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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
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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
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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
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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
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inside
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A shared vision The new code of conduct will help employees do the right thing
Growing up Balfour Beatty WorkPlace celebrates its first anniversary
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How CSR will survive the crisis Corporate social responsibility in the US is alive and well despite the financial downturn
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Around the world Highlights from across the Group
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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.
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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).
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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
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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
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>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
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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 ...
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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.
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>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
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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
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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
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Letter from Chile
Half-year results Analysts predict bright future
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Thunderous approval
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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
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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.
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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.
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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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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?
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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
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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
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Sustainability Group-wide
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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.
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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.
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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
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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
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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
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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
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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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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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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
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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
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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
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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.
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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
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The 68-storey One Island East on Hong Kong Island, constructed by Gammon
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The reconstruction and improvement of Tuen Mun Road – Eastern Section
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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.”
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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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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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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
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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.
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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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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
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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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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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“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.
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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
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IT CAME DOWN TO THE QUALITY OF THE PEOPLE WE PUT ON THE JOB
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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
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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
[email protected] Balfour Beatty is a registered trademark of Balfour Beatty plc
Words and design Bladonmore Europe www.bladonmore.com
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