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'It is possible': Why U+I is targeting local firms over tier ones

U+I is overseeing £300m of development in Brighton – yet the big tier ones are not its main targets. Delivery director Mark Richardson reveals why the client is trying a different model.

For a man who talks a lot about de-risking a project, U+I’s director of delivery Mark Richardson is happy to make what others might consider some pretty bold moves.

Take the lengths the former Laing O’Rourke man is willing to go to establish trust on a project. “If we’ve given our word and subsequently find that what we committed to wasn’t the best decision, we still remain committed to it – and this soon creates trust,” he says.

His reason for this approach is simply: that any risks are outweighed by the potential rewards. “Generosity is matched with generosity and fire is matched with fire,” he tells CN. “All projects have problems, but trust engenders an environment of solutions and people feeling open and free to suggest answers to the problems.

“Without trust you have a time-consuming commercial contractual environment with little or no solutions being put forward, because everyone is focused on their contractual and commercial position.

“It’s about understanding each other’s risks and, with that shared understanding, collectively de-risk the process for one another.”

Direct contracting and PBAs

U+I has not been afraid to take some pretty radical steps to achieve a culture of trust.

The developer is trying out two new models of contracting on developments worth a total of £300m in Brighton.

The first of these projects is its £200m Preston Barracks scheme, where the developer is breaking up work into smaller packages and working directly with smaller local firms where possible.

This week CN exclusively revealed that U+I had appointed Graham Construction as the first contractor on Preston Barracks, agreeing a £14m deal for a 50,000 sq ft commercial hub for start‐ups and SMEs.

U+I Preston Barracks Brighton

U+I Preston Barracks Brighton

U+I’s £200m Preston Barracks scheme

Meanwhile the developer’s Circus Street project in the city has also employed a progressive approach, with U+I using a project bank account system on the £100m scheme.

As Mr Richardson explains, the adoption of a project bank account allowed the firm to select a smaller contractor than might otherwise have been viable.

“Collaboration doesn’t mean we can relax on our ambitions in terms of apprenticeships, training, health and safety or any of the standards”

This model, U+I believes, has the benefit of the attention to detail SMEs can offer, but without saddling them with a huge budget the likes of which they have no previous experience managing.

“We awarded Henry Construction an £85m project as main contractor – that is its biggest contract by some considerable margin to date,” Mr Richardson says. “How we de-risked that project was with the trade contractors setting up a project bank accounts.”

Direct approach, high standards

U+I believes that by dealing as directly as possible with subcontractors and using project bank accounts, it can create a collaborative environment in which standards are further improved.

“We’re working really hard to get collaboration at every level with our designers, with our trade contractors, with our main contractors,” its director of delivery continues. “Collaboration doesn’t mean we can relax on our ambitions in terms of apprenticeships, training, health and safety or any of the standards; in fact, we work with those businesses to ensure their standards are absolutely benchmarked against what any of the tier ones will deliver.”

Mr Richardson cites skills and technology as two areas where expectations will continue to be high regardless of the contractor.

“In terms of delivering an average of one apprenticeship to every £3m of revenue – an average any government body is looking for – we’re introducing those sorts of standards as well,” he says. “We want to take the lead [on introducing new technology] and to put in place the collaboration necessary for BIM Level 2.

“It’s not a case of wanting to use you because it’s a cheaper price and we can forgo this, this and this; we want all of those things as well.”

“I understand the challenges and where their risks are. Every time I’ve asked the question, they would all rather work direct for a client”

At the same time, he emphasises that a focus on innovation and quality doesn’t have to come at the expense of value for money, with U+I still operating a strict two-stage procurement process.

“In all of these cases there was a competitive two-stage process held when we were selecting those contractors, so we knew we were getting value for money,” he says. “However, we also allowed them to innovate and bring ideas as part of that, and then showed a real willingness to take on board and adopt their suggestions.”

Overwhelming response

It’s not just U+I that benefits from these changes, according to Mr Richardson; it’s also the contractors themselves.

“Their response has been overwhelming,” he says. “I think it helps that I come from a 38-year contractor background; I’ve been in their shoes and understand the challenges and where their risks are. Every time I’ve asked the question, they would all rather work direct for a client.”

“Most tier ones are internationally owned; their mandate comes from distant shores, and that isn’t necessarily in the interests of the projects we’re talking about”

A direct contracting model also helps smaller firms when it comes to the major industry challenge late payment, Mr Richardson argues. “One of the issues if you are a [small business] and working for a main contractor; I wouldn’t say you are held to ransom, but the payment record as we saw with Carillion is very challenging, and they will hold on to those trade contractors’ monies for as long as possible.”

A place for tier ones

Though Mr Richardson is not employing many traditional tier ones on U+I’s projects, he still believes such major contractors continue to have a significant role to play.

“There is a place for tier ones – let’s be honest: the HS2s, the major infrastructure projects, some of the big government projects could not be done [without them].”

However, for the types of project U+I has down in Brighton, he feels that they simply are not the right fit. “It’s fair to say most of the tier ones are internationally owned; their mandate and authorisation comes from distant shores, and that isn’t necessarily in the interests of the projects we’re talking about down in Brighton.

“[Their focus on larger schemes] gives us a great chance on the kind of projects we’ve got to find a way of giving the opportunity to the local contractors and the tier twos.

“We’re showing that it’s possible.”

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