Great Portland Estates’ head of projects talks to Construction News about collaboration, fair payment and why clients must recognise firms are ‘mentally tired’.
- Multiplex’s winning credentials
- Standing out from the crowd
- Enjoy your collaboration
- Unfair payment ‘abhorrent’
- New boom warning
- Public sector impact
It’s a grey day in London’s West End where, despite the gloomy skies, Construction News has an excellent vantage point from which to overlook several Great Portland Estates schemes that will transform some of London’s busiest streets.
From the top of Oxford House, where GPE is working in a shared office space with its supply chain, you can see site workers scurrying around the 0.93 ha site of the former Royal Mail sorting office, Rathbone Square.
GPE’s head of projects James Pellatt beams as he explains how the £500m scheme will “leave a legacy that is going to be there for 300 years”.
When complete, it will house office, retail and residential space, as well as a new public square.
“We’re too easy to say, ‘We’ll just work through this’, so there’s a huge amount of pressure”
The project, for which Lend Lease is main contractor, forms part of GPE’s committed and near-term pipeline of more than 1m sq ft and is one of several major projects situated at the east end of Oxford Street, where the developer is regenerating some of the area’s tired and rundown building stock.
Oxford House sits opposite a new Crossrail station and the GPE-owned 73/89 Oxford Street scheme, which Construction News revealed last month will be built by Brookfield Multiplex.
“That’s a tricky job - a really hard job to build,” Mr Pellatt says.
“In fact in some ways it’s even more difficult than Rathbone in that you’ve got a retained façade, you’ve got Oxford Street and you’re fully enclosed around three sides.”
Multiplex’s winning credentials
So why was Brookfield Multiplex chosen for the job? “We needed someone who we could trust, so for that we negotiated with them, and we didn’t tender for that.
“We just thought we needed to get the right resource and the right management.”
Overseeing a vast pipeline of work, as a developer still in the execution cycle of its portfolio, Mr Pellatt is reassuringly pro-contractor when he discusses market capacity and how GPE selects firms for its biggest jobs.
“It’s not just about money; it’s about why you get into it, because you should enjoy that sense of collaboration and have a sense that it is going to last”
It’s rare to hear a high-profile London client talk sympathetically about the pressures faced by contractors in the downturn, but he talks about the “hidden pressures” of the industry that have left people mentally drained.
“We’re too macho an industry”, he argues, warning that the pressures of working within construction are all too easily ignored by clients and firms alike.
“We’re too easy to say, ‘We’ll just work through this’, so there’s a huge amount of pressure and that’s a hidden problem in that people are just mentally tired - we have got to recognise that.”
Standing out from the crowd
Appointing contractors to schemes can be straightforward, such as GPE going to Multiplex for its latest pre-construction award, but when dealing with multiple bidders, how does he distinguish between them?
At present there are few contractors attempting to share innovative methods across their suite of projects, he says.
Though this does not surprise Mr Pellatt, as many businesses have had to stick to “survival mode” after the recession, it’s clear there are opportunities for firms who come to the table with innovative solutions learned from other parts of their businesses, or with other clients.
Some contractors need to remember their unique selling point.
“Their skill is in coming up with the idea that, ‘Actually, I can build that four weeks quicker by changing the method of construction’ - that’s the value they can add.”
Sell those concepts and pitch them back to GPE when bidding for work, he says.
Put simply, the developer wants “certainty of outcome”; that does not mean it wants firms “taking a shortcut” but thinking their proposition through and using the strongest parts of its business and people to push themselves ahead of their competitors.
“We want to know when we’re going to finish it, that it’s going to be finished to the right quality, it’s going to operate well and it’s going to be well commissioned.”
This can mean GPE paying “a bit more money in terms of cost per square foot”, but it is a sacrifice the firm is willing to make to ensure its projects are delivered on time.
Aware that contractors can be traditional in their approach, and that there is a discrepancy between having great ideas and being able to pitch them in a boardroom environment, Mr Pellatt says he aims to visit firms and build relationships with prospective project leaders before selecting preferred bidders.
“When we are selecting contractors and the people who are going to be running our jobs, we try to identify them early so we can go and visit them on site.”
Enjoy your collaboration
The “stiff and wooden” boardroom environment only adds to the pressures of having to win the job, he explains, “and I don’t think there’s enough done to relieve that pressure”.
For Mr Pellatt, this failing is one that only adds to the growing skills and labour pressure being felt by firms, particularly in the booming London market.
“If we want to get people back into the industry you need to think that it’s not just about money; it’s about why you get into it, because you should enjoy that sense of collaboration and have a sense that it is going to last.”
“I don’t think people think enough about the design and whether it will stand the test of time”
For Mr Pellatt, there is too much time given to “getting in and building it quickly”.
He stresses that this only leaves a “horrendous” legacy behind and is a big factor in GPE’s investment in BIM on its projects (see box).
“I don’t think people think enough about the design and whether it will stand the test of time,” he says.
At a point where the industry “is on its knees” there is no time for mistrust or negative stereotypes held by the property sector against contractors, Mr Pellatt says.
“If you’re working in property and construction you may as well be talking a different language and I don’t think we do enough to straddle both industries.”
Unfair payment ‘abhorrent’
The head of projects advocates collaboration across projects to deliver the best results on schemes. This approach could see contractors taking new methods of project delivery to clients from other projects to get better results.
He argues passionately that misconceptions and myths about the construction industry need to be tackled urgently.
The industry needs to move away from the “traditional argument of beating up a contractor because they are going to rip me off”, he says.
GPE takes pride in paying its contractors on time, he says firmly. “We’re very transparent about the fact we don’t need to raise external finance; we do this with our own money.
“Withholding payments to refund your balance sheet is to me utterly abhorrent - that is the industry eating itself”
“We want to make sure that gets passed down to the trade contractors, which is why people need to think far in advance of minimising risk for smaller contractors.”
Mr Pellatt pauses - perhaps reticent to inflame what is a sensitive topic - but then explains that GPE refuses to work with firms who employ poor payment terms.
This is why GPE likes to do repeat business with different contractors, “because they know us and know we’re going to pay.
“Withholding payments to refund your balance sheet is to me utterly abhorrent, that’s the industry eating itself and is the quickest way for trade contractors to become insolvent. We need to make sure people do get paid.”
New boom warning
As for the medium-term outlook for commercial work in the capital, Mr Pellatt has a warning for firms who see work picking up and think this will lead to a fresh boom in commercial projects.
“What we see within central London and in our spaces is actually there isn’t an upswing and there’s not going to be an upswing in commercial office work,” Mr Pellatt says.
“I think contractors expect it to happen - assuming because the good times are back that people are going to be developing.
“But there are so many barriers to entry in terms of developers being able to develop commercial office space that there are actually relatively few schemes [going ahead].”
GPE is selective around where it commits to schemes.
Chief executive Toby Courtauld pointed out in May that 86 per cent of the pipeline sat within 800 m of a Crossrail station and Crossrail 2 is likely to factor into its next development cycle.
But how easy does it find simply getting projects off the ground, a common complaint of contractors and developers alike?
Public sector impact
With councils already feeling the effects of severe cuts in funding from central government, many will have tough decisions ahead about which services to prioritise - a point that has not gone unnoticed by Mr Pellatt.
He warns that planning departments are going to get “thinner and thinner”, with fewer staff to deal with an increase in applications, “which is why we’re not seeing a lot of commercial schemes coming through.
“There’s nothing wrong with the planning process. The problem comes more from a lack of resource than anything else”
“There’s nothing wrong with the planning process,” he hastens to add. “It’s a legitimate process and absolutely should be by democratically elected councillors.
“But that’s not the problem. The problem comes more from a lack of resource than anything else.”
So can developers step in and help fund this gap? “It’s a delicate balance,” Mr Pellatt says, but argues that developers could collectively assist in the funding of department resources.
Developers are able to enter into planning performance agreements with local authorities, with the hope of providing certainty and transparency over the process of determining a large and complex planning application.
This is a chargeable agreement, the cost of which varies between different local authorities and cannot be put in place after a planning application has been submitted.
Both the developer and local authority are expected to take shared responsibility for the implementation of a PPA.
Mr Pellatt agrees that this is one area upon which could be improved, with further legislation such as the Community Infrastructure Levy, having “no guidance” as to where the levy goes to “so that money just goes back into the council pot.”
But this isn’t a developer sitting around waiting for handouts.
Sure of what it expects and wants from its supply chain, in a healthy financial state and sitting on a pipeline of schemes that will transform London, for firms winning work with GPE, the future looks bright.
Major BIM investment paying off for FM
When GPE starts a job it has two customers, Mr Pellatt explains: the building occupiers and its own shareholders - and they need to keep both happy.
How does the developer do that? “By investing heavily in design and operation,” he says.
A staunch advocate of the use of building information modelling on GPE schemes, Mr Pellatt says one of the reasons the developer invests so heavily in it is to help communication with facilities management.
In fact, this is “probably the number one reason why”, he adds. Working with Bam Construct at St Lawrence House, Mr Pellatt says the team have “almost cracked” using BIM for FM.
For Mr Pellatt, “there is no point” in moving into a building that looks good but is not comfortable.
“It’s a failing of the industry that we come to a dead stop and we rarely think beyond a certain point in a project; as a consequence, the lack of understanding of what happens in the FM world is quite staggering.”
Mr Pellatt also praises the government-backed BIM Task Group, which was set up to lead the UK’s implementation of the Government Construction Strategy recommendation that Level 2 BIM be mandated on public sector contracts by 2016.
But Mr Pellatt sees dark clouds ahead with the possibility of the BIM Task Group being disbanded in 2016.
“I think the task group needs another five years; whether you get to Level 3 maturity is another issue.
“On the back of that work that is carried out, understanding exactly what goes into a building… it goes back to that key point of [helping] our occupiers manage a building.”