The client is king

Despite all the talk of partnering at seminars up and down the country, m&e contractors at the sharp end are finding that such alliances rarely filter down to subcontractors, and m&e firms are still at the mercy of their dreaded adversary: the builder.

Most m&e contractors would love to be employed directly by enlightened end-user clients because, as has been demonstrated many times by Constructing Excellence and other best practice groups, working direct for the client generally leads to earlier involvement by the specialist and better teamworking.

For many m&e contractors, that opportunity rarely presents itself. A lot of clients place their work through main building contractors and the m&e content is handled as a domestic subcontract. As part of this magazine’s recent Building Services Summit, we wanted to find out more about how main contractors procure their m&e services. What lessons can m&e contractors learn and what changes can they make in their business as a result? Our findings suggest that if the m&e industry wants to be a partner at the top table, it had better pay more attention to its teamworking skills.

Our research targeted the top 50 main contractors with a comprehensive survey looking at workload predictions, how they selected m&e contractors, what they thought of their performance and where they thought the industry could improve.

We had a 32% response rate, with our respondents being collectively responsible for around £5.9 billion of work – 10% of UK construction output. Firms that replied include Laing O’ Rourke, Mansell, Skanska, Wates, Willmott Dixon, Simons, Pearce, R G Carter, Styles & Wood, Jarvis, Eric Wright, Cubitt and Bovis Lend Lease.

Every one of them thought the outlook was good, on average predicting an 8% growth in 2005. The public sector was, unsurprisingly, expected to fare better than the private sector. Office, retail and leisure weighed in at expected 5% growth next year; defence, infrastructure and health boasted predicted rises of 10%, but top spot goes to education, where our contractors are looking forward to a 17% rise over the next 12 months.

Across all sectors, main contractors are expecting a massive growth in the rise of PFI/PPP type procurement, by 28% according to our survey. All are aligning themselves and their supply chains to be able to work this way.

M&E firms tend to revert to a contractual stance, even when in a long-term partnership

The average m&e content across our survey was 18%, so that means between them they are responsible for £1.06 billion of m&e work. With only 7% of this, around £70 million, handled in-house that leaves a whopping £986 million of work that they want to dish out to m&e contracting specialists.

So what are they looking for and how do they go about finding the right firm? You’ll see from figure 1 that just over half make a decision based on personal experience or the recommendation of someone else in the office. For 38% of respondents it was whether they personally used them in the past, with another 15% looking for recommendations from work colleagues.

The next most important factor is the client; 15% of respondents drew up a shortlist based on names supplied by the client. Almost as important is the building services consultant, with 12% of main contractors citing them as an influence.

The m&e contractor’s reputation within the industry also figured, although to a much lesser extent at only 8%. The ‘other factors’ segment includes knowledge of the proposed project manager and price acceptance.

Overall then it’s obvious from this chart that if you’ve done a good job for a main contractor, you’re on the right track to winning some more work from them in the future.

Moving on to the attributes that main contractors are looking for once they’ve drawn up a shortlist, we can see from figure 2 that certain things are more important than the factors you might expect. For example, you might think that price is more important than anything else, but the truth is that it only accounts for a 9% chunk of the pie chart. Far more significant were factors such as the ability to work as part of an integrated team, the technical ability to do the job, the quality of output and reputation and the ability to add value.

M&E contractors do not offer solutions to wider procurement requirements

Interestingly, while a firm’s safety record may not have come under close scrutiny a few years ago, various government initiatives have raised the profile and safety is now a more important consideration than price.

Our survey highlighted that main contractors are less than happy with the performance of m&e specialists. On attention to detail and defects, these are some of the comments we received: “Half of all defects at handover are m&e related”; “poor commissioning and handover processes”; “lack of co-ordination of other specialists” and “technical incompetence.” It doesn’t get any better when it comes to costs and budget issues. A few of the complaints levelled at the m&e sector were: “very claims conscious”; “inability to add value or maintain budget”; “lack of predictability of final cost” and “don’t always represent the best interests of the client – more interested in maximising their margins”.

The comments on teamwork read: must try harder. “M&E firms have a fixed view and are not prepared to change or be challenged”; “no team culture, they’re not team players”; “tend to revert to a contractual stance, even when in a long-term partnership” and “weak understanding of supply chain issues.”

Innovation was not a strong suit either: “unable to carry learning from one project to another”; “no real strive for change – content with the status quo”; “m&e contractors do not offer solutions to wider procurement requirements” and “they make little use of computers and, instead, use labour-intensive processes.”

So what can m&e specialists do to improve? For those that haven’t already changed their businesses in line with the sort of initiatives found in Egan’s Rethinking construction, then it is time to do so.

Alliances, integrated teams, partnering; the message is clear: working together brings more to the party. Indeed, there is much evidence on the Constructing Excellence web site and elsewhere to suggest that the industry will achieve higher profits if it adapts to work this way. It makes business sense.

M&E firms have a fixed view and are not prepared to change or be challenged

More effort also has to be put in upfront to get the cost turnout right. There has to be fewer surprises for the client otherwise you won’t get repeat business.

Get these things right, and the evidence suggests that the defects will drop too. M&E firms have to find ways to minimise defects at handover, say main contractors.

A few more points came out in the analysis. The client really is king – keep them happy. Communication skills also have to be addressed. Certainly the m&e industry is starting to look at some of these so-called softer skills more closely nowadays.

And the last point, early involvement brings specialist knowledge to bear at a time when it can add most value, therefore making m&e firms more valuable to the client. But they have to want it.

Finally, after that barrage of criticism, some m&e firms that were given glowing references by our respondents. Crown House Engineering, Balfour Kilpatrick, Goodmarriott and Hursthouse, Hirst & Danson, AMEC, Meica Services and T Clarke were all rated highly and Emcor, Hills Electrical & Mechanical, Lorne Stewart, Lowe & Oliver, Mitie, NG Bailey, Rosser & Russell, Wetherby, Inviron, EEW and Excelsior all got a mention.

The industry is changing and it seems that some in the m&e sector have been left behind, but the message is: it’s never too late to catch up and there is plenty of assistance out there. So make sure you go out there and grab hold of it.