update FUtURe the issUe

update
winter 2009
The magazine for all Balfour Beatty people
the
FUTURE
issue
How our projects and people are shaping tomorrow
Hong Kong:
How Gammon defied
the downturn
Global:
Group welcome for
Parsons Brinckerhoff
United Kingdom:
Balfour Beatty
WorkPlace grows up
22
Welcome to the new-look update.
This edition comes at a time of change and great
opportunity. Undoubtedly, the economic climate is
difficult, but our strong first half-year results (p.10),
followed by our acquisition of Parsons Brinckerhoff (p.18),
put us in a good position. The acquisition fulfils a key
strategic ambition and will transform our capabilities. It has
received strong support from investors and stakeholders,
who recognise this is a very close fit. We share common
values and goals, and we look forward to sharing exciting
times ahead.
Built to last
Sustainable business
practices are becoming part
of the Group’s DNA
The bigger picture
Transforming London’s
M25 network ahead of the
2012 Olympics
18
As we continue our journey to becoming a global leader
in integrated infrastructure, our commitment to an ethical
culture (p.22) and sustainable development (p.12) will
continue to set us apart – as will our people and our ability
to bring together all our talents. The following pages give
a sense of what that future might look like.
I hope you enjoy the issue.
Ian Tyler,
Chief Executive
Update W inter 2009
25
Constructive energy
How Gammon Construction
is succeeding in bucking the
downward trend
Regulars
4 Group hub
11Letter from ... Chile
35Backtofront
Bigger. Better
Keith Hawksworth and
Andrew Wolstenholme on
the acquisition of
Parsons Brinckerhoff
Cover image: At work on the M25
By David Vintiner
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We share common
values and goals
12
16
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inside
22
28
A shared vision
The new code of conduct
will help employees do the
right thing
Growing up
Balfour Beatty WorkPlace
celebrates its first
anniversary
32
How CSR will
survive the crisis
Corporate social responsibility
in the US is alive and well
despite the financial downturn
33
>grouphub
2
3
1
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4
4
Around the world
Highlights from across the Group
1
United States
Balfour Beatty has won
$449 million of new contracts
in the southern US states
of Virginia, South Carolina,
Georgia, Texas and North
Carolina. In Virginia, Heery
International won a contract
for the renovation of Langley
Air Force Base Hospital’s
outpatient clinic, co-ordinated
through the Fort Worth
District of the US Army Corps
of Engineers, while Balfour
Beatty Construction US was
awarded three contracts also
from the Fort Worth District.
2
United Kingdom
Balfour Beatty has
been selected as the
preferred bidder by Blackburn
with Darwen and Bolton
Councils in Lancashire
for their £450 million PPP
Building Schools for the
Future (BSF) programme.
Balfour Beatty will build or
remodel nine schools in
Blackburn and Darwen by
2015 and build or remodel 15
schools, two special schools
and seven pupil referral units
in Bolton (see p.8 for more
on the BSF programme).
3
Switzerland
Balfour Beatty Rail
has set up base camp at the
world’s longest rail tunnel,
the 57km Gotthard Base
Tunnel. As well as using
technology developed for the
Channel Tunnel, the project
will take advantage of new
developments, including
a “concrete train”. The
train will enable concrete
to be produced on site in
the tunnel, and will be in
operation for up to 15 hours
in two shifts, with a third for
cleaning and reloading.
Kong
4 Hong
Gammon
Construction has been
awarded the Centennial
Campus contract by the
University of Hong Kong.
The contract, which
comprises the Centennial
Campus and the University
Street and Associated
Works Phase 1, is due for
completion by spring 2012.
The campus will assist the
University of Hong Kong in
moving towards recognition
as a major international
research-led institution.
Partnering helps
water projects flow
Balfour Beatty is capitalising on
expertise from across its business
to ensure the company remains a
key supplier to the water industry.
Balfour Beatty Utility Solutions
(BBUS), together with partner Dean
& Dyball (a division of Balfour Beatty
Regional Civil Engineering), has
been chosen by South West Water
in the UK as an alliance partner for
a £590 million capital investment
programme. The project is just the
first of what BBUS hopes will be a
considerable growth in its aboveground non-infrastructure work.
“This is a strong signal of Balfour
Beatty’s increasing presence in
the non-infrastructure market,”
said Jonathan Chapman, Head of
Business Development at BBUS.
The win was down to Balfour Beatty
drawing on experience from across
the Group, such as the expertise at
Dean & Dyball, he added.
BBUS is also busy retendering
a number of contracts as its
customers reach the end of
their regulatory period. Chapman
explained that current regulatory
requirements require tenders to
be more efficient and innovative
than ever.
Diversity is the answer for Barnhart
Diversity is the key to Barnhart’s continued
development in the Californian education
market, according to President Eric
Stenman. The firm’s education building
programme has this year completed school
projects in San Jacinto and Santee, and the
$104 million Del Norte High School project
for Poway Unified School District.
“One of the things that makes
Barnhart so successful is the diversity of
Update W inter 2009
approaches we can offer to
school districts,” he said.
These include the
leaseback arrangement
created for the Del Norte
project, which enabled the
authority to use various
qualification markers
alongside price to get the
best build team together.
Mansell’s laser-like focus on
national and regional frameworks
is helping to secure future work.
The UK contractor has won
positions on six frameworks in
recent months, including Devon
County Council’s Construction
Framework South West, which
will be used to procure a wide
range of services including
educational facilities, civic
buildings and leisure facilities.
“We have a strong reputation
for being able to deliver under
this type of arrangement,” said
Barry Jones, Director of Mansell’s
national business team.
He said the company’s success
is down to a strategy combining
a “regionally led approach with a
commitment to developing longterm sustainable relationships in
specific market sectors”.
Mansell has also been named
on frameworks established by
the Olympic Delivery Authority,
East Midlands Property Alliance,
London Overground Rail
Operations Ltd, Moat housing
association and the Walsall
Housing Group.
The London Overground
Rail Operations framework is
particularly exciting, said Jones,
because rail is an area in which
Mansell is seeking to increase
its activity. These six frameworks
have a total value of more than
£250 million. Mansell already
has a presence on more than
90 framework and partnering
arrangements, providing a long
pipeline of projects for the firm.
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Frameworks
build success
5
>grouphub
Balfour Beatty Engineering Services by Managing Director John Moore
How does heritage
make a difference?
It’s a competitive
marketplace, and to be the
best, you need to have a
unique selling point. Ours
is our history. It is obviously
sad to lose two great names,
but it’s clear that our heritage
is captured in the expertise
built up over the 300-year
history of our companies.
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Birmingham New Hospital
6
What
makes
you different
from your
competitors?
We
were
formed by combining the
collective major mechanical
and electrical engineering
strengths of Balfour
Kilpatrick and Haden Young
earlier this year. We have
some of the best-trained
people in the business and
use the most innovative
techniques. Our own off-site
manufacturing and more
than 3,500 staff enable us
to self-deliver on a lot of
our work. Balfour Beatty
Engineering Services
(BBES) is a unique business
model; it has a broad
range of service capability
that complements a deep
breadth of sector coverage.
What has been the
biggest change to
the business?
The divisional structure
– this now better aligns
the company structure with
our different customer
groups. For example, we
now have a division
dedicated to Health and
Education, which accounts
for our two largest market
sectors. This gives us
the opportunity to deliver
best practice across all
of our projects in these
sectors. And we have
complementary expertise.
Haden Young had always
been known as an extremely
strong mechanical player
and Balfour Kilpatrick had a
similar reputation for
its electrical capability. Now
it’s clear this combined
organisation is a leader in
building services disciplines.
Tell us one thing we
might not know
about BBES?
We worked on
Europe’s largest
on-shore wind farm, at
Whitelee, just outside
Glasgow, Scotland.
Which project best
encapsulates your
approach?
Birmingham New
Hospital, West
Midlands, is a vast project
that demonstrates our
talents and resources in
many areas. It involved
mechanical and electrical
expertise combined with
innovation, including a huge
amount of modularisation
and some “out of the box”
thinking to deliver this hugely
complex project.
What is your most
promising market?
This is far easier
to single out –
nuclear new build. The
announcement confirming
that new build nuclear
is firmly back on the UK
government’s agenda
was well received in our
business. Having been
involved in the construction
of the UK’s original fleet
of nuclear power stations
from as far back as the
late 1950s and as recently
as the 1990s, many of our
employees have experience
in the delivery of these
engineering masterpieces.
Following the licensed site
competitions, the nature of
the opportunity has become
more clearly defined, with
10 site owners confirmed
and another site still being
competed. This equates to
a potential market that is in
excess of £2.5 billion.
What’s the most
important thing
you’ve learned from the
rest of the Group?
As we were
developing our merger
plan, we spent some time
with Robert Van Cleave and
his team at Balfour Beatty
Construction US. They
provided valuable insight on
their experience of merging
businesses, such as making
sure we avoided the
temptation of going quickly
at the expense of getting
employees’ buy-in.
OFT announcement
Following a Competitions
Act investigation into the
construction sector, the
Office of Fair Trading (OFT)
fined Mansell £5.2 million.
Any anti-competitive
behaviour by Mansell
occurred before it was
acquired by Balfour Beatty.
The Group has since carried
out an audit across all
its businesses to ensure
complete compliance with
competition law, as well as
detailed training (see p.22).
Green contractor award
Balfour Beatty Construction
US has been ranked ninth in
Engineering News Record’s
top 100 green contractors
of 2009, having broken into
the list for the first time
just last year.
On track in Texas
Balfour Beatty
Infrastructure’s long
association with the Texan
state authorities has helped
it secure another major
transport contract.
The firm has been chosen
by the North Texas Tollway
Authority (NTTA) for a $415
million project to develop
phase four of the State
Highway 161 Tollway in the
Dallas-Fort Worth region.
John Rempe, VicePresident of BBI’s SouthWest region in the US,
believes its previous
successes helped it shape
an attractive bid. “We have
already established a joint
venture with Fluor, and had
an understanding of what
it takes to be successful,”
he said. “We don’t have
to learn about each other
again, and can use a lot of
good lessons applied to the
State Highway 130 project
in Austin.”
The win is particularly
important given the tough
economic conditions, with
Rempe pointing out that
competition is very high,
with 12 to 15 bidders
competing for every project.
Balfour Beatty has worked
on 10 projects for the Texan
authorities over the past 10
years, all delivered on time.
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Your guide to ...
7
Mansell takes a
step back in time
UK contractor Mansell has completed a unique project in
Shropshire, West Midlands that had workers consulting
the history books. It has developed the Ironbridge
Gorge Museum Trust’s Victorian Town in Telford, which
included the expansion of Canal Street with its parade
of Victorian-style shops. The development required the
company to use traditional building materials and ensure
the entire site retained its historical authenticity.
Update W inter 2009
>grouphub
A sporting chance at
London Youth Games
New team set to drive the Group’s growth in the UK government’s Building
Schools for the Future (BSF) programme
Pleckgate High School (main and right) and
Darwen Vale High School (middle and bottom)
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Giving back
8
New team Balfour Beatty Education is
set to drive the Group’s growth in the
UK government’s Building Schools for
the Future (BSF) programme. David
Swarbrick, Managing Director of New
Business at Balfour Beatty Capital, is
leading the new integrated Balfour
Beatty schools team. Known as Balfour
Beatty Education, the venture involves
Balfour Beatty’s Capital, Construction
and WorkPlace businesses. “BSF
represents an absolutely key market
for both the Construction and Capital
businesses,” he said. “It will make up a
large proportion of the order book.
“We have always collaborated in
securing new work, but we wanted to
be more integrated and have a better
focus on the needs of customers. We’re
doing that by co-locating and creating
a single culture where everybody is
focused on the needs of education.”
In October, it was selected as
preferred bidder on Blackburn with
Darwen and Bolton Councils’ £450
million BSF project in Lancashire.
Balfour Beatty reached financial close
on the £200 million Southwark BSF
project in London in May and secured
Stoke-on-Trent Staffordshire’s £250
million schools project two months later.
Meanwhile, Balfour Beatty WorkPlace
has won the facilities management
contract for the first phase of Liverpool
Merseyside’s BSF scheme.
The new entity, Balfour Beatty
Education, has set up an integrated team
in Sale, Cheshire and is doing the same at
Ludgate House in London. It is resourced
to bid for six BSF projects at one time,
“making us by far the biggest bid team in
the market”, Swarbrick added.
It is currently bidding for projects in
the London Borough of Ealing, Yorkshire,
Derby, East Midlands, Hertfordshire and
Oldham, Lancashire.
A dedicated team of Balfour Beatty
employees has helped construct a
clinic for a rural Kenyan community
in desperate need of healthcare
facilities. The project aimed to
utilise the skills and experience
gained by the team within the UK
PFI healthcare market.
Working on behalf of the
Project Rhino Charitable Trust, the
colleagues, who self-funded the
trip and slept in tents, spent two
weeks with local tradesmen in the
village of Kilo in Kenya’s Rift Valley,
building the stone clinic, complete
with maternity delivery rooms and
adjoining nurse’s house.
The area’s local population is
mainly subsistence farmers, and
poverty is widespread. Regular
long-term droughts, punctuated
with flash floods, mean the area’s
5,000 dwellings cannot rely on
adequate harvests.
The extreme climate causes
erosion and severe damage to
earth roads, making vehicular
access difficult. Beth Watkins
explains: “Travel to hospital is
difficult – women approaching
Update W inter 2009
delivery or requiring ante- or postnatal care have to walk a minimum
of 10km to the nearest government
clinic, which is staffed only during
the week.”
Working with the local
tradesmen, the team installed the
clinic’s windows, rendered walls,
fitted electrics and built the ceiling
framework. Enough funding was
raised to help local tradesmen
complete the final touches.
The team also forged links with
the local community, distributing
toys, pens, geometry sets and
clothing to Kilo Primary and
Nursery Schools, playing football
and rugby against local teams,
and painting a primary school
classroom and blackboards.
“Seeing what the nurse does
with limited resources brought
home just how important the
clinic is to local people,” adds
Calum Kerr.
The team: Calum Kerr, Ewa
Jaglarz, Beth Watkins, Steve
Richardson, Gary Fisher, Sophie
Martin, Nicola Williams, Bill
Foster, Rob Eyre and Cyril Mandry
from Balfour Beatty Capital and
Alison Stone from Balfour Beatty
WorkPlace.
Balfour Beatty’s sponsorship has helped grow
the London Youth Games in 2009. More than
47,000 young Londoners participated this year,
including over 3,000 disabled participants.
New disciplines such as a triathlon and a
regatta proved popular with youngsters, many
of whom were able to get involved thanks
to Balfour Beatty’s commitment to
grassroots projects in every borough
in the capital. Russell Findlay, Chief
Executive of London Youth Games,
said: “The support of Balfour Beatty
has been phenomenal and helped
make a real difference to the sporting
future of young people in the capital.”
Balfour Beatty also helped the London
Youth Games launch its Hall of Fame, which
celebrates former competitors such as Linford
Christie who have excelled on the world stage.
Families welcome
early-warning calls
Balfour Beatty Communities has highlighted
the importance of listening to employees to
help deliver innovations.
Patrick Hoppaugh, Community Manager
at Travis in Fairfield, California, said the
creation of voice-broadcasting technology
for its family-housing residents came
from an idea put forward by a maintenance
technician.
The telephone system means urgent
information, such as storm warnings or
power-outage alerts, can be delivered to
residents instantly by contacting them on
their mobiles with a pre-recorded message.
Terri Edelman, Senior Vice-President of
Operations at Balfour Beatty Communities,
added that the development has helped to
reduce costs and manpower.
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› Education is key to success
The Balfour Beatty team hands out
toys at Kilo primary school
9
Letter from Chile
Half-year results
Analysts predict bright future
14
%
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Thunderous approval
10
Balfour Beatty Construction US’s Buffalo
Thunder resort and casino in New Mexico
has been named Project of the Year by the
American Subcontractors Association of
New Mexico. A Hilton property, the $280
million project was completed three months
early and on budget.
Triple success
Balfour Beatty set itself a high benchmark
at Network Rail’s inaugural Partnership
Awards. The Group scooped the Supplier of
the Year Award, while Balfour Beatty Civil
Engineering won the safety award for its
Forth Bridge refurbishment work. Balfour
Beatty Rail Projects was highly commended
in the environmental sustainability category.
Learning by doing
A group of aspiring site managers from
Balfour Beatty recently took part in a
pilot course at the UK’s first construction
training simulator to develop construction
leadership and management skills. The
ACT-UK Simulation Centre in Coventry, West
Midlands re-creates a real-life environment,
taking trainees through every aspect of a
construction project. With the assistance of
4-D simulation and actors, the trainees act out
a range of scenarios, including dealing with
subcontractors and members of the public.
Analysts have painted
a bright picture for the
future of Balfour Beatty
after it announced a 14
per cent rise in pre-tax
profits to £108 million for
the first half of the year.
Among the deals to reach
financial close in the first
part of the year were the
£6.2 billion M25 roadwidening project, a PPP
hospital in Fife, Scotland and
a public-private partnership
to redevelop Southwark’s
secondary schools in London.
William (Billy) Smith has worked across five
continents for Balfour Beatty in a career
spanning 20 years. After two decades of
roaming, he has found his true home in Santiago
Billy (second
from right)
meets Prince
Charles in
Santiago
30%
A strong performance in the US market helped to boost
profits, with the US now providing 30 per cent of overall
Group revenue.
£12.5 billion
order book
Andy Brown, an analyst at Panmure
Gordon, said the Obama administration is
expected to make a significant investment
in infrastructure, and that Balfour Beatty’s
US operations will be well placed to take
advantage of this. Howard Seymour, an
analyst at Numis Securities, suggested
the US infrastructure market would give
Balfour Beatty a “solid backdrop” to
develop its American businesses.
Even in a more
difficult market,
Balfour Beatty is
going to perform
more strongly
than others
Brown pointed out that Balfour Beatty
has announced a clutch of new contracts
since the results and said these would
strengthen the company going into the
second half of 2009. “Balfour Beatty’s
broad infrastructure theme means it is in
a much more resilient area,” he added.
Seymour agreed the company is well
positioned. “Even in a more difficult market,
Balfour Beatty is going to perform more
strongly than others,” he said.
W
hy Chile?
I was
attracted by
the challenge
of a project
where the language is not English
and of course the step up to being
General Manager. We provided
Spanish lessons for any staff
who, like me, were new to the
language or felt a little rusty. From
a standing start 18 months ago, I
can now hold my own.
And then there was the
opportunity to explore South
America: the Atacama Desert, the
driest 1,000km stretch on earth,
and the glaciers and icebergs
in Patagonia. And there’s a live
volcano not too far from here.
The works are carried out using
staff directly employed by Balfour
Beatty Chile SA. This is different
from my other experiences where
we would usually have a local
joint venture partner. Many of our
workers are new to the railway,
so we have provided railwayspecific training to expand the
pool of available resources, paying
particular attention to safety.
Update W inter 2009
We have a strong relationship
with the customer. Four years ago,
we completed Line 4 and Line 4a
on the Santiago Metro, which were
the first steel wheel, steel rail lines
built on the Metro. In 2008, we
were awarded the extension of two
other Metro lines: Line 5 and Line
1. Two major milestones have been
completed on time so far. The third
– the completion of the second
section of Line 5 – is scheduled for
September 2010. We
also maintain the trackwork on the
entire Metro de Santiago network.
The heavy mining industry
in Chile makes for a big expat
community in Santiago. Although
we work hard, we try to ensure
that the team has time to socialise
together. We often go to one of the
local vineyards for Sunday lunch.
Most expats live in Las Condes
(known as “SanHattan”) because
of its skyscrapers, financial district,
shopping, restaurants and parks.
The diversity of scenery outside
Santiago is breathtaking. During
the winter, we can be skiing within
an hour of the city; go the other
way and we can be on the beach.
An attractive market
One of the challenges of working
in a new country is adapting to
the business culture, although
Chileans often refer to themselves
as the British of South America –
they are more conservative than
other Latin Americans, and have
a more European view. Chile
has one of the region’s most
stable economies. It is attracting
more attention from the UK,
with recent visits
by Prince Charles,
Prime Minister
Gordon Brown and
Sir Andrew Cahn,
Chief Executive
of UK Trade &
Investments.
For us, further
expansion of the
Metro system,
investment in
the Chilean state
railways, and
a tram system planned for Las
Condes, provide a pipeline of work
that we’re keen to tap into. This is
a good platform for Balfour Beatty
in the rest of South America.
At a glance
Population: 16.8 million (UN, 2008)
Main exports: Copper, fish, fruit,
paper and pulp, chemicals
Capital: Santiago
Area: 4,300km long and (on average)
175km wide
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>grouphub
17
11
Sustainability Group-wide
Balfour Beatty aims to be A leader in
sustainable development by 2020, but how is the
Group transforming this vision into a reality?
12
A
t first glance, it may
seem as if a
government office
in Hong Kong, a
bank in the US and
a hospital in Birmingham, West
Midlands, UK, have little in common
– apart from the involvement of
Balfour Beatty’s operating
companies. But these schemes,
and many others, are putting them
at the forefront of sustainable
development. From energy-efficient
technology, water-recycling
systems and waste minimisation,
to off-site fabrication, learning
opportunities for local communities
and charity fundraising, sustainable
business practices are gradually
we are training
local schools
and colleges via
a learning hub
Update W inter 2009
seeping into all of the Group’s
operations. But it doesn’t end there.
By influencing customers and the
supply chain in the short term, the
firm is ensuring that both financial
and environmental costs are
minimised in the long term through
construction and operation of
sustainable and efficient
infrastructure.
Group Head of Environment
Jonathan Garrett cites projects such
as Tamar (the government
headquarters in Hong Kong) as an
example of the Group’s progress in
becoming the most sustainable
business in the built environment
sector. “Originally, the brief was for
the design and build of a new
government headquarters.
Gammon Construction’s redesign
was for a more environmentally
sustainable building,” he explains.
After showing the customer the
financial and environmental benefits
of building orientation to enhance
ventilation, connectivity via green
space and technologies such as
sustainable urban drainage systems,
photovoltaic panels, green roofing
and sea-water cooling systems, the
government chose the alternative
design. Such a move was not just
good for the customer, but could
give Gammon a boost in the
building market. “The in-house
design team know that in their
market they have to differentiate
themselves and they have done
this by designing more sustainable
buildings,” says Garrett.
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Built to Last
Thinking long-term
In the UK, a similar philosophy has
influenced the Birmingham Hospital
project. Here, not only are
sustainable solutions being
incorporated into the physical
design, but they are also stimulating
interest in the construction industry
as a career choice, and thus
contributing to the long-term health
of the sector. On the physical side,
prefabrication of structures and
services is cutting the waste
generated and energy used on site.
On the intellectual side, a centre
has been set up to teach young
people about the realities of
entering the profession.
“Here, we are training local
schools and colleges via a learning
hub, which teaches them more
about how construction works,”
explains Mike Peasland, Group
Managing Director and Chairman
of the Balfour Beatty Sustainability
Working Group. “It is a major
five-year, £600 million programme
and the timescale gives us more
13
Sustainability Group-wide
14
Meeting new targets
Chief Executive Ian Tyler says is
critical for the long-term survival of
the business. A roadmap that sets
out the strategic objectives of the
vision, and a user guide to assist
with implementing it, has just been
published (see box).
Industry experts agree that such
strategies are gaining importance,
thanks to legislative drivers,
customer pressure and investor
interest. Investment funds are
increasingly turning to tools such as
the Dow Jones Sustainability Index
when placing equity with privatesector firms. It ranks firms
according to economic, social and
On the legislative side, the UK’s
Carbon Reduction Commitment,
effective from April 2010, limits
the volume of greenhouse gas
emissions across 5,000 businesses
from all sectors. To prevent 4
million tonnes of carbon dioxide
entering the atmosphere every year
by 2020, participants will have to
become more energy-efficient.
Cost savings are expected to be in
the region of £1 billion. “Providers
of infrastructure have to meet
challenging carbon-reduction
targets. Balfour Beatty is providing
that infrastructure so it has a
contribution to make in terms of
Achieving the 2020 vision
Businesses will be challenged to meet targets
covering 31 issues relating to sustainable
development. Each falls into one of three aims:
to create profitable markets, to build healthy
communities, and to enable customers to
meet these aims within environmental limits.
For each issue, operating companies must
meet a minimum, mandatory standard by
2012, and will be expected to work towards
the higher level of “excellent”. These levels
are steering the firm towards meeting aspirational operating standards for 2020.
AIM: Creating profitable markets
ISSUE: Influencing the market environment
GOAL: External bodies recognise us as a
reliable reference on sustainability
2012 MANDATORY STANDARD: Actively
participate in industry debate, conferences,
standards committees and trade press, linking
our work to sustainable outcomes. 2012 EXCELLENCE: Through recognition of
our capabilities and ongoing improvements
in delivering sustainable solutions, we obtain
widespread accreditation from relevant third
parties, providing us with the authority and
credibility to comment on these issues.
2020 VISION: Balfour Beatty’s reputation is
such that we are approached as the reference point on sustainability within our sectors by government, industry authorities and
potential customers. We are trusted as the
leader for applying the delivery of sustainable
solutions within our sectors and operating
companies. When appropriate, our work
plans are adopted as national standards or
best practice by our sectors and competitors.
Sustainable design is becoming increasingly
important in the construction sector
hitting those targets,” says Martin
Hunt, Head of Built Environment for
UK sustainable development
organisation Forum for the Future.
Industry body Constructing
Excellence says Balfour Beatty’s
plans will help in meeting a
range of sustainability objectives
laid out by the UK government
in its Strategy for Sustainable
Construction. “This is what the
industry needs, for a company
like Balfour Beatty to be grasping
and driving forward the agenda
– or the industry won’t meet
its targets,” says Constructing
Excellence Director, Jon de Souza.
These targets include reducing
deaths in construction by 10 per
cent, a push to get 230,000 new
workers into the industry by 2010
and a demand that 25 per cent of
materials are responsibly sourced.
Martin Jolly, Balfour Beatty
WorkPlace Technical Development
Director, knows this very well.
Update W inter 2009
WorkPlace has been partnering
with energy technology firms such
as Sabien and powerPerfector to
ensure it uses the most efficient
equipment for minimising energy
consumption. Such initiatives
are exactly what the 2020 vision
is encouraging and many of the
objectives are already being
achieved through initiatives such as
Zero Harm and the Green Business
Initiative in the US.
“Simon Wright [Supply Chain
and Sustainability Director] at
Mansell went through a database
of its projects and found £2 billion
of work included an element of
sustainability,” says Garrett. “If
you go into any of our businesses
in 2020 and ask what sustainability
means to this project, we’ll
be able to tell you. It’s not just
about the environment, it is
economic. If we get this right, we
win more work, but it has to be a
collective responsibility.”
❚ In the UK, Balfour Beatty Civil
Engineering re-used more than
1 million tonnes of aggregate on
the M1 motorway widening
project, saving £3 million on
virgin aggregate
❚ Balfour Beatty WorkPlace
helped schools in Stoke-on-Trent,
England save more than 10 million
kilowatt hours per annum by better
monitoring of heating systems
❚ In the Middle East, Dutco Balfour
Beatty has initiated and led an
industry-wide safety organisation
called Build Safe Dubai, which is
improving site safety in the region
and has more than 80 members
❚ On the East London Line in
the UK’s capital, Balfour Beatty
Civil Engineering and Balfour
Beatty Rail divisions met Network
Rail’s requirements for equality
and diversity by setting up onsite placements for students,
establishing a training and advisory
group, making links with “back to
work” organisations and providing
diversity training to managers
❚ In the UK, Balfour Beatty
Construction Northern set up
a learning hub at Manchester
schools, which operates as a
training and job shop, meeting
social-regeneration needs
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We want to be leading in
our sector, and our Index
ranking is one way
to measure that
time to interact locally. Something
like this demonstrates our wider
commitment to the industry.”
Meanwhile in the United States,
engineers on the $500 million Bank
of America Center project in
Charlotte, North Carolina have
saved the customer $8.3 million in
water treatment and transportation
costs. “The project team came up
with a system on site that allows
contaminated water to be treated
and re-used as required, eliminating
the need to transport thousands of
gallons to a nearby cleaning facility
and back to the site,” says Rich
Rantala, Senior Vice-President for
Business Enhancement Practices,
Balfour Beatty Construction US. It
also meant that less water was
required from the local supplier as
more than 43,000 gallons were
treated every day.
Taking the lead in these types
of initiatives is core to Balfour
Beatty’s “Sustainability Vision
2020”, a strategy that has been
developed by the Sustainability
Working Group over the past
12 months. “This is an umbrella
strategy,” explains Peasland. “We
already have pockets of excellence
within all our operating companies
but this corrals it all together and
uses the Group as a conduit.”
Ultimately, the plan aims to embed
sustainability in everything Balfour
Beatty does by 2020 – something
Sustainability
in action
environmental performance. At 67
per cent, Balfour Beatty is some
way above the industry average of
48 per cent, but below the highest,
at 82 per cent. “We want to be
leading in our sector, and our
ranking in this Index is one way to
measure that,” says Peasland.
15
Roads UK
The bigGER picture
Connect Plus Services, a
joint venture comprising
Balfour Beatty, Atkins and
Egis, is responsible for the
day-to-day operation of
the Dartford Crossing, an
integral section of the M25
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Following the financial close of the £6.2 billion design, build, finance and operate contract
to transform sections of the UK’s M25 motorway, update spends a day with the team
revitalising a crucial part of the UK’s transport network ahead of the 2012 Olympics
16
17
Working together to handle
18m-long sheet piles (part
of 6km of sheet pile walls
between J16 and J18)
Putting the finishing touches to the
slipformed slot drain
M25 north of J16, where 150,000 vehicles per day pass
through the Denham railway viaduct
Update W inter 2009
Adding another lane onto the existing sevenspan Berry Lane viaduct, south of J18
Parsons Brinckerhoff
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PB leads the general
engineering consultants for the
$2.5 billion Woodrow Wilson
bridge in Washington DC
18
bigger.
better
Balfour Beatty’s acquisition of Parsons
Brinckerhoff, the US-based engineering
and professional services specialist,
has been hailed as transformational
on both sides of the atlantic
The acquisition of Parsons
Brinckerhoff (PB) for $626 million,
will create an enlarged Group
capable of being a global leader in
infrastructure services.
update hears from Keith
Hawksworth, Chief Executive
Officer of PB, on why the previously
employee-owned business has
found the right partner for the future,
and from Andrew Wolstenholme of
Balfour Beatty, who is leading the
integration of PB into the Group.
We have played
a leading role
in some of the
most notable
infrastructure
projects of the
20th century. The first – New
York City’s first subway, the IRT –
remains one of the world’s most
heavily used rapid transit systems.
At PB, we strive to be a positive
force in the development and
operation of infrastructure around
the world. Like Balfour Beatty, we
aim to create and care for assets
that leave a lasting legacy. This is just
one aspect in which we are highly
complementary. The combination of
our businesses will create a world
leader in project development, design
and delivery of construction services.
Meeting our customers’ needs
is what drives us both. Throughout
its history, PB has been involved in
grand-scale projects that dramatically
improve communities and we look
forward to continuing and enhancing
this focus as part of the Balfour
Beatty Group.
We look forward to building
on our distinguished reputation
in key sectors such as transport,
environment, power, water and
buildings/Federal, applying our
expertise to new sectors and
geographies. We work in more than
80 countries, with over 50 per cent of
our employees outside the US.
I am delighted that PB has
become part of the Balfour Beatty
Group, a company that shares our
values, culture and commitment
to professionalism, integrity and
technical excellence.
“The acquisition
of PB is ambitious
and the integration process
presents a unique set of challenges.
However, Balfour Beatty has a
successful history of bringing
companies into the Group and the
opportunities are enormous.
The acquisition is something that
we have been thinking about for
some time and, critically, we believe
that not only are the cultures of the
organisations extremely similar, but
there is little operational overlap.
If you also look at the values and
traditions of the two companies, we
are starting in a good place – both
have proud heritages and we care
about how we do things rather than
just what we do.
PB has around 13,000
employees, more than 100 offices
the group’s
long-term
growth
potential
will be
enhanced
Keith Hawksworth
Update W inter 2009
and annual revenue in excess of
$2 billion, and the acquisition will
mean that the Group can boast
a professional services business
with global reach.
Balfour Beatty’s ability to serve
the infrastructure markets will be
significantly strengthened and
the Group’s long-term growth
potential enhanced.
While professional services has
been an area of strong growth for
the Group through Balfour Beatty
Management (BBM) and Heery,
by bringing PB into the fold we
have dramatically expanded our
capability. Importantly, the Group
now has the skills and experience
to offer a service that spans the
entire life cycle of an asset.
What happens next …
You can break down the process
into stages: on day one we need to
have a number of business-critical
work streams in place. Following
this, there are system integration
processes such as tax, finance
and IT, as well as other functional
streams that need to be brought
together quickly. Alongside this
will be the important integration
of BBM and PB in the UK. Nick
Flew has been announced as PB’s
Managing Director in the UK and
will be leading this process.
Finally, the third and most exciting
phase is about ensuring that our
two organisations can take full
advantage of new opportunities.
The integration role is to make
sure that every part of Balfour
Beatty receives the greatest
possible benefit out of this deal
and leverages all the opportunities.
In other words, I must ensure that
the whole is greater than the sum
of the individual parts.
A brief guide to
History
Founded in 1885 and
headquartered in New
York City, Parsons
Brinckerhoff (PB) is
one of the world’s
leading professional
services companies.
Sectors
PB provides strategic
consulting, planning,
engineering, programme
and construction
management and
operations and
maintenance services to
public and private sector
customers. Expertise
includes transportation,
power, buildings, water
and wastewater,
environmental and urban/
community development.
Projects
Some of the prestigious
infrastructure projects PB
has been involved with
include the NORAD
hardened underground
facility in Colorado; the
Taiwan High-Speed Rail
Line; the Palm Jumeirah
development project in
Dubai; and the Bay Area
Rapid Transit (BART)
system in San Francisco.
PB is the delivery partner
of the Greater Manchester
Passenger Transport
Executive in the UK for
the expansion of the
Manchester Metrolink.
What it will mean day to day …
The majority of employees should
not expect any difference at all.
For others, the change will be
incremental. It will, however, mean
working within an organisation that
has a wider global reach and a larger
reservoir of professional and project
management services than before.
On exciting opportunities …
We acquired PB for strategic
long-term growth. The acquisition
provides us with the capability
to manage the whole life cycle
of big, one-off projects. We must
now work together to take full
advantage of the opportunities this
acquisition presents to us.”
Andrew Wolstenholme
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On making the
integration
work …
19
Parsons Brinckerhoff
Illustration by Jamie Sneddon
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The acquisition presents a unique opportunity for the Group to become a leader in professional
and construction services in the infrastructure market, particularly in transportation and power.
It will enhance its position in US civil infrastructure, especially in transportation. As well as
strengthening its position in existing markets, the deal increases Balfour Beatty’s global footprint:
US
❚ Strengthened
position in federal
markets
❚ Greater
opportunity
for existing
construction
services
businesses
❚ Stronger offer
in emerging PPP
markets
UK
❚ Larger
professional
services presence
❚ Become a major
player in the
power market
❚ Significant
opportunity
for increased
performance
Australia
❚ Establish a
strong position
in certain key
infrastructure
markets
❚ Transportation
and infrastructure
expertise for the
mining sector
Hong Kong,
Singapore,
UAE
Parsons
Brinckerhoff and
Balfour Beatty
businesses
working together
will create a more
powerful presence,
particularly
in power and
transportation
India, China,
South Korea,
South Africa
Opportunities for
enlarged Group
to participate in
emerging growth
markets, with
an integrated
approach
Parsons Brinckerhoff has an
international presence in
transportation, building,
power and water, across
markets such as healthcare,
sport & leisure and aviation.
The acquisition fulfils a
number of strategic
ambitions – it is estimated
that professional services
will grow from 5 per cent to
23 per cent of the Group’s
value. And that Australia,
Asia and the Middle East
will grow to make up 10 per
cent and the US 32 per cent
of Group revenue.
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Look into the future …
20
21
Update W inter 2009
22
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A shared
vision
Clear guidance on ethical behaviour helps
boost morale and performance. Balfour
Beatty’s revised code of conduct will ring true,
irrespective of boundaries and culture
W
ith expansion
proceeding
at a rapid
rate, Balfour
Beatty’s new
code of conduct, which forms part
of its values programme, is poised
for launch. Consistency was a
central objective.
Chris Vaughan, General Counsel
and Company Secretary, explains
that he and Chief Operating Officer
Andrew McNaughton wanted to
unify existing corporate values
across the whole Group.
Vaughan told update: “Balfour
Beatty is a great success story in
terms of how much it has grown
– in the past five or six years it
has probably trebled in size. What
we haven’t done before is to try
and set out a consistent set of
corporate values that are applied
across the Group.
“But that doesn’t mean the
Group doesn’t have values. It does
– a lot of our operating companies
have established their own values
and, to a certain extent, they are
all consistent. We wanted to move
to a single platform across the
Group for the next phase of the
development and growth of the
company.”
McNaughton acknowledges that
differences will exist due to cultural
Illustration by Oliver Burston
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Code of conduct Group-wide
variables. “The businesses in the
US are different from the UK and
Hong Kong,” he says. “What we
don’t want to do is to suddenly
create a uniform delivery, because
our operating companies offer
different products and services,
and work with different customers
and cultures. What we want is
something that people immediately
recognise that unites us as an
organisation. The whole of our
business is greater than the sum of
its parts – but it doesn’t make us a
plain vanilla organisation.”
But, regardless of culture, isn’t
a code of conduct just common
sense? Vaughan agrees that it is
indeed a reminder of what people
already know with key legal points
emphasised, but he stresses that it
is not intended to be patronising.
“We believe we can engage
employees by providing what I
hope is an interesting document
to read. It is meant as a guide, a
reminder. I don’t want people to
Update W inter 2009
get it and put it in a drawer or on a
shelf. I want them to read it, think
about it and refer to it frequently.”
McNaughton agrees, saying that
in terms of ethical practice, Balfour
Beatty is providing a framework of
principles to help employees do the
right thing and protect the Balfour
Beatty brand and reputation: “It’s
about reducing risk to the business,
about minimising the potential for
people to take actions that could
import risk into the business. What
do we expect to see in terms of
results and performance? Well, it
is that level of consistency, it’s the
elimination of the potential
for people to take decisions that
could be of harm to the business
– financially, commercially or
to our reputation.”
Embedding the code
During their research, McNaughton
and Vaughan found that the Group’s
codes tended to be largely rulebased – something they wanted to
23
23
A code of
conduct is about
reducing risk to
the business
24
avoid. Vaughan says: “Our business
is very broad and diverse. So, to
come up with a set of rules that
everyone can pick up and use in
every single circumstance that they
may find themselves in means that
you end up with huge, voluminous
documents. We wanted a principlesand values-based code. It’s also
about embedding the code in the
business. There have been some
classic examples – Enron had a code
of conduct which won awards – and
look what happened to it!
“It’s not that we are particularly
at a turning point, it is more about
pulling together what we already
have. And we have experienced
some issues. We have undergone
an investigation by the Office of
Fair Trading, which investigates
competition in the UK. We settled
an investigation by the Serious
Fraud Office last year. We want
to make sure that we don’t shoot
ourselves in the foot,” he says.
“The code of conduct focuses very
much on being a guiding document
to help keep us out of trouble in
some ways; the values programme
underpins it and focuses on the
opportunity and the growth. The
two sit hand in hand.”
Key drivers
Companies with a highly ethical
culture have been found to be high
performers. “There is evidence
that those companies that have
corporate values and codes of
conduct are often the highestperforming. That’s what we are
determined to be,” says Vaughan.
This belief is borne out by the
views of the Institute of Business
Ethics (IBE). Simon Webley, IBE
Research Director, says: “Since the
economic cycle turned down and
it’s not a turning point; it’s
more about pulling together
what we already have
was made worse by irresponsible
behaviour in the worldwide financial
sector, companies have paid more
attention to the way they are doing
business as opposed to what they
are doing. Reputational risks are
now routinely being assessed
and senior people are being
appointed to oversee corporate
responsibility policies.” Research
indicates, he adds, that the
benefits of taking ethical behaviour
seriously are the recruitment and
retention of good-quality staff,
good credit ratings, respect in the
marketplace, consistent behaviour
and high morale among employees.
But can such an international
organisation expect to unify its
values and transfer a code of
conduct across boundaries and
cultures? McNaughton says that
the values’ meanings have been
tested in operating companies
around the world to ensure that
they are valid and consistent. And
the code was created with input
from a wide range of OpCos and
with different cultures in mind.
“As we roll out the programme,
we are engaging with nominated
champions from each of the parts
of the business to ensure that it
is done in a way that’s relevant
to people, whether they be in
Glasgow, Singapore, Dallas, or
Dubai,” he explains.
A
n almost tangible
atmosphere of
excitement and
activity emanates
from the Gammon
Hong Kong office. The partowned Balfour Beatty subsidiary
is celebrating a string of big
project wins that have secured its
leading position in the Hong Kong
construction market.
Earlier this year, Gammon won
its largest ever civil engineering
contract, the Harbour Area
Treatment Scheme Stage 2A,
a massive piece of sewage
infrastructure valued at HK$3.76
billion. Other recent high-profile
portfolio additions have included
the Tamar project to construct
the Hong Kong government
headquarters, a HK$2.82 billion
project to reconstruct and upgrade
the Tuen Mun Road – Eastern
constructive
energy
After an encouraging 2009, Thomas Ho, chief executive
of Gammon construction in Hong Kong, is confident.
ho and his colleagues discuss the principles that
have helped the firm to defy the downturn
At a glance
Our Code of Conduct
• Launched in November 2009
• Applies to the whole Balfour
Beatty Group
• Will involve extensive training
(face-to-face and e-learning)
• Will be regularly reviewed
Update W inter 2009
The 68-storey One Island
East on Hong Kong Island,
constructed by Gammon
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Construction Hong Kong
25
25
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The reconstruction and improvement of
Tuen Mun Road – Eastern Section
26
Section, and a contract to redevelop
the Hennessy Centre – the first
platinum-level LEED (Leadership
in Energy and Environmental
Design) building in Hong Kong.
Gammon has also been awarded
a HK$1.97 billion contract by the
University of Hong Kong for the
construction of the Centennial
Campus. This is the second
contract won by Gammon for
the project, following the recent
completion of re-provisioning work
on the reservoirs.
The growth in Gammon’s
turnover and market share has
come despite a downturn that
saw the value of the Hong Kong
construction market drop from
HK$110 billion in 1997 to HK$50
billion last year.
Thomas Ho is clear about the
reasons for this resilience. “It
came down to the quality of people
we put on the job, their technical
excellence and their capabilities
in design and innovation, and also
our brand reputation in quality and
safety,” he says.
Ho believes Gammon’s working
culture is also crucial: “I try to
involve staff in decision-making,
and encourage open discussion, so
that we can have a free exchange
of ideas; we are a learning
organisation.”
The passion and enthusiasm of
the Gammon team comes across
loud and clear when speaking
to individual members. And
collectively they offer a valuable
breadth of expertise.
“We participate in a variety of
sectors, such as building, civil,
mechanical and electrical (M&E)
and foundations, and I think we
are seen to be the number one
firm in all those sectors, which I’m
very proud of. We’re promoting
an integrated offering for our
customers,” says Ho.
This view is echoed by Matthew
Forbes of Credo, a strategy
consultancy with significant
experience in the construction and
support services sectors.
“People see Gammon as one of
the few players with the necessary
scale, technical capabilities and
breadth of service to take on
the largest and most complex
projects, in both infrastructure and
buildings,” says Forbes.
“Either within its own business
or via Balfour Beatty, Gammon has
access to a full range of life cycle
services as well as some specialist
areas including rail, infrastructure
and utility services,” he continues.
“We have learned a lot from
Balfour Beatty,” adds Ho, citing a
recent contract win in Singapore to
build a campus for the Institute of
Technical Education. Gammon drew
on its parent company’s expertise
in public-private partnerships to
win the business and ensure the
smooth running of the project. The
I encourage open discussion
so that we can have a free
exchange of ideas
two companies will also be teaming
up to tender for rail contracts for
trackwork and power in Singapore.
Meanwhile, back in Hong Kong,
the government has launched a
big drive to boost the construction
industry. Ten huge infrastructure
projects will be coming up for
tender in the next few years,
including a number of rail contracts
that particularly interest Gammon.
This is, as Ho says, a “golden
opportunity” but it is not without its
challenges: “Projects are becoming
more complex and demanding, so
you can imagine the importance of
getting the right people.”
His other major concern is health
and safety: “This is very close to my
heart. The fatality and incident rate
is still not good enough. We need
to find the best possible way to
achieve Zero Harm that involves a
cultural change. We will get there.”
Ultimately, Gammon aims to
expand further afield. Its turnover
in Singapore has more than tripled
in the past few years and there are
plans to explore opportunities in
Vietnam and the Philippines and,
eventually, China and India.
For now though, making
Gammon the “employer of choice”
is Ho’s guiding principle: “I treasure
our people and our talents. It is the
people that we offer to the industry
who are being recognised and who
are selling our brand.”
Update W inter 2009
engineering
sustainability
HR & training
John Clark,
Head of Engineering,
Lambeth Associates
Shirlee Algire,
Group Sustainability
and CSR Manager
Stephen Sy,
Managing Quantity
Surveyor
John Clark is an engineer
through and through: “What
I love most about my job is
that I can lead a large group
of staff and still spend most of
my time being the engineer I
dreamt of being when I was
at school.”
Clark heads Gammon’s 110strong design group, Lambeth
Associates, an unrivalled
in-house engineering
resource. It prides itself on
incorporating design and
engineering into the project
planning process and makes
a huge contribution to
tenders (which are almost
all awarded on a combined
technical and
price basis).
The group is involved
in virtually every Gammon
project and is constantly
developing new techniques.
It is currently building
expertise in tunnelling
design, 3D and 4D animation,
and modularisation, where
engineers prefabricate as
much as possible off site
before putting it in place.
“It’s something Balfour
Beatty used for the Heathrow
Terminal 5 project in the UK,
so some of our staff visited
that project and came back
with ideas to develop here,”
says Clark.
“What I am most proud of is
that we’re not afraid to have a
go at anything,” he says.
“I would like to think that
ethos has helped to build
Gammon’s reputation as the
contractor that any customer
would prefer if he has a
challenging project.”
“Construction has
big impacts; we have
responsibility for those
impacts,” says Shirlee Algire.
Fulfilling that responsibility
involves leading a team of
environmental professionals,
including urban planners,
scientists and engineers, who
ensure good sustainability
practice is employed across
Gammon’s operations. “They
have the passion: that’s why
they’re in the business. It’s
very stimulating to see people
who are creative and also
very good at what they do.”
The team works on
innovative solutions geared
towards sustainability, which
Algire must then communicate
to the rest of the business. “I
put a tremendous amount of
effort into building a network
so that I can spread the word
about new developments.”
Gammon’s involvement in
Hong Kong’s first LEEDcertified project has proved
helpful in this: “It has
added visibility to what
is achievable.”
Algire is developing the
company’s sustainability
criteria on good building
practice, as well as feeding
into and drawing on Balfour
Beatty’s sustainability
framework: “There’s a
tremendous amount we can
learn from all the operating
companies, so having Balfour
Beatty help facilitate that has
been very good. Sustainability
is the way we deliver our
work and the way we run
our business and everybody
contributes to that.”
Stephen Sy has a dual function
at Gammon. In his commercial
role, he supports the M&E
department in commercial
management of projects and
also boosts profits with a
combination of cost control
exercises and income
maximisation. He also helps
to train graduate quantity
surveyors (QSs).
This training is crucial to
attracting new talent: “We ask
new recruits why they join
Gammon and the training and
our corporate reputation are
the most common reasons.”
The QS training programme
takes 30 months and includes
half-yearly reviews: “We
assign supervisors who we
think can really give proper
guidance, rather than just
signing their log books.”
Sy is excited about the
projected upturn in the market,
but he is aware that it presents
recruitment challenges: “We
need the right people for the
right job. However, the market
probably requires 300 quantity
surveyors and the universities
can only supply perhaps 150 or
200 – that’s the talent war we
are going to face.”
Striving to become
the employer of choice
is something Sy believes
Balfour Beatty and Gammon
have in common. “We are
both consistent in our core
values and share a high level
of integrity. I can imagine
that in future there will be
more interaction between
the two firms because of the
globalisation of markets and
growth of the businesses.”
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Construction Hong Kong
27
Services UK
growing up
28
If we don’t
do our job
properly,
a nuclear
reactor could
be shut down
soundly though, because I have
very good people who are looking
after our customers’ interests and
keeping our business safe.”
That leaves Craven to focus
on the bigger picture. This year,
his division celebrates its first
anniversary as BBW – prior to that it
had been known as Haden Building
Management (HBML), the name
it held when it was acquired by
Balfour Beatty in 1986. At the time
of last year’s rebranding, Craven set
the division an ambitious challenge
– to grow from a £400 million to
a £1 billion turnover company
by 2013. It may sound like a big
mountain, particularly in the current
economic conditions, but Craven is
no stranger to building businesses
under tough circumstances.
The Zimbabwe born-and-bred
48-year-old trained as an engineer
at the University of Witwatersrand
in South Africa. “Just after its
independence, Zimbabwe ran out
of foreign currency so I had to pay
my own way through university,”
he remembers. “I supported myself
by running a temporary catering and
bar staff operation.” The business
took off and Craven never saw
his degree through to the end.
“Rather than becoming a chartered
engineer, I chose to go into catering
as a full-time job,” he says.
He ran three businesses in South
Africa – two catering companies
and a restaurant – before moving
to the UK in 1991, when he turned
30. “I came out here on a gap
year but spent all my money, so I
took a job,” he says. His first role
was running a leisure company in
Portsmouth, on the south coast.
From there, he moved into the
corporate catering world, taking a
job with Gardner Merchant, which
was later acquired by Sodexho
– the catering company which is
now a major BBW competitor.
Craven hadn’t always intended
to forge a career in facilities
management (FM), but after his
time in the catering industry,
making the leap to a broader FM
role seemed quite natural. And
having now spent several years
working in FM, he begs to differ
with those who think it’s dull. “We
do everything from answering
telephones at the government’s
Department of Work and Pensions
to cleaning reactor buildings at
nuclear power stations – the extent
of our work is extremely varied,”
he says. The other motivating
factor? The people he works with
and for. “In this kind of businessto-business service environment,
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evin Craven should
have a lot on his
mind. As Managing
Director of Balfour
Beatty WorkPlace
(BBW) – Balfour Beatty’s facilities
management arm – he leads a
team of 14,000 employees who
service customers that are critical
to the UK’s public infrastructure.
“If we don’t do our job properly, a
nuclear reactor could be shut down
because of us, or a hospital could
go down and people’s lives could be
put at risk,” he says. “I sleep quite
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Photography by David Vintiner
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Balfour Beatty Workplace is one this year.
Managing Director Kevin Craven says the
Facilities Management arm is on track
to make a big contribution to the Group
Update W inter 2009
Services UK
30
it’s very much about dealing with
people, serving people and doing
things on behalf of people. It’s a
very people-orientated business,
even though it seems like it’s about
buildings,” he says.
Natural fit
The HBML acquisition was long
before Craven’s time – he joined as
Managing Director in 2006 – but he
believes it was a natural extension
to Balfour Beatty’s construction
capability. The Group already had
divisions in place to finance and
build public infrastructure. With the
acquisition of HBML, the company
could now maintain those buildings,
extending the relationship with
the customer beyond the lifetime
of the construction project. There
were benefits for HBML too – most
notable was having the financial
strength of Balfour Beatty behind it.
“Working with us was not seen as a
risk because of the size and security
of Balfour Beatty,” Craven says.
It made sense, then, to take that
benefit to its logical conclusion by
adopting the Group’s name. The
rationale for the rebranding was
twofold: first, the Balfour Beatty
name was more recognisable
in the marketplace than HBML
ever was and, second, HBML
needed a name that would reflect
the fact that it had diversified
from its traditional strong point of
engineering maintenance to include
a range of other services including
IT, cleaning and catering.
In addition to this “hard service”,
as BBW categorises it, the division
also offers soft services which
include, among other things,
grounds maintentance (security and
pest control), property and project
services (space planning and estate
management), business services
(lease and rates management and
managing moves) and professional
In practice: working with the Met Police
Cleaning out the cells across north London’s
police stations after a drunken Friday night
isn’t everybody’s idea of a fun weekend.
Neither is collecting the 20 tonnes of manure
dropped every week by the Metropolitan
Police Authority’s horses. Yet these are just
two of the tasks Balfour Beatty WorkPlace
(BBW) does as part of its £150 million sevenyear facilities management contract with
the Metropolitan Police Authority (MPA).
It’s a typical example of the varied work that
BBW undertakes for its customers. Signed
in 2006, with a facility to extend the contract
for a further three years beyond its initial
seven, the Met deal provides for full facilities
management services across the force’s
north London property portfolio.
As an extension of this contract, from
1 October BBW began delivering a full range
of soft services to the Met’s administrative
headquarters, at Empress State Building in
Earls Court, London.
In a further strengthening of BBW’s
partnership with the Metropolitan Police,
earlier this year the company started
delivery on an additional five-year contract
to service three police communication,
command and control centres in London – in
Lambeth, Bow and Hendon. The contract,
which has an extension opportunity of three
years, covers the full range of facilities
management services, including building
engineering services, pest control, security
and reception. Around 140 staff transferred
to BBW’s employment under the TUPE
labour law.
culture that Craven is encouraging.
“We are trying, with the new brand,
to bring out the personality of the
organisation,” he explains. “We
have an engineering heritage but we
also do everything else, and we do it
with a smile and some personality.”
That’s important at BBW, where
customer relationships can last for
20, sometimes 30 years. That length
of contract can’t be sustained on
product or service alone. “We are
about providing a service over a
long period of time and building a
relationship with a customer that is
enduring and lasting,” says Craven.
“We need different kinds of people
and skills for that.”
Good interpersonal skills,
openness and an ability to
collaborate, multitask and be
flexible help BBW differentiate
itself from its competitors. Softer
skills are often more important than
the practical skills. Craven reckons
the 94 per cent account retention
rate is evidence that employees
are getting the customer
relationship management aspect of
the job right.
Big goals
Alongside the quality of customer
relationships and service delivery,
Craven is focusing on his aim
of turning BBW into a £1 billion
turnover company by 2013. By
setting that marker in the sand, not
only did Craven want to put BBW
in a market-leader position, he
also wanted to set the workforce
an ambitious goal. Is it on track?
Craven is optimistic: BBW grew
turnover to £450 million in 2009
and, thanks to an internal addition
of the Group’s Local Authority
division, turnover is expected to
reach £550 million in 2010.
Update W inter 2009
Would he consider spreading
his risk further by expanding into
Europe and perhaps beyond? After
all, BBW has already seconded
people to the Group’s US operation
to help with a number of projects,
including a magistrate’s court
in Long Beach, California and a
hospital in Bermuda. Craven’s
team also provided consultancy
services to colleagues in the Middle
East who were part of the project
to build the Burj Mall in Dubai.
Craven says BBW was called in
because of its expertise in systems
commissioning and operation,
gained particularly from its publicprivate partnerships. He says: “At
the moment, however, we have so
much strategic opportunity ahead
of us in the UK that we are not
having to think internationally.”
Developing the platform and
people to grow the business is
uppermost in Craven’s mind. “We
are talking about doubling turnover
again in the next five years, so we
have to ensure our systems and
processes are fit for purpose for a
much bigger business,” he says.
How BBW recruits and retains
its people is critical to achieving
that goal. The division will need to
recruit an additional 25 per cent
each year to help it become a £1
billion turnover company by 2013.
A number of initiatives – including
a management programme, a
graduate recruitment and an MBA
programme – are in place to find the
right leaders to grow the business.
“The companies that succeed
over the next five years are going
to be those that have the best
talent on board,” says Craven.
If BBW can be one of these
companies, Craven can continue to
sleep soundly at night.
Trendwatch: FM
Kevin Craven may think Balfour
Beatty WorkPlace’s short-term
opportunities are mostly in the UK,
but that doesn’t mean he’s taking his
eye off global trends. He thinks there
are two areas for industry players to
monitor: the “intelligent buildings”
scenario and consolidation within
customer companies.
“The drive to reduce energy
consumption and carbon footprints
has already led to a greater use of
automated building management
systems,” says Craven. One spin-off
has been a reduction in energy
costs. A logical extension of that
is automating labour costs, which
currently account for around 80 per
cent of spend on a contract. “You’re
going to see intelligent robots
cleaning certain areas of buildings.
That technology trend is certainly on
the way,” Craven predicts.
A more immediate concern is
the move by customers towards
consolidating supply chains. Many
of BBW’s customers have grown
through acquisition, making their
FM needs more complex. They
have also been outsourcing more
of their FM responsibilities. Now,
customers are finding they have
to bundle their FM services or
consolidate their supply chains
to find new savings. With fewer
but bigger contracts to go round,
competition will get tougher.
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We have an engineering
heritage but we also do
everything else, and we
do it with a smile and
some personality
services (document storage and
retrieval and health and safety
advice). BBW services a broad
range of sites from commercial
enterprises and industrial locations
to schools and hospitals. For
example, when Balfour Beatty
built five secondary schools,
a special school, two post-16
centres and two leisure centres
in north Nottinghamshire in the
UK, BBW won a contract with the
local Bassetlaw District Council to
provide full FM services for those
buildings over a 25-year term.
A number of names were
shortlisted to reflect the breadth
and depth of the division’s newer
offering but BBW won everyone’s
vote. “WorkPlace can refer to the
physical fabric that surrounds us
or it can be more holistic, referring
to what happens in that building,”
Craven says. The name seemed
to sum up perfectly the diversity of
services that the division now offers
and it reflected the down-to-earth
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Corporate responsibility US
How CSR
will survive
the crisis
the financial downturn has not diminished the
corporate conscience in the US. At balfour beatty,
staff are embracing a range of initiatives
Illustration by Alex Williamson
32
Update W inter 2009
President. “These co-ordinated
events are typically under one of
three service umbrellas: students
and their schools; home repair and
building; and the environment,” he
explains. The home repair aspect
allows staff to join projects such
as Operation Homefront (see box),
which provides practical help to
military families.
Participation in Heery from the
Heart has nearly doubled since
2008, with 700 of Heery’s 1,500
staff now taking part. However, its
community projects are not just
one-offs, as Heitz explains. “We
support our employees’ efforts
year round. For example, a group
of employees are landscaping and
maintaining a park in Suwanee,
Georgia. Suwanee is a customer
of ours that was given land for a
beautiful and well-used park, but
doesn’t have the operating budget
to give it the attention it deserves.”
Heightened responsibility
Connie Oliver, Vice President of
Corporate Communications for
Balfour Beatty Construction in
the US, believes the economic
crisis has brought CSR to the fore.
“Everyone acknowledges dollars
are tighter for non-profits, and that
what we give is so much more
appreciated in this environment. We
feel fortunate because, compared
to many other companies, we
are doing pretty well. As a result,
we feel a heightened sense of
responsibility for giving back.”
Oliver sees Balfour Beatty
Construction’s CSR role in three
parts: straight financial support;
Operation Homefront:
building homes for
war veterans
“When the request for volunteers came
out from Heery, I was working at Camp
Pendleton on a Wounded Warrior
barracks for returning marines and
sailors. We asked how we could help,
and that led us to Operation Homefront.
“I worked on two homes. One was for
a sergeant in the marines who had been
shot by a sniper in Iraq. On his way home
to Camp Pendleton, the water pipes in his
house burst, and his wife wasn’t able to
meet him.
“We got 10 plumbers in and they tore
all the old plumbing out and replaced it in
one day, working from 7am until 8.30pm.
The heating contractor installed a new
system, I had my crew of 10 or more, and
we pitched in and painted the house,
mowed the yard, put in a vegetable
garden and had a great time.
“These people serve by choice, and
for me it was a way to do something
to help them. By the time I was done, I
figured out it was as good for me as it
was for them.”
Sean Hulen is a Vice President at
Barnhart, which offered its services
to Operation Homefront as part of
the Heery from the Heart
community-service month.
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I
n the past year, the public has
more seriously questioned
how companies govern
themselves; indeed, in the
US, one of President Obama’s
loudest calls has been for a “new
era of responsibility”.
Corporate social responsibility
(CSR) encompasses areas from
charitable giving and community
service to corporate ethics and
sustainability. In times when
money is tight, there’s a risk that
CSR budgets will be squeezed.
In a poll by CSR International,
however, 44 per cent of CSR
professionals said CSR would
increase as a result of the crisis,
A further 26 per cent said it would
not change, while 22 per cent felt
it would weaken. Some may find
these results surprising. Yet CSR
isn’t just about charitable giving,
and the fact that it may increase
for many US firms suggests it
has taken on a more strategic
importance.
Michael Porter and Mark Kramer
are both Professors at Harvard.
Writing in the Harvard Business
Review, they claimed: “The more
closely tied a social issue is to a
company’s business, the greater
the opportunity to leverage the
firm’s resources.” In the starkest
light, CSR programmes that can
be tied to bottom-line profits will
always last longer than those that
rely purely on spare cash.
But that’s not to say altruism
is dying out. Heery International
holds an annual community-service
month, Heery from the Heart, the
brainchild of Bill Heitz, the firm’s
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34
“being good citizens in general”,
with particular reference to areas
of ethics and sustainability; and
community support – “rallying
employees around a good cause
is a huge part of the culture here.”
She cites the example of staff who
volunteered for Hunger Busters
and SOME (So Others May Eat),
two local organisations helping to
provide food for those in need.
Another local event, Hearts and
Hammers puts Balfour
Beatty staff to work
repairing homes for
the underprivileged
and/or elderly.
And the company
also provided pro
bono services to
expand Give Kids
The World Village, a
resort where children
with life-threatening
illnesses stay when visiting
Walt Disney World and other
Central Florida attractions.
“Our team in Florida built
numerous additions at the village,”
explains Oliver, “and then it all
came full circle when one of our
employees in Texas stayed at the
village with her family and young
son, who was receiving brain
cancer treatment at the time and
enjoying a trip to Disney World.”
Option to choose
The practical use of Balfour
Beatty’s resources is a common
theme across its US businesses.
Liza Caceres is the Manager
of Communications, Strategy
and Image at Balfour Beatty
Infrastructure Inc. and Balfour
Beatty Rail Inc. The firm encourages
regional offices to run projects of
their own choice. “For example,”she
explains, “Balfour Beatty Rail in
Jacksonville offers support to
Juvenile Diabetes. Here in our
Atlanta office, we do a big push
during the holidays, where we
‘adopt’ families for Thanksgiving and
Christmas and make sure they have
a meal and presents.”
CSR can extend beyond
giving to being embedded in
everyday activities. Balfour Beatty
Communities has built and maintains
family housing at 44 US army,
navy and air force bases.
It runs LifeWorks (see
box), which offers
service families
academic and health
schemes, and social
programmes, and
sits separate to the
CSR work that the
business does, such as
providing practical help for
injured veterans and educational
scholarships for children of its
service members.
Recently, with support from
Balfour Beatty’s Centenary Fund,
Balfour Beatty Communities has
established a three-year grant
totalling $75,000 to be donated to
Project H.O.M.E., an organisation
in Philadelphia dedicated to tackling
homelessness and addressing
the structural causes of poverty.
Project H.O.M.E.’s centre offers
programmes that provide a safe,
nurturing and challenging academic
environment where children are
encouraged to achieve their
highest potential.
But CSR stretches into Balfour
Beatty offices too, from policies on
ethics and equality to sustainability
concerns. At Balfour Beatty
Construction US, the company is
now measuring the carbon footprint
impact of its 200-plus jobsites
under construction in 2009. This
effort is the latest culmination of
a grassroots effort for greener
practices, which originated with one
very passionate employee. The one
constant across all Balfour Beatty’s
CSR projects in the US is that if
staffers can make a case, they can
make it happen.
16
LifeWorks:
offering families
social support
“Residents are curious about
LifeWorks and very proactive.
They want to generate ideas and
get involved, and love the idea of
bringing their community closer.
One of our resident’s daughters has
MPS (mucopolysaccharidosis), and
her mother expressed an interest in
organising a fundraising walk/run
at Travis. Every single agency on
the base ended up being involved
– construction, resident volunteers,
military volunteers, our employees.
It was a 5km walk or run and was
an amazing collaboration, with more
than 500 people participating. We
ended up donating more than $8,500
to the National MPS Society.”
WORKING WITH US
WAS NOT SEEN AS
A RISK BECAUSE
OF THE SIZE AND
SECURITY OF
BALFOUR BEATTY
page 28
28
IT CAME DOWN TO
THE QUALITY OF
THE PEOPLE WE
PUT ON THE JOB
18
page 25
25
Amy Adams is the LifeWorks
Coordinator at Travis Air Force
Base in California.
THE EMPLOYEES
MAYBE HAVE A
HEIGHTENED
SENSE OF
RESPONSIBILITY
FOR GIVING BACK
page 32
NEXT ISSUE: SUMMER 2010
If you have any comments on update, or story suggestions, please email update@balfourbeatty.com
Update W inter 2009
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Editorial Team
Balfour Beatty Group
Corporate Communications
Duncan Murray, Hannah James, Lynn Harvey
Balfour Beatty plc
130 Wilton Road
London SW1V 1LQ
+44 (0)20 7216 6800
info@balfourbeatty.com
Balfour Beatty is a registered trademark of Balfour Beatty plc
Words and design
Bladonmore Europe
www.bladonmore.com
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