Helical Bar’s director on how it procures work and the market conditions in London
Matthew Bonning-Snook, director, Helical Bar
What’s your pipeline looking like?
We’ve got a lot that’s just started and quite a bit that’s going out for tender in due course. We’ve got our scheme at Old Street roundabout, which is about 330,000ft2, just down the road we have Maple House which is about 75,000ft2 and up in Scotland we are building Scottish Power’s new HQ. On top of that we are building three retirement villages.
How do you procure construction work?
Design and build is mainly what we are receiving from the market these days. We always want to do fixed cost work because you know exactly what you are going in for. There’s less risk transfer [to contractors] now that things are getting hotter. We are getting fixed numbers and contractors are being a bit more picky about jobs. But we have big and punchy projects in key parts of the City so contractor interest is pretty good.
What are your priorities when selecting contractors?
There has been huge interest in London from people looking for a safe haven for capital. Demand is strong so we are not looking to pre-let at the early stages of development because we are hoping that rents will rise
It’s the usual issues of who you have got on the team and if they have experience on similar projects. It’s no use having a team that is used to doing hotels when you are carving up an office building in Shoreditch. You need the right people with the right experience and hopefully a contact at a reasonably high level within the organisation so that if you are having a difficulty you can pick up the phone and rectify it sooner rather than later. We’re not looking particularly far afield: the safe pair of hands is still preferable to any competitive edge you might get.
We are finding that contractors are taking quite different views and pricing on risk. We are having to keep discussions going with two or three for some considerable time to ensure that we have the best possible price and the best team and partner. It’s a challenging market and the contractors are having to play a clever game in terms of keeping their subcontractors on side while we get everything in place in terms of financing.
Do you see market conditions improving further over the next year, and if so, are you worried about cost implications?
There has been huge interest in London from people looking for a safe haven for capital. Demand is strong so we are not looking to pre-let at the early stages of development because we are hoping that rents will rise. We are very conscious that we need to offset the construction risk by having fixed price contracts and working with people we can trust so that we can deliver the building at the right price. Costs are continuing to go up and I don’t see that stopping any time soon. You only have to look at the number of cranes going up in London to know that there’s a lot going on. There’s a lot of pressure on labour, materials and cranes, which we have to be aware of when we are pricing things.
Does the strengthening market mean you are altering the way you work with your supply chain, and if so how?
It’s good to get the contractor on board early. You might not get who you want so early engagement is key. For key features like cladding, we might even start to engage with the sub-contractor before we get the main contractor on board.