of them are traditional business books however they tell stories which I have found useful.

We can learn from the past and all of these people have been exceptional in what they do. I have looked back over 100s of books I have read and after considerable deliberation these are the most influential. There are a few others on the fringe which didn't make the cut.

They are not necessarily ranked in order of preference but more in the order to read them.

I've mixed lighter books with heavier books and left some of the more challenging stuff to the end.

Just the best book on how business works. Backed up with facts:
Good to Great
Jim Collins

The sequel talking about how businesses can be sustainable:
Built to Last
Jim Collins

This book is more about the man than the company. Great integrity and values:
Who says elephants can't dance
Louis v gerstner

How to look at the world and its markets differently:
Purple Cow 
Seth Godin

How business was done:
Jack Welsh

An amazing story of innovation, tenacity and culture:
Creativity Inc
ED catmull

A very practical book on business issues:
43 mistakes business's make and how to avoid them
Duncan bannatyne

How to build s culture from nothing:
Bill and Dave
How Hewlett and Packard built the Worls Greatest Company
Michael S Malone

This guy influenced so much you need to understand him:
My life and Work
Henry ford and Samuel Crowther

For me the ultimate business man. A genius. Unlikely to be repeated or replicated but we can learn some small things
Steve Jobs. The exclusive biography
Walter Isaacson 

When you have read this lot you will be sick of you life.To cheer you up stick your head into the two Danny Baker Auto Biograhies as well as any book by Peter Kay. They will have you laughing out loud without fail!

Sunday, 12 October 2014

10 Construction bosses leaving their roles in 2014 so far. Is this a crisis?

In 2012 the construction industry in the UK contributed £83.0 billion in economic output, 6% of the total. 2.15 million jobs or 6.5% of the UK total were in the construction industry in Q4 2013.

The top 30 contractors in the UK by revenue, turn over around £26 billion. During 2014 10 of these organisations have lost the senior leaders of their business. The majority have been sacked with some resigning or retiring. An industry which contributes 6% of the UK output which then loses such a large percentage of its leadership must be in crisis. 

During the banking crisis of 2008 the banking industry did not lose this many Chief Executives. Most of these directors have lost their jobs due to drastic financial loses. Like with the banking crisis now is the time to look at the reasons what we have found ourselves in this position and more importantly how can we stop it happening in the future.

These directors are not necessarily bad leaders but have found themselves at the top table at the wrong time and are therefore scapegoats. The issues are not with individuals but with the system.

Culture is the fundamental issue with our industry. We do not collaborate, we are not open and honest and we do not invest long term. 

The top 30 contractors by revenue are listed below. The 10 bosses who have moved on are identified.

Kier chief executive Paul Sheffield stepped down at the end of June after a career spanning more than 30 years with the contractor.

Balfour Beatty
Balfour Beatty chief executive Andrew McNaughton quit "with immediate effect" at the same time as the firm issued a profit warning for 2014.

Morgan Sindall




Galliford Try
Galliford Try boss Greg Fitzgerald plans to retire after 33 years at the firm before the end of next year.



Paul Drechsler the long term boss left Wates in January.

ISG’s construction managing director Alan McCarthy-Wyper left the firm after just 18 months. McCarthy-Wyper was brought in from Balfour Beatty Rail by ISG chief executive David Lawther in May 2013.

Laing O Rouke

Willmott Dixon confirmed that divisional chief executive of its capital works division will step down at the end of this year.

John Frankiewicz has worked for the contractor for 30 years and will return as a non-executive director in 2016 after taking a year-out from the industry

Lend Lease

Brookfield Multiplex


Booker Vessels

John Sisk


Bowmer & Kirkland


McLaughlin & Harvey



Vinci Construction UK revealed a new senior management team after a recent reorganisation.

The reshuffle followed the departure of chief executive John Stanion and his replacement by Bruno Dupety, former boss of Vinci group business Soletanche Freyssinet.Vinci Construction UK managing director Andrew Ridley-Barker and commercial director Paul Tuplin also exited.


Shepherd Construction managing director Phil Greer left the company earlier this year.Phil was a Shepherd veteran having occupied a string of senior positions since joining the company 35 years ago.



Sir Robert McAlpine

Vince Corrigan suddenly left the firm. Corrigan, 53, was a main board director and London and South East region boss.


10 directors is 10 months must be a crisis. All of these bosses could not have all become bad leaders overnight. The issue is not the individuals biput the system and culture which exists across constructiin.

It's time to rethink!

Wednesday, 8 October 2014

What have the the Red Arrows and Aston Martin got to do with construction?

The answer is absolutely nothing! Maybe that is the problem we have in construction.Both organisations are acknowledged for their excellence. 
I came across these organisations at the Kent Construction Expo today where I was speaking about digital construction.What made this event special was the fact that on the same site in the same day was the Kent manufacturing expo. 
There was a stark difference between the two. The manufacturing event was very digital and had machines doing all sorts of clever things on show. There was even a real car which was beautiful. The construction aspect was less impressive regretfully with mainly service business rather than products or technology. 
The talk from the red arrows pilot was fantastic. He talked about highly performing teams and how, through briefing and de briefing in every single flight, they strived for excellence. EverY flight is recorded on video from the ground and then reviewed. They do three runs every day and every one is de briefed before the next flight. They have an openness about performance and are objective about their own errors. 
Can you imagine this level of commitment  to excellence and performance in construction. 
I then listened to the purchasing director from Aston Martin. They have 140 supply chain partners. They are real partners and they support one another. They are looking for innovation all of the time but they measure performance of their supply chain constantly and and provide ongoing feedback. There is incredible openness and every quotation must be totally broken down and transparent. 
How different is this to the culture in construction. I'm sure we have all struggled to get even the simplest schedule of rates or a preliminaries breakdown in the past. 
The issues in construction are all cultural. Today another tier one boss lost his job for poor performance. T Clark posted a profit warning and Royal Dutch BAM made 650 people redundant. 
These issues are no one individuals responsibility but are down to all of us who have worked within this environment. We must challenge now for a better and different way of doing things. We can build an industry with a sustainably future.