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Construction News Summit 2015: Day two as it happened

Catch up with the news, quotes and highlights from the Construction News Summit 2015 on the second day of this year’s two-day event.

What you need to know

What’s happened on day two so far

  • Second day begins with VIP breakfast briefing
  • Guest speaker Jim O’Sullivan of Highways England addresses delegates at exclusive opening session
  • Andrew Neil opens the Summit’s main day
  • Patrick McLoughlin delivers keynote address on government infrastructure plans
  • Panel discussion debates the economic and political factors to influence the industry in the next five years
  • Breakout sessions discuss pipelines and procurement in the public sector, education and residential sectors
  • Delegates hear from Swansea Bay Tidal Lagoon construction director Andrew McNaughton
  • Subcontractor panel featuring three CEOs tackles payment, working with main contractors and innovation in the supply chain
  • CEOs from Laing O’Rourke, Carillion, Graham and Murphy round off the day with hard-hitting panel debate

 

5:31pm: Finally, a big thank you to everyone who has joined the live blog, watched our videos, read our articles or tweeted. The third annual CN Summit has been the biggest and best ever - we’ll be back next year, going from strength to strength.

5.25pm: Andrew Neil thanks the final panelists. Our fingers are about to fall off. I think we can all agree this has been a brilliant two days of industry data, interviews with major names throughout the sector, unrivalled networking opportunity and of course, packed with forward looking insight into the future of UK construction.

Check out cnplus.co.uk in the coming days for all the news, analysis and video highlights from the day.

5.23pm: Development of your company’s culture, says Richard Howson. Andrew Neil comments that there is a greater sense of optimism in the sector than when he hosted last year’s Summit.

5.22pm: Steve Hollingshead: longer term view taken by government on infrastructure gives us the chance to work more collaboratively with our clients.

5.21pm: Anna Stewart says companies need to be self-determining. Once you have a strategy, it’s ok to say no and stick with it. Make sure people have confidence in plan and then stop whingeing.

5.19pm: Michael Graham - there is really good technical competence. Projects priced too competitively have washed through. The major challenge is fully engaging the workforce. Have to ensure companies are developing two or three leaders below them to get continuity.

5.16pm: Anna Stewart - We have French and Spanish partners. We’re not less productive on a like for like basis.

5.15pm: Steve Hollingshead says we are “heading towards a crisis in productivity”. It needs to be solved, because it’s the best way of solving the resource crisis. Our business is focusing on how we can take people out of the process. Need fewer staff, helps to solve the resourcing crisis.

5.13pm: Are UK tier ones as good as international counterparts on productivity? Richard Howson says in international markets he doesn’t see a lot of difference. If we have properly coordinated designs at the right time, schemes will be built efficiently.

5.11pm: Anna Stewart: With offsite manufacture, you don’t necessarily have to be a manufacturer, you can also be a buyer. Steve Hollingshead says the industry can be lazy in design, starting schemes without knowing how to finish them.

5.09pm: Michael Graham says being private means you don’t let the pendulum swing so far away from the business that you lose sight of being a family-owned company.

5.07pm: Andrew Neil asks Anna Stewart, any plans to go public? Shareholders at LOR are forgiving, she says, a difference from a listed company. It’s uncompromising in a listed company where people can lose their jobs quite fast (“is she looking at me”, quips Richard Howson).

5.06pm: Steve Hollingshead: I absolutely prefer the private sector. I worked with Laing O’Rourke for many years. Professionally run but able to take a far longer term view of the investments it makes in the business.

5.05pm: What are the benefits of being public or privately-owned companies? Richard Howson says he’s sometimes envious of companies like Laing O’Rourke because they can ebb and flow.

5.02pm: Steve Hollingshead says industry contractors should be aiming at 10 per cent average margins, up from current one to two. At a minimum level should be paying more like 5 per cent. Need to provide specialist services.

5pm: Anna Stewart says she thinks project bank accounts have been a disaster. Working capital has moved to the banks. Margins haven’t moved. I don’t like them because we’ve lost the responsiveness from the supply chain.

4.58pm: Steve Hollingshead says European contractors tend to focus on higher margin contracts. Chinese take a long term view and challenge to the UK is their appetite for risk is very different to what tier one UK firms have. Stark difference between contract terms UK and Chinese ‘PLC’s are willing to enter into.

4.56pm: Richard Howson: The government should buy British (eyebrow suitably arched). We could be in France or Germany or Spain but we wouldn’t win. It’s difficult for Chinese to bring their own resources and compete as they have in India, but likely they will acquire a major contractor.

4.55pm: Anna Stewart says UK is an open market to European colleagues. She doesn’t think HS2 packages are big enough to necessitate joint ventures. Claims other contractors want access to UK as part of international businesses, as it’s a good trading environment.

4:52pm: “There’s a lot we can learn from other cultures,” says Steve Hollingshead. “In China, in Australia, there are more women employed in construction.”

4:49pm: “Is the problem that a career in construction needs difficult subjects?” says Andrew Neil, citing qualifications engineers need. “It’s much easier to do media studies and kids will gravitate towards that.”

Media studies never did me any ham…

4:46pm: “Traditionally we’ve always hid our light under a bushel,” says Michael Graham. “There’s more to do to promote ourselves in the community.”

4:42pm: Discussion moves on to diversity. “Is it still a man’s world?” asks Mr Neil.

“I think sites and offices are better places to work now,” says Anna Stewart. “It’s not a diversity crisis - it’s an image crisis.”

Richard Howson adds: “I think it has had an image crisis, but it’s improved significantly. I’d be happy for my children to work in construction.”

4:39pm: Will low margins mean more consolidation between tier one contractors?

“I think it should have taken place 20 years ago, and the question is, why hasn’t it?” says Carillion’s CEO Richard Howson.

4:36pm: “With such low margins, why do you bother?” challenges Andrew Neil.

“Because I love the construction industry,” says Michael Graham - after a moment’s pause.

4:33pm: “Absolutely, main contractors are undercapitalised,” says Steve Hollingshead from Murphy, addressing an earlier point.

4:32pm: Joining Andrew Neil on stage now are the CEOs of Laing O’Rourke, Carillion, Murphy and Graham. How’s that for a lineup?

To kick off, our chair asks the CEOs how business is going. Anna Stewart says the Laing O’Rourke order book is “the best it’s ever been”.

4:30pm: On that note, Andrew Neil thanks the subcontractor chief executives for taking part in a very interesting discussion.

4:28pm: I would agree, says Mark Davey. “It’s collaboration - but that confrontation is still lurking in the background.”

4:25pm: The panel is asked whether they would describe working with tier one contractors as “confrontation or collaboration”.

The industry has moved from a place of confrontation during the recession to one of collaboration now, says Ian Lawson.

4:20pm: The conversation moves on to overseas contractors and supply chains entering the UK market fully formed.

“I think the Chinese will need to work with us for our expertise,” says Ian Lawson.

4:17pm: Jon Fenton says in some case, subcontractors’ ability to innovate is marginalised and stifled by main contractor demands.

“We innovate for ourselves as much as anyone else,” says Lakesmere’s chief executive Mark Davey. Good to hear a subbie prioritising innovation!

4:14pm: Andrew Neil cuts to the chase. “Would we be better off without main contractors?”

The panel answers no. “They’re a necessary part of the supply chain.” “They’re the ones that pay us!” adds Mr Davey.

4:10pm: A question comes in about payment: would digitising payment offer greater transparency, certainty and growth?

(This is an industry that is reluctant to use BIM, is wary of social media and ignores data, so don’t hold your breath - digital ed.)

4:07pm: “We’ve been going from strength to strength,” says Jon Fenton, from Van Elle. “We’re very excited about infrastructure.”

“The opportunities we can see going forward are very good, very strong,” chimes in Ian Lawson.

4:04pm: “How do you read the market at the moment?” asks Andrew Neil.

“I’m not sure we had a dip in the third quarter,” replies Mr Davey, “But the market is changing. We are seeing the ripple effect from London throughout the rest of the country - Leeds, Manchester, Birmingham and other major cities.”

4:01pm: It turns out the other subcontractor CEOs are in a similiar position.

“We have certain facilities,” says Ian Lawson from Severfield, vaguely. What are these facilities, Ian? What are they?

3:57pm: “We don’t do bank accounts,” says Mark Davey from Lakesmere.

“Where do you keep your money?” asks Andrew Neil rather incredulously. “In the company!” comes the reply from Mr Davey.

3:50pm: Everyone is back in the great hall now for the final session of this year’s CN Summit. First up, chief executives Ian Lawson, Mark Davey and Jon Fenton discuss how their businesses are adapting to meet future opportunities.

 

3:15pm: STILL TO COME:

  • The Subcontractor Panel; featuring the chief executives of Lakesmere, Severfield and Van Elle.
  • The Tier One Panel: featuring the chief excutives of Carillion, Graham, Laing O’Rourke and Murphy.

Don’t go anywhere!

3:12pm: That just about wraps up the second lot of breakout sessions, and it’s time for more coffee, tea and biscuits: see below from this rather hungry author.

3:05pm: A question comes in during the regional session about the Northern Powerhouse. Is it just a phrase that will ultimately mean nothing, like this government’s ‘Big Society’?

There’s certainly a lot of talk about the Northern Powerhouse - but there’s still the feeling that not enough spades are in the ground.

2:59pm: UK Regeneration chief executive Jackie Sedak discusses London in the regional outlook session. “If London was a problem, it’s a problem the rest of the world would love to have.”

2:52pm: There’s video galore from the CN Summit so far, and in Blue Peter style, here’s one we did earlier.

2:40pm: Tom Bridges, chief officer of economy and regeneration at Leeds City Council, says that he is “wading through an alphabet soup of bureaucracy” to get the city’s South Bank scheme off the ground.

“There’s potentially 136 hectares of development land available,” Mr Bridges points out. And it’s not getting used!

2:36pm: Kenny Ingram from IFS says that the culture of the industry is holding back infrastructure development. “The UK is far behind other nations when it comes to using new technologies” he says, in the session on infrastructure delivery.

2:31pm: In discussion over the outlook for UK regions, Aberdeen City Council’s Gordon McIntosh has this to say.

“We have recently finished a masterplan for Aberdeen city centre and we’re looking for around £2.9bn in investment in the city.

“The priority is clearly on housing, there’s a huge strain. And connectivity - there’s no suburban rail service, and to get anywhere by public transport is very, very difficult.”

Interested in working in Scotland? There’s a lot of opportunity there…

2:29pm: In the commercial session, there’s another call for a show of hands from Melanie Leech.

“Who’s heard of or been in talks with UKTI?” Barely half the room raises a hand - clearly more work to be done for firms getting their names out.

2:13pm: In the infrastructure breakout session, Network Rail’s commercial and development director Neil Thompson says the client needs to be better at working with contractors all the way through the chain, including tier two and three firms.

“We have good contract and payment terms,” Mr Thompson stresses.

2:01pm: We’re back from lunch and into the second set of our breakout sessions.

Andrew Neil is chairing a discussion on the regional project outlook, while in breakout session B, Melanie Leech from the British Property Federation is leading the discussion on commercial projects.

Over in breakout session C, our editor Rebecca Evans heads up the debate on infrastructure, where delegates will shortly be hearing from Andrew McNaughton about the Swansea Bay Tidal Lagoon project.

12:29pm: Andrew Neil thanks the panellists and the breakout sessions head for a networking lunch. If you’re following the Summit on Twitter, expect to see pictures of food shortly!

12:17pm: Mr Bowman from Barts Health Trust answers a question about supply chains, and a record of poor efficiency in the health service.

“There are too many supply chains in the NHS, particularly in operations. The NHS model for purchasing construction schemes has an identifiable process we can follow - it’s moving in the right direction.”

12:08pm: Our audience is really enjoying Slido to ask questions of the panel. You can ask your own too, although if you’re not here, you won’t hear the answers. But I’m sure they will enjoy answering them all the same!

11:59am: Mark Dickinson from Anthology inadvertently highlights the short-termism that can hinder the industry. “Our business model works now in the short term. Will it work in 15-20 years? Don’t know, and it’s not my problem.”

11:55am: Scott Hammond at Essential Living tells residential delegates about his company’s approach to procuring: “We’ve had to alter procurement methods away from fixed price design and build.

“We’re setting up subcontractor frameworks for major trades like M&E and drylining.”

11:50am: In the main room, we’ve got public sector clients TfL, the Environment Agency, Ministry of Justice and Barts Health trust discussing investment in the public sector.

Andrew Bowman from Barts Health Trust says: “I don’t see any new PFIs working in the NHS. That time has been.”

11:42am: If you’re not here, keep up on Twitter as per the link below. And, if you’re not registered or subscribed to Construction News, you can sign up here for free to read all our Summit content, and get our free email newsletters.

11:31am: In the main room, we have Graeme Craig from Transport for London talking about his client’s development pipeline in the next few years.

In breakout room B, The North West Cambridge Development’s construction director Gavin Heaphy is discussing education plans.

And in breakout room C, Essential Living’s managing director Scott Hammond is doing much the same on residential construction.

11:14am: The Summit now divides into the first of its breakout sessions. The focus is on three areas: public sector, education and residential.

You can get an idea of the full programme here - and to get all the latest from those sessions, ensure you’re following #CNSummit on Twitter.

10:43am: With that, a fairly positive note I’d say, we take our first break. Coffee and biscuits for all!

10:39am: Another question from the floor. “Would you invest in large UK contractors?”

“I’d have to look at the balance sheet, but I think construction is a good long term bet,” says Trevor Williams.

10:36am: The panel is asked how lofty goals are going to be achieved.

“Let’s not worry so much about the money,” says Geoffrey Spence. “Let’s look at training colleges and apprenticeships.”

10:32am: How does the need for improved infrastructure in the UK compare to the rest of Europe?, asks Andrew Neil to James Whittall from the European Investment Bank.

“I think it’s the case elsewhere,” says Mr Whittal, “Europe’s realising the need for better infrastructure. But it will all come down to funding.”

10:27am: Financial markets, the reversal of quantitative easing: there are some big risks to the performance of the industry continuing as strongly, says Trevor Williams.

10:20am: We’re taking questions from the audience using Slido - at the cutting edge of digital, that’s us - one Andrew Neil puts to the panel is on whether PFI is back on the agenda.

It’s a possibility, according to Infrastructure UK’s Geoffrey Spence.

10:18am: Our first story is online - here’s what Patrick McLoughlin had to say about where he wants to attract HS2 investment from China.

10:13am: Trevor Williams asks the audience if the UK should leave the European Union. One hand goes up. But, as Mr Williams points out, the room is full of business people. If the vote is put to the public, we could find ourselves outside the EU - which would be a disaster.

10:10am: Andrew Neil gets a plug for This Week on BBC2 in while challenging Rhian Kelly. Must be a record early mention for Mr Neil’s programme at a Summit!

10:07am: Asked what the Bank is doing, Mr Whittall adds that it’s investing billions of pounds into projects, which it hopes will ‘leverage’ more private sector funding too.

If you’re playing CN Summit bingo at home, chalk off ‘leverage’.

10:01am: Mr Whittall is asked by Andrew Neil “what’s not to like?” about the current UK economic situation.

“UK investment as a percentage of GDP is still well below average,” says the man from the EIB.

9:56am: Our first panel discussion of the day is up now - Trevor Williams takes a seat and is joined by Daniel Hanson from Bloomberg; Rhian Kelly from CBI; Geoffrey Spence, the chief executive of Infrastructure UK; and James Whittall from the European Investment Bank.

9:54am: Despite that increase in pay, there’s a warning sounded by the speaker - weak inflation forecasts and low UK interest rates means that borrowing costs are likely to remain low, and wages are only back in real terms to where they were in 2003.

9:52am: Looking at major schemes, Trevor Williams harks back to a theme Patrick McLoughlin mentioned earlier on - skills.

“There’s no question that these projects like HS2 will have to be paid for with money from elsewhere, and built with skills from elsewhere,” says Mr Williams.

9:50am: This is likely to be the most colourful set of slides we’ll see today. Lloyds chief economist has plenty of graphs to support his address, and positively for UK construction, most seem to be going in the right direction.

9:47am: Mr Williams says the slowest growing part of the UK at the moment is Scotland, and it’s all down to oil – the region’s highly dependent on exports and it is starting to feel the impact of falling prices.

9:44am: In fact, the growth looks pretty good compared with Europe - and only just behind the forecast growth for the USA.

9:40am: Trevor Williams is Lloyds Bank’s chief economist, and he’s up on stage delivering the next keynote address.

The UK will remain a solid G7 growth economy over the next 10 years, says Mr Williams.

9:34am: Given it’s still only 9.30am or so, Mr McLoughlin has done okay in dealing with Andrew Neil. He leaves the stage to applause, but I imagine his day won’t get any easier when he heads into Parliament. And first, our reporter Jack Simpson looks like he’s going to get a few questions with him…

9:30am: The next question he gets is on what the UK wants from the Chinese on HS2. “Do we want their investment or do we want their expertise?” asks Mr Neil.

Both, is the answer - but it’s clear that the funding available is attractive, as Andrew Neil presses Mr McLoughlin.

9:26am: Andrew Neil wastes no time in hitting the transport secretary with direct questions. “Is Network Rail fit for purpose?” our chair asks.

Patrick McLoughlin says it’s dealing with a number of difficulties pretty well.

9:23am: “We face - you face - unprecedented challenges. But we also have unprecedented opportunity.

“The government is up for the challenge. You need to be too,” Mr McLoughlin finishes on.

9:21am: “Change on the scale I’m talking about will take time,” says Patrick McLoughlin. But it is vital: “This country is accustomed to Victorian infrastructure, stuck together with 21st century bits of technology.”

9:18am: Mr McLoughlin also highlights the gender imbalance in the industry, where male employees make up 90% of the workforce in some skills. Changing this “is imperative” he says.

9:15am: “We’re committed to training a new generation of skilled staff”, says the secretary of state for transport.

He highlights building new training facilities and the 7,000 people trained so far through Crossrail’s academy.

9:12am: We’re living with a legacy of underinvestment, says Mr McLoughlin. He’s not just talking about Labour though - this goes back generations, he adds.

9:08am: Andrew Neil says his contribution was described as ‘superfluous’ last year - which is surely a Freudian slip. Undeterred, he takes our delegates through the plan for today - and then introduces the transport minister, Patrick McLoughlin, our keynote speaker today.

9:06am: Back by popular demand, Andrew Neil is to chair today’s Summit, and Rebecca welcomes Mr Neil to the stage.

9:04am: The CN Summit is a unique chance for the whole supply chain to ask together, ‘what can we do better?’ says Rebecca.

9:01am: Rebecca Evans takes to the stage, and the full day of the CN Summit begins!

8:50am: The main room is filling up - there’s a bit of a Hogwarts feel to it here in Central Hall Westminster. What looks like a huge church organ looms behind the stage, where Andrew Neil will soon be looming large over our select group of politicians, contractors and clients.

8:40am: The breakfast briefing over, delegates help themselves to another coffee and network while we await the main event to kick off.

Rebecca Evans, editor of Construction News, will shortly take to the stage to open the main day of the Summit 2015.

7:05am: Why not read what happened yesterday? Two fascinating panel discussions on procurement strategies and technology, plus presentations on BIM, asset management and collaborative working.

Also, your humble scribe wrote 2,400 words yesterday. I’m aiming for 5,000 today…

7:02am: As this is an exclusive session, we won’t be bringing all the juicy news just yet. Look out for our emails throughout the day to get breaking news and exclusive comment first.

(If you’ve not signed up to Construction News yet, you’ll need to do that first – it’s free, and you can choose the emails you want to receive straight away).

7:00am: Welcome to day two of the Construction News Summit, and thanks for joining the live blog today.

I will be with you for the next 12 hours, aided by the entire Construction News team, who will be doing the hard graft: reporting, interviewing, tweeting and filming everything that goes on at the Summit so we can bring you total coverage from the packed programme.

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