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Carillion spies 'fantastic opportunity' to work alongside Chinese contractor

Carillion is relishing the opportunity to work with Chinese contractors rather than seeing any threat to its intellectual property, according to its managing director for construction services.

A joint venture of Carillion, the Beijing Construction Engineering Group and the Greater Manchester Pension Fund was chosen by Manchester Airports Group for its £800m Manchester Airport City development in October.

Adam Green, who has visited BCEG sites in Beijing, told Construction News Carillion was in a unique position to learn from working alongside the Chinese contractor on a scheme that may prove to be a “game-changer”.

“Where some see a threat I think you have to look at the flip side; I see a fantastic opportunity to work with BCEG and to learn – that’s a two-way thing,” he said.

“I have seen some of their operations and it’s fascinating to see them delivering things in a different way, almost always through self-delivery.

“I see a partner in them and someone to work alongside and why wouldn’t I want to be at the forefront of [Chinese contractors working in the UK]?”

On intellectual property, Mr Green said he was focused on “ensuring we have a big enough engine to generate big enough ideas, rather than worrying about losing one or two” during the process.

He said Carillion is still seeing evidence of waste in tendering for schemes, where five or six contractors can end up bidding millions each on schemes, though he insists procurement within the public sector is generally improving and most public sector clients are being more collaborative and encouraging less man-marking.

“Schemes are being developed from early stages and that limits the amount of duplication you find in procurement, so instead of five or six contractors spending quarter of a million each to bid, you have got teams that can be better utilised,” Mr Green said.

“But in certain places and markets you can spend 10 times [a quarter of a million]. It’s the money you spend and resources you have to apply that is the thing that frustrates.

“The direction of travel generally is good, though. If we can try to ensure the most expensive part of the [bidding] process is reserved for when you’ve got fewer bidders involved that can be good, provided you’re smart about how you select up front.”

Carillion’s construction arm has secured several high-profile jobs in recent months, including the £335m Royal Liverpool Hospital private finance initiative, a £100m deal to expand the A6 Manchester Airport Relief Road in joint venture with Morgan Sindall, and a place on both lots of the Education Funding Agency’s £4bn contractors’ framework.

But Mr Green insisted that while there is greater optimism in the market, the industry still has tough times ahead and Carillion will continue to ensure it is “clear about where we are spending our money and placing our bets”.

Mr Green said the contractor was aware there were skills shortages to be tackled but said Carillion was the largest single employer of construction apprentices in the UK through its national network of training centres.

He said: “Network Rail spending on its overhead line programme puts real pressure on anything high voltage, so whether you’re hanging cable over a railway or a conductor for National Grid, there’s going to be real pressure in terms of expertise and other sectors, such as building in London, where there are some real inflation pressures there for certain trades.”

Carillion will be hoping to win its share of the High Speed 2 programme and Mr Green admitted the contractor had learned lessons from missing out on several Crossrail deals. He estimated that Carillion was winning one in three rail tenders on average.

“We were very selective; we only went for a small number of big opportunities and obviously the other guys had a better offer,” he said. “I decided at the time to go it alone on some of [the deals].

“There are learning points from that; we do ensure we continually challenge what we do.

“It was disappointing but we’ve done really well in other areas, such as winning some great roads jobs like the A1 and on the managed motorway programme. They have been brilliant opportunities to work in a semi-alliancing environment.”

  • Adam Green is a new columnist for Construction News. Read his views on the need for targeted training for apprentices in the rail sector here.

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