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Mergers & Acquisitions in Transport, Infrastructure & Construction – The 2021 Roundup

January can sometimes be a bit of a duller month after the hype of Christmas and New Year, but it can also be a great opportunity to review your businesses plans for the year ahead.

If you are considering making any changes to your teams, we offer a range of executive search packages and talent mapping options that can be tailored around your requirements.

January is also a good time take a look back at what has happened in the market over the last 12 months, so it’s perfect timing for our annual Mergers & Acquisitions update.

Take a look at the biggest mergers and buyouts in transport, infrastructure and the built environment from 2021…

Turner & Townsend

In July, CBRE Group acquired a 60% stake in UK consultant Turner & Townsend in a deal worth approximately £960m.

nmcn

After nmcn entered administration in October, different parts of the business was acquired by various companies. The Water business was sold to Galliford Try and its Telecoms, Plant, Transport & Accommodation Business Units to private investment firm SVELLA.

Keltbray acquired nmcn’s portfolio of highways infrastructure contracts and associated assets.

Ferrovial

Has sold off its Infrastructure Services division in Spain and Portugal for £156m to Spanish private equity business Portobello Capital. The division covers the infrastructure maintenance and facilities management.

The sale of Amey, Ferrovial Infrastructure Services’ UK arm, is progressing, with several interested bidders in discussions.

M Group

Last month, M Group bought Babcock’s Overhead Line Power business for £50m. Following the acquisition, the business will be rebranded to form part of Morrison Energy Services, sitting alongside the existing electricity, gas and green energy capabilities.

In May 2021 they completed the acquisition of Skanska UK’s £320m revenue infrastructure services operation, which focuses on highways maintenance and street lighting contracts.

They also rounded off the year by acquiring £20m-turnover electrical control and instrumentation specialist Z-Tech Control Systems.

Bouygues

Have bought the Equans services arm of fellow French-owned energy giant Engie for €7.1bn. Equans’ activities cover a host of areas from technical services, facilities management, construction and regeneration and renewables, employing 13,500 staff.

WSP

In April WSP announced the acquisition of Golder, a global consulting firm with over 60 years of experience in providing earth sciences and environmental consulting services. The addition of Golder increases WSP’s workforce by approximately 7,000 people.

United Living

Bought telecoms infrastructure business Great British Communications in a move to broaden its offer.

M&J Evans

Walsall based ground works and civil engineering contractor M&J Evans has acquired Swindon based rival Flynn Group. Flynn has grown to become one of the leading ground engineering companies in the South West region with a workforce of over 530 staff and a turnover of £50m.

Sureserve

Specialist compliance contractor Sureserve has bought Manchester-based sustainable energy consultant CorEnergy for £7.5m.

RSK

RSK added several more businesses to the group last year. The latest deals saw the acquisition of MWH Treatment, Centara, CR Civil Engineering Ltd, the Enviresearch group and E.D.P. Health, Safety and Environment Consultants Ltd (EDP).

National Grid

The power infrastructure asset owner has bought Western Power Distribution, which operates across the southwest and Midlands, from US energy giant PPL Corporation for £7.8bn.

In a separate transaction, National Grid will also sell its US Rhode Island utility business – The Narragansett Electric Company – to PPL for £2.7bn.

National Express

National Express and Stagecoach have agreed a deal that will forge a £1.9bn transport operating group. The proposed merger is expected to be completed in late 2022, bringing Stagecoach’s UK local bus operations together with National Express’s intercity coach network.

Stantec

Stantec announced in December that it has completed the acquisition of the North America and Asia Pacific engineering and consulting group Cardno Limited.

AECOM

Announced in November the agreement to sell their Oil & Gas maintenance and turnaround services business to affiliates of Graham Construction. The deal is anticipated to close in the second quarter of 2022.

Kier

Completed the sale of it’s Kier Living business to private equity investor Terra Firma in June. the newly acquired company to be rebranded as Tilia Homes.

Severfield

Have acquired fabricator DAM Structures Limited in a deal worth up to £27m. Severfield will initially pay £12m cash for the business with a further £7m payable in 2022 and a performance-based consideration of up to £8m over five-years.

Landsec

It was announced in November that Landsec is set to buy regeneration specialist U+I in a deal worth £190m.

Geoffrey Osborne

Have sold their Osborne Infrastructure business to private equity firm Sullivan Street for an undisclosed sum. The infrastructure business, which was established as a separate entity from its parent company in 2017, turned over £130.8m in the 12 months to 31 March 2020.

Alstom

Alstom announced that it has agreed to divest its Coradia Polyvalent platform, its Reichshoffen production site in France and its TALENT3 platform, currently developed in Hennigsdorf, Germany to the Spanish company CAF. This was one of the conditions from the European Commission of the clearance for the Alstom/Bombardier transaction.

Alstom now expects to close the transaction with Bombardier between April and September of 2022.

Egis

In February, Egis completed its acquisition of a majority shareholding in CPMS TOPCO and its operational arm, Collaborative Project Management Services Limited (CPMS).

SSE Contracting

The M&E contracting business of SSE Enterprise has been acquired by AURELIUS, which aims to grow the business off the back of increased public spending.

Tetra Tech

Have acquired leading UK M&E consultancy Hoare Lea. The purchase follows Tetra Tech’s acquisition of WYG two years ago.

KBR

In October, Babcock International Group completed the sale of its Frazer-Nash consultancy to KBR for £293m.

SWARCO

In a transaction closed in September, SWARCO AG acquired 100% of the shares in Dynniq Mobility.

Rhomberg Sersa Rail

Have acquired Balfour Beatty’s Track Solutions business in the US and rebranded it as Rhomberg Sersa North America.

Assystem

International transport, energy health and defence engineering group Assystem has acquired Schofield Lothian Ltd, a London-based company which has 80 consultants specialising in project management, commercial management, rail project consents & engagement, and environmental services.

And if you are looking to make any changes to your teams this year, please do get in touch to see how we could help you.

Author: Jim Newsom

Jim Newsom

Managing Director

Movers and Shakers in Transport & Infrastructure – The Headlines from December 2021

The end of the year is here and what an eventful year it has been, with the ongoing pandemic, losing out on the Euros and the introduction of the William-Shapps Plan for Rail.

In our final round up of the year, let’s take a look at the major movers and shakers in transport and infrastructure for December…

Transport Scotland

Chris Gibb has been appointed as Chief Executive Officer of Scottish Rail Holdings; he will also chair the board of ScotRail Trains.

ScotRail

A new Chief Operating Officer has been appointed, Joanne Maguire will start the role in April, she is currently Vice Principal – Resources at the University of the West of Scotland.

M Group Services

Neil Edwards steps down from his role as Managing Director of the Transport division, he will remain with the group on a part-time basis supporting various projects.

 Keltbray

Paul Wiltcher has been appointed as Operations Director for Keltbray’s Piling division, he leaves his role at Skanska where he was previously Operations Director.

NG Bailey

Ex-Balfour JV’s HS2 Commercial Director Martin Pitt has joined NG Bailey as its new Group Commercial Director.

Rail Freight Group

Martin Bignell has been appointed as the new Scottish and Northern Representative.

AECOM

Ambrose McGuire has been appointed as AECOM’s new Programme Management Leader for Europe and India; he leaves his role at Jacobs where he was most recently seconded to HS2 leading the integrated project team for Contract C2/3 of the central section of Phase 1 of the major rail programme.

RSSB

Ex-Network Rail Finance Director for the Anglia Route Hannah Kingsley joins RSSB as their new Chief Financial Officer.

Osborne

Andrea Green leaves Costain and joins Osborne as their new Business Development Director.

Former Wates Chief Operating Officer Dave Smith will be returning to frontline leadership as Chief Executive with immediate effect following Andy Steele’s departure.

Taylor Wimpey

Chief Executive Pete Redfern has announced that he will be leaving the housebuilder after 14 years. He will remain the role until his successor has been appointed.

Keolis Amey Docklands

Richard Graham was recently appointed as the new Managing Director, he was previously the Performance and Development Director of Keolis UK.

Galliford Try

Richard Towse takes on the role of Commercial Director for Galliford Try’s Highways division, he leaves his role as Commercial Director at Volker Stevin.

WSP

Phil Wells is the new WSP Stations Group Director, this is WSP’s third senior hire in six months for WSP UK Rail. He joins from AECOM.

Tony Sheach will be joining WSP as a Senior Director in the Planning & Advisory business with a national role as Growth Lead across the development sector. He joins from Mott MacDonald.

TXM Consult

Michael Grace has joined TXM Consult as Strategic Development Director, leaving his role as Regional Director, Rail & Transit UK at SNC-Lavalin Rail & Transit.

House of Commons

Louise Haigh MP has been appointed as the new Shadow Transport Secretary.

Wendy Morton has been appointed as the new Transport Minister.

Dual Inventive

Mark Prescott joins the rail solutions provider as their new International Business Development Director.

Build UK

Andy Steele will be stepping down from his role as Chairman.

Mott MacDonald

A new General Manager for Scotland and Ireland has been appointed, Norrie Westbrook joins as Divisional General manager for Buildings and Cities in Northern Ireland, Ireland, and Scotland.

NEOM

Rob Ewen has joined NEOM as Executive Director, leaving his role at HammiGlobal Group as Director Global Development.

SCAPE Scotland

Gary Meechan joins he public sector procurement specialist as Framework Manager, leaving Currie & Brown after 8 years.

Are you looking to make some senior hires for the year ahead? If so please get in touch to discuss how we can help you with you hiring needs.

Author: Jim Newsom

Jim Newsom

Managing Director

What’s in Store for 2022?

With the Omicron variant in full flight across the UK, it is difficult to go into the Christmas party season without some trepidation for next year but fingers crossed the booster jab campaign and other measures will allow the country to quickly resume its journey out of the pandemic’s grip in 2022. Here are our predictions for five major people trends in the infrastructure sector next year.

1. Salaries will rise

Office for National Statistics figures this week showed that Consumer Prices Index inflation was at its highest rate for a decade as shortages persist of many items and employment levels grow. As the UK – we hope – continues to accelerate out of the pandemic next year, we expect to see this supply-and-demand equation put further pressure on prices. This, in turn, will lead to employees demanding pay rises, especially in what they see as a booming job market and with pent-up dissatisfaction at roles some have felt trapped in for the last two years sparking what has already been dubbed The Great Resignation. Expect to pay more to attract or retain staff at all levels in 2022, particularly good leaders.

2. Relocations abroad will resume

In those hazy days when Corona was a drink and social distancing meant staying away from those who had enjoyed a few too many, a growing number of senior British infrastructure professionals were being tempted to sunnier climates to drive other countries’ ambitious infrastructure plans. That grounded pretty much to a halt in March 2020 as travel restrictions, huge uncertainty and a desire to stay near family put the knockers on emigration plans. But we’ve noticed a tentative re-opening of these doors as countries such as Australia, Canada and parts of the Middle East look to bring in British expertise to help deliver huge pipelines of work. Expect some long-haul flights in 2022.

3. Collaboration skills will become critical

When Network Rail unveiled plans to put almost £10bn worth of potential work to market on Bonfire Night this year, in the form of its Southern Integrated Delivery framework, it fired a long-awaited rocket into the procurement space. The rail infrastructure operator said it was looking to achieve “a step change in the way renewals are delivered” by creating a “fully integrated team” based on the industry-led Project 13 model, which seeks to boost collaboration and productivity. After all the talk, 2022 looks like the year when consultants and contractors realise the urgency of hiring leaders who have proved they can genuinely work with rather than against clients.

4. All sums will add up to net zero

Clearly the decarbonisation agenda is not going anywhere fast. As well as Cop26 and its pledges to move away from the burning of fossil fuels for energy and road transport, there are client-led moves such as Network Rail’s target that 75% of the emissions suppliers create on the railway are within science-based targets by 2025. Pressure will only grow when a re-written PAS2080 – the standard for whole-life management of carbon in infrastructure – emerges in the near future. Demonstration that a project helps towards zero carbon goals will be a prerequisite of future funding and planning decisions, making individuals who can do the calculations and explanations highly prized assets next year.

5. It will be smart to work smart

With so much to achieve in building and upgrading infrastructure assets for a post-pandemic world while meeting decarbonisation, productivity and collaboration goals, there will be a huge focus on achieving more for less. This means contractors and consultants finding ways to get projects designed, approved and built as quickly and efficiently as possible. Those with the skills to get schemes through key hurdles at pace without burning budgets or bridges will pay for themselves and bring their organisations success. It is going to be a tough year but the rewards are there for the canny.

How did we do last year?

Glancing back through time, we made 10 predictions this time last year for what we expected to see in 2021. Without going through those in painstaking detail, let’s say we were probably on the right lines with most of them, even if some are taking longer to materialise than expected.

We said there would be a return to office and hybrid working, which wasn’t far wrong, at least until the latest guidance putting the brakes on that in light of Omicron. Our forecasted focus on electric vehicle charging infrastructure was given fresh impetus by the COP26 pledge to end the sale of cars driven by fossil fuels – and indeed there are already five times as many charge points in the UK as there were five years ago. We also foresaw a shake-up of the train operating jobs market, and ministers in 2021 announced the creation of Great British Railways to own and run the network, something we expect to lead to lots of people movement.

Meanwhile, it gives us no pleasure to record that we predicted the downfall of a major contractor this year, as was seen with unfortunately nmcn collapsing into administration in the autumn. We hope 2022 will see contractor’s P&Ls recover across the board.

Of course, we’re still waiting for approval of the Sizewell C new nuclear project, which we thought would happen in 2021.

What are your predictions for 2022?

Author: Jim Newsom

Jim Newsom

Managing Director

What does the IRP mean for you?

Speculation and uncertainty had been growing for some time about the fate of various proposed rail projects in the north of England and we finally got some clarity from ministers when they published the Integrated Rail Plan (IRP).

Of course, headlines were made by the curtailing of High Speed 2’s (HS2) Eastern Leg, which will now only go as far as East Midlands Parkway rather than continuing to Leeds as initially planned.

There was, however, also confirmation that the western leg of the rapid rail mega-scheme would go ahead, linking London all the way to Manchester on a dedicated new high-speed line.

Ministers also promised another high-speed line between Warrington in Lancashire and Marsden in Yorkshire, via Manchester. This 64km stretch will form part of the Northern Powerhouse Rail (NPR) project linking Liverpool and York, with the rest of the scheme made up of upgraded and electrified sections of existing line.

There will also be electrification of the Midland Main Line from London to Nottingham, Derby and Sheffield while £200 million has been set aside to kickstart construction of a mass transit system for West Yorkshire.

Transport secretary Grant Shapps described the overall package of projects as “ambitious, deliverable and backed by the largest single government investment ever made in our rail network”. However, at £96 billion, that investment is a huge reduction from the £185 billion the government says the full HS2 and NPR schemes would have cost.

So, unpicking all this, what does the IRP mean for different parts of the industry?

Contractors

The obvious impact on contractors is that there is a smaller overall investment under the latest plans than there could have been if all northern rail projects had been funded – but there was an inevitability about this; costs had spiralled and budgets were tightened in the wake of Covid-19. Something had to give and now at least construction companies know what that is: largely the chunk of HS2 phase 2b that would have linked the East Midlands and Leeds. Start on site was some way off for this work so its cancellation doesn’t hit any contractor directly although a few long-term strategies may be rewritten.

It would appear a good time to forge connections in the North-West and bolster your capabilities on mass transit systems if you operate in Yorkshire. Meanwhile the IRP’s wholehearted, if pragmatic, backing of rail electrification after years of dithering could pave the way for a raft of such projects in coming years.

Consultants

With its spending power dimmed by the largesse of the pandemic response, the government has had to cut back its infrastructure ambitions – but it remains desperate to deliver as much in the regions as it can to boost its much-heralded Levelling Up agenda. Management consultancies who can offer smarter ways of working – essentially advising on processes that will allow more to be done with less – will surely get a good audience in Whitehall. Similarly engineering consultancies capable of smoothing projects through tricky design iterations, managing stakeholder communication and overcoming planning hurdles could find themselves in high demand. Again it has to be noted that there is less overall spending than once imagined but advisory fees that can make their own business case should not be in danger.

Suppliers

After all the uncertainty of recent years, the IRP appears, on face value at least, to finally give the supply chain a clear plan to work to. Indeed the plan itself boasts of offering an investment “commitment” to 2050 that should “give confidence for the UK supply chain to invest in skills and capability”. It is in part designed to smooth out the workflow peaks and troughs that infrastructure companies have for so long been urging an end to. Clearly the IRP makes a good case for prioritising presence in the North-West over new contacts East of the pennines, and electrification skills over new-build capabilities, when making business decisions over the next few years.

With the New Year just round the corner, lots of clients are starting to look at their executive recruitment plans for their 2022 pipeline. Get in touch to see how we can help you find the best talent for your upcoming projects.

Author: Jim Newsom

Jim Newsom

Managing Director

UK Major Projects Pipeline Update

In the year since our last major projects update, the UK infrastructure pipeline has shown real resilience and adaptability in the face of the ongoing pandemic.

The organisations and people involved in major projects across the country have rallied in order to keep these programmes on track and safe for everyone involved.

A lot has changed since our last report. Let’s take a look at where the UK’s biggest projects are now…

Rail

HS2

As per the government’s Integrated Rail Plan (IRP), published earlier this week, it has been confirmed that the proposed HS2 line to Leeds will not go ahead.

HS2 East will run direct from central Nottingham to Birmingham in 26 minutes, and from central Nottingham to London in 57 minutes. HS2 will also run from London to Sheffield in 1 hour 27 minutes

HS2 West will run from London to Manchester in 1 hour 11 minutes and from Birmingham to Manchester in 41 to 51 minutes.

Aside from the IRP, the first two of ten TBM’s that will work on HS2 began their 10-mile journey through the Chilterns back in May. They have now completed just over 1.5 miles between them and are ahead of schedule.

HS2 Ltd has started to release tenders for Phase One and 2a rail systems packages. This will continue over the next 2 years with the shortlisted bidders.

The Euston Station design has officially been scaled back to a, “less complex, more efficient 10-platform design, which can be built in a single-stage, and can still support the full operation of the HS2 network,”

Phase 2a is taking the next steps for the £500million development partner contract, which will see the successful bidder partner with HS2 Ltd to lead the design and delivery of the 36-mile Phase 2a route.

The shortlisted bidders are:

  • 2 Connect JV – AECOM Limited / Costain Integrated Services Limited
  • AMS JV – Atkins Limited / Mace Consult Limited / SYSTRA Limited
  • Jacobs U.K. Limited.

Northern Powerhouse

The much-anticipated IRP was finally published this week, which at last, provides some clarity on the future of NPR and how it will link up with HS2.

The government have selected the first of the options put forward by Transport for the North (TfN) in 2019, a mixture of newbuild high-speed and upgraded conventional line. Northern Powerhouse Rail (NPR) will connect Leeds and Manchester in 33 minutes, down from 55 minutes now.

Crossrail 1

Whitechapel became the seventh of nine stations to be handed over to TfL earlier this year, and a schedule to wind-up Tier 1 contractor involvement at the seven most advanced stations is already in place.

Main work contractors will remain on site at Canary Wharf beyond the end of the year, with work to complete the troubled Bond Street station already taken in-house.

Trial running has been taking place since May. The next phase for Crossrail will be Trial Operations, which involves testing more than 150 real-time scenarios to ensure the readiness of the railway for the general public.

Mark Wild has confirmed that this is on target to start this month, with the line being fully operational in the first half of 2022.

East West Rail

The East West Railway Company (EWR Co) brought in Arcadis as commercial partner, responsible for commercial management and cost planning, as well as procuring and administering contracts.

Arcadis will work closely with Jacobs after they were appointed as programme partner earlier this summer.

However, the organisation was left disappointed by the governments lack of clarity in the budget on whether the full route will be funded. The project aims to have services operating between Oxford and Milton Keynes by 2025, the subsequent stage would see trains run from Oxford to Bedford. The final stage would see services operate to Cambridge.

Network Rail CP7

Procurement for CP7 has just started, with delivery of civils and building work in Network Rail’s Kent, Sussex and Wessex routes moving to a longer-term partnership approach. Their Southern Integrated Delivery (SID) is based on Project 13 principles – an ICE-led initiative that aims to improve productivity in delivery and provide better value for money through an enterprise model.

Network Rail has valued the civils and building lot at £4.3bn.

Also out for procurement under the same model is a £1bn electrification and plant SID contract for the London and South East region, which will also cover CP7 and CP8.

Water

AMP 7

Thames Water has confirmed the final contractors for its AMP7 programme to deliver the clean and wastewater projects:

  • Lot 3 – Non-Infrastructure – Galliford Try and MWH Treatment (London).
  • Lot 4 – Non-Infrastructure – Interserve and Mott Macdonald Bentley (Thames Valley).
  • Lot 5 – Infrastructure – J Murphy and Barhale Ltd (London – North).
  • Lot 6 – Infrastructure – Morrison Utility Service and Galliford Try (London – South).
  • Lot 7 – Infrastructure – Morrison Utility Service and Mott Macdonald Bentley (Thames Valley).

United Utilities are continuing with the Haweswater Aqueduct Resilience Programme (HARP) with construction expected to begin in 2023. The PQQ for contractors will be out in Q1 of next year.

Ofwat has set aside £500million to allow water companies to explore a series of schemes to help maintain supplies in future decades. One of these schemes includes the Thames Water Abingdon reservoir which will be going to public consultation.

Thames Tideway

Tideway have now built around 20km of the 25km super sewer and are around 65% complete.

In May, Construction reached a major milestone following the excavation of a 60m deep shaft at the King Edward Memorial Park site in Wapping. The shaft is the deepest and the last of 21 shafts to be excavated.

Construction is on track to be completed by 2025.

Highways

Lower Thames Crossing

National Highways had planned to submit a new application later this year to restart the consent process, after it pulled its original plans late last year. However, it has now said that an application will not go in until 2022.

At the request of Thurrock Council, the new plans will take in to consideration the future growth of the Port of Tilbury.

Despite setbacks, National Highways have continued with procurement. The following construction and engineering companies have been shortlisted for the main works contracts:

Kent Roads (Lot 1):

  • BFV JV; comprising of BAM Nuttall Limited, Ferrovial Construction (UK) Ltd and VINCI Construction Grands Projets.
  • Costain Limited.
  • Kier Eiffage (KEJV); comprising of Kier Highways Limited and Eiffage Génie Civil.Skanska Construction UK Limited.

Roads North of the Thames (Lot 2):

  • Balfour Beatty Civil Engineering Ltd.
  • Kier Eiffage (KEJV); comprising of Kier Highways Limited and Eiffage Génie Civil.

Tunnels and approaches:

  • BFV JV; comprising BAM Nuttall Ltd, Ferrovial Construction (UK) Ltd and VINCI Construction Grands Projets, supported by Atkins Ltd, Tecnica y Proyectos SA (TYPSA) and Stantec UK Limited.
  • Bouygues Murphy Joint Venture (BMJV); comprising Bouygues Travaux Publics S.A.S. and J Murphy & Sons Ltd, supported by Mott McDonald Ltd and Ove Arup and Partners Ltd.
  • Dragados-Hochtief Joint Venture (DH JV); comprising Dragados S.A. and HOCHTIEF Infrastructure Gmbh.

Smart Motorways

There has been lots of controversy surrounding Smart Motorways and the future of the scheme is unclear. The Commons’ Transport Select Committee recently said there was not enough safety and economic data to justify continuing with the plans, DfT responded that this would be taken under consideration.

A303

Like several of the major transport schemes, the future of the £1.7bn tunnel by Stonehenge was left uncertain following the recent budget announcement.

The lack of mention of the Stonehenge Tunnel or wider A303 upgrade has led to speculation that the scheme has been pushed back.

Transport Secretary Grant Shapps is understood to still be considering his options in relation to the Stonehenge scheme, after a High Court judge deemed the original development consent order to be unlawful.

However, work started on site for the dualling of the Sparkford to Ilchester section of the A303 in September this year and the A358 Taunton to Southfields (part of the same corridor) went to public consultation on the preferred route this month and it’s funded to go to DCO decision.

Energy

Hinkley Point C

Five years after getting the go-ahead, the number of people across Britain working on the Hinkley Point C power station has reached 22,000.

Despite setbacks caused by the pandemic, Hinkley has reached several milestones:

  • The next prefabricated 17m high section of the first reactor building is complete and ready to be lifted into place.
  • Work to build the 16m high floor for the first turbine and generator is under way, ready for the world’s most powerful “Arabelle” turbine which arrives later this year. Each turbine can produce more than 3% of the nation’s electricity, enough for more than 3m homes.
  • The country’s first “T-pylons” have been installed for the station’s 35-mile grid connection.

Other Nuclear

  • Following the publication of the government’s Net Zero Strategy, the future of the UK’s nuclear power production has become somewhat clearer.
  • The government reiterated its commitment to investing in one more large scale nuclear power plant and The Net Zero Strategy implies that the Sizewell C development is currently favoured by the government.
  • The strategy adds that the Wylfa site is being considered alongside other sites for the development of small modular reactor (SMR) technologies.
  • The Regulated Asset Base (RAB) model will be used to fund new nuclear projects.

Offshore Wind

Offshore Wind Leasing Round 4 continues to progress and, the six proposed offshore wind projects are currently undergoing environmental assessments.

  • RWE Renewables – two sites at Dogger Bank each with the potential to produce 1500 MW.
  • Green Investment Group / Total – a site off the Lincolnshire Coast supporting 1500 MW.
  • Consortium of EnBW and BP – two sites in Northern Wales & Irish Sea both with the potential to produce 1500 MW.
  • Offshore Wind Limited, a Joint Venture between Cobra Instalaciones y Servicios, S.A. and Flotation Energy plc – Small site off Lincolnshire Coast which could host 480 MW of offshore wind.

Coire Glas

SSE Renewables has announced shortlists of contractors for both the civil engineering works and mechanical and electrical works for the proposed 1.5GW pumped hydro storage scheme at Coire Glas in Scotland’s Great Glen.

The civil engineering and mechanical and electrical works for the project will comprise detailed design and site investigation over the next 2 years, ahead of any final decision by SSE Renewables to proceed with the scheme.

Those shortlisted for civil engineering works are:

  • Bechtel Ltd., Acciona Construcción S.A. and Webuild S.p.A consortium.
  • Eiffage Génie Civil, BeMo Tunnelling UK Ltd., BAM Nuttall Ltd., and Marti Tunnel AG consortium.
  • STRABAG UK Ltd.
  • Dragados S.A.

The companies shortlisted for mechanical and electrical works are:

  • Voith Hydro GmbH & Co KG.
  • ANDRITZ HYDRO GmbH.
  • GE Hydro France.

Aviation

Unsurprisingly, thanks to COVID-19, all major aviation projects in UK are still on hold. But, with leisure travel numbers significantly up, it won’t be long before owners start spending again. We expect to see some airport capital programmes moving again mid next year.

You can find out more about how we could help you recruit senior leaders for your major projects teams by getting in touch with me to discuss your needs and plans. Give me a ring on 0203 026 3871.

Author: Jim Newsom

Jim Newsom

Managing Director

The Passenger Services Contract – What Impact Can We Expect for the Private Rail Sector?

DfT officials have given the first glimpse into the commercial arrangements that will replace the current franchise deals to operate train services across the UK.

At a market engagement day in early November, Ministers and senior Civil Servants told the market about the new Passenger Service Contract. These contracts will be let by the new Great British Railways (GBR) in the future, with DfT starting the process in the interim.

Earlier this year I wrote about the way I expected this shift – described as “the biggest change to the railways in 25 years” – would play out for the industry.

Now we have more insight into the way the government wants things to work. To summarise, it seems the new arrangements will remove the strategic responsibility, and most of the risk and reward, from the operating companies and transfer it to GBR.

Critically, there will be a fixed profit margin to the operating companies, which may be as little as 0.5% for their troubles. The risk for trade union negotiations will remain with the operators.

Quite how many owning groups will be interested in operating contracts on wafer thin margins, with no commercial levers to increase revenue and still be at the mercy of union strike action will be interesting to see.

The early feedback from senior figures at existing operating companies was not hugely positive. While it is early days, there does not appear to be a big enough carrot tempting firms to bid the opportunities when they arise. Certainly not if they are in the form outlined earlier this month.

One Director asked why the government wants the private sector involved at all if all the decisions are to be made by the state body. With Wales & Borders, South Eastern and Northern a significant market share is already in public sector ownership.

Of course, there is a need for a change in model as has been identified in the numerous government reviews. The extended upward curve of passenger use of the railways had begun to straighten out well before the Covid-19 pandemic saw numbers plummet and necessitated billion-pound bailouts to keep services running.

There could be a major shake-up across the sector as business leaders and staff at all levels weigh up whether they want to be involved.

So what does this change to PSCs mean for industry talent?

1. Exodus of operating company staff

Under the new plans, responsibility for setting timetables, fixing fares and drawing up strategic plans to boost passenger use will almost certainly move from the franchises to Great British Railways. Those currently doing these roles in TOCs face an uncertain future. Some will find their way to the new public sector client, but Great British Railways won’t have capacity for all. Others will need to look for opportunities in different industries and perhaps even different countries.

2. Consolidation of the operating companies

There are currently 9 private sector owning groups operating franchises on the UK railways. By 2024 this could be much lower as business leaders of the TOC parent company groups consider whether the UK rail market is still a viable market. Most groups working in this field also have fingers in other pies, which may have better returns on offer for shareholders. Some will look to the international market. The margins talked about will not support large group overheads. We may see consolidation in the future with a handful of owning groups making a fist of running super-lean UK operations under the new passenger service contracts.

3. Interest from abroad

Representatives of companies from Spain, Japan and several other nations attended the engagement day earlier this month. There could be some very different entities out there that are set up to deliver under this system. Whether they move into the UK market, or stay where they are, they could very well offer opportunities for adventurous UK staff displaced in the forthcoming shake-up.

4. Changing market for rolling stock

Train manufacturers and leasing companies have built their businesses on the premise that shiny new trains encourage people on to the railways and boosts revenue. That model will have to go under the new regime. However, there will still be an imperative for new trains; decarbonisation. There is likely to be an ‘arms race’ to decarbonise rolling stock fleets. We have just seen an order for the UK’s first ever hydrogen train fleet which will be built by Alstom in Britain and financed by Eversholt Rail. Rolling stock businesses need to prepare for a major shift in their product offering.

5. Opportunities for consultants

While the operating companies will no longer be focused on commercial innovations, they will still need help staying efficient and managing resources. The big opportunity will come from advising the Great British Railway as it finds its feet and takes charge of the commercial offer to passengers.

All in all then much change ahead, and despite a clear direction of travel, a lot of uncertainty. If your company is preparing to make internal organisational changes following recent news, please get in touch to discuss how we can help you.

Author: Jim Newsom

Jim Newsom

Managing Director

Movers and Shakers in Transport & Infrastructure – The Headlines from October 2021

We’re approaching an exciting time of year with Halloween, bonfire night and of course the joys of Christmas shopping during a global chip shortage. The next few months are certainly going to be filled with festivities, but it’s also an eventful time of year for shake-ups within the sector.

Let’s look at this month’s movers and shakers…

Lendlease

Lendlease Europe will appoint a new CFO after Tom Mackellar has moved to a role at Lendlease’s headquarters in Australia next month. Executive General Manager for Finance John Clark will replace him in the interim.

Amey

James Holmes has been appointed as Rail Sector Director for Amey, he leaves his role at Skanska as Operations Director in their Infrastructure division.

Sisk

Sisk CEO Steve Bowcott has announced he will be stepping down after more than six years in the role. Chief Operating Officer Paul Brown will succeed Steve.

ISG

ISG CEO Paul Cossell is stepping down in January next year but will remain in an Executive role and become Vice Chair. Matt Blowers, ISG’s Chief Operations Officer will take over as CEO.

BAM Nuttall

A new Managing Director of Major Projects has been appointed, Richard Prime has been promoted into the role after Ian Parish was appointed as Interim Managing Director of the civils firm last month.

Southeastern

Steve White has begun his role as Southeastern’s new Managing Director this month ahead of the transfer to DOHL, he moves across from Govia Thameslink Railway where he was Deputy Chief Executive.

Arriva Rail

A new Customer Experience Director has been appointed for Arriva Rail London; Charlotte Whitfield took on the role on an interim basis last month, but her appointment has now been made permanent.

Michael Lonsdale

Group Finance Director Anu Kohli has left the company after 8 years, she has been replaced with a new Group Financial Controller Kam Grewal.

WSP

Matt Bailey has been appointed as Delivery Director in a newly created senior leadership role, he joins the Rail business and will support projects and pursuits across the rail division.

Stuart Dickson has been appointed as Director of Rail Major Projects in another newly created role, he will support the delivery of major rail programmes.

Keltbray

Neil Lindley has joined Keltbray as Programme Director for its HS2 work, he will report to Managing Director of Rail Neil Thompson.

Systra

Ex-Aspin Chief Executive Graeme Castle has joined Systra as its new Operations Director for the UK and Ireland, he will take charge of major rail projects.

Mace

Mace boss Mark Reynolds will take on the role as joint Chair and Chief Executive as Stephen Pycroft leaves his role as Chair at the end of this year.

Vistry

Chief Executive Greg Fitzgerald has told the board he will lead the business beyond 2022 after originally committing to serve as CEO until the end of 2022.

Costain

Matthew Higham has been appointed as the new Chief Digital Officer; he leaves his role as Chief Digital Officer for Microsoft.

Trainline

Martin Sheehan has been appointed as Chief Corporate Affairs Officer; he joins from Portland the leading strategic communications consultancy.

Mike Hyde has also joined s Chief Data Officer, leaving his role at Facebook.

Hull Trains

David Gibson has been appointed as the new Managing Director for Hull Trains.

Tolent

Andy McLeod who has been Chief Executive since 2018 will leave his role at the end of November, former Chief Operating Officer Paul Webster will succeed him.

RSE

Ex-nmcn Director Paul Green has joined RSE this month as Portfolio Director.

Construction Scotland Industry Leadership Group

Ron Fraser has been appointed as the new Chair.

Are you looking to make some changes to your senior leadership team in preparation for 2022? If so, please do book a confidential discussion by clicking HERE.

Author: Jim Newsom

Jim Newsom

Managing Director

Employee Ownership Trusts – Why are so many UK Contractors switching to EOTs?

Buckingham Group recently became the latest construction company to move to an employee ownership model, part of the growing trend of companies using EOTs.

Last month the contractor transferred 100% of its equity into an employee ownership trust (EOT). This followed similar moves from civils firm McGee, Erith Group, Kilnbridge and rail infrastructure specialist CCS Group (Cleshar).

EOTs were introduced a few years ago by the government. With tax incentives to encourage more companies to give their staff a stake in their businesses.

They are often used by founding directors or the leadership of family-owned businesses who wish to exit or retire from their company. They may not feel comfortable selling to the highest bidder or can’t agree a price with an external party. Instead, they pass the business to the next level of management, who agree to pay for it out of the company’s future profits.

While many consultancies are likely to continue to be sold as bolt-on acquisitions to foreign players, contractors are typically going down the employee-ownership route or selling to private equity.

So why are contractors increasingly using EOTs?

1. Securing a sale

Sometimes an owner or controlling partnership can’t come to an agreement with third parties over the value of a business. This could be due to inherent risks or opportunities. Or the business may be perceived externally to rely on the departing founders. Either way, a group of senior Directors well versed in the outfit having been in-situ for years may be better placed to meet the sellers’ expectations.

2. Protecting legacy and vision

If someone has built a business up over several decades, they may baulk at the thought of a large multinational swallowing it up and changing the firm’s identity. Handing control to trusted managers who the founder has hired, trained and mentored over the years gives peace of mind.

3. Looking after staff

Departing owners might worry about the impact on their staff of a trade sale or private equity takeover. That could bring about a less forgiving approach in how to run the business. In some cases, owners may have family members and lifelong friends on their books and a strong desire to look after them. An EOT provides reassurance of continuity while there is also the opportunity to pay annual tax-free bonuses to loyal employees.

4. Smooth handover

The disruption and stress of a corporate sale can have a significant impact. Retaining ownership within the company’s existing staff can reduce this substantially. Ultimately this all benefits the bottom line and everyone involved. The process can also be more transparent to staff.

5. Financial factors

In some cases, a higher price could be secured for a company on the open market but there are many financial reasons to consider an EOT. A correctly structured sale to employees can bypass capital gains and inheritance tax grabs. Of course, there is a risk as the cash is not all paid up front. But Directors can in some cases continue to take salaries and receive extra income from the realisation of their sale fee over a period of years.

6. Staff motivation

Structured correctly, an EOT will benefit all eligible employees. While senior Managers will still have better remuneration packages, staff lower down the chain will now have a stake in the business. This can bond them to their company’s cause and drive better morale and performance. Increasing productivity should benefit the bottom line and drive quicker repayment of the sale fee as well as act as a positive retention tool.

We’ve looked at the widespread benefits of selling to EOTs but there are also risks. The money isn’t paid up front, and no big investor is parachuting in to grow the company overnight. To make sure you get the model right, it is important for business owners to consider the following:

  1. Have confidence in the leadership team taking control. If they make a mess of things, and the company fails, you won’t receive your full payment. While various factors above such as staff motivation and protected legacy will become null and void overnight.
  2. Be sure the business is on a healthy footing. If you know there are problems waiting to surface, there is no point hiding these. You will be affected when things go wrong and there are no profits to pay the bill.
  3. Appoint the right trustees. You need to be sure that these will fulfil their roles ensuring the company is being run in the right way.
  4. Structure the new business correctly. You want all staff to be motivated and feel invested in the success of a company, and no-one to feel passed over for a larger stake.

In summary, EOTs won’t work for all companies but we expect to see many more mid-sized contractors turning to this model in the coming years. If you need to strengthen your company leadership team in preparation for a future sale please do get in touch HERE.

Author: Jim Newsom

Jim Newsom

Managing Director

Mergers & Acquisitions – What Types of Leaders do you Need to Succeed?

The sale of parts of the nmcn business has added to the growing number of companies bolting on new divisions this year.

Keltbray, Galliford Try and Svella all bought business units of nmcn from the administrators Grant Thornton. Leading to the transfer of about 1,600 people into new organisations.

In very different circumstances, Geoffrey Osborne recently sold its Osborne Infrastructure division to private equity firm Sullivan Street. Which pledged to keep growing the business and support its existing management team.

M Group Services bought Skanska’s highways maintenance and street lighting division earlier this year, renaming it Milestone Infrastructure. Whilst German private equity outfit Aurelius acquired a majority stake in SSE Contracting.

This growing trend could be a result of construction companies deciding to focus on their core specialisms post-pandemic, to be more profitable in a smaller area of the market.

If this continues there are likely to be plenty of opportunities for ambitious businesses to pick up new divisions at competitive prices. Bolt-on acquisitions can be a quick and effective way to grow in a changing market. But there are plenty of pitfalls and no guarantee of success.

So, if you are looking to make an acquisition, what are the key people you need to ensure you get the right fit and manage the process correctly?

1. Strategy leader

Before you can make a successful acquisition, you need to find the right business to buy. This requires accurate and detailed strategic thinking. What are you trying to achieve? How will you best do that and what does it take to make it happen?

It is critical to have someone in a senior business development or strategy role who you can rely on to identify the right opportunities.

If you don’t immediately think of someone within your business, it might be time to recruit externally. It is tempting to look for a M&A specialist from the corporate finance world. But you may also want someone with practical experience of your industry.

Many successful acquisitions are led by an individual who has not just bought companies before but has overseen the integration of them as well. They will understand the difference between sales talk and reality, they can ask the pertinent questions at the right time. Are they also brave enough to advise you walk away from a deal if it doesn’t look right? This could be someone from a strategy-focused role or a Managing Director that has been through the M&A process before.

2. Turnaround leader

Bringing a large number of staff and assets into a new business doesn’t always run smoothly. Some things, possibly some people, might need to change. The first 12-18 months can be hard as everyone adapts to this.

You need to be confident that you have the right person to steer the acquired business through these choppy waters. Most likely an Operations Director, or a hands-on Managing Director. This individual needs to be resilient, focused and have change management skills. They may exist within your current structure or even as part of the management team you are bringing in. But they need to be clear on their mission and dedicated to taking the decisions necessary to fulfilling it.

If you need to bring in the skills externally then make sure you look for clear evidence at interview that candidates have overseen business transformations before.

3. People leader

Behind the operational team, you need a sharp HR team led by a Director who can manage the people side of a huge integration and change programme. From bringing in staff through the TUPE process to aligning pay and conditions with existing staff over time.

The incoming staff will need to be fully integrated into their new company and could be resistant to any changes which they perceive will impact them negatively.

Some changes may need to be made immediately and others are best done over time with lots of consultation. Treading this tightrope is not for the faint hearted. The HR leader can have as big a part to play in the success of an acquisition as any other role.

There is huge potential for dispute and aggravation when two businesses are combined. So, having a calm head in charge of the people aspects is vital.

As always, the key to making your business successful is having the right senior leaders in place.

If you’re considering acquiring a division to grow your business, or need professional advice on getting your recruitment strategy in place please do get in contact by clicking HERE.

Author: Jim Newsom

Jim Newsom

Managing Director

Movers and Shakers in Transport & Infrastructure – The Headlines from September 2021

Autumn is always a busy time for recruitment and there have seen some big changes in the transport and infrastructure sectors this month.

Let’s take a look at this month’s movers and shakers…

Department for Business, Energy and Industrial Strategy

Following Anne-Marie Trevelyan’s departure, Lee Rowley MP for North East Derbyshire has been appointed to succeed her as Construction Minister.

BAM Nuttall

Adrian Savory is to leave his role as Managing Director after just over a year in the role, Managing Director of Major Projects Ian Parish has been named as interim Managing Director.

Affinity Water

Pauline Walsh has stepped down from her role as Chief Executive after 3 years in the role. Stuart Ledger the current Chief Financial Officer has stepped into the role in the interim.

Skanska

Terry Muckian has been appointed as Managing Director for Skanska’s Cementation ground engineering business. Terry has been with Skanska for over a decade and was most recently MD for the Utility business.

Weston Homes

Taylor Wimpey’s Managing Director for London operations, Peter Gore has recently joined Weston Homes as their new Group Operations Director.

WSP

Kerry Bangle joins as Transport Planning Director (London and South East), she was previously a Principal Consultant at the Nichols Group.

Bob Tong and Dr Katherine Ibbotson have joined WSP in their planning and advisory business. Bob has joined as Head of Planning and Dr Katherine as Director within the Strategic Advisory team. Bob joins WSP from Lendlease where he was most recently Director of Infrastructure and Katherine joins the Environment Agency where she most recently led the Net Zero Carbon Infrastructure Programme and their internal Carbon and Cost team.

Willmott Dixon

Former Kier Legal Boss Hugh Raven has joined Willmott Dixon’s board as General Counsel in the newly created role where he will have overall responsibility for legal and regulatory affairs.

Atkins

Ian Chapman has moved internally to become Practice Director for the Rail Controls Systems practice within Atkins. He was previously a Client Director in the Strategic Rail market team.

Buckingham Group

Buckingham Group recently transferred 100% of their equity into the Employee Ownership Trust. Following this founders Paul Wheeler (Chairman) and Patricia Wheeler, and long-standing Group Stadia Director and Partner Kevin Underwood all retire from the Board. Partners Mike Kempley (CEO) and Tim Brown (COO) move into the roles of Chairman and Deputy Chairman, declaring an intent to stay involved for 5-years and 2-years respectively.

UK Infrastructure Bank

Ex-HSBC Chief Executive John Flint has been appointed as the first permanent Chief Executive of the UK Infrastructure Bank. He stepped down from his role at HSBC in 2019.

Heathrow

There have been several changes to the HAL executive team. Helen Elsby was recently appointed as Chief Solutions Officer, she was promoted from her role as Director of Procurement and has been with Heathrow since 2009.

Nigel Milton was appointed as Chief of Staff & Carbon in September, prior to this he was Director of Communications.

Chris Annetts was promoted from his role as Strategy, Regulation and Customer Director to Chief Strategy.

Chevron Group

Chris Woodroofe has joined Chevron Group as Group Chief Operating Officer, he left his role as Chief Operating Officer at Gatwick Airport last year.

Laing O’Rourke

Adrian Spragg leaves his role at Accenture to join Laing O’Rourke as their new Group Head of Digital.

Costain

Ex-Rolls-Royce Head of Digital Neil Crockett has been appointed as a Non-Executive Director to Costain’s board and will sit on the Audit, Remuneration and Nomination committees.

Waterman

Andrew Ferguson has been promoted to Managing Director from his role as Executive Director for the infrastructure and environmental consulting business in the UK.

Women in Rail

Christine Fernandes has been appointed as the new Chair and Shona Clive as the new Vice Chair. Christine is Business Development Lead at CAF and Shona is Project Lead of the Rail Cluster project at Scottish Engineering.

TXM Group

Mark Hughes is the new Managing Director of the 2XM Consulting business for Australia, New Zealand and South East Asia for TXM Group.

Greenlink Interconnector

James O’Reilly has been appointed as Chief Executive, he leaves his role as Chief Operating Officer for Phelan Energy Group.

Scape

Rachel Sudlow has joined Scape from Balfour Beatty as their first Research and Development Leader. She will focus on increasing digital innovation across the sector.

Palace of Westminster Restoration and Renewal Sponsor Body

Ex-Cambridgeshire Autonomous Metro Chief Executive and former Crossrail Deputy CEO Chris Sexton has joined the Restoration body as Chief of Staff.

We are expecting a busy few months ahead with many clients looking to recruit in the autumn. Looking to make a shake-up to your senior leadership team? If so, please do book a confidential discussion by clicking HERE.

Author: Jim Newsom

Jim Newsom

Managing Director

UK New Nuclear Build – is it the only answer to the UK Energy conundrum?

Energy has been in the news even more than usual recently. With the spotlight on what the key sources will be for powering our homes and businesses in the future.

UEA professor in energy and climate change Charlie Wilson told the BBC last weekend that the need for big nuclear plants have been superseded by technology.

He argued that battery technology could be scaled up to allow renewable sources to generate power in favourable conditions and store it until it’s needed.

This would be a radical departure from the energy plan most contractors are working to. Many are working on the £20bn Hinkley Point C nuclear plant in Somerset and looking forward to EDF’s huge follow-up project at Sizewell C in Suffolk.

So, what are the challenges facing new nuclear construction in the UK? And should the supply chain be worried about the pipeline?

 1. Renewables

With the UK’s 2030 net zero commitment and the immediate drive for environmentally-friendly policies, there is pressure to introduce more renewable energy to the grid. But the recent energy crisis has shown the limitations of relying on natural sources.

With wind speeds down across the UK, the proportion of power generated by offshore wind has plummeted. While offshore wind has made great strides in recent years we can’t guarantee the conditions we need for significant reliance on renewables alone.

2. Storage technology

There are some great pilot projects. Such as the battery storage facility built in Oxford by EDF Renewables’ Pivot Power unit. Which wants to create 40 sites across the country to hold a total of 2 gigawatts of electricity. This is a fantastic step forward.

But, Renewables UK says 66,000 gigawatt hours are currently produced per year by wind farms.

If the UK was to move to only using renewable energy sources, it would have to ramp up its production of wind turbines and other schemes. And it would have to build a colossal amount of storage capacity to keep some power back for the still, cloudy days. It looks too big a leap on it’s own.

3. Fossil fuels

If renewables are not the full answer, could the UK fall back on coal and gas for its remaining power needs? Recent events have shown this is not always an easy answer. With a large chunk of our electricity currently coming from imported natural gas, global market conditions have impacted prices and seen some manufacturers pause production at times of extreme cost.

An application by West Cumbria Mining to build a coal mine in the North West, approved by the local planning authority, is going through a costly and bitter public inquiry. This comes after the government realised it might not show the country in its best light as it lobbied for environmental commitments ahead of COP26.

4. Planning

So, if we don’t want to turn back to traditional fossil fuel sources, and we can’t fast forward to having the infrastructure to rely on weather-based generation, that leaves us needing another answer. At the moment nuclear power is probably the best bet we’ve got. With a generation of facilities nearing the end of their life and decommissioning gearing up around the country, we need to find modern new plants to make nuclear power for the future.

The positive here is that communities exist around the UK with the skills and infrastructure to help the process. It is no coincidence that Hinkley Point C and Sizewell C are close to historic reactors.

5. Funding

The real hurdle that remains for big nuclear projects is funding. Their sheer size, complexity and regulations involved, make them very expensive investments.

The question for the UK government, is whether it would like to stump up its own money for a new nuclear plant or accept the money of another government elsewhere in the world. EDF is 85% owned by the French government. While the state-sponsored China General Nuclear Power Group also has a stake in the Hinkley and Sizewell schemes. But according to reports the UK Government plans to force the sale of China’s 20 per cent stake in Sizewell C.

6. Small modular reactors

One possible route for the UK to go down would be development of smaller modular reactors. Boris Johnson backed further research into this technology in his 10 Point Plan for a green industrial revolution.

The benefit of this approach is the ability to scale-up nuclear power capacity in bite-sized chunks. Potentially building several reactors on one site over time without the need for a mammoth up-front investment.

The challenge here is the time it will take to get the technology approved as safe to use.  Any new development in something as potentially dangerous as nuclear reaction has a mountain of testing and paperwork to go through.

Ultimately the government will likely realise its only real choice is to take its own stake in a big one-off nuclear new build. There don’t seem to be viable and palatable alternatives.

The quicker ministers commit to making this happen, the better it will be for the industry. This would benefit the UK economy as a whole and the general population as energy customers.

Looking to recruit senior talent for within the energy sector? Please get in touch HERE.

Author: Jim Newsom

Jim Newsom

Managing Director

National Infrastructure Pipeline – What are the Risks and Which Projects Will Make it onto Site?

Recently the Treasury set out details of £31 billion of infrastructure and construction procurement activity planned for the next year. This formed part of a National Infrastructure Pipeline the government pledged would support an average of 425,000 jobs per year to 2025.

Infrastructure and Projects Authority Chief Executive Nick Smallwood said the pipeline would “allow industry to plan and strategise for the coming years”.

But to what extent can contractors and consultants bank on the work in the pipeline making it onto site?

Only time will tell, but let’s look at the risks that exist…

1. Planning

We don’t have to look far into the Treasury’s pipeline to see where planning risk could impact the figures. c£4 billion of the value is against a tunnels and approaches contract for the Lower Thames Crossing.

The project has yet to receive a development consent order and National Highways (Highways England at the time) withdrew its first DCO application last autumn following correspondence with the Planning Inspectorate. They submitted an updated version this summer, with changes reportedly costing hundreds of millions of pounds.

Meanwhile the A303 upgrade scheme near Stonehenge faces its own battle. This comes after a High Court judge ruled it was unlawfully approved by ministers. Campaigners are emboldened and further challenges could follow.

With the legal challenge to Heathrow Expansion being overturned last month, it’s clear that a project promoter can adhere to all due process and still have a lengthy delay caused by environmental lobbyists.

2. Political

In Australia and the US major projects are often negatively impacted when there is a change in government at local or national level. The UK usually fairs quite well at keeping major projects going in the face of political change. But there are no guarantees. Could ministers cut a road or power scheme due to mounting environmental pressures?

Looking at the 10-year horizon, there is risk to the eastern leg of HS2. Speculation has grown that it may never reach Leeds as currently planned. Is the proposed coal mine in Cumbria under pressure ahead of the UK hosting the COP26 climate change summit? Will the UK government decide to shy away from Chinese involvement in key infrastructure? And could that affect planned nuclear plants at Sizewell C and Bradwell?

3. Human resources

Even if all the projects make it to market, are there the people to successfully deliver them?

Construction’s skills shortage is well publicised. With an ageing workforce and a historic failure to attract school leavers and graduates, certain schemes look more vulnerable to talent shortages than others. If all the major projects come to fruition at a similar time there could be a real battle over senior staff, leading to salary inflation and an impact on programmes.

4. Materials

The Construction Leadership Council warned in June that the materials shortage had a long way left to run. Builders’ merchants have spoken of their challenges getting various key products to sites.

Hopefully the shortages caused by the UK’s exit from the EU, Covid-19 and the Suez Canal blockage start to abate in time for projects in the pipeline to get underway. But tender prices could continue to rise and this leads us to our final risk area.

5. Client budgets

In the wake of the pandemic budgets are tight across the public sector. If the risk factors above lead some projects to rise in price, there could be intense pressure to cut costs elsewhere. Understanding which clients and projects are vulnerable could be invaluable to prioritise management time over the coming years.

Uploading a multi-billion-pound contract on an Excel spreadsheet to a government portal is one thing. But getting it through the hurdles of the real world and on to site is quite another. Leaders will be conducting their own analysis of the schemes listed on the pipeline and speaking to those in the know to work out the best places to direct their organisation’s time and resources.

Wise businesses will seek to spread their bets and avoid dependency on one region, sector or client.

Looking to set up your senior leadership team in time for a major project? If so, please do get in touch to discuss how we can help you with your hiring needs.

Author: Jim Newsom

Jim Newsom

Managing Director