Sir Robert McAlpine is British Land’s sole contractor on the £1bn upgrade of London’s Broadgate Campus. So just what is SRM doing to instil so much faith in its client?
In 1985, Margaret Thatcher sat in the driving seat of a crane, tweed jacket on and pearls around her neck, posing for photos as she launched the construction of Broadgate Campus in London.
“We are drawing back the curtain of the future,” she announced in her ceremony speech. Political grandstanding aside, Broadgate was a project that marked a change in the way financial powerhouses worked in London.
Banks no longer needed to be physically near the Bank of England and the Stock Exchange. As technology and connectivity developed, businesses could branch out from the shadows of the City, moving into bigger workspaces such as Broadgate.
Now, British Land is writing the next chapter in Broadgate’s development. The company has a 10-year plan to transform the site, which is predominantly office-based, into a mixed-use development.
With £1bn of construction contracts in the pipeline, it is a massive scheme to take on for Sir Robert McAlpine, which is the sole main contractor under a 10-year framework signed in 2015.
But isn’t it risky for just one firm to oversee such a huge pipeline of works? Not according to British Land project director Charles Horne and Sir Robert McAlpine project director Paul Gregory.
Picking the winner
Both agree that trust between both parties is absolutely central to delivering such a mammoth scheme.
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According to Mr Horne, it was decided that only one contractor would be selected in order to lower the risk and create as secure a labour supply as possible. “The framework gives us the benefit of a long-term commitment with our contractors, as one of the main worries we have is what may happen to the market following the final negotiations of Brexit, and whether our overseas workers will disappear,” Mr Horne says.
“Working with Sir Robert McAlpine and building a strong relationship with its tier two and three supply chain means you provide yourself assurance and reduce risk; that was one of the key drivers of having this framework.”
The process of picking a single main contractor started in 2015, when British Land invited eight firms to tender for the framework: Bam Construction, Carillion, Laing O’Rourke, Lendlease, Mace, Multiplex, Sir Robert McAlpine and Skanska. Laing O’Rourke, Lendlease and SRM were shortlisted, before McAlpine finally scooped the contract in 2015.
“Don’t just give us a price to keep us happy; we want you to say, ‘We’re busy at the moment, we can’t do this job but come back to us for the next one’”
Paul Gregory, Sir Robert McAlpine
What was it about them that made British Land put all of their eggs in the contractor’s basket? “Sir Robert McAlpine were chosen based on their team, methodology and commercial offer,” Mr Horne says.
When it comes to picking its tier two and three supply chain, Mr Gregory says McAlpine looks for transparency and trust. “When you’re going into a framework, you’ve got to work together and work with us – it’s about trust, honesty and collaboration,” he says.
“We pick four contractors for each trade and we encourage contractors to be honest with us. Don’t just give us a price to keep us happy; we want you to say, ‘We’re busy at the moment, we can’t do this job but come back to us for the next one’.”
Sir Robert McAlpine is currently delivering three projects simultaneously on the Broadgate Campus scheme.
A 520,000 sq ft office-led redevelopment – 100 Liverpool Street – will be completed in December 2019. Keltbray is currently demolishing the existing building above a shopping mall that remains open to the public. The second project under way, 1 Finsbury Avenue, comprises a 288,000 sq ft refurbishment that began in June 2017 and is due to complete February 2019.
Finally, the refurbishment of 135 Broadgate, which was built in 1988 and comprises 325,000 sq ft, commenced in December 2017 and is scheduled to complete in April 2019.
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The next project in the pipeline is 1-2 Broadgate, through which Sir Robert McAlpine will deliver a major office and retail building and is currently undergoing a feasibility study with an eye to start on site in Q4 2019 (see timeline, below). This will be followed by the rebuilding of 2-3 Finsbury Avenue into a 34-storey mixed-use development.
But as Brexit continues to cast uncertainty over the commercial market, risks to the pipeline’s viability have had to be taken into consideration. After the EU referendum result, British Land was advised to take stock of what had happened, Mr Horne recalls.
This led to the developer altering its original plans for 1 Finsbury Avenue. Originally, British Land submitted plans to add two storeys onto the building and was given the green light by the City of London Corporation. However, Mr Horne says the Brexit vote caused British Land to change its proposals from redevelopment to refurbishment.
“Given the [uncertainty] that Brexit posed, it was felt [we should] refurbish that and re-let it as it currently stands,” he explains. “It’s a listed building in the first instance so we can’t carry out massive changes to the exterior.”
Broadgate campus: What’s in the pipeline?
- January 2017: 100 Liverpool Street begins on site
- June 2017: Work on 1 Finsbury Avenue commences
- December 2017: 135 Bishopsgate gets under way
- Q1 2018: Redevelopment of marketing suite 3 Broadgate to start, subject to board approval
- February 2019: 1 Finsbury Avenue set to complete
- April 2019: Expected end date for 135 Bishopsgate
- Q4 2019: Redevelopment of 1-2 Broadgate to begin, subject to board approval
- December 2019: 100 Liverpool Street scheduled for completion
- Q3 2020: Redevelopment of mixed-use scheme 2-3 Finsbury Avenue
A cautious approach to managing risk runs throughout the whole project, as British Land is sharing it on some projects instead of leaving it to the main contractor to handle. “When you’re taking on a £250m project, there are a lot of risks,” Mr Horne says. “Sir Robert McAlpine’s board will want to make sure they aren’t taking on unreasonable risks. We have to accept that and compromise.”
For Sir Robert McAlpine, this distribution of risk can speed up construction. “If you take an entrenched position on who owns the risk, it won’t work,” Mr Gregory says, adding that if you sit down and talk openly about who is the best person to own that risk, you get solutions much quicker.
An example of this can be seen on the 100 Liverpool Street development. The project was signed under a design-and-build contract in March 2016, and in January 2017 work started on site.
“Paul and I demonstrated to the site stakeholders that we have an ethos of trust, honesty and collaboration and that we mean what we say”
Charles Horne, British Land
Sir Robert McAlpine worked at the design stage to remove as much risk as possible, taking on the majority of that which remained once construction commenced. However, British Land has also taken on a number of specific risks to ensure they are handled appropriately.
“The biggest risk I saw when we began 100 Liverpool Street was that Crossrail was immediately adjacent to that building, Network Rail owned the shopping mall below our building, and Transport for London has a bus station within our building which we would have to move elsewhere for a year,” Mr Horne says.
British Land had to sign legal agreements with all three public bodies, pledging to fulfil certain obligations while construction works are ongoing at 100 Liverpool Street. British Land is responsible for the risks of this legal agreement – not McAlpine. “It helps if the client takes on risk as you get a better solution and everyone wins,” Mr Gregory says. “Sometimes you will take on risk that isn’t fair and it doesn’t help anyone, as the job will suffer in some way.”
Getting these three public bodies to work together and sign legal agreements in time for construction to begin took hard work and commitment, Mr Horne says.
“Paul and I demonstrated to them we have an ethos of trust, honesty and collaboration and that we mean what we say,” he says. “We now have the most amazing relationship with these three public bodies, and we couldn’t have done it without them.”
Mr Horne turns to his opposite number: “How many significant arguments have we had so far, apart from the occasional stamp of the foot?”
“None,” McAlpine’s Mr Gregory answers. “We don’t always see eye to eye, but we’re honest about it. We might not like what we hear sometimes but we trust each other to go and sort out the problem in the best interests of everyone.”
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It’s trust, honesty and collaboration between client and contractor that have ensured every deadline has been met so far, 18 months into the framework agreement, according to Mr Horne.
“I’ll phone Paul at 8 o’clock most nights and he’ll ring me at 7 o’clock most mornings… as well as Saturdays and Sundays,” he says with a smile. “There’s always a conversation going on. There is a mutual respect and admiration of each other’s abilities and experience that makes it work so successfully. So rather than hindering each other, you work together.”
One of the most fundamental parts of the Broadgate Campus strategy was to set up a co-located office for every firm working on the scheme. At Eden House adjacent to the campus, all the supply chain – from architect to demolition contractor – work together under one roof.
“Co-location cuts down the email transfer. If you have people there, you can just go over to talk to them – and we don’t talk enough in this industry”
Paul Gregory, Sir Robert McAlpine
“When you co-locate, you don’t have to say, ‘I’ll come to your office next week and we can sort it out’,” Mr Horne explains. “You can go directly to them and sit down and sort the problem out. It’s something to behold when you have the architect, structural engineers, mechanical engineers, cost consultants all working together.”
Firms are separated by a few floors of the building or could even be a few desks apart, helping to strengthen communication, Mr Gregory says. “Co-location cuts down the email transfer,” he says. “We all get hundreds of emails a day, and you can’t read them all. If you have people there, you can just go over to talk to them – and we don’t talk enough in this industry.”
It’s clear that collaboration between British Land and Sir Robert McAlpine is a crucial factor in delivering the Broadgate Campus – but will it continue beyond this development for future projects?
“I can say without hesitation that Sir Robert McAlpine is a long-term partner of British Land on other projects, not just on this one,” Mr Horne says.
Chris Grigg’s firm approach
Speaking at the CN Summit in November last year, British Land chief executive Chris Grigg warned against moving development away from London.
He said the idea the UK could suddenly “do without” the capital was a mistake, adding that incentivising development in other areas would be the most sensible investment strategy.
“The idea that you can suddenly do without London or survive some big shift away is wrong,” Mr Grigg told delegates.
“There’s little doubt the bulk of the investment spend has been weighted to London… the challenge is to make sure the Birminghams, the Manchesters fulfil their potential.”
Mr Grigg added that advanced manufacturing or offsite construction is “unequivocally the way forwards. He said British Land are “trying to do it more and more”, but there are also times when a more conventional approach will be the right one.
An offsite approach for the Cheesegrater was used by Laing O’Rourke, Mr Grigg said, adding that British Land are using this same approach for its super-prime resi and commercial Clarges development in Mayfair.