When Building reported two weeks ago that Bovis Lend Lease’s UK chief executive Jason Millett was leaving, rumours of bad blood between the UK division and its Australian parent were quickly revived. Mark Leftly reports on how it came to this
At the tender age of 38, Jason Millett had landed himself one of the glamour jobs in construction: chief operating officer of Bovis Lend Lease’s UK operations.
This was 2003, and Millett had made good on a prediction in Building that he was one of the 40 rising stars of the industry aged under 40. Even better news was to follow, with promotion to the full chief executive post at the turn of 2005.
But all this has turned sour. Last month, Millett handed in his resignation to his boss Bob Johnston, the global chief executive of Bovis Lend Lease. This followed a six-month bust-up over the direction of the business, which would have seen Millett’s empire carved up. Rather than stay on in a reduced role, one of construction’s hottest properties put himself on the job market. The upshot is that Bovis’ Australian parent Lend Lease has drafted in one of its own to help it take greater control of its UK subsidiary.
How it started
The roots of the recent upheaval go as far back as 2000, when Lend Lease bought Bovis from ports operator P&O. Rumours that the British division would never gel with its Aussie parent have circulated ever since.
The first difficulties happened early in the relationship, although there wasn’t “instant animosity”, according to a source close to the group. About 60-70% of Bovis’ business had been “non-risk”, mainly in construction management, but today that figure has reversed. Lend Lease wanted greater returns, and was willing to take on riskier, higher margin work.
Besides, with the evolution of the PFI sector – effectively a risk-bearing design-and-build model – and construction management going out of fashion as guaranteed maximum price grew more popular, the market was moving in that direction anyway. To try to buck the market would have left the then 115-year-old company looking antiquated. “Lend Lease’s view was that Bovis could make more money. But market forces moved Bovis as much as Lend Lease,” says the source.
As all this was going on, Millett’s star was rising. He helped regional managing director Dennis Bate build up Bovis’ work in the North. Traditionally, Bovis’ power base had been the South-east, but Bate’s strategy and Millett’s operational skill had helped it win a string of prestigious contracts, including the Trafford Centre in Manchester and the Lowry Centre in Salford.
Bate, though, was approaching retirement, so it was the young blood Millett who benefited from the successes in the North. In mid-2003 he replaced Les Chatfield as COO in the UK. To stay with his family, Millett opted to remain in Manchester, and worked only sporadically from Bovis’ head office in London. Sources suggest that this situation might have irked some clients, but they maintain it was never a major problem.
Certainly, it didn’t affect Millett’s standing with some of the company’s top brass. In September 2003, Adrian Chamberlain, in very much a Lend Lease rather than a Bovis appointment (see above right), became chief executive of Lend Lease Europe, based in the UK. At the time, Lend Lease was organised into three business streams – construction/ project management/PFI; retail and communities; and property investment. Each of these were within business units organised geographically: Europe, Middle East & Africa (EMEA); Asia Pacific; and the Americas. Impressed by Millett, Chamberlain promoted the wonderkid from COO to full chief executive of UK construction at the end of 2004. This put him just below John Spanswick, joint chairman and chief executive of the EMEA construction business.
Trouble in the engine room
Johnston believed the job was simply too big for one man. He wanted to divide Millett’s empire into PFI and pure construction roles
For years, Bovis Lend Lease had virtually propped up its Australian parent, which had suffered a severe decline in its property investment operation. At the half-year results in January 2003, for example, the division was again the group’s best performer with Aus$59.7m profit, making up more than half the company’s overall Aus$113.1m profit. But then, as one Bovis insider told Building, “the engine room started getting a malfunction”.
The BBC’s £400m Broadcasting House was the biggest design-and-build contract that Bovis had ever taken on. Getting the job was in line with Lend Lease’s risk-taking strategy, but it was on this contract that its luck ran out. Technical problems on the scheme, coupled with further difficulties at the Bridgewater Place project in Leeds, including the bankruptcy of a concrete supplier, led to a writedown of £14.7m at the start of this year.
Lend Lease’s overall boss, Greg Clarke, decided to restructure the group, and it was this that led eventually to Millett’s departure. Clarke decided to put global chief executives in charge of the construction, retail and investment businesses, sitting across the three geographic regions.
Chamberlain is known to have vehemently disagreed with this change, despite the fact that it was unlikely to lead to a diminution of his job – he is understood to have been offered the global chief executive role for construction, though in the event he left the company. The restructuring was announced last July, with Bob Johnston appointed to chief executive of global construction, working alongside chairman Spanswick.
Johnston is very much a Lend Lease man, an Australian with two decades at the company under his belt. The problems at the BBC and Bridgewater Place were bound to be associated with Millett’s tenure as UK boss. Few would blame him personally, but the problems did occur on his watch and Johnston believed the job was simply too big for one man. He wanted to divide Millett’s empire into PFI and pure construction roles. Millett disagreed, and fought hard to keep the joint role.
But it was not a battle that Millett could win. With Chamberlain gone, he hadn’t the support he needed. Johnston, on the other hand, reported directly to overall boss Clarke, who would have been bound to back him in a dispute of this kind.
The terms of Millett’s departure were not fully negotiated by the time Johnston gave his first UK interview to Building on 30 June. In the interview, Johnston emphasised that Lend Lease and Bovis had to settle their differences and act like a proper family: “I don’t differentiate between Bovis and Lend Lease. We are Lend Lease.” A week later Building got the scoop that Millett had resigned.
Although one industry source says it could have given the unfair impression of Johnston as “a blunt instrument”, it also made him appear a strong leader – an impression boosted by his decision to take on Millett’s PFI responsibilities. Murray Coleman, another Lend Lease Australian, was flown in to take over the construction side.
As for Millett, some feel that he was promoted too early and didn’t have the experience that would have helped him iron out the difficulties on problem contracts. “It was a mistake – greatness was thrust upon him too young,” says one senior industry figure.
But he is sure to be back, with rumours linking him to developers and even a top job at listed rival Amec. Whatever he chooses, most believe he will stay in the North, and that he will be back in another major role, only this time equipped with the experience he perhaps lacked at Bovis.
Bovis Lend Lease declined an invitation to comment on this article.