Hudson's way

David Hudson certainly doesn’t step back from a dispute or controversy. The 52-year-old, who in person sitting in his office in Victoria, central London, is quietly spoken and well mannered, has fought his corner in the High Court as well as in the public eye in recent years. Most recently his firm Tropus was forced to publicly defend its record with regard to one of the more troubled projects of recent times, the new Wembley stadium. The firm was labelled a “disenfranchised consultant” by the client on the scheme after Tropus wrote a critical report on the procurement of the redeveloped stadium. Tropus, who were replaced on the scheme by Capita Symonds in 2002, stoutly defended its record, claiming its report was backed by another separate study and that its performance on the scheme was never questioned.

Prior to Wembley, Hudson found himself in the centre of a bust-up within his former firm. A difference in styles led to him departing McBains Cooper, only two years after Hudson was instrumental in creating the firm, a merger between historic names McBains, which Hudson was senior partner of, and Henry Cooper. The divorce proved very messy. Just as splitting couples end in bitter dispute over the children or the record collection, the two parties in the McBains split took their argument over who owned what to the High Court.

Hudson and fellow departing partner Barrie Simpson emerged with the spoils, winning damages and costs within days of the case starting (see timeline on page 14). “The court case was extraordinary, it was like Perry Mason,” recalls Hudson. “It was crazy it ended up in court.” Unfortunately there had been a “complete breakdown of relationships” at the firm, he says. “There were different aspirations, there was politics, ambition and backstabbing,” Hudson adds, although time has now healed any bad feeling he has towards the firm. “All of the former partners have left, the acrimony has gone. I would be very happy to work with them now.”

The difference in business aspirations between the two merger parties alluded to by Hudson – he claimed he wanted McBains to diversify more while the Henry Cooper side of the firm was “more conservative” – offered a clue as to the direction that Hudson and Simpson, who has since retired, took with their new venture. The duo decided the new firm, initially called just McBains then renamed Tropus in 1999, should be taking a lead in a market that was in its infancy – PFI. “We did not see how we couldn’t get involved,” Hudson says. “But not just as a consultant, not just doing the spadework for a 2.5% fee.”

Hudson’s target was for the firm to act as a consortium leader bidding for smaller PFI work as well as running a more traditional QS and project management firm. After spending a year drawing up a business plan the firm secured its first PFI job, a £2.5m health centre in Manchester in 1996. The firm put £170,000 of its own cash into the venture – the scheme reached financial close in 1998 and was built

The court case was extraordinary, it was like Perry Mason. It was crazy it ended up in court

in 1999. And the roots of the firm’s interests in property development also emerged from the scheme. Tropus bought land from the primary health trust in another area of Manchester and developed student accommodation on it. Hudson admits the first PFI was a “loss leader”. “We didn’t make any money out of it, we made sure it worked,” he explains.

From there the firm has picked up other PFIs, such as the £6m Nottinghamshire Police Authority Operational Support headquarters and the £25m Willesden Community Hospital in North London. On top of this the firm has secured a LIFT scheme, a £50m scheme to build and operate primary health centres in Norfolk, and is active in commercial property development. It has also recently entered the facilities management market, setting up a new venture called Accuro that will work on the firm’s public sector work as well as private sector work. The emergence of the different business streams has led to the formation of

a holding group, called Guildhouse, which sits above the trading firms and is led by Hudson himself (see company structure box). Hudson sees the expansion into other specialisms as a natural progression. “Something like facilities management is an extension of QS-ing. It’s about managing contracts and sub-contracts. There’s no fundamental difference between leading an FM contract to a maintenance or building one.”

Hudson admits that the transition from consultant to public and private developer is not without its growing pains, not least for the firm’s balance sheet. “It’s difficult to move from a consultancy to an investor. A lot of cash has to go out. The returns come much later. But we are over the worst of that now.” The firm experienced much frustration and sweaty palms in closing one particular deal, the Willesden hospital scheme, which took five years to finalise. The firm was preferred bidder for two and a half years, incurring its consortia costs totalling £3m. “Had that collapsed right at the end it would have been a massive hole in the business,” says Hudson. “For me I am quite relaxed about it – you have only taken the risk because you have a firm belief that the risk is small. You don’t risk £3m thinking you are going to lose. It’s about understanding the risks.”

It’s difficult to move from a consultancy to an investor. A lot of cash has to go out. The returns come much later.

Hudson claims that his consultancy experience is an advantage when approaching the notoriously tortured negotiations involved in securing PFI schemes. “With that background we are used to thinking of coming up with solutions. Of course we have a commercial angle (when negotiating) but we don’t start by being hardnosed,” he argues. Hence Hudson’s surprise that other QS firms have not made the same move into PFI. “I’m surprised. A lot of them would have been in a very strong position to do this (when we did it).”

So where does Hudson’s expansion into development leave Tropus? The firm’s workload is now equally split between working on in-house work for other Guildhouse arms and working for outside clients, mainly in the private sector. “It’s been a natural progression for them (Tropus),” he says. “The danger is that they just end up supporting the rest of the Guildhouse Group but that’s not been the case. We want them to keep to the roots and strength of the firm.” The firm recruited former Gardiner & Theobald partner Fred Perfect early last year to head up Tropus’ QS division, which Hudson stresses is part of the drive to retain that expertise. Hudson adds that there is now “a greater deal of separation” between Tropus and the rest of Guildhouse. “We now have formal agreement between the two and fee structures when Tropus is working for another Guildhouse arm,” he says.

Hudson now describes himself as a “businessman” rather than a professional given the new tack taken by his firm, and admits to being decidedly rusty in the traditional arts of quantity surveying. “I enjoy it more running a variety of businesses. There’s more control and it’s more dynamic and creative. The professions tend to be more responsive to something else that has been instigated. We take things from an idea to fruition.”