A week in the world of main contracting

Even though the data dials say something different, there is lots going on in this industry for main contractors. There always is. In one week, Building wrote about the following…

Bovis beat Mace to the £330m Gracechurch Street tower job for Sellar. The firm needed that win and it might convince other clients to follow suit. While they might be renamed, Bovis is, by and large, the Lendlease of a year or so ago – just without the Lendlease backing. Which has left some a bit nervous but, sooner or later, one client had to take a punt.

It’s been written before and worth saying again: Mace and Multiplex can’t build everything. For the health of this industry, somebody else needs to offer clients looking to develop commercial towers in the capital an alternative.

The Bovis win is interesting for several reasons, not least for the fact that it is bidding the office bit of the 18 Blackfriars scheme south of the river. It’s being developed by Hines and had been supposed to be awarded by now. That it’s not might have some a bit twitched but as one involved in the whole process said: “It’s a big decision and they need to get it right.”

It remains to be seen whether the Bovis win for Sellar – breaking the impression that, rightly or wrongly, those big Sellar schemes tend to end up with Mace – might have strengthened the hand of remaining rival Multiplex, which is bidding the office tower and two residential blocks.

>> Also read: Slide in construction output eases but jobs-cutting hits five-year high

But whoever wins it, most will be thinking this: get on and award it. Everyone knows jobs are taking longer to award and pre-construction services agreements are being extended but 18 Blackfriars, which has been renamed the Round, is a big one. It’s not often a £1bn scheme is the next cab off the rank but it is and a lot are watching to see which way it goes.

The Bovis win is interesting for several reasons, not least for the fact that it is bidding the office bit of the 18 Blackfriars scheme

Meanwhile, Mace has said it’s not looking to recruit a new construction director after Andrew Jackson left last autumn just a few months into the role. There’s bound to be a few disappointed hats that had been thrown in the ring – it’s a big job with a big salary – but chief executive Jason Millett said the firm is managing fine without one. Presumably the message is: if you don’t need to shell out hundreds of thousands of pounds each year, then don’t.

Shelling out is exactly what Wates has been doing these past few months setting up a new fit out arm, which is being headed by the man who did the same thing at ISG. Speak to anyone and Lee Phillips has an enviable network of contacts in London fit out, forcing Wates to presumably move fast in order to secure his services. That ISG went down in late September and the new business was announced the following month is rather proof of that. The firm has since had glitzy corporate launches, headed off to events at Cannes and Milan and been stocking up on staff.

In other words, lots of resource and manpower has gone into the new business since it was launched last autumn so winning its inaugural job – a £20m scheme for credit rating agency Moody’s in the City – will have been a relief. It can’t comment of course but, like the Bovis win, those at the top will be hoping it’s the catalyst for more things.

One-time Wates boss, Andrew Davies, who, remember, was let go early to try and rescue Carillion only for it to go belly-up before he even got there, has instead been turning his hand to turning fortunes around at Kier. He’d never say the job was complete but last week, it raised its medium-term margins target up to 4.5%. For those who’ve been following the firm the past few years, that sort of figure was once unthinkable. It’s likely to be in a positive net cash position soon. As a reminder, the firm’s average month-end net debt at one stage stood at close to £550m.

So there is still plenty going on in the world of contracting and, happily, plenty to write about. 

Dave Rogers is Building’s deputy editor