A week earlier, talks had collapsed over price, and a disappointed Taylor had taken off on a much needed family holiday, believing that the game was over. But at the eleventh hour, P&O chairman Lord Sterling had called Lend Lease back to the negotiation table. Taylor boarded a plane and 48 hours later, on the morning of 4 October 1999, P&O stunned the City by announcing that it had sold Bovis to Lend Lease for £285m.
Five months on, Bovis’ hummingbird logo has been laid to rest and the process of knitting Bovis and Lend Lease Projects together under the blue canopy of its parent has begun.
So far, the priority has been rationalising operations in Australia and Asia, where Bovis had a 700-strong outfit but made very little money. In the process, about 40 people have lost their jobs.
Now, the man charged with bringing Bovis Lend Lease together in more than name has finally swapped Sydney for Sloane Square. The company is to have its headquarters in the UK, and, for the time being at least, Taylor is installed in Bovis’ London office with the title of Bovis Lend Lease group president.
It has come as a relief to the 38-year-old Queenslander, who was beginning to wonder whether the dream of creating a fully integrated global construction services provider would end up his worst nightmare.
“Just because everyone speaks English, you don’t necessarily mean the same thing,” says Taylor, number three in the management troika of Czech-born Sir Frank Lampl and American lawyer Luther Cochrane, respectively Bovis Lend Lease’s chairman and chief executive. Cochrane is to remain in the USA.
“Because of the time difference, we’d have these late-night telephone conversations. They’d end up totally unresolved and circuitous. I was depressed and frustrated because it seemed so hard to communicate.”
Even basic jargon such as guaranteed maximum price or lump sum seemed to mean different things in the UK, USA and Australia. “I thought, gee, that was a brief honeymoon, and we haven’t really started yet,” he says.
But the move to Britain has restored Taylor’s confidence. “The past few weeks have been amazing. Just by being here, I’ve realised that we are on the same wavelength – getting the management team together and realising that this really is going to work and getting excited about it.”
His prime aim is to double Bovis’ profit within the next four years. That will be done by a more entrepreneurial approach than Bovis has been used to. But first there is the company structure to sort out.
Lend Lease is a very dynamic organisation. I think we’ll see a bit more of that in Bovis
“Over the next three months, my role is to work with Luther and Frank and the senior management team on strategy, integration and e-business. We know conceptually where we want to take it. We just need to put it into specific actions.
“Once we’ve got the plan of attack sorted out, I’ll go into a chief operating officer role. That really means I’ll run the day-to-day operations. Luther will be focusing on overall direction.” Sir Frank will remain chairman but his role is likely to be focused on client relationships. Cochrane and Taylor report to the parent company through its real estate board, one tier down from the main board.
Although not everyone at Bovis preferred the Lend Lease shilling to the stock market, other staff see the synergy between the two organisations and Lend Lease’s go-gett ing approach as a breath of fresh air. The signs are they won’t be disappointed.
“I think you will see changes,” Taylor acknowledges. ”I don’t see any road blocks in the senior management team. But I don’t know whether in six months we’ll all be doing the things we thought we’d be doing.
“And six months after that could well be different again. The thing about Lend Lease, it is a very dynamic organisation. I think we’ll see a bit more of that in Bovis. As opportunities arise, you reconfigure and you grab them.”
You bet. Lend Lease has bloomed from a humble contractor in the 1950s to Australia’s 15th-largest quoted company with an annual turnover of more than £1.5bn and about 5000 staff. Its 1999 operating profit was £162m, made from its main activities of property development and financial services. By comparison, Bovis’ operating profit in 1998 was £21m, with a similar number of staff.
Taylor’s track record is equally impressive. A civil engineer with a first class Honours degree, he joined Lend Lease as a site manager in 1985 and, by 1998, was running the project management arm. He was instrumental in turning it into a profitable business.
A thoroughly modern manager, Taylor cuts an unusual figure in the quiet, ordered offices of Liscarten House, Bovis’ London home. Piles of paper are stacked on his office floor and his desk looks as if he has emptied his briefcase on to it. Coming from an environment of gregarious open-plan offices, he says the formality takes a little getting used to.
Tall and thin, with a hearty laugh, Taylor is more Jacob’s Creek than Castlemaine XXXX. He’s friendly and casual and very human. He talks about the various tugs on his time as a globetrotting executive and father of four young children. He’s perplexed by the British class system and the fuss surrounding anyone with a title. He chats about making friends in his new Wimbledon home – a process he and his wife jokingly refer to as couple courtship. And when he talks about how each move to a new city has brought another child, and his worry that it might happen again, he is grinning from ear to ear.
But once he gets down to business, the vocabulary becomes text book American management speak. Buzzwords such as vertical integration, smart front ends and value-adder pepper his conversation.
We have a great opportunity to build the foundations of how the industry will operate for the next 20-30 years
“We’re in a market that is moving and we’re seeing it move into global client relations, integrated service offerings, true front end skills and being able to add value. And that means the way the industry has worked historically is going to change,” he says in a typical response.
Plainly speaking, the plan for Bovis Lend Lease is to build on Bovis’ strides to become a global player by following clients as they have developed around the world. It wants to boost returns by expanding the range of services it can offer, from finance to facilities management. At the moment, 80% of Bovis’ profit comes from fee-based construction and lump sum/GMP contracting. The remaining 20% comes from private finance initiative work and partnering with global clients. Taylor wants to see this profit profile changed so it is split equally between all four types of work. That means upping the high-risk work, where the rewards are greater.
The central plank of this strategy will be to buy expertise, in areas such as industrial design, and offer it to industries crying out for “fully integrated property solutions”. Or, as Taylor refers to them, “smart front ends” to bolt on to the “already good body”.
“What we’ve got to do strategically now is to pick the growth industries, like communication, pharmaceutical, biotech and microelectronics. Or pick industries where there is major rationalisation, like food and drinks where you can add value. Once these become efficient, the trick is to move on.”
Taylor sees e-commerce as the foundation stone for this future, because of the benefits it can bring in reducing inefficiencies and increasing margins. In the USA, Bovis Lend Lease has a stake in a new e-commerce venture. In the UK, Bovis Lend Lease is throwing its lot in with four other major contractors to produce an industry-wide e-commerce marketplace. Taylor says the firm has invested £5m on e-commerce so far, but it will be significantly more in the future.
How Bovis Lend Lease will dovetail with its parent is also being looked at. It is expected to do most of its parent’s construction work – about £500m-1bn annually or about 10% of its workload. In turn, Lend Lease will give Bovis Lend Lease financial expertise and muscle. Meanwhile, in the UK, Bovis Lend Lease and Lend Lease’s services functions, such as human resources and IT, will be brought together.
One thorny issue that lingers is whether rival developers, particularly in retail, will shun the contractor that has picked up the lion’s share of shopping centre construction. Taylor seems unconcerned.
“We can’t ignore it. But there’s bound to be a client in every region that has a problem with the fact that we are part of Lend Lease. But it’s really quite unusual for Lend Lease to be head to head with one of our clients,” he says.
So, will the culture change in the company? Injecting a greater willingness to probe and see if things can be done better is certainly on the cards, he says. “You can’t sit and think just because I’ve done it this way for 10 years, five years even, it’s the right way.
“The key challenge is for the senior management team to take the bones of the vision and agree passionately about the detail of where we are going to take the business.”