GAMECHANGERS CONSTRUCTION MAGAZINE FOUR / SEVENTEEN

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CONTENTS cover

24

Edward Hardy, Considerate Constructors Scheme Q&A

44

Q&A with Caterpillar Inc. CEO Jim Umpleby about headquarters moving

43

The CN100 2016

GameChangers™ welcomes news and views from its readers. Correspondence should be sent to gamechangers@acq5.com For more information about GameChangers™ visit www.acq5.com/posts/ gamechangers/ GameChangers™ Copyright © 2016 GameChangers™ No part of this magazine may be reproduced, stored in a retrieval system or transmitted in any form without permission.

SAFE HARBOR The interviews in this publication may contain certain forward looking statements with respect to the financial condition, results of operations of the businesses profiled. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. The statements may have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in these announcements should be construed as a profit forecast.

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46

The 50 States of Construction: How NY firms adapt to complex logistics, soaring demand

36

Construction grows in February but inflation still strong

INTERNATIONAL CONSTRUCTION COSTS 2017: COST CERTAINTY IN AN UNCERTAIN WORLD

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UK Offsite Manufacture: The challenges and opportunities for construction markets

52

International Construction Costs Report 2017: COST CERTAINTY IN AN UNCERTAIN WORLD

TEAM David Rogan - President & Editor-In-Chief Jon Van Dyke - Editorial Director James Wiltshire - Publisher EDITORIAL J Robson - Editor-At-Large L. B. Kooler - Deputy Editor P Ramone - Senior Editor J LaRusso - Copy Chief M-C Fisher - Editorial Assistant B Sancheze - Senior Staff Writer ADVERTISING A Bott - Digital Advertising Director J Downey - Advertising Director Z Wolfel - Business Development Director C Thomas - Account Executive H Smith - Account Executive ADMINISTRATION A Kessler - Finance & Admin Director T Dolby - Technology Manager P Hughes - Operations Coordinator T. A. Black - Office Manager

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AECOM PLANS $3.5B NEW HOUSING INFRASTRUCTURE CONSTRUCTION BEATS FORECASTS IN SPENDING RUN JANUARY New residential construction in the US was more robust than expected in January according to the Census Bureau, even as builders continued to face labor and land shortages.

Housing starts fell by 2.6%, but at a higher-than-forecast seasonally adjusted annual rate of 1.246 million. Starts for December were revised up to a rate of 1.279 million.

Building permits increased by 4.6% at a rate of 1.285 million, suggesting that construction may rebound in the months ahead. Economists had forecast that housing starts were flat compared to the prior month, at a seasonally adjusted annual rate of 1.226 million, according to Bloomberg. They had estimated that building permits were little changed as well, up by 0.2% to a seasonally adjusted annual rate of 1.23 million.

Builders continue to struggle with labor shortages and a lack of developed lots, according to the National Association of Homebuilders (NAHB). The NAHB’s February report on builder sentiment showed that optimism settled back to a “normal range” as buyer traffic fell. Housing starts tend to be volatile month-to-month, especially in the multifamily segment.

HOCHTIEF COULD BID FOR U.S. BORDER WALL CONTRACT German builder Hochtief is keen for more work in the United States, including any possible contract to build a wall on the U.S. border with Mexico, Chief Executive Marcelino Fernandez Verdes said.

“No decision is yet known. But we are open for all contracts in the United States,” he told journalists on Tuesday when asked if Hochtief would be interested in building the wall.

The U.S. Customs and Border Protection agency said last week it would accept proposals next month for the design of a wall to be built near the U.S.-Mexican frontier, a first step in picking vendors for President Donald Trump’s proposed border wall. Fernandez Verdes was speaking after Hochtief, which is majority-owned by Spanish construction group ACS, published 2016 financial results.

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• Global engineering and construction company AECOM is getting ready to spend as much as $3.5 billion in an effort to become the largest infrastructure firm in the world, according to Bloomberg.

• AECOM will spend the money on acquisitions and organic growth over the next five years in preparation for an anticipated increase in U.S. infrastructure spending.

Meanwhile, the company sent the Treasury Department a $200-billion list of water and infrastructure projects that it says will have an economic impact of up to $1.3 trillion.

• Despite an industry-wide sense of urgency and enthusiasm around President Donald Trump’s proposed $1 trillion in infrastructure spending, AECOM CEO Michael Burke said he doesn’t expect that work to begin in full until 2018 or 2019.

It will be interesting to see which, if any, of the projects on AECOM’s wish list appear among the 50 high-priority infrastructure projects that the Trump administration reportedly floated to the country’s governors in January.

One government project the company has said it is not interested in, according to CityLab, is the proposed U.S.– Mexico border wall, which has become a leading issue for Trump. He campaigned on it, and one of his first actions in office was to instruct the Department of Homeland Security to expedite its construction. AECOM is not alone.

Global engineering firms CH2M and Bechtel, as well as design firm Leo A Daly, are among other AEC firms that have indicated they will not submit bids, CityLab reported.

Defense contractor Raytheon and Caddell have been listed as potential bidders on the work.

A DHS report estimated that the wall’s construction would cost approximately $22 billion over three years, but that was before the agency’s announcement this week, which provided bidders with additional details on the project. The DHS has specified that the bidders are to submit conceptual designs by March 10 for 30-foot-tall concrete barriers that would retain an aesthetic quality but be difficult to damage and hard to climb. Full bids by a narrowed list of firms are due May 3.

Other large infrastructure projects and developments like the new Rams stadium in Los Angeles and the decommissioning of a nuclear-power plant in San Diego promise to keep the company busy as well, Burke told Bloomberg. AECOM has also expanded its construction business, announcing last month that it rebranded two fast-growing acquisitions, Tishman Construction and Hunt Construction, as AECOM Tishman and AECOM Hunt.

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US CONSTRUCTION SPENDING DROPS 1 PERCENT IN JANUARY Builders cut back on construction spending in January by the largest amount in nine months, with weakness stemming from the biggest reduction in government activity in nearly 15 years.

Construction spending fell 1 percent in January, the Commerce Department reported. It was the first decline since September and the biggest drop since a 2.9 percent dip in April.

Spending on government projects tumbled 5 percent, the largest one-month drop since March 2002.

President Donald Trump wants to sharply increase spending on government infrastructure projects over the next decade. But his proposal is expected to face hurdles winning approval in Congress at a time of rising budget deficits.

For January, spending by the federal government on construction projects was down 7.4 percent, while spending by state and local governments fell 4.8 percent. The overall decline in government spending pushed total activity in the category down to a seasonally adjusted annual rate of $268.7 billion, the lowest level since last March.

Residential construction showed a modest gain, while private nonresidential activity was flat.

The 1 percent fall in total construction spending followed a tiny 0.1 percent rise in December and left total activity at an annual rate of $1.18 trillion, 3.1 percent higher than a year ago.

Economists believe that construction activity should provide support for overall economic growth this year, driven by continued strength in housing construction.

DHS SHARES MORE DETAILS ON BORDER WALL SPECIFICATIONS • The Department of Homeland Security and U.S. Customs and Border Protection have released additional specifications for the proposed border wall between the U.S. and Mexico.

Conceptual designs are due March 20, and from there, project officials are expected to narrow the list of bidding finalists.

• Federal officials have supplemented the original notice posted late last month with details that prescribe 30-foottall sections of concrete with anti-climbing and anti-damage features. The formal request for proposals is expected to be posted.

The contractors, engineers and designers to make the cut will be required to submit a full RFP, including pricing, by May 3. The department will likely issue contracts to multiple companies.

• The agency’s notice, posted online, also indicated that before the wall’s construction would begin, the winning bidder or bidders would build prototypes for evaluation. If and when the wall is built, construction is likely to begin in the West, near El Paso, TX, Tucson, AZ, and El Centro, CA, according to the Austin American-Statesman.

The agency said the 30-foot concrete barriers would not necessarily comprise the entirety of the wall but would be used for the initial phase of construction.

In addition, experts have noted that there are some areas along the border that would not be appropriate for concrete barriers.

According to the American-Statesman, some U.S. Border Patrol agents have argued that they need to be able to see through the wall for safety reasons and would like federal officials to utilize a design that would let them do that.

The barriers that currently run along the border include both fencing and solid wall.

U.S. Customs’ preliminary notice about bidding procedures for the project drew more than 200 interested parties, although upon media investigation, many of those inquiries were determined to be less than serious inquiries from non-construction-related businesses.

Among those having expressed interest are defense contractor Raytheon and global construction firm Caddell, which represent the size and caliber of operation with the capacity to service such a large-scale project.

There are still no details about how the government will pay for the wall, although an early Department of Homeland Security report gauged the cost of the three-year project at $22 billion.

One of President Donald Trump’s first post-inauguration actions was to sign an executive order that directed the DHS to accelerate construction of the wall.

House Republicans have since introduced a spending plan that would allocate $12 billion to $15 billion for its construction.

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CHINASAVVY LANDS PRESTIGIOUS USD 1.3 MILLION ENGINEERING CONTRACT TO SUPPLY COMPONENTS FOR HIGH-TECH STORAGE SYSTEMS Christopher Devereux, the Managing Director of ChinaSavvy announced the company’s receipt of a USD 1.3 million order to supply components for high-tech robotic storage systems

by Hamilton Storage, a global company with headquarters in Massachusetts, United States.

ChinaSavvy is a British owned and managed engineering and manufacturing company based in China. The company, founded in 2003, was established with the primary aim of delivering world-class engineering and manufacturing services to blue-chip companies in USA, UK, Australia and many other countries around the globe, while taking advantage of low Chinese manufacturing costs.

In the bid to achieve world-class engineering in China, Chinasavvy, an ISO 9001-2008 company, recruited highly qualified engineers and tech veterans and coupled them with state-of-the-art technology in the engineering and manufacturing industry. The company has earned a global reputation in the delivery of high quality, world-class engineering and manufacturing services at affordable prices. ChinaSavvy’s customer base is extremely loyal with companies continuing to rely on Chinasavvy for engineering and manufacturing after 10 to 12 years. And Hamilton has already indicated a long-term commitment to Chinasavvy for further components and systems. The initial US$1.3 million order is to supply components for ultra low temperature robotic storage systems in United States of America to major pharmaceutical companies. Hamilton Storage, part of the Hamilton group, has operations world-wide and are leaders in this field.

Christopher Devereux, the Managing Director of ChinaSavvy says, “We are committed to ensuring that we deliver exceptional world-class engineering and manufacturing services to Hamilton Storage, to cement the business partnership and prove to them that they have taken the right business decision. Once again we have shown that ‘China pricing’ can go hand in hand with exceptional quality and on-time deliveries.

For this order we are combining various manufacturing skills including: aluminium extrusion and punching; laser cutting, die-casting; injection moulding; fabrication and assembly”.

Dave Recchia, Head of Purchasing at Hamilton Storage says, “Hamilton Storage conducted an extensive search for a new manufacturing partner last summer. During this search our purchasing team discovered ChinaSavvy. It became evident very quickly during the quoting process that ChinaSavvy was unique among other vendors in Asia. We were very impressed with the turnaround time on quotes, the ease of communication in English, and also the highly competitive pricing.”

John Genereux – Director of R&D at Hamilton Storage added: “As initial work progresses we see ChinaSavvy’s commitment to our project and their deep focus on sound engineering and overall product quality. Hamilton Storage looks forward to a long productive partnership with ChinaSavvy and would recommend them to other companies looking for a highly competent partner in Asia.”

HOUSING SLOWDOWN DRAGS DOWN CONSTRUCTION GROWTH A slowdown in the housing sector saw construction buyers report a slight dip in growth rates last month.

The latest Markit/CIPS UK Construction Purchasing Managers’ Index dropped to 52.2 in March from 52.5 in February.

A softening of the housing market outweighed a rebound in the commercial and civil engineering sectors. Buyers are confident about future prospects with almost half expecting business to increase this year compared to 9% predicting a decline.

Tim Moore, senior economist at IHS Markit and author of the Markit/ CIPS Construction PMI, said: “UK construction firms experienced a growth slowdown in March, with the loss of momentum centred on house-building.

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“A weaker trend for residential work has been reported throughout 2017 so far, which provides an indication that the cooling UK housing market has started to act as a drag on the construction sector.”

“Civil engineering projects were the construction sector’s main growth engine in March, driven by rising infrastructure spending and a strong pipeline of new work throughout the UK. “March data showed a slight rebound in commercial construction activity.”

“Survey respondents noted that the resilient economic backdrop and receding Brexit-related anxieties have helped to stabilise client demand after the disruption to development projects last summer.”

“Despite a relatively subdued rise in new work during March, UK construction firms reported a more sanguine assessment of their year-ahead growth prospects.”

“Business confidence was among the highest seen since the end of 2015, which construction companies linked to upcoming tender opportunities, plans for increased marketing expenditure and hopes of a sustained recovery in clients’ willingness to spend.”

Duncan Brock, director of customer relationships at the Chartered Institute of Procurement & Supply, said: “Where the housing sector acted as the main engine of growth over the last four years, this month it was slower and stuttering, while overall purchasing activity in the construction sector was disappointingly tame, shackled by a lack of new orders and rising costs.

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“This downbeat effect took a small bite out of any strong rises in employment levels, as the increase in staff hiring was at a three-month low.

“But as the sector showed strong optimism for future business, concerns over the skilled labour availability are likely to persist in coming months.

“Pressure on suppliers remained intense, as they battled against lower stocks and made greater efforts to fight the pincer movement of a shortage in some materials and the continued force of higher global commodity prices.”

POCKET APP DEVELOPS NEW SALES SOLUTION APP FOR JEWSON Pocket App, the UK’s largest independent app developer has announced the launch of a new sales tool application designed for Jewson, the UK’s leading supplier of sustainable timber and building materials. Already live and in use, the new mobile app will transform the service provided by Jewson’s sales teams across the UK. For both trade and retail customers, the app has been designed to assist in pricing and comparison for the thousands of Jewson products. , The application encompasses multiple functionality which turns a formerly paper based process into one centralised application.

The application was designed and developed within 48 hours following Pocket App’s successful participation in Jewson’s hackathon. The hackathon saw Jewson invite developers and designers from multiple agencies to come to their offices and produce an app to support the Jewson sales team.

Following the Pocket App designers successful audition, they were invited to pitch the app and ultimately win the contract. Paul Swaddle, Chairman, Pocket App comments, “Like many organisations Jewson was keen to streamline the way in which its sales team operated and was keen for us to produce an application that not only enabled the team to show perspective customers the vast array of Jewson’s product line but provided the Jewson sales team confidence that product and prices were at their fingertips.”

The app’s features include a guided tutorial, categories feature allowing the sales force to prepare advanced listings, as well as product & search tools, pricing break information and a UK store location and information function. The app also boasts offline functionality to enable the sales teams to interact with their customer effectively in more remote locations across the UK. Future features will see the introduction of product comparability, communication HUB and chat messenger service. Russell Jordan, eBusiness Development Manager at Jewson commented, “Replacing the original paper based process to price up jobs with the Pocket App will ensure the service our sales team provides is a lot smoother.

The investment in the app will not only save time but will keep information in one place, making it quicker for the sales team to locate and refer to it when needed. As a business, it is important for Jewson to take the necessary steps to consistently improve the service provided to our customers, and the Pocket App is a tool which will help us to do so.” Paul Swaddle, Chairman, Pocket App, continues “We are delighted to have been involved in developing this project alongside an industry leading organisation like Jewson. As a leading supplier of timber and building materials the app is designed to provide the sales team with a streamlined interface, enabling faster and smoother interaction with customers and colleagues.”

‘WE’RE NOT BLUFFING’: CONSTRUCTION UNION ON COLLISION COURSE OVER BUILDING CODE Builders risk losing government work as CFMEU refuses to renegotiate workplace deals that don’t comply with code Major builders risk-losing millions of dollars of government work after the Construction Forestry Mining Energy Union decided to refuse to renegotiate workplace deals that don’t comply with the federal government’s building code. The high-stakes move sets the construction union on a collision

course with the Turnbull government and reinstated building regulator the Australian Building and Construction Commission.

The building code, attached to the ABCC bill, which passed over union objections in November, bans companies from government work if their industrial agreements breach highly prescriptive rules about their content.

Last week the CFMEU’s construction division said it would reject the code as an attack on workers’ rights and vowed to resist it “by all means available”.

“The code discriminates against workers and promotes job insecurity, poor safety and the exploitation of temporary visa workers,” it said.

Companies have until September to negotiate code-compliant agreements, after senator Derryn Hinch agreed to trim the phase-in period to nine months.

But the CFMEU construction national secretary, Dave Noonan, told Guardian Australia the binding resolution meant the union would not accept demands by employers to cut conditions that put agreements in violation of the code.

“Where there is an agreement in place, and many of those have only just been concluded, it’s quite lawful.”

“Employers are saying we need to pull those apart, and we’re saying we don’t accept that, we’re not going to give those conditions away and give you a code-compliant agreement just because you ask.”

The union objects to the code and ABCC guidance ban clauses that: • Give Australian residents and citizens preference over workers on temporary work visas in employment and retrenchment • Limit casualisation or place restrictions on replacement of permanent employees with labour hire workers • Set minimum ratios for apprentices • Ban an “all-up rate of pay”, which the union believes is an attack on overtime penalty rates because employers can pay a total rate of pay that discharges

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the obligation to pay penalties.

Noonan agreed that the union’s decision could have a wide impact on which builders can negotiate for government work. He noted that builders in Victoria and Queensland had a new generation of agreements in place with up to three years still left to run, and any company with a non-compliant agreement anywhere in the country would not be eligible for government work.

Asked about widespread consequences of the decision, Noonan replied: “That’s a matter for the government – we’re not the ones who have made the call to ban anyone from government work.”

“Are they proposing to ban companies because they don’t like the contents of their industrial agreements? Do they have to casualise their workforces?

“These are important protections. Let’s see the colour of the [government’s] money – we’re not bluffing either.”

Noonan said it was the government’s “highly ideological” approach to industrial relations and not the union’s decision that was the cause of a looming “disaster” of major builders being refused work.

The Master Builders Australia chief executive, Denita Wawn, suggested the CFMEU’s threat was a “stunt” but added it was “consistent with their antics of long-standing”. “[The union’s decision is] totally unhelpful and un-useful for builders trying to do their job. It will hold up infrastructure ... and the union is holding the country to ransom.”

Wawn suggested that builders could be forced to seek non-union agreements or pursue good-faith bargaining cases to force the union to renegotiate agreements. The employment minister, Michaelia Cash, said the code was “the law of the land, as passed by parliament”.

“The CFMEU’s refusal to respect and adhere to the law is disappointing but unsurprising,” she said, despite the fact that it is not unlawful to refuse to comply with the code. Cash did not respond to questions about whether the government has done modelling on the impact of increased costs on government projects if fewer builders are able to tender for work.

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SALLY CAVE BECOMES THE UK’S FIRST FEMALE GAS MEMBRANE INSTALLER AND TRAINER IN A MALE DOMINATED CONSTRUCTION INDUSTRY Following the completion of a NVQ Level II in Gas Membrane Installation, Sally Cave, a 28-year-old Project Manager at Doncaster Membrane Installation Ltd (DMI), has become the first qualified female gas membrane installer and Training Assessor in the UK; and has received high praise from three leading trade organisations in the process.

Sally’s achievement is even more remarkable given the way men dominate the construction industry. According to UCATT, the trade union for the construction industry, women make up only 11 per cent of the construction workforce and just 1 per cent of workers on site. The Office for National Statistics says that the number of women working as roofers, bricklayers and glaziers is so low that it is unmeasurable. Sally, who lives in Sheffield, has worked at the family owned business since 2013 and began studying for her qualification in 2014. It now means she can oversee the fitting of membranes on construction sites where there is deemed to be a risk of gas ingress from the strata below the buildings.

Achieving the NVQ is just one step along the career development path that Sally has set out for herself, as she explains; “When I started work here in 2013, I was doing one day a week on admin tasks helping out my dad who started the company in 1993, when I was only four. I quickly realised that I could hardly tell the lads what to do unless I fully understood all the processes involved, so I enrolled to study through the Construction Industry Training Board (CITB) approved British Geomembrane Association (BGA) course. It meant being out on site a lot, which I found I loved doing; even though I never really envisaged myself being out managing projects. Yes, this is a very male dominated industry, but I get total respect from everyone in the team because they know I can do exactly what they can irrespective of my gender,” said Sally.

Sally was presented with her NVQ Level II certificate by Martin Cockcroft, the new Chair of the BGA. “Sally has clearly shown that there are no barriers of personal development in our industry with the right training, support and motivation. On behalf of the BGA I would like to congratulate Sally on her achievement,” said Martin.

Sarah Beale, CEO at CITB, commented: “It’s great that Sally has become the first woman to complete this qualification, and we want many more people from all backgrounds to follow her. CITB encourages diversity in the industry – no matter who you are or where you come from, construction has opportunities for all.

Congratulations again to Sally, I wish her the very best for her future career.”

DMI is affiliated to Build UK, which has also praised Sally for her achievement.

“It is always a great pleasure to see someone achieve professional standards and qualifications in their chosen occupation and huge congratulations to Sally as the first woman to gain this specialist qualification. We are an industry of opportunity and as Sally has demonstrated it is an industry that is #notjustforboys.” said Suzannah Nichol MBE, Chief Executive of Build UK, the trade organisation that provides a strong collective voice for the construction industry by bringing together clients, main contractors and trade associations representing over 11,500 specialist contractors.

The NVQ course covered a wide range of subjects including Health and Safety, Personal Protective Equipment, ventilation, gas dilution and installation as well as all the regulations surrounding installations.

“Gaining the qualification is important for my long-term plans,” says Sally “I really enjoy the training side of things and hope to develop a training school that becomes a beacon of excellence for the industry. DMI already runs upskilling courses for general construction workers that want to be able to lay membranes and move on to become qualified technicians. Unfortunately, we are still seeing unqualified people laying membranes - which is a really dangerous practice as inadequately laid membranes can be killers.”

“A Gamechanger changes the way that something is done, thought of or made; they transform the accepted rules, processes, strategies and management of business functions. They shift behaviour, shape culture and make clever happen.�

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FL PARTNERS ACQUIRES POTENSIS RECRUITMENT, ONE OF THE UK’S LEADING HOUSEBUILDING AND CONSTRUCTION RECRUITERS Funds managed by FL Partners, a Dublin-based investment boutique have acquired Potensis Recruitment, one of the largest recruiters to the UK housebuilding and construction industries, together with SEAL Resource Management, a related business.

There is huge demand for housing in the UK with at least 300,000 new homes needed annually for the foreseeable future and only c. 170,000 built in 2016. Human capital is critically important to addressing this significant deficit and Potensis helps its clients get the right people for this strategically-important and rapidly-evolving market.”

Potensis, founded in 2000, provides temporary and permanent recruitment services to the residential housebuilding, social housing and commercial construction sectors. It recruits across all job levels and its clients include many of the UK’s leading publicly-listed housebuilders and social housing groups. Most of its clients have worked with Potensis for at least a decade.

“Over the last 16 years, Potensis has grown into a strong business with a loyal client base and a leading specialist offering. The transfer to new ownership under a new management team will position the company to deliver on its exciting growth plans.”

Jared Sullivan, founder and managing director, has invested alongside FL. Steven Kirkpatrick has been recruited as CEO of the Group and is also investing in the company. Steven has worked in recruitment for 20 years and was formerly CEO of Cordant Recruitment and, before that, managing director of Adecco’s UK general staffing businesses.

Chris Birt, Investment Professional at CORDET, commented: “We have worked closely with FL Partners and Steven over the last few months and are delighted to be financing this transaction. Their operational expertise coupled with Potensis’ position as the go-to expert in the sector means the business is ideally positioned to benefit from the clear macro drivers and to help its clients navigate the chronic skills shortage facing the industry.”

The need for housing in the UK remains acute and Potensis will seek to extend its existing strong positions in the London and the South East residential and social housing markets more broadly throughout the UK and internationally. Souter Investments, the family office of Sir Brian Souter, was part of the syndicate of investors. Debt finance for the transaction was provided by CORDET Capital Partners LLP and OakNorth Bank. FL was advised on the deal by Deloitte and White & Case. Peter Crowley and Neill Hughes, founders and managing partners at FL Partners said: “We are very excited about the opportunities for Potensis.

Mohith Sondhi, Debt Finance Director at OakNorth Bank, commented: “This is an attractive opportunity for FL Partners to acquire a regional market leader at a time when many recruiters are stalling growth plans. The UK construction industry generates around £90bn annually, accounting for 6.7% of GDP and employing over 2.9 million people. With a further one million houses needing to be built by 2020, we have no doubt that Potensis’ services will be in high demand over the coming years, and look forward to watching it grow.”

MILLS & REEVE TO SIGNIFICANTLY GROW LONDON OFFICE WITH MAXWELL WINWARD MERGER Leading UK law firm Mills & Reeve has announced the completion of a merger agreement with London law firm Maxwell Winward. The enlarged Mills & Reeve London office will continue to be based at Monument Place.

Maxwell Winward, which was created in 2007 following a merger between Maxwell Batley and Winward Fearon, is renowned for its real estate, surety, projects and construction practices.

The merger, which will take effect from 1 June 2017, will allow Mills & Reeve to further develop its real estate and projects and construction practices in London. In addition, the enhanced scale will provide further opportunities across its unique set of sector specialisms such as education, health, private wealth, insurance, technology, sport, charities and food and agri-business.

Nationally Mills & Reeve will have 116 partners and nearly 1,000 staff operating from six offices in Birmingham, Cambridge, Leeds, London, Manchester and Norwich.

Justin Ripman, Mills & Reeve senior partner, said: “This merger will enable us to substantially grow our presence in the City. It helps realise a key aim of our 2020 strategy to expand our offering to London based and international clients by successfully leveraging our nationwide network of leading legal experts. “Indeed, the merger will enhance our real estate investment and insurance sectors, as well as our projects and construction practice. Maxwell Winward’s surety practice bridges the insurance and construction sectors in which we’re already strong while its power plant expertise will add another area of know-how to our projects offering. “We are very excited about the potential that our increased scale gives us in London and the further career opportunities that it creates for the talented lawyers, business services professionals and legal support staff in our enlarged firm.”

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Adrian Luto, Maxwell Winward senior partner, added: “The merger provides a great opportunity to extend the range of services we can offer clients while continuing to focus on what we do best. Combining our real estate expertise will allow us to widen our offering by providing a more extensive service without losing the personal touch.”

“This is also a great cultural fit and we are delighted to be merging with a firm that has featured in The Sunday Times’ 100 Best Companies to Work For list for 14 years running.”

The new combined firm will have a turnover of approximately £93 million with Mills & Reeve posting a record turnover of £87.2 million in the year to 31 May 2016, an increase of more than £5.5 million from the previous year.

The merger follows a year of growth for the Mills & Reeve London office. The family team has rapidly expanded with Tim Whitney joining from Russell-Cooke along with Sara Hanna, formerly of Burgess Mee Family Law and Vardags. To meet the growing demand for international tax advice for high-net worth individuals, the private wealth team has just been enhanced by the arrival of Gillian Kennedy-Smith from Clarke Willmott.

And in July 2016 the litigation practice was strengthened with the appointment of Eric France as head of commercial disputes in London. Eric joined Mills & Reeve after 10 years at Clifford Chance.

In September 2016 Mills & Reeve won most innovative workplace initiative at The Lawyer’s Business Leadership Awards for the move to Monument Place. The judges were impressed at how the move was used to completely reimagine the working environment with a host of innovative changes designed to promote agile working.

HUSCH BLACKWELL REVENUE SOARS, PARTNER PROFITS SLIP AFTER ACQUISITION A big merger last year translated into big gains for Husch Blackwell: Gross revenue jumped more than 20 percent from the prior year, net income was up 18.5 percent and the equity partnership grew by 30 percent.

Missouri-based Husch Blackwell hit those numbers with its acquisition of 144-lawyer, Wisconsin firm Whyte Hirschboeck Dudek, the fourth-largest law firm merger of 2016. The merged firm’s revenue last year exceeded the combined revenue of the two firms from 2015, reaching $350 million and likely ranking Husch Blackwell amongst the ‘Am Law 100’. Net income grew to $96 million.

Not all the results were so rosy, though. With 612 full-time lawyers, revenue per lawyer dropped about 3 percent to $570,000, and profits per partner sunk 8 percent to $565,000, inching the firm’s profit margin downward.

Husch Blackwell’s CEO and managing partner Gregory Smith said the firm still hit its budgets for the year.

“We knew the combination with Whyte Hirschboeck Dudek would require an investment last year,” he said. “I’m frankly pretty proud of my partners for seeing the long game and being willing to make the investments.”

Those investments included capital expenditures such as converting computer systems at Whyte Hirschboeck’s offices in Madison, Milwaukee and Waukesha, Wisconsin, and in Chicago, where Husch Blackwell already had a presence, to match the rest of the firm.

Husch Blackwell also took on liabilities of the smaller firm, Smith said. He declined to disclose other details about the investments, or to elaborate about challenges he said arose during the merger because Whyte Hirschboeck had not been structured as a limited liability partnership.

The Whyte Hirschboeck merger brings to Husch Blackwell a capital markets practice run primarily out of Milwaukee, as well as real estate, retail and banking clients, Smith said.

More broadly, the firm’s public-private partnerships practice has grown in recent years, including with project finance work on a water pipeline deal for Garney Construction in San Antonio. The firm has grown in Denver, Smith said, while its Texas offices— Austin, Dallas and Houston—remain busy.

Last year, the firm closed its London office, which had in recent years hosted rotating Husch Blackwell lawyers from the U.S. The arrangement allowed Husch Blackwell’s lawyers to work with British firm Pinsent Masons for referrals.

The office closure means no more stand-alone Husch Blackwell address, but the firm’s relationship with Pinsent Masons “has not changed in any way,” Smith said.

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Husch Blackwell has no other offices abroad, and its footprint stretches primarily across the American interior and Texas.

About five years ago, the firm reorganized its practice areas so they aligned better with six industries: energy, financial services; food and agribusiness; health care; real estate and construction; and technology, manufacturing and transportation. It also deequitized 25 partners and cut more than 20 associates and nonequity partners for underperformance around that time.

Then, a year and a half ago came a “strategy refresh,” as Smith called it. A large part of the revamp involved a compensation system overhaul, which the firm is putting to use this year. The firm previously was on a “traditional” compensation system that factored in matter origination, management responsibilities and billing credits, among other things.

“It worked for a long, long time,” Smith said. Though he remained vague about the changes, Smith said the new system involves different incentives. “We remain nonformulaic, but we’re measuring different things, and we’re emphasizing and rewarding different things,” Smith said.

So what’s next? “We will continue to grow, and continue to focus on growth opportunities like the one we just accomplished,” he said.

CINVEN ENTERS INTO EXCLUSIVE NEGOTIATIONS TO ACQUIRE CHRYSO International private equity firm Cinven has entered into exclusive negotiations to acquire CHRYSO (‘the Group’), a global specialty chemicals group for construction materials, for an undisclosed amount.

Headquartered in France, CHRYSO is a leading international producer of additives and admixtures, which improve the performance of concrete and cement, and construction systems for the repair and maintenance of buildings. The Group operates across Europe, Africa, the Middle East, Asia and the US; with sales in more than 100 countries worldwide.

The Group has 29 manufacturing facilities globally and four R&D centres, employing c. 1,130 people. CHRYSO is strongly focused on innovation and customer support, providing tailor-made solutions for its global cement and concrete manufacturer customer base.

Cinven’s Industrials and French teams identified CHRYSO as an attractive investment opportunity based on: • The Group’s strong market position in an attractive market segment across both developed and emerging geographies; • Its highly experienced management team led by President and Chief Executive Officer, Thierry Bernard, who has overseen the Group’s strong historic growth; • The Group’s successful track record of acquiring and integrating businesses, including completing six acquisitions in the past two years, with further consolidation opportunities, particularly in emerging economies; • The Group’s excellent innovation capabilities facilitated through its R&D centres and close proximity to its customers; • The strong growth in infrastructure spending, increasing housing demands in emerging economies, and a housing market recovery in Europe and the US; and • Attractive geographic expansion opportunities into the Middle East and Southeast Asia.

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This investment would follow Cinven’s acquisition of French-headquartered Labco, one of the largest European operators of medical diagnostics laboratories, in August 2015, which Cinven subsequently merged with German-headquartered synlab in October 2015, to create the largest clinical laboratory services company in Europe.

Commenting on the CHRYSO investment, Xavier Geismar, Partner at Cinven, said: “We had identified CHRYSO as a strong business operating in the highly attractive building chemistry industry and have been following the company closely. Cinven is delighted to have this opportunity to invest in the business, backing the excellent management team.

Our ability to move quickly to secure the investment reflects the effectiveness of our sector-geographic matrix origination approach, with our French and Industrials teams working closely together on the opportunity.”

Nicolas Paulmier, Partner at Cinven, added: “We are very excited by the growth prospects at CHRYSO. The business is very well run and there are considerable opportunities to grow the business organically, as well as through acquisition and into other geographies. Cinven has a significant track record of working with companies to support their buy and build strategies and internationalising their businesses, particularly in Asia, and we are looking forward to doing this with CHRYSO.” Thierry Bernard, President and Chief Executive Officer of CHRYSO Group, said: “CHRYSO is extremely well positioned to benefit from several attractive market drivers including increasing concrete consumption for infrastructure and housing globally; the greater complexity and scale of construction projects - with tougher requirements on building materials performance; and a growing focus on sustainable development.

“We are very pleased to be working with Cinven given their considerable experience of growing companies responsibly and working closely with management teams to achieve global leadership.” CHRYSO will represent Cinven’s fourth investment from The Sixth Cinven Fund. The works’ council of CHRYSO will be consulted on the transaction and the completion of the transaction would be subject to customary regulatory approvals.

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THE CONSTRUCTION INDUSTRY COUNCIL HAS MERGED ITS EDUCATION FOR THE BUILT ENVIRONMENT COMMITTEE (E4BE) WITH THE 14-TO-19 ADVISORY COMMITTEE FOR CONSTRUCTION & THE BUILT ENVIRONMENT EDUCATION. The new committee is to be known as the Construction & Built Environment Education Advisory Committee. It is chaired by Roy Cavanagh of Seddon Construction and includes representatives of employers, professional bodies, universities, colleges and schools.

Roy Cavanagh said the merger would “help create a single voice for the sector on education issues and policy”.

The role of the committee is to help shape construction & the built environment education, to develop education standards and encourage the delivery of suitable qualifications based on them.

Chartered Institute of Building deputy chief executive Bridget Bartlett said: “It makes sense to pull these two committees together to improve our effectiveness, reduce duplication and most importantly make sure the big issues in education and training don’t slip between the cracks. The industry needs strong voices as we talk with government and combining these resources together will turn up the volume, particularly on critical issues such as Technical Levels and degree apprenticeships.”

The Institution of Civil Engineers and the Royal Institution of Chartered Surveyors, both members of the Construction Industry Council, also supported the merger. “The merged body will be well-placed to join up all stakeholders,” said ICE head of education policy Andrew Stanley.

PROVINCIAL DEPARTMENT MERGER FACES HURDLES Some provincial departments might be merged in keeping with the Government’s commitment to streamline its notoriously clunky and bloated bureaucracy, according to a new draft resolution circulated by the Ministry of Home Affairs (MoHA).

The idea is generally well-received by the public, however, experts and people in the know caution that further study is needed, otherwise such reforms could result in counterproductive disarray rather than achieving their ambitious goal.

Specifically, local departments of planning and investment would merge into the departments of finance to form departments of planning and finance. Provincial departments of transport would merge with the departments of construction, or, in Hanoi and HCM City, with the municipal departments of planning and architecture, to form a department of transport, construction, and urban development.

In addition, the draft law allows localities to decide whether to set up specialised departments. The Department of Science and Technology is optional and its functions can be folded into the Department of Education and Training.

The Department of Information and Communications, which provides counsel for provincial People’s Committee on management of media and IT matters, is also optional for provinces with sparse populations; its duties can be carried out by the Department of Culture, Sports and Tourism.

Department of Tourism will only be set up in places with a recognised natural or cultural heritage and with tourism

sector contributing over 10 percent for five consecutive years to its Regional Gross Domestic Products (RGDP).

In the draft, MoHA also limited the number of directors and officials in provincial departments and lower level offices.

Experts say the proposal is likely to meet with strong resistance, especially from those departments that would be merged, however the efficiency of State management must be the overriding goal. According to the MoHA survey, 19 of 63 provinces and municipalities in the country are still not completely on board with the new draft.

The Hanoi People’s Committee argued that the capital city is a vast area, with a heavy workload, while State management competence remains at a “developing” level. Therefore, consideration is advised and implementation must be conducted in phases, preventing a sudden deluge of work.

Chairman of the HCM City People’s Committee Nguyen Thanh Phong and other heads of related agencies are also against the idea of “super-departments”, saying the increased workload of a sprawling metropolis combined with staff cuts would create severe bureaucratic bottlenecks.

According to Thang Van Phuc, former Deputy Minister of Home Affairs, the proposed merging of provincial departments is an absolute necessity. He also said the proposal is not actually new, having been floated nearly 20 years ago at a Party Plenary in 1999.

“However, the idea never came to be realised due to a lack of determination. This led to the current state of administration where overlapping jurisdictions and inefficiency are rife,” Phuc said. He said developed nations only have 12 to 15 ministries, while Vietnam has 22 ministries and ministry-level agencies, but “service delivery to the public is certainly not on a par,” in addition to wastefulness.

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Responding to the concern that mergers might cause a sudden and possibly crippling influx of work for State administrations, Phúc said the concern stems from “a controlling mind-set” - the State tries to be all and everything, spreading themselves too thin. “If local departments focus on development of policies and carrying out inspection duties, overload will not happen,” he said.

Downer’s first-half results, released on February 2, showed the company had on-balance sheet gearing of just 1% and net debt of $A22 million. Its operating cash flow was $A244 million and work in hand rose 13% in the first half to $A21.1 billion. Last month Fletcher said it has a backlog of construction work awarded but not completed of $2.7 billion.

Pham Sy Liem, Vice Chairman of the Vietnam Construction General Association, while favouring the idea maintained that it would have far-reaching impacts. “It’s best to pilot it in a number of provinces first before implementing it nationwide,” he said.

Its $A3.6 billion of first-half revenue was spread between rail, transport services, utility services, mining, electrical construction and maintenance and technology and communications services.

“We’ve tried merging and separation like this several times already, and a slew of problems and loss and confusion resulted each time. It took quite some time before things settled back to normal,” Liem said.

DOWNER FILLS GAP IN NZ ‘VERTICAL’ CONSTRUCTION WITH HAWKINS ACQUISITION Downer EDI, the Australian-based infrastructure and mining firm, will become New Zealand’s No 2 ‘vertical’ construction company after Fletcher Building, with the acquisition of Hawkins from the McConnell family.

The company has said it has agreed to acquire Hawkins with a settlement date of March 31 but didn’t give a price.

Hawkins is understood to have annual sales of $600-700 million and the sale price was likely in a range of $A50-100 million. The deal doesn’t include any of Hawkins’ offshore operations, which have included a geothermal development in Indonesia and interests in Australia, Papua New Guinea and the South Pacific.

“We have a large range of capabilities in New Zealand. This adds vertical construction,” said Michael Sharp, Downer’s head of corporate affairs, referring to construction of buildings rather than drainage or roading infrastructure, Downer’s customers in New Zealand include the NZ Transport Agency and most local authorities. Hawkins has contracts including the SH16 Lincoln-to-Westgate upgrade, the construction of Auckland’s Park Hyatt Hotel, the Pier B extension at Auckland International Airport, Wellington International Airport’s Rongotai control tower, Wellington City Council’s Arlington housing project, the Christchurch Town Hall and the Avon River Precinct in Christchurch.

Sharp said Hawkins will benefit from Downer’s balance sheet strength. It intends to maintain the Hawkins brand and keep on its experienced managers, he said. The deal would add to earnings in Downer’s first year of ownership, it said.

An issue for construction firms is the requirement for bonding – setting aside funds to ensure projects can be completed, which to date has fallen to the existing owners of Hawkins.

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Downer chief executive Grant Fenn said the acquisition would allow Downer to benefit from construction activity in New Zealand. “It is estimated that over $50 billion will be invested in non-residential construction in New Zealand over the next five years,” he said.

The acquisition would follow Fletcher Building’s acquisition of rival construction company Higgins Group Holdings last year for $303 million. The Commerce Commission approved that deal after Fletcher dropped the Horokiwi Quarries business from its application to reduce its dominance in the aggregates market.

Horokiwi Quarries is a 50-50 joint venture between Higgins and privately held construction firm Fulton Hogan. In January, Downer EDI said its New Zealand boss Cos Broyn was leaving to take over the reins at Fulton Hogan although he faces a nine-month restraint period before he can become Fulton Hogan chief executive.

John McConnell told the NZ Herald in 2015 that the family was forced to sell its interest in construction firm McConnell Dowell in the wake of the 1987 sharemarket crash and the family subsequently started its own business, McConnell Group. In 1996 the McConnell family invested in 50% of the Hawkins business and by 2002 had bought 100% 100 percent shareholding, according to the Hawkins website.

Downer shares last traded at A$7.21 on the ASX and have soared 96% in the past 12 months.

ENGINEERING CONTRACTORS AGREE £5BN MERGER Two of Britain’s biggest energy contractors, Amec Foster Wheeler and John Wood Group, are joining forces.

The board of Amec Foster Wheeler has approved an allshare takeover approach from John Wood. The transaction will result in Amec Foster Wheeler shareholders owning approximately 44% of the share capital of the combined group and John Wood shareholders having 56%. Wood directors reckon they can make sustainable cost synergies of at least £110m a year through the merger after it beds in.

Based on the closing price of £7.52 per Wood Group Share on 10th March 2017, the terms of the combination value Amec Foster Wheeler at approximately £2,225m.

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Wood Group chairman Ian Marchant said: “The combination represents a transformational transaction for Wood Group, which accelerates our strategy and creates a global leader in project, engineering and technical services delivery across a range of industrial sectors. The Combination extends the scale and scope of our services, deepens our existing customer relationships, facilitates further development of our technology-enabled solutions and broadens our end market, geographic and customer exposure.”

“The combination will create an asset-light, largely reimbursable business of greater scale and enhanced capability, diversified across the oil & gas, chemicals, renewables, environment & infrastructure and mining segments.”

“By leveraging Amec Foster Wheeler’s and Wood Group’s combined asset life cycle services across project delivery, engineering, modifications, construction, operations, maintenance and consulting activities, the combined group will be able to better capitalise on growth opportunities across a broad cross section of energy and industrial end markets.”

Amec Foster Wheeler has been in a state of flux since the departure of long-serving chief executive Samir Brikho in January 2016. He was replaced by former Halliburton executive Jonathan Lewis. In 2015 Amec Foster Wheeler made a loss of £235m before tax on revenues of £4.5bn. Its 2016 results had been due next week.”

Amec Foster Wheeler chairman John Connolly said: “Since the arrival of Jonathan Lewis as CEO, the executive management team of Amec Foster Wheeler has made significant progress towards the transformation of the business. This has been achieved through cost reduction initiatives, the disposal of non-core assets and a reorganisation of the business.”

“The Amec Foster Wheeler board have fully supported the revised strategy and the preparations to deliver the appropriate balance sheet to support the standalone prospects of Amec Foster Wheeler.”

“However, the Amec Foster Wheeler board believes that a combination with Wood Group adds to the standalone prospects of Amec Foster Wheeler, by accelerating the delivery of the future value inherent in the Amec Foster Wheeler business and, at the same time, helps to realise the full potential of each of Amec Foster Wheeler and Wood Group.”

BOVIS IN £1.2BN MERGER TALKS WITH GALLIFORD TRY Bovis Homes has confirmed it is in ongoing talks with Galliford Try about a possible merger.

Bovis said that it has received proposals from Galliford Try and Redrow about a potential merger. Both initial approaches have been rebuffed but Bovis is still talking to Galliford Try. Bovis said: “The decision to reject the proposals was communicated to the two parties.

“Redrow subsequently indicated that it was not willing to improve the terms of its proposal and discussions were terminated. Discussions with Galliford Try are ongoing.”

The company added: “In the meantime, the Board is making good progress with plans to recover and improve group profitability and enhance return on capital employed.

“The search for a new Chief Executive is also progressing well.

“The Board of Bovis remains committed to maximising returns to shareholders and will continue to consider all strategic alternatives.”

Galliford Try’s current offer values Bovis at £1,191m and would make Galliford Try the 52.25% majority shareholder in the merged group. Under City takeover rules the firm now has until April 9 to make a firm offer for Bovis. Redrow made a share and cash offer giving Bovis a 32.4% stake in any merged company.

IRONSHORE SPECIALTY ADDS M&A TRANSITION COVERAGE FOR CONSTRUCTION RISKS Ironshore Specialty Casualty has enhanced its transition protection policy form to address contractual exposures related to an organizational merger or acquisition specific to the construction industry.

“The all-share structure of the offer allows our shareholders to benefit from the significant synergies and other strategic benefits that is expected to be realised from the combination.”

Ironshore’s Construction Transition Protection product provides coverage for abrupt and accidental property damage or bodily injury arising out of work completed by a construction company that occurred prior to the closure of the corporate transaction.

“Amec Foster Wheeler will also be well represented on the board of the combined group, with four of our directors joining the combined group’s board, including Roy Franklin, who will be appointed deputy chairman and senior independent director.”

Construction companies typically have contractual requirements to obtain insurance coverage for work completed prior to the merger or acquisition. Construction Transition Protection is offered for limits of up to $2 million per occurrence on a primary basis and up to $10 million

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on an excess basis. Coverage is underwritten on a claims-made basis for an injury period stipulated within contractual documentation or up to a maximum of 5 years to cover potential liabilities resulting from past operations.

Ben Beauvais, lead, Construction Industry Practice, said the product benefits those clients that require coverage to satisfy contractual requirements when the entity’s liabilities are not acquired under the terms of the agreement.

Ironshore’s Construction Industry Group provides customized risk coverages including surety, builder’s risk, professional liability, environmental, stand-alone terrorism, cyber, general/ excess liability and wrap-up insurance.

Ironshore underwrites a range of insurance programs for all types of commercial and residential construction projects and delivery methods.

FLACK GLOBAL METALS AND KENWOOD PAINTED METALS ANNOUNCE ACQUISITION Jeremy K. Flack, CEO of Flack Global Metals, and Greg Underwood, President of Kenwood Painted Metals, have announced the merger of their companies, effective April 1, 2017. Mr. Flack will retain his position as CEO of Flack Global Metals, and Mr. Underwood will join the company as executive vice president. Flack has realized considerable recent gains that are reflected in its 34 percent year-on-year revenue growth and 30 percent gross profit increase in 2016. The merger will help Flack sustain its growth trajectory moving forward.

“As Greg and I considered this opportunity, it became evident that Kenwood’s painted materials experience, strong brand recognition, and wide customer base in concert with our revolutionary approach has the potential to create a compelling presence in the metals industry,” stated Mr. Flack. Ben Bucci, Flack Global Metals president, said, “This merger represents two strong companies coming together to further our capabilities for execution at even higher levels. With combined capital and scale, our companies create a compelling offering that is galvanizing the iconic US steel and metals industry. We believe this is exactly what customers and vendors expect from The Next Generation Service Center.”

Kenwood will expand and enhance Flack’s network of North American processing partners and global network of resources.

“The merger is a great opportunity for us to expand our product offering,” said Mr. Underwood. “Kenwood adds extensive coil coating expertise to Flack’s impressive processing capabilities. Flack’s pivotal convergence of its metals market expertise and international networks allow us to capture new opportunities and service clients from purchase through delivery.”

Flack and Kenwood share an asset-light business model, forgoing physical assets in favor of developing the flexibility and geographic reach to deliver customized solutions. Both companies work primarily with OEMs in transportation, automotive, HVAC, construction, doors and lighting.

Founded in 2010, Flack designs and fulfills supply chains for OEMs using flat rolled steel, aluminum and stainless. Each metal is prepared to all value levels including coating, embossing, blanking, slitting, and sheeting. The company’s market experts help customers make informed purchasing decisions and mitigate risk through long- and short-term pricing solutions that support budgets and provide increased efficiencies with greater returns. Logistics teams develop strategic programs that optimize customers’ supply chains to mitigate volatility and uneven inventories.

Kenwood has been a leader in painted metals for over 30 years. The knowledge and technical expertise behind its success augments the integrity, durability, and functionality of the original material. Also joining Flack’s leadership team will be Kenwood’s Aaron Underwood, as vice president of construction products, Rick Sutkus, as chief operating officer, and Jeremiah Porter as vice president of business intelligence. Headquartered in Cleveland, Ohio, Flack will add Kenwood’s suburban Chicago, Illinois and Atlanta, Georgia offices to its existing locations in Chicago, Scottsdale, Arizona and Columbia, South Carolina.

MOVING UP: BROWNE JACOBSON TARGETS TOP-50 SPOT THROUGH MERGER TALKS WITH BEALE & COMPANY Midlands-based Browne Jacobson is in late-stage merger talks with London-based construction and insurance specialist Beale & Co to create a combined outfit with eight offices and a turnover of £82m – putting the firm firmly in the top 50 of the Legal Business 100.

In a joint statement, Iain Blatherwick, managing partner at Browne Jacobson, and Anthony Smith, senior partner at Beale & Company, said the combination, which would have over 1,000 staff and 137 partners, would offer clear strategic benefits.

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‘We have been in discussions for some time and can now confirm that we have agreed heads of terms. Our practice areas are highly complementary and we believe there is a strong strategic and cultural fit. Over the coming months, further discussions will take place to agree the steps for bringing both firms together in a merger. No further comment will be made by either firm until those discussions have concluded.’ Browne Jacobson, the larger partner in the merger, has offices in Birmingham, Exeter, London, Manchester and Nottingham, and, in addition to building up strength in London, would gain a presence in Bristol, Dubai

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and Dublin from the tie-up. Last year Browne Jacobson announced a 9% increase in turnover to £64m, leading to a 5.5% award to employees as part of its annual performance award scheme. Fee income for Beale & Co stood at £14.7m for the financial year 2015/16.

Key sectors for Browne Jacobson include brands, education, financial services, health, insurance, private sector, public, retail and technology while Beale & Co has strong offerings in construction engineering & infrastructure as well as insurance.

CH2M EXPLORES £3BN MERGER WITH ATKINS

The US firm is the largest of the two businesses employing about 25,000 employees in more than 50 countries, with around £4.3bn revenue.

American consulting giant CH2M is reported to have approached UK rival Atkins about a possible £3bn-plus merger.

The two consulting engineers have worked together in recent years on major UK infrastructure works, including the London Olympic Games, as delivery partner on HS2 phase one and early design for Crossrail 2. According to a report in the Times CH2M is believed to have made a senior level approach at the end of last year to explore whether a tie-up could work. But it is unclear how far talks developed.

CH2M expanded in the UK back in 2011 when it scooped up another engineering consultant Halcrow.

Atkins has more than 18,000 employees helping to generate about £1.9bn in turnover.

Both engineering groups have a global reach with Atkins keen to expand in Denver-based CH2M’s home US market.

Likewise CH2M could benefit from Atkins’ UK presence as well as gaining access to European markets such as Scandinavia, where Atkins is one of the top engineering and design consultancies.

Both groups would also strengthen their presence in the Middle East and Asia-Pacific. “It is our policy not to comment on rumour and speculation,” said an Atkins spokesman.

“Gamechanger, what we define as an individual or business that aims to create a new model that leaves the older model obsolete.

Gamechangers impact how the game is played from one objective and ruling model to a completely new vision – changing the face of how we know something.”

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CONSTRUCTION SUPPLY HOLDINGS NAMES MITCH WILLIAMS PRESIDENT AND CEO Construction Supply Holdings announced the appointment of Mitch Williams as President and CEO. Construction Supply Holdings is a leader in the distribution of construction materials, accessories and tools primarily for professional concrete and masonry contractors in the United States and Canada.

The company has 48 branches with 750 employees and offers over 70,000 SKUs for nearly 25,000 customers.

Most recently, Mitch was the CEO of Rexel’s $1.7 billion Asia Pacific region which had more than 250 branches in 13 countries and over 3,000 employees.

Having spent his entire career in distribution, Mitch brings valuable experience to Construction Supply.

“Mitch brings proven experience in sales, commercial leadership, operational excellence, supply chain, acquisitions and integration. These are all things that will make him an exceptional partner for our existing teams, customers and vendors,” said Brian Henry, a Partner at The Sterling Group.

In late 2016, The Sterling Group, a middle market private equity firm based in Houston, Texas, brought together Brock White Company, LLC, Border Construction Specialties, LLC and Stetson Building Products, Inc., forming Construction Supply Holdings.

Each an industry leader in their respective markets, the combined companies represent a much broader geographic footprint and the opportunity to continue providing best-in-class products and services to their growing customer bases. “Sterling and each of the three existing teams have a shared vision and plan to build a best-in-class distribution business,” said Mitch Williams. “The opportunity to join such a strong team with a passion for construction materials was one I couldn’t pass up.” Sterling has a long history of partnering with management to build businesses and transform segments of the building products industry, including successful investments in Roofing Supply Group and American Bath Group.

FORREST CEO LEAVES AS REFINANCING DEAL STRUCK Contractor Forrest is parting company with CEO Lee McCarren. The Bolton-based company has confirmed McCarren will by leaving “by mutual agreement” after eight years in charge. Forrest has also concluded a refinancing package to support the business in delivering a £600m order book. Forrest announced 30 job losses last month as part of a restructuring as it shifts from its traditional market refurbishing social housing towards more new build construction. Bob Holt, Chairman at Forrest said: “The new funding deal provides a strong financial platform that will enable Forrest to deliver growth over the next few years, whilst maintaining the Company ethos of providing personalised, customer focussed services.

“The Board thanks our clients and supply chain for their continued support during the refinancing process”. Holt added: “Since Lee joined the business in 2009 he has led the transformation of the business into a multi-disciplinary contractor.“The Board thank him for his considerable contribution and effort over the years and wish him every success for the future”. McCarren said: “I have had a great time leading the Forrest business and working with its great book of customers but believe that now is the perfect time, in view of the new investment, for me to depart and go onto a new challenge. “I wish the business great success going forward.”

DOUBLE BOARD APPOINTMENT AT SURGO CONSTRUCTION Newcastle-headquartered Surgo Construction has appointed two new board members.

David Blyth and Martin Blight have taken their places alongside chairman Ian Walker, managing director James Walker, Jeff Alexander, Jeff Charlton, and Steven Coombes. The double appointment is designed to further strength and add depth to Surgo’s senior management structure. Blyth will assume the role of commercial director with responsibility for a team of four, while Blight has been made estimating director and will oversee a team of five.

Further appointments are expected in the coming months.

Walker said: “During their time with the company both David and Martin have made a significant contribution to the success of Surgo Construction and their appointment to the board is a clear reflection of that.

“As we continue to win work and deliver a wide range of projects, this will assist in our continued efforts to challenge existing processes and methods to exceed our clients’ expectations.” Surgo works on a range of projects across the commercial, industrial, residential, retail and education sectors. It is currently onsite at the refurbishment of Newcastle University’s Hatton Gallery, an upgrade of The Gate and the construction of NETPark’s National Formulation Centre.

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MOTT MACDONALD INTERSERVE APPOINTS NEW CHIEF APPOINTS NEW EXECUTIVE GLOBAL MD Mott MacDonald has appointed Mike Haigh as the new managing director of its global business.

Haigh (pictured) will be responsible for the day-to-day management and operational performance of the whole Mott MacDonald group, which has 16,000 staff working across engineering, management and development consultancy.

He has been promoted from his role as managing director of the firm’s Europe and Africa division, which has more than 7,000 staff and revenue of over £820m.

Haigh joined Mott MacDonald as a graduate engineer in 1981 and worked his way up at the firm before being appointed to its executive board in 2013.

Commenting on his new role, Haigh said: “The needs of the world’s population and technology are changing fast and we have tremendous opportunities to work with our clients and partners to create clever, intelligent solutions that enhance value for them, their stakeholders and the wider society.

Interserve has appointed Debbie White from support services group Sodexo as new chief executive officer.

White is currently CEO of Government and Healthcare worldwide at the Sodexo Group. She will join Interserve in September when existing chief Adrian Ringrose will step down. White, who graduated with an economics degree from Cambridge, has held several senior financial roles. White started her career at former accounting giant Arthur Andersen before moving to Astrazeneca and PwC. In 2004 she became the chief financial officer of Sodexo’s UK operations. She has progressed through the firm to be the current chief executive of government and healthcare worldwide. Under her leadership, the business diversified into probation services and expanded through several acquisitions.

Interserve chairman Glyn Barker said: “Having conducted an extensive search and selection process, I am delighted that Debbie White is joining Interserve as CEO. “Debbie has considerable experience and expertise and a strong track record of success in running complex businesses in the international support services sector.

“There are exciting times ahead for our industry and Mott MacDonald and I’m delighted to be taking up this role, working with such talented colleagues.”

“I am confident that, under Debbie’s leadership, the team will deliver the change and growth necessary to take Interserve forward and enhance shareholder value.”

Keith Howells, Mott MacDonald group chairman, said: “I’ve known Mike since he joined us as a graduate, and I’m delighted to have him running our worldwide operations in his new role as group managing director.”

White said: “I am delighted to be joining Interserve. Over the years I have had a great respect for the company and its people and I am looking forward to leading the organisation into a new era.”

KEO ANNOUNCES APPOINTMENT OF FIRST COO Dr. Abdol Hagh takes up role at the planning, design, engineering and project management firm KEO International Consultants has announced the appointment of Dr. Abdol Hagh as the company’s first Chief Operating Officer.

In his new role, Dr. Abdol Hagh will be instrumental in setting and formulating policies related to strategic planning, growth and decision-making on all operations.

As COO, Dr. Hagh will also be fully responsible for leading the design related business in KEO, which includes the delivery of all architectural, engineering, planning and landscape architecture services.

He will report to Donna Sultan, President and CEO of the planning, design, engineering and project management firm.

“Dr. Abdol Hagh is one of our industry’s most accomplished professionals,” said Sultan. “His appointment is an important move for KEO and I look forward to working with him in providing the leadership for our consultancy firm.”

The holder of a Master of Science degree in engineering from MIT and a PhD in engineering from Northeastern University in Boston, Dr. Hagh is a 35-year industry veteran. Prior to joining KEO, he spent eight years in high profile positions in the construction, engineering and building design sectors.

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SIG SHARES RISE CHANG HWEE NEE ON APPOINTMENT OF APPOINTED NATIONAL NEW CHIEF EXECUTIVE HERITAGE BOARD CEO Shares in SIG, the FTSE 250 building material supplier, jumped after it appointed an industry veteran as chief executive and signalled confidence in its longer-term outlook.

The group, which specialises in insulation and roofing, has endured a difficult year in which it was hit by a downturn in construction activity following the UK’s vote to leave the EU. Shares fell more than quarter in 2016, with the company warning in November that it would miss profit forecasts owing to tougher competition, weak demand and delays to some projects after the Brexit vote. Stuart Mitchell, SIG’s chief executive, stepped down as a result.

SIG said Meinie Oldersma would become chief executive.

Mr Oldersma is joining from Brammer, a rival distributor of building materials.

He will take over the running of SIG as part of an overhaul of the company’s management, replacing Mel Ewell, an interim CEO, who will revert to being a non-executive director of the company. The transition will take place in April.

SIG said it was “disappointed” with its financial performance in 2016, and said it faces further uncertainty in many of its major markets this year. However, the company said the “longer term outlook in our core markets continues to offer considerable opportunity”.

Chang Hwee Nee will be appointed as the National Heritage Board’s chief executive officer with effect from May 1, the Ministry of Culture, Community and Youth (MCCY) said in a media release.

Ms Chang, 54, will take over from Rosa Huey Daniel, who was appointed CEO of National Arts Council but has continued to oversee key projects at NHB pending the appointment of a new chief executive.

Ms Chang is currently Deputy Secretary (Planning) of the Ministry of National Development where she oversees policies relating to land use, greenery, biodiversity, construction, the built environment and food security.

She served as a member of the NHB Board from 2009 to 2015 and has a strong interest in Singapore’s heritage, MCCY said in its media release.

“Ms Chang’s leadership experience will be instrumental in leading NHB as it works with the Ministry to draw up the long-term heritage plan for Singapore, strengthen the museum and heritage ecosystem, enhance the outreach to schools, and engage the wider community,” said MCCY. “Her ability to work with multiple stakeholders will deepen engagement with heritage supporters from the people, private and public sectors, on Singapore’s shared heritage and national identity.”

Shares in SIG were up almost 12 per cent at 120p in morning trade, the highest level since the profit warning in November.

Leslie Van de Walle, SIG’s chairman, said Mr Oldersma would bring more than 30 years of experience in the industry.

“He has lived and worked in a number of locations throughout Europe and has driven successful transformations of complexity and scale in a variety of organisations,” said Mr Van de Walle.

Before Brammer, Mr Oldersma was chief executive at 20:20 Mobile Group and non-executive director of a number of distribution companies.

In January, SIG appointed a new chief financial officer, Nick Maddock. “[The nomination of Mr Oldersma] completes the recruitment of the executive team to take the business forward,” said Mr Van de Walle.

Some analysts remained sceptical. Charlie Campbell of Liberum said the group was “structurally challenged”, but house broker Panmure Gordon said the stock’s recent recovery suggests “investors are beginning to assume SIG can recover”.

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MC CONSTRUCTION HIRES NEW OPERATIONS DIRECTOR North West construction firm Manchester & Cheshire Construction has recruited a former Deloitte Real Estate director to the newly created role of operations director.

Michelle Richardson, 35, joins MC Construction from Deloitte Real Estate, formerly Drivers Jonas, where she was a technical director.

She started at Drivers Jonas in 2008 as a senior project manager and won a series of promotions.

David Lowe, managing director of Manchester & Cheshire, said: “We have created the role of operations director to strengthen our structure as the business grows.

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“Michelle brings a wealth of knowledge and understanding of the client and consultant side, and she shares our passion for construction and our drive.

“Her experience will enable us to deliver an increased number of larger projects as we continue our growth strategy with a goal to become a £20m turnover business by 2018.”

Richardson said: “Having worked with Manchester & Cheshire in the past for a mutual client, it was clear we shared the same values and ethics in relation to the delivery of construction projects.

“I’m excited to join the company in this new role.

Manchester & Cheshire has a strong history and I’m looking forward to being part of its future.”

HOUSEBUILDING EXPERT APPOINTED TO BOOST CONSTRUCTION SPEED A new Director of Accelerated Construction has been appointed by the Homes and Communities Agency (HCA).

Stephen Kinsella will be leading the HCA’s Accelerated Construction unit, as part of their plans to increase the pace and scale of building more homes. The agency also intends on working with new entrants in order to develop “smarter approaches to house building”.

Expected to cost £2bn, the programme will involve the HCA taking direct action to construct homes on supplementary public sector land. In addition to speeding up the pace of house building, the HCA also intend to diversify the market through supporting modern construction methods and smaller builders.

Both of these aims were set out in February’s Housing White Paper.

Stephen will be reporting to the HCA Chief Executive, Nick Walkley. Commenting on the new appointment, Mr Walkley stated: “This is a very important appointment for the agency and we’re very pleased to have found someone who has the same ambition and passion to transform housebuilding in this country so more people can have a home of their own. Stephen is a private sector housebuilding leader with a comprehensive understanding of developing on public land. He will bring strong leadership skills, extensive industry knowledge and a track record for doing things differently.”

Also commenting was Sir Edward Lister. The Chairman of the HCA highlighted the evidential nature of the new appointment, indicating the Agency’s aim to both increase construction speed and diversify the market.

“This is a very important appointment for the agency and we’re very pleased to have found someone who has the same ambition and passion to transform housebuilding in this country so more people can have a home of their own. Stephen is a private sector housebuilding leader with a comprehensive understanding of developing on public land. He will bring strong leadership skills, extensive industry knowledge and a track record for doing things differently.”

Stephen also expressed his own enthusiasm on the appointment, stating: “I am excited by this opportunity to create a new delivery model for housing supply and increase innovation in the sector. The major housebuilders have a huge role to play in increasing supply but it is clear to me that Accelerated Construction and other HCA-backed initiatives are essential to diversify the market and ensure we can meet the pent-up demand for housing in this country.”

MASTER BUILDERS APPOINTS FIRST WOMAN CEO One of Australia’s great male bastions, the building industry, has for the first time in its 127-year history chosen a woman to champion its cause as it sets about trying to attract more female workers. Master Builders Australia marked International Women’s Day by announcing that Denita Wawn as its new chief executive and voice for the 32,000 - mostly male - workers in the $200 million building and construction industry. Ms Wawn, who has spent the past 14 months as the industry group’s operations manager, previously headed Brewers Association of Australia and New Zealand and has held senior roles at the Australian Hotels Association and National Farmers’ Federation. Her top priority is to work with employers, schools and universities to encourage more women into the building and construction industry, where just 10 per cent of the workforce is female. “I would love to think in 10 years if we can get it up to at least 25 per cent that would be fantastic,” she told AAP. “We hope with my appointment that people can see there’s a cultural shift in the industry and women are welcomed and embraced in the industry.” Ms Wawn says employers need to be more proactive in trying to attract women to the industry by doing things like specifying in job ads that female applicants are welcome.

An even bigger challenge is helping girls understand the range of job opportunities, from architectural design roles through to being a brickie. Ms Wawn said having more women workers in relatively highly-paid building and construction jobs could help narrow the general 16 per cent pay gap between men and women workers in Australia. “I think if we doubled the number of women in the industry we would see higher pay rates simply because you are in an industry that has higher pay,” she said. “We need to encourage women into higher paying industries and higher paying roles to close that salary discrepancy.” Having spent much of her career in male-dominated industries, Ms Wawn’s message to young women is to be yourself and not try to be “one of the boys”. “I think that it’s important when working in male dominated areas that you work hard, you call a spade a spade but equally you be true to yourself,” she said.

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THE RISE OF CONSTRUCTION – GAMECHANGERS SPEAKS WITH EDWARD HARDY OF CONSIDERATE CONSTRUCTORS SCHEME The value of total construction contracts awarded in the UK reached £74bn in 2015, a year on year increase of 16%, due to an influx of mega projects being commissioned and the average construction project value increasing by 18% to £6.2m for 2015.

With the rise of construction contracts, it was the perfect opportunity for Gamechangers to sit down with Edward Hardy, Chief Executive of ‘Considerate Constructors Scheme and find out more about one of the leaders in the construction industry.

Q. Will you tell us more about the Considerate Constructors Scheme, and your role as Chief Executive?

The Considerate Constructors Scheme is a non-profit making independent organisation founded in 1997 by the construction industry to improve its image and encourage best practice beyond statutory requirements.

The Scheme works through the voluntary registration of construction projects, companies, sub-contractors and suppliers who agree to abide by our Code of Considerate Practice. Everyone registered with the Scheme is monitored by industry professionals on their performance against three areas of the Code: consideration towards the general public, the workforce and the environment. Every year, the Scheme registers around 8,000 sites and makes over 15,000 site visits.

There are also around 1000 separately registered companies, sub-contractors and suppliers who are also monitored against the same criteria. My role as Chief Executive is to run the Scheme and to represent the Scheme at all levels.

Q. How did you find yourself in the industry?

My father ran a construction company his entire career and as such I was always involved with the industry and had laboured on his sites and also worked in his offices. When he retired, he was still involved within the construction industry and was offered the opportunity of running the Scheme, which he accepted, but he accepted after discussing with me that it would involve me working with him as well. My father retired from the Scheme in 2000 – and I was put forward as the potential replacement Chief Executive and I am delighted to say that this was ratified and I have been Chief Executive ever since.

Q. What is the key to improving the image of the construction industry?

A cultural shift. A cultural change and a change in mentality from where construction used to be; behaviours and practices that were considered years ago as acceptable are now understood to be unacceptable. The change in mentality is for construction to realise that it cannot give itself the excuse of ‘being construction’; it has to adopt the highest standards to ensure that it is just as attractive as any other sector as a possible career option. There are no reasons why the standards in construction should not be as good as, or indeed better, than those in any other sector.

Q. Where did it all ‘start to go wrong’ for the

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Where did it all ‘start to go wrong’ for the construction industry and what motivated the Considerate Constructors Scheme to launch?

The question implies that it was right before it went wrong. Construction as an industry has evolved and will continue to evolve. If you look back at the history of construction, particularly in terms of Health and Safety, it is only getting better and has only ever got better. Not so long ago there was no such thing as Health and Safety. With our involvement, considerate construction will continue to improve forever.

Q. Can you shed a little light on the philosophies of the Considerate Constructors Scheme and how you’re making an impact in the industry?

The construction industry can always be better. It is a markedly better than it was, but the philosophy has to be that it must continue to improve - with the ultimate aim being that construction is seen and recognised by all as a professionally managed, well-run sector that people would aspire to work in. And those who work in the sector are given the respect they deserve for doing what they do.

The Scheme is making an impact in the industry by changing the culture and behaviours on construction sites and in construction companies, reminding them that it is no longer acceptable to be a bad neighbour, a poor employer, or harmful to the environment. And actually, we should relish the challenge (and we do relish it) to forever be a good neighbour, employer, and a green industry.

Q. Will you tell us more about the most detrimental risks that are involved within construction?

From our standpoint, there are many risks, and everyone understands that working in construction contains risks. The greatest risk is that the construction industry does not have or gain the reputation that it should have. Most of us who work in construction realise it is, in the main, a very professional, well run, well managed, safe industry. However, the public perception of the industry and what is constantly being publicised is that the sector is unprofessional, reckless, careless, uncaring, and in some cases, illegal.

Unfortunately, there is very little focus on the positive side of the industry. For us, in terms of the image of the industry, it is the ongoing negative perception the public has because of how it is presented. The Scheme works to continually challenge sites to improve how they appear, because ultimately the construction site is the shop window to the sector, and in some cases these do not appear as professional as they could.

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Q. How do you simplify “image improvement” whilst still reducing risk?

Image is not just about the how something appears, it is also about reputation, and these two things must go hand in hand.

Image is what you present of yourself, whereas reputation is how you are known – and so the Scheme wants to challenge the industry on both.

What we [the Scheme] want to do is to promote the positive image which reflects where the industry is today and that things have moved on a long way. Many sites and companies, especially those who are part of the Scheme, work incredibly hard to achieve ever higher standards each year. In a large number of cases, they do look after their workforce, are very focused on occupational health and health and safety, risk awareness, and are far more caring to the environment that most would realise; no mean achievement for a sector with a negative track record for environmental consideration.

In a large number of cases, construction does a huge amount to be good neighbours, so in terms of simplifying image improvement, what we need to do is change the overall public perception of construction, based on inaccurate historical experience. We need to do this by showcasing a positive image and reputation; showing what it is like now, and challenging the perceptions that construction is full of ‘builders bums’, wolf-whistlers and offensive language. On the vast majority of construction sites, these negative behaviours are things of the past.

Q. Comprising of first-class achievements, Considerate Constructors Scheme has won its fair share of awards.

What do you feel is key to such success?

Hard work and a lot of effort spent convincing those in the sector that it was about time the industry needed to change.

No longer could construction hide behind the fact that it was ‘construction’. Instead of using all of these excuses as to why it was bad, we challenge the sector to be better and to constantly improve. This undertaking has involved thousands of hours of hundreds of meetings with all of the relevant people across the industry, gradually convincing all involved that the idea of a better industry is good for everyone.

Part of the Scheme’s success is also down to timing and a generational change – those that are coming into the sector and have been coming into the sector over the last 10-15 years have vastly different expectations to those who came before them. We would not be as arrogant as to say that the sea change in the industry is solely down to us, although we do believe we play an important part in that by changing the expectations that people should have when they are working in the UK construction sector.

The most important accolades are the National Site Awards and the National Company Awards that we award our topperforming sites and companies. These annual national awards recognise those sites and compaines registered with the Scheme that have raised the bar for considerate construction.

Winning a National Award is an exceptional achievement, and recognises sites and companies that have made the greatest contribution towards improving the image of construction.

Our Awards are only given to the top performing 10% of those registered and monitored by the Scheme so winning one of these shows that the site or company is truly performing at the very highest standard compared to all others in the sector.

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Q. Can you tell us more about the processes you’re applying this year and any potential risks that the Considerate Constructors Scheme may face?

This year, (as we do every year) we have updated our Checklist to change the expectations that our Monitors have when going to sites and companies. We have changed this in two key areas. These are the things sites and companies must be doing to achieve compliance with the Scheme. The other points are to see what sites could be doing to achieve a higher score. Some items that last year would have actually warranted a member achieving a higher score have now been moved into the compliance section, meaning that every site and company must now do these to achieve a basic level of compliance.

We are also now challenging the industry on how it ensures their workforce is legitimate to work. This means that we will be asking every site or company we monitor to provide that they are only using and employing workers and supply chain staff, who are legally allowed to work on their sites. Unfortunately construction has a reputation as a sector that does employ illegal workers and this has to change as in the majority or cases this is untrue.

Cycle safety is also something we take incredibly seriously and this has been reflected in our Checklist expectations.

We have also made healthy lifestyle advice mandatory now as part of the compliance section when looking at the workforce.

We have added some new items to the non-compliance section to challenge main contractors. Of particular note is goodwill for local communities - something we have always encouraged of our members.

Generating goodwill is now a necessary compliance for every site and company registered with us, and we would expect goodwill activities in every registration.

The other big challenge we have set through this year’s Checklist is to ask a new question, which is: What is the site doing to improve its image and the overall image of the industry to attract and retain the workforce necessary for the future of construction?

So, all of these are hugely challenging subjects, not to mention all of the other hundreds of items based on our Code of Considerate Practice.

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Q. As of 2016, what recent projects have you embarked on?

We are often asked as a Scheme about individual projects, interesting projects, exciting projects, noteworthy projects that we are involved with and so on. As a Scheme, we register somewhere in the region of 700 sites every month and have several thousand construction companies also registered with us at any time as part of our Company Registration, so most noteworthy sites and projects is the answer. It would be a shame to name only a few.

I think the question should be: Are there any noteworthy sites that are not registered with the Scheme? This would probably be an easier list to compile.

This year, we are very excited to have launched an addition to our monitoring service, meaning that we will now be able to monitor in relation to the Public Services (Social Value) Act, which came in to effect a couple of years ago. The construction industry clients, particularly those in the public sector, are now requiring their construction sites to prove they are achieving the expectations of social value legislation. We are now able to independently monitor what these sites and companies are doing to achieve those expectations, and provide a report, which can then be given to the client.

We have also launched star ratings posters, similar to the familiar hygiene certificate ratings in restaurants or star ratings on hotels. Up until now, registered organisations have displayed our registration posters and banners however have until now not publicly shown how well they are performing. So, from now, sites and companies are able to display star ratings posters to show how well they performed against our Code of Considerate Practice, demonstrating to the public how well they are doing in terms of being a considerate constructor.

We are also in the final stages of developing a female industry cartoon character. We already have one costume character, Ivor Goodsite, whom we launched around 10 years ago. We were asked what a construction site could do when visiting a school, and we introduced Ivor as a focal point to help get children interested and become aware of construction. The idea was to inspire the next generation into construction and inform them about health and safety. Ivor Goodsite is hugely successful, visiting over 30,000 children at schools throughout the UK in the last 12 months. What is also not commonly known is that site and companies registered with the Scheme made over 7000 visits to schools in the last year meaning that over 350,000 children were informed about our sector.

The reason for introducing a new character is that we are constantly challenging the construction sector to do more when looking at future recruitment and encouraging a more diverse workforce.

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Q. How will we see the brand develop over the course of the year?

We are currently reviewing our branding to reflect how Scheme registered sites, companies and suppliers are promoting the image of the industry through their excellence in raising the standards of considerate constructors and we will move away from talking about ‘improving’ the image of construction as in the vast majority of cases our sites and companies are now considerate.

Q. What changes have you seen over the past few years within the industry?

Equality is one of the biggest changes.

However, there is still a huge amount more to do in this area. The Scheme pioneered equality many years ago by including the provision for female facilities in our Checklist very early on, stressing that sites should provide facilities for all, and in particular, females. The industry had for some years been pushing to have more females working on construction sites and we were staggered that no one was making sure that all the necessary facilities were on site to accommodate them. We have seen a huge change in the facilities that are now provided on sites and are delighted to see that the vast majority of sites, and in particular the larger sites have fantastic facilities for all. This is something we are very proud to have made happen.

Occupational health is one of the other areas where there has been great progress, particularly over the last five years.

since we launched it in 2015. The Hub has already been visited over 450,000 times with over 1200 examples of best practice available. It is a free online resource for the industry to share their considerate practice by showcasing examples, innovations, case studies and undertaking e-learning modules.

The Best Practice Hub is proving to be an essential way for the construction industry to achieve this greater collaboration and, by doing so, helps continue to raise standards across the industry as a whole.

Q. What have been some of the memorable and more challenging events for you personally at the Considerate Constructors Scheme?

There are many memorable events, but a few spring immediately to mind. The first is when we had carried out our 100,000th site visit in 2014. It was a fantastic opportunity to bring together all of those who have had the greatest influence in the success of the Scheme over all of the years. In the early days we had never imagined we would ever achieve this number, and the fact that we are now heading towards our 100,000th Site Registration is even more staggering. It only goes to show how the industry has embraced our concept of considerate construction.

Community engagement and being a good neighbour are a central part of being a considerate constructor.

Registered sites and companies have developed fantastic programmes for positive community engagements.

The other event was when we first introduced the industry mascot, Ivor Goodsite. When we got our first costume I thought it was only right that I should be the first person to wear it: how could I expect someone else to wear it, if I had not done it myself? So, I arrived at a school dressed in a costume character and being shouted at and kicked by hundreds of school children who were convinced I was their teacher!

Last year the costume was hired over 500 times and I will admit that it is no longer me in it.

Collaboration across the industry has also improved. The Best Practice Hub is one such example and is proving to be a key resource for the construction world

The biggest challenge I find and continue to find with the Scheme is convincing those that do not necessarily understand the Scheme, that it is a

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good thing and is set up genuinely for the right reasons and genuinely to help the industry to improve itself. There are still many people in many sectors of the industry who may not see the Scheme as a force for good and changing that perception is something I always enjoy.

Q. In your opinion, what defines a Gamechanger?

Someone or something that moves the expected norm in to a different trajectory, for want of an improved outcome.

Q. What motivates you as Chief Executive at the Considerate Constructors Scheme?

The Scheme does make a real difference. For me, to be involved in an organisation whose sole motivation is to make something better, for all the right reasons, is a wonderful thing to get up for every day. Everything we do and everything we make is for the betterment of the industry and the public, and that is hugely satisfying.

Q. What does success mean to you?

Personally, success for me is achieving happiness and balance in life.

Q. What is your greatest weakness?

I can be slightly obsessive about detail, and can be overly critical. It is because I believe that things can always be better.

Q. Where do you see yourself in 2020?

Continuing to lead an even more successful scheme that strives to make even greater changes in the future.

Q. What is your best advice to aspiring entrepreneurs and businesses out there?

Do not give up and do not focus on the negative; never focus on why you cannot do something, because there is no point.

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yourself or your business why something would be hard to do or why it should not be done. People often cite the fact that people tried before and it has not worked and so on. Ignore all of that, if you think something is a good idea, and you have belief in it, this is the most important thing. Then it is simply a case of convincing others of why you believe something is the right way, or a successful way of doing it.

Q. What does the future hold for construction?

We are working with a group of like-minded organisations to put together a media campaign to show the population that construction is full of fantastic career opportunities. We are keen to highlight the myriad of different options available to people in construction, and, show that those already working in the industry are, in the main professional, sensible people.

I hope to see the future of construction as an industry with a better reputation and image so that everyone working in construction is proud to do so. In the future I hope that when a daughter says “Daddy and Mummy I would like to work in construction”, they are delighted by that choice because their view is that construction is a fantastic sector to work in, with great opportunities.

Q. Can you let us in on what’s to come over the course of the next 5 years for the Considerate Constructors Scheme?

What you will see from the Scheme is a big push to be in the SME sector within construction and a big push to be more involved in the domestic side of the industry where, unfortunately, a lot of negative stories about construction emanate.

There will also be a big drive in terms of promoting a positive image of the industry, moving away from talking about improving the image to promoting a positive image.

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Construction grows in February but inflation still strong The Markit/CIPS Purchasing Managers’ Index rose to 52.5, up from 52.2 in January, with any reading above 50 signalling growth UK construction output remained robust in February but input cost pressures on the industry remained severe according to the latest survey snapshot of the sector.

The Markit/CIPS Purchasing Managers’ Index rose slightly to 52.5, up from 52.2 in January, with any reading above 50 signalling growth. The increase was driven by the civil engineering index, while house building growth fell to its weakest level in six months and commercial construction slipped into contraction territory. The survey balance for rising input costs was the second highest since August 2008, driven by the 12 per cent plunge in the pound since last June’s Brexit vote.

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The overall economy has held up surprisingly strongly since the Brexit vote due to strong household spending.

But most economists expect a slowdown this year due to rising consumer price inflation crimping families’ consumption and a continued drag from delayed business investment due to the Brexit uncertainty for firms.

“With Brexit uncertainty likely to continue to weigh on business confidence and falling real wages set to worsen housing affordability, it remains hard to see the construction’s sector malaise coming to an end this year,” said Samuel Tombs, economist at Pantheon.

Construction starts climb 12% in January The value of new construction starts in January climbed 12% to a seasonally adjusted annual rate of $690.2 billion, according to Dodge Data & Analytics. After losing momentum during last year’s fourth quarter, nonresidential building strengthened in January, with much of the lift coming from the start of the $3.4 billion Central Terminal Building at LaGuardia Airport in New York NY as well as groundbreaking for several other large airport terminal projects.

“Suppliers’ efforts to pass on rising energy costs and global commodity prices have been amplified by the weak sterling exchange rate,” said Tim Moore, economist at Markit.

Construction output grew by 0.2 per cent in the final quarter of 2016 according to the latest estimate from the Office for National Statistics, following a 0.8 per cent contraction in the third quarter.

Building firms account for around 6 per cent of the UK’s output.

Non-building construction bounced back from a subdued December, with the boost arising from a $750 million natural gas-fired power plant in Florida plus two pipeline projects – the $900 million Plains Diamond oil pipeline in Arkansas and Oklahoma, and the $767 million Presidio Crossing natural gas pipeline in Texas.

Meanwhile, residential building edged upward in January as the result of a slight gain for single-family housing. On an unadjusted basis, total construction starts in January were reported at $48.5 billion, down 3% from the same month a year ago which included especially strong amounts for the often volatile manufacturing plant and electric utility/gas plant categories. If manufacturing plants and electric utilities/ gas plants are excluded, total construction starts in January would be up 10% from last year’s corresponding volume.

The January statistics raised the Dodge Index to 146 (2000=100), compared to 130 in December. The Dodge Index reached its 2016 peak in August at 156, and held close to that level in September at 153. The next three months showed the Dodge Index retreating 5% to 6% each month, culminating in December’s 130.

For the full year 2016, the Dodge Index averaged 144. “The 12% gain for total construction starts in January gets 2017 off to a healthy beginning, following the declines reported toward the end of 2016,” stated Robert A. Murray, chief economist for Dodge Data & Analytics.

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“What’s noteworthy about January’s rebound is that the institutional side of the nonresidential building market, led by airport terminal work, has assumed a more substantial role in keeping the expansion going,” Murray continued.

“The institutional side of nonresidential building has typically lagged the pattern shown by commercial building, and its continued growth is needed for overall nonresidential building to advance further in 2017.

While commercial building is also expected to see growth in 2017, its rate of increase will be restrained as vacancy rates level off and banks in the near term maintain a cautious stance towards commercial real estate loans pending any changes to the Dodd-Frank regulations. The public works sector is also anticipated to strengthen in 2017, with help coming from more pipeline work, although Congress needs to finalize fiscal 2017 appropriations which at the moment are set at essentially status quo levels under a continuing resolution that expires at the end of April. The proposal for greater infrastructure spending by the Trump Administration, assuming it gets passed in some form by Congress during this year’s first half, may not have a discernible impact on public works construction starts until the end of 2017 and into 2018.”

Nonresidential building in January climbed 16% to $261.5 billion (annual rate), following lackluster activity in December.

The inclusion of the $3.4 billion Central Terminal Building project at LaGuardia Airport as a January start provided much of the upward push, supporting a 37% gain for the institutional categories as a group and a 768% hike for the transportation terminal category. If the Central Terminal Building project is excluded, nonresidential building in January would have receded 2%, the institutional categories as a group would be down 1%, but the transportation terminal category would still have registered a 138% increase given the support coming from other large airport terminal projects. These included a $477 million project at San Francisco International Airport, a $420 million international arrivals facility at Seattle-Tacoma International Airport, and a $70 million expansion for Terminal 3 at Chicago’s O’Hare International Airport.

Also advancing in January were healthcare facilities, rising 6% with the help of these projects – the $239 million Banner University Medical Center in Phoenix AZ, the $230 million Westchester Medical Center ambulatory care pavilion in Valhalla NY, and a $135 million hospital modernization project in Galveston TX. The public buildings category in January rose 1%, aided by the start of the $210 million Multnomah County Central Courthouse in Portland OR. On the negative side for the institutional sector, January declines were reported for educational facilities, down 18%; amusement-related work, down 36%; and religious buildings, down 44%. Even with its January decline, the educational facilities category did include the start of several notable science-related university projects, such as a $252 million building at Stanford University in Palo Alto CA, a $143 million building at the University of Washington in Seattle WA, and a $117 million building at Penn State University in University Park PA. The commercial side of the nonresidential building market grew 12% in January. Office construction starts climbed 26%, and featured the start of two large data centers – a $600 million data center in McClellan CA and a $395 million data center in Sterling VA.

Other large office projects reported as January starts were the $329 million office portion of a $355 million mixed-use building in Brooklyn NY, a $105 million office building in Austin TX, and a $100 million office building renovation in Washington DC. Warehouse construction in January increased 21%, helped by groundbreaking for an $87 million distribution center for the U.S. Postal Service in Portland OR. Hotel construction in January rose 5%, and included the start of a $160 million convention center hotel in Daytona Beach FL. Declines in January were reported for store construction, down 1%; and commercial garages, down 7%. The manufacturing plant category in January plunged 69% relative to December, which included the start of a $1.2 billion pharmaceutical plant in Clayton NC. The largest manufacturing project reported as a January start was a $200 million pharmaceutical plant expansion in Waco TX. Nonbuilding construction, at $121.1 billion (annual rate), rebounded 44% in January after plunging 40% in December.

The electric utility/gas plant category surged 285% following extremely low activity in December, lifted by the January start of a $750 million natural gas-fired power plant in Florida.

January’s amount for this category was still weak by recent standards, coming in 65% below the average monthly pace for electric utilities/gas plants during 2016. The public works categories as a group climbed 32% in January, led by a 222% surge for the miscellaneous public works category, which includes pipelines, mass transit, and site work. The two large pipeline projects entered as January starts were the $900 million Plains Diamond oil pipeline in Arkansas and Oklahoma, and the $767 million Presidio Crossing natural gas pipeline in Texas. Additional miscellaneous public works projects entered as January starts were a $321 million light rail project in Bellevue WA and a $142 million natural gas pipeline in Pennsylvania. River/harbor development work in January bounced back 64% after December’s 75% plunge, and sewer construction improved 4% with the January start of a $137 million wastewater treatment plant in Pennsylvania. On the negative side, highway and bridge construction slipped 2% in January, maintaining the lackluster activity reported towards the end of 2016, although the latest month did include a $298 million HOV lane project on Interstate 5 in the San Diego CA area. Water supply construction in January dropped 13% after soaring 57% in December.

Residential building in January increased 1% to $307.6 billion (annual rate), basically maintaining the improved level achieved in December with an 8% gain. Single family housing in January grew 1%, due to this pattern by major region – the Midwest, up 13%; the Northeast, up 7%; the South Atlantic and South Central, each up 2%; and the West, down 10%. Multifamily housing in January held steady with its December amount. There were 13 multifamily projects valued at $100 million or more that reached groundbreaking in January, similar to the 14 such projects in December, including these January starts – the $615 million multifamily portion of the $650 million One Grant Park (phase 1) in Chicago IL, the $423 million City Point apartment building in Brooklyn NY, and the $282 million multifamily portion of the $345 million Jamaica Station development in Queens NY. The top five metropolitan areas in terms of the dollar amount of multifamily starts in January were the following – New York NY, Chicago IL, Washington DC, San Jose CA, and Los Angeles CA.

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The 3% decline for total construction starts on an unadjusted basis for January 2017 relative to January 2016 was the result of a varied performance by major sector. Nonresidential building advanced 27%, with institutional building up 74%, commercial building, up 14%, and manufacturing building down 72%. Residential building rose 1%, with single family housing up 7% and multifamily housing down 10%.

Nonbuilding construction fell 37%, with public works down 14% and electric utilities/gas plants down 77%. By geography, total construction starts for January 2017 relative to January 2016 revealed this pattern – the Northeast, up 22%; the West, up 21%; the South Atlantic, down 8%; the Midwest, down 14%; and the South Central, down 24%.

Useful perspective is made possible by looking at twelve-month moving totals, in this case the twelve months ending January 2017 versus the twelve months ending January 2016, which lessens the volatility present in onemonth comparisons. For the twelve months ending January 2017, total construction starts were up 1%. By major sector, nonresidential building grew 5%, with commercial building up 12%, institutional building up 10%, and manufacturing building down 36%. Residential building also grew 5%, with single family housing up 8% and multifamily housing down 1%. Nonbuilding construction dropped 12%, with public works down 6% and electric utilities/gas plants down 26%.

Original Source: Dodge Data & Analytics

10 construction industry trends to watch in 2017 With 2016 in the rear-view mirror, construction professionals are turning their attention to the year ahead. While construction spending failed to meet analyst expectations last year, economists predict 5% growth in the value of starts in 2017, according to Dodge Data & Analytics.

Despite that positive forecast, a feeling of uncertainty continues to loom over the industry. We spoke with experts from various sectors of the construction sector to find out their predictions for 2017. While questions regarding what the incoming Trump administration means for construction dominated the conversation, they also described the new technologies, project delivery methods and workforce management trends they expect to shape the industry this year.

Here are the top 10 trends to watch in 2017: 1. Collaborative project delivery methods will become more popular The days of design-bid-build domination might be winding down, as experts expect collaborative approaches to become more common for projects. Design-build, public-private partnerships and integrated project delivery are three of the most often-cited methods that are altering the industry and are likely to gain ground in 2017.

“There will be a continuing and expanded trend towards project team collaboration. I call that moving from an art to a science,” said Sue Klawans, senior vice president and director of operational excellence and planning at the Gilbane Building Company. “The owner-architect-contractor, if we happen to build a good relationship, it’s an art.

“Design-build is taking hold,” said Michael Vardaro, managing partner at Zetlin & De Chiara. “It allows more collaboration and gets you to the completed product much faster.”

On the public sector side, P3s involve a government entity hiring a group from the private sector to design, finance and build a large project. That group will then operate and maintain the facility for years before turning it back over to the owner.

“It’s taken a few years, but [P3s] have definitely caught on in the United States. [Agencies] just don’t know how to do it,” said William Eliopoulos, head of the construction industry practice at Rutan & Tucker. “As a delivery method, they’re used to the old traditional way. This is new. They’re giving up a little more control, which is a good thing. They’re going to rely now on a private developer to do some of the things they used to do themselves.”

2. The labour shortage will continue to plague the industry One trend that the industry hoped would fade away is, instead, raging on. The skilled labour shortage is a major concern for firms across the U.S. as employers struggle to staff their job sites. “If the economy stays strong and there’s continued investment in infrastructure, I don’t see the shortage going away,” Klawans said.

This trend is lingering after a huge chunk of the construction workforce were forced to leave the industry for other jobs during the recession when their work disappeared.

All the research and demonstrated achievements are coming from starting to organize thoughts about that and figure out what are the factors that allow a team to collaborate better.”

Between April 2006 and January 2011, the construction industry eliminated more than 40% of its work force, cutting nearly 2.3 million jobs. Unfortunately, significant portions of those workers haven’t returned.

The design-build process consolidates the design and construction phases into one contract, while the less common IPD arrangement involves the owner, architect, contractor and other project stakeholders entering into a single contract in which they collectively determine project goals, costs, risk-sharing and compensation.

A lack of technical training in schools and less emphasis on the trades are also contributing to a smaller pool of workers entering the industry. Combined with an aging workforce, those factors are creating a struggle for construction firms seeking employees for positions ranging from skilled trades to managerial roles.

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Aside from the long-term implications of a dwindling labour pool, firms are feeling the immediate impacts of the worker shortage, as it can lead to higher costs and longer project schedules.

One obstacle holding offsite back from stronger growth has been the industry’s slow-to-evolve nature, but Julian Anderson, president of Rider Levett Bucknall, believes the method is starting to overcome that hurdle.

On the positive side, Klawans noted that the current dearth of workers presents an opportunity for young people choosing a career path. “It presents an exciting opportunity for people with skills and capabilities but who have not traditionally had access to a well-paying job,” she said.

“This industry has a lot of them, in the trades and project management.”

“It’s one of those things that people figured out would be a good thing to do. I’ve seen the problem being that no one wants to be the first to do it. If I’m the first and it fails, I’m an idiot,” he said. “Things change slowly in construction. Once something is embedded, then it takes off pretty quickly.”

3. The feeling of uncertainty will linger under the new administration Last year was defined by uncertainty, as construction firms awaited the results of the presidential election. The next administration has the power to significantly alter regulations, taxes, labour policy and countless other aspects of business.

With Donald Trump winning the election, many firms were cautiously optimistic about his construction and development background, his promises to cut regulations and his massive infrastructure proposal. However, experts say the feeling of uncertainty hasn’t disappeared — and likely won’t in the months to come. That fear of the unknown could keep owners from starting or continuing new projects.

“I don’t know if anybody can predict what the new administration will really do,” said Gina Vitiello, construction attorney at Chamberlain Hrdlicka. “There’s a sense of uncertainty among contractors. If I’m planning on a major contract and it might not go forward, that’s a little scary.”

Some experts are concerned about possible trade conflicts with China and other countries — which could rock the U.S. economy and raise material prices — as well as the impact of stricter immigration policies on the construction labour force.

“I worry our industry is going to be so tied to the administration, which is not a status quo administration,” said Stuart Meurer, executive vice president and chief operating officer of Windover Construction. “ I’m fearful of people’s reaction to it. I think it’ll curtail construction in 2018.”

4. Offsite/modular construction will gain a stronger foothold in the market Offsite construction, also called modular or prefab, isn’t new to the industry. However, experts predict the building method will grow in 2017 as quality; time and labour concerns make alternatives to traditional construction methods more attractive.

“There’s always an emphasis on condensing the construction schedule of a project and saving cost — two very important points in any development scenario,” Vardaro said. “Modular has the ability to suppress schedule. If you’re fabricating a module in a factory, sometimes it’s easier to maintain quality control. You don’t have to deal with weather.”

Klawans noted that the first element of modular to take off in the industry is HVAC assemblies created offsite. Those contractors are finding that offsite methods allow them to reduce hour’s onsite, improve efficiency and perform more subassemblies than in the past, according to Klawans. She said that as more firms utilize offsite construction, they will see the benefits, and other companies will in turn try out the method.

5. Construction firms are cautiously optimistic for a future infrastructure-spending boost Infrastructure spending saw major play during the 2016 campaign, with President-elect Donald Trump proposing a $1 trillion infrastructure plan over 10 years. Although light on details so far, the plan involves trading an 82% tax break for private equity investment in revenue-generating infrastructure projects.

That emphasis on rebuilding the nation’s infrastructure shone a spotlight on the construction industry, as a lack of steady federal funding has left many contractors uncertain about when their next projects will start. With a potential $1 trillion funding infusion, companies in that sector are optimistic about the years ahead — if Trump and Congress are able to agree on a path forward.

“When Trump says at his victory speech he wants to put $1 trillion into infrastructure and mentions public-private partnerships, that gets everybody excited,” Eliopoulos said.

“His plan is short on details, so it’s difficult to tell exactly what he’s got in mind.”

The impact of such a massive infrastructure plan goes beyond firms in the infrastructure sector, according to Meurer. “Anybody that does both might focus more on [infrastructure projects] and allow opportunities for the other projects to spread to the market,” creating a boon for firms in the vertical construction business, he said.

6. IoT holds the potential to revolutionize the job site The Internet of Things encapsulates several aspects of the construction tech landscape, including equipment and employee tracking, wearable’s, drone surveying and other information collected on the job site. As contractors and subs continue their quest to cut costs and improve efficiencies, many are turning to IoT options to improve site operations.

Garrett Harley, director of engineering and construction strategy for Oracle, said he tends to combine the terms IoT and business intelligence. “It’s the aggregation and collection going into a central repository where you can make intelligent decisions based on what you’re collecting,”

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he said. “All those decisions are just a way of moving something from a manual process to seeing that information in real-time.”

Experts say that increasing workforce costs — which include recruiting and wage costs for current employees — will cut into contractors’ bottom lines.

Wearable’s, for instance, can track workers in the field and ensure that they protected from or at least aware of job site hazards and other potential injuries, and equipment sensors can monitor whether machinery is in need of repair.

8. VR/AR tech will pick up steam

Willy Schlacks, president at EquipmentShare, pointed to labour tracking as a major technology trend poised to take off in construction. “The amount of waste in labour mistakes or labour fraud is enormous in the construction industry,” he said. “The adoption [of labour tracking technology] is going to be pretty quick because there’s such a strong correlation to the bottom line.”

Along with increased use of new technologies comes the need for interoperability. Firms still struggle to find solutions that take all of the information collected from different devices and sensors, and then translate it into quality information.

“The challenges become where you reach the point where there’s this tidal wave of information,” said Tony Colonna, senior vice president for innovative construction solutions at Skanska USA. “Being able to transform a lot of disconnected information into what we’ll call the actionable, something that gives me context, takes data from multiple sources and turns it into data we can use.”

Harley said he believes the construction industry is still in the process of embracing new technologies, with a group of progressive contractors leading the way. Companies that fail to keep up with the newest technologies risk getting left behind.

7. Construction costs will rise due to materials and labour One of the most common concerns industry experts cited for 2017 is the escalating cost of doing business. With rising material and labour costs, firms will likely struggle to maintain their margins in the coming year.

Contractors have been expecting an impending bump in material costs after several years of relatively flat growth. The Associated Builders and Contractors called the most recent decline in material prices “the calm before the storm.”

“We’re already starting to see escalation in materials creep back in,” Meurer said. “We knew it would be coming, and we knew it would be a big factor in 2017.” He added that inflation is also a concern going forward because it could put the brakes on new projects in the coming years.

Anderson noted that construction costs continue to outpace inflation, which is a trend that he believes will “become unglued” at some point. “You can’t keep pushing up the cost of construction without having people put off construction,” he said. “The developers and builders have to keep pushing up their prices to the end user, and eventually the end user gets sick of it.” On the labour side, the skilledworker shortage has led to employers raising average pay higher than the national average.

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Virtual and augmented reality technology is one of the most buzzed-about trends in the construction tech space, as it can enhance collaboration among project stakeholders before building begins.

VR and AR can allow the construction team to detect errors ahead of time and avoid costly mistakes. They also have the potential to improve job site safety, such as letting managers and workers view job site conditions without subjecting them to safety hazards.

For example, researchers at the Institute for Computation in Engineering at the Ruhr-Universität Bochum in Germany are training workers on VR versions of job sites. And in September, construction giant Bechtel joined forces with Human Condition Safety to offer VR immersion safety training.

Klawans sees the potential for combining VR/AR and modelling. “There are other shiny pennies, but I think there’s a ton of value to be leveraged from VR/AR.” Colonna said that with virtual reality, the “cool” factor is still somewhat outweighed by high implementation costs. “You can see a lot of very sophisticated presentations, but the challenge is with the software platforms today,” he said. “It’s kind of cost prohibitive to use that on a regular basis. It’s in more of early deployment.”

9. The sustainable construction movement will consider changing its message The incoming Trump administration has implications beyond infrastructure, as sustainable building leaders are now considering the possibility of altering their messaging to ensure the movement continues.

“It’s really important not to lose the gains of the past by clinging to the way we talk about things,” said Beth Heider, chief sustainability officer at Skanska USA. “It’s really important to look at the work that we’ve done under the umbrella of sustainability and continue with that work and just recognize that there are lots of ways to articulate what we’re achieving.”

Heider said she believes the industry should put less emphasis on the climate change implications of sustainable construction and focus more on the bottom line, as resiliency and high-performing buildings can lower energy costs and create jobs.

“The new administration has probably been a wakeup call to the nation that all perspectives don’t feel as if they’re heard,” she said. “That also means you’ve got folks across the country that we aren’t communicating with. This gives us an opportunity to communicate the value of smart, highperforming buildings and infrastructure in a way that can be understood by more people.”

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Both Heider and Vardaro are optimistic that sustainable construction and the green building movement will continue to make strides in 2017. Vardaro said the year ahead will bring “the next step of building green,” with more owners and tenants demanding energy-efficient features in new buildings. Sustainable construction, he said, will be more of the norm rather than the exception going forward.

10. Construction firms will face increased scrutiny and prosecution of safety and fraud incidents The construction industry continues to face increased scrutiny for safety violations and incidents amid a building boom. Experts predict that 2017 will see continued heightened attention to job site safety from agencies and law enforcement. One of the most notable cases of 2016 in the industry involved the death of 22-year-old worker Carlos Moncayo, who was killed in an excavation collapse at a New York City job site.

The general contractor on the project, Harco Construction, was charged with criminally negligent homicide and manslaughter and was ordered to pay $10,000.

Despite some claims that it is an overreach to criminally prosecute contractors for accidents like Moncayo’s, authorities have ramped up their efforts to ensure job site safety.

In response to the Moncayo incident as well as other safety and corruption issues in the city’s construction industry, Manhattan District Attorney Cyrus Vance set up the Construction Fraud Task Force in 2015, which investigates safety, fraud and other legal violations.

“All firms will face greater scrutiny of accidents, including potential criminal prosecution for workplace injuries that in the past may have been treated solely as traditional accidents,” said Brian Gardner, chairman of Cole Schotz’s Construction Services Department.

Gardner added that construction companies should also expect increased attention to fraudulent practices in the years ahead, as wage and billing practices are becoming “criminally scrutinized” more often.

Original Source: Construction Dive

In an uncertain world, how can construction cost remain certain?

NYC is the world’s most expensive city for construction • Once again, international design and consultancy firm Arcadis has named New York City as the world’s most expensive city in which to build, according to its annual International Construction Costs Index. Building in New York is 50% more expensive than in the average U.S. metro and 20% more expensive than in other pricey cities like Boston, Chicago and Los Angeles.

• Real estate availability – or lack thereof – was a key factor driving costs up in the city due to the need for increased controls in other areas, such as optimal storage and staging of materials, the need for skilled and experienced contractors, and the use of modular construction.

• Arcadis expects New York City to remain the most expensive city for construction through 2017, with the metro continuing to pump out massive projects and draw international investors.

New York is the world’s most expensive city to build in, according to the latest International Construction Costs report published

by Arcadis, the leading global design & consultancy firm for natural and built assets. The high-density Asian cities of Hong Kong, in second, and Macau, fifth, rank in the top five, along with Geneva, third, and London, fourth.

London has fallen two places since last year, largely due to the devaluation of the pound following the UK’s Brexit vote making it less expensive compared to other cities. Shanghai, in 35th, and Manilla, 38th, suffer the biggest decreases overall, both dropping eight places. The highest climbers in the ranking of 44 cities are Auckland, which is up to 13th, Belgrade up to 30th, and Taipei, 40th, all of which rose four places compared to 2016.

“New York rises to the top globally once again due to a lack of real estate availability, accessibility issues and high real estate prices,” says David Hudd, Arcadis Cost and Commercial Director. “To build in such a dense urban environment like NYC, you must find solutions to control costs, such as expertly handling storage, transport and staging of building materials, identifying skilled construction firms and labor far in advance, and implementing modularized construction.”

New York construction shows no signs of slowing down The trend for the Big Apple to remain the most expensive for construction is likely to continue into 2017 and beyond as largescale construction projects and international investors drive development.

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New York is almost 50 percent more expensive in construction costs than the national average in the U.S., and more than 20 percent higher than other major cities like Chicago, Los Angeles, Seattle or Boston.

San Francisco is the second most expensive city for hard construction costs, due to its equally cramped environment, the rigorous seismic requirements and competition for contractors.

Meanwhile, Houston is a bargain, relatively speaking, as the city’s hard construction costs are currently 10 percent below the national average.

U.S. construction output growth is expected to increase at around 3 percent per year, driven by the housing market, the recovery of large metropolitan areas and the continued investment in manufacturing as the pace of reintroducing domestic manufacturing accelerates, especially in light of proposals of the new U.S. administration.

Housing continues to be a bright sector but with build rates remaining 30 percent below the pre-crisis peak, there should be potential for further growth.

The 2017 edition of the annual International Construction Costs report details the relative cost of building in 44 of the world’s major cities across 13 building types, while outlining the significant product quality, supply chain and cost differential factors.

The top 10 most expensive cities to build in: • New York • Hong Kong • Geneva • London • Macau • Copenhagen • Stockholm • Frankfurt • Paris • Vienna Regional construction cost differences Asia The effects of China’s continuing transition away from an investment driven economy are having an impact on construction costs. In some cases, real estate markets are suffering from over-supply which is exacerbated by a slowdown in demand from Chinese tourists and commercial occupiers. Looking forward, demand is expected to be tied into large scale investment in energy and transport infrastructure such as the One Belt One Road project.

South America Brazil faces a tough future, although it is hoped that new fiscal measures introduced by the government to return the economy to growth will lead to a recovery in demand from the commercial and private residential sectors. However, prospects for investment in resource industries remain poor given continuing conditions of oversupply.

Australia Pacific Construction in Australia continues to be impacted by a big overhang caused by the slowdown in commodity markets, but infrastructure and housing markets remain strong in New South Wales and Victoria in particular. Prospects for growth are closely aligned to an ambitious AUS $184 billion transport infrastructure plan focused on rail and motorway construction.

Europe There are significant cost differences within the Eurozone for construction, with costs in Lisbon and Athens still at an almost 50 percent discount to Paris, for example.

Risks in forecasting the European market’s performance include Brexit and the upcoming elections in a number of EU countries.

In London, development activity in infrastructure is strong, but key commercial sectors including offices and prime residential have seen a slowdown due to Brexit uncertainty.

Middle East Doha and Dubai continue to invest in development as the FIFA World Cup 2022 and Expo 2020 approach. Other cities have seen a stall or decline due to reduced public spending in light of lower oil prices.

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The CN100 2016 This year’s CN100 portrays an industry that has faced a difficult market for the best part of a decade. For some, hard work is beginning to show tangible rewards.

The past 12 months still represent the culmination of what has felt like a recession hangover for many contractors, with the last problem contracts still eating away at profit margins and revenue.

Overall, the industry’s 25 largest contractors have an average pre-tax margin of just 1.2 per cent, with three of the top 10 posting a pre-tax loss – leader Balfour Beatty (-£199m), sixthplaced Morgan Sindall (-£14.8m) and ISG in 10th (-£12.9m).

The top 25’s average pre-tax margin is down from last year’s 1.8 per cent, and a significant reduction on the top-25 average of 2.4 per cent seen in 2014’s CN100, as problem contracts won in tougher times have reared their heads.

The CN100 reflects a market where there has been no shortage of work, with revenues broadly improving. The total revenue of the UK’s 100 largest contractors has risen by 6.6 per cent to reach £64.40bn, up from £60.4bn a year earlier.

Total pre-tax profit for the CN100 has also increased by an impressive 83 per cent to £948.9m, compared with last year’s £518.5m.

Of the top 25, Vinci and Sir Robert McAlpine also recorded pre-tax losses in their latest results. Vinci lost £69.4m, on top of its pre-tax loss of £216.9m a year earlier, while 23rdplaced Sir Robert McAlpine – down from 19th in 2015 – reported a pre-tax loss of £35.7m.

Although the industry has faced problems in the past year: there is still a disparity between those companies winning work and those winning profitable work.

Pre-tax margins have shown modest improvement, with the average across the leading 100 contractors now 2.4 per cent – up from 2.1 per cent last year. However, taking a closer look at the different fortunes of the largest contractors and their smaller peers tells its own story, with wildly differing turnover growth and margins.

Balfour Beatty has had well-publicised woes in recent years and has started to reduce its revenues through more targeted bidding, but is still out on its own at the top.

Its revenue is down 4.3 per cent compared with last year’s CN100, and while losses were slightly less drastic at £199m, down from a whopping £304m a year earlier, the company is still very much in the process of turning around its performance – particularly in the UK. Still, with CEO Leo Quinn revealing that Balfour has closed 81 per cent of the 89 problem contracts identified in 2015, the outlook is more positive for next year. The CN100 top 10 witnessed some movement, with Kier supplanting Laing O’Rourke in third place. Ongoing difficulties with problem contracts saw turnover at Laing O’Rourke drop by 13.3 per cent, and subsequently it fell two places to fifth, allowing Interserve to rise to fourth place.

However, the second quartile of companies, with turnover typically between £600m and £250m, recorded among the strongest margins of the top 100. The average profit margin for firms ranked 26-50 in the CN100 was 2.9 per cent, with some stand-out performances across the largest of these companies. Big movers included Brookfield Multiplex, which jumped 14 places to 27th from 41st last year after increasing its revenue by 110.4 per cent – the largest turnover growth in the CN100 – while at the same time trebling pre-tax profit.

North-east contractor Esh also soared 18 places to enter the top 50 for the first time, having boosted revenue by 43.8 per cent. It is a similar tale for the lower quarter of the table, with firms ranked 76-100 recording average pre-tax margins of 3.3 per cent - the highest average in the CN100 Re-entries to the CN100 this year included McAleer & Rushe, which returned to the table in 71st place, having dropped out last year.

The firm posted revenue of £180m, up from £104m a year earlier. Other re-entries included Herbert T Forrest, which increased its revenue from £96.5m to £152.7m to re-enter in 82nd, while Scottish firm R J McLeod and demolition specialist Erith entered the top 100 for the first time, ranking 98th and 100th respectively. The lower half of the table has not been without its difficulties, with eight firms posting a pre-tax loss in their most recent results, compared with 11 in the top half of the CN100.Nevertheless, these smaller, leaner businesses have largely been able to adapt their businesses quicker to market changes than their larger counterparts.

How did many of these firms manage to restructure and focus their businesses after years of reduced workloads, low margins and increased skills shortages?

Original Source and Report in full: Construction News

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Q&A with Caterpillar Inc. CEO Jim Umpleby about headquarters move.

Caterpillar Inc. CEO Jim Umpleby spoke with the Journal Star ahead of the announcement that the company will not build a planned three-tower office complex in Peoria and will move its global headquarters to the Chicago area, in the United States. The plan calls for the company’s top executives to relocate, with a total workforce of about 300 to be located in the new global headquarters once the transition is complete.

About two-thirds of our business over the last five years has come from outside the United States.

Here are Umpleby’s explanations and answers to questions in his own words...

And again, both of these decisions, although they seem related, are independent decisions. They’re very much focused on allowing Caterpillar to grow and prosper again.

What was the rationale behind these decisions for the global headquarters?

We’ve struggled these last five years. Our sales and revenues have declined significantly. We peaked out over $66 billion in 2012, and we’re down more than 40 percent. Our outlook for this year is about $37.5 billion, and it’s been a painful process for us. We’ve had to let a lot of our colleagues and friends go. It’s been painful for our employees. I’m very proud of what our employees have done to keep the company strong during this period, but we really now are focused very much on growing the company again. As a result of that decision and a need to prioritize resources, we made a decision not to build a new office complex in Peoria.

Our thought here is that money would be better served, quite frankly, being invested in new products, new services, new solutions that will allow us to grow revenue, so that is the trade-off we are making. As you can imagine when volume drops as significantly as it has, we have to make priority decisions with the money that we have to invest, and that is the decision that we made.

The other decision is an independent decision, but it may seem linked. We have decided to locate a small, lean headquarters team, a team of senior executives, in the Chicago area to have better access to flights.

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We see a lot of growth coming in the international markets, and we believe that speed and agility for our senior leadership team to be able to travel around the globe is very important. I do want to emphasize that the vast majority of our employees in Peoria will not be relocated.

Who made the decision to move the global headquarters?

A decision like this to move headquarters requires approval from the Board of Directors. It is a board decision, which I and the executive office fully support. It’s been under consideration for some time. The actual decision was made relatively recently.

Clearly, it’s been under discussion for some time. The decision was made about two years ago to build a new office building, and it’s important to think about the context.

In 2014, the year that just ended before we made that announcement, our sales were approximately $55 billion.

The midpoint of our outlook for this year is $37.5 billion.

So over the last two years, our volumes have continued to decline, and many of our customers are really suffering. Our mining customers have struggled to survive over the last few years.

Customers are becoming more demanding, there are new competitors that are coming at us every day, and we are very focused on getting us growing again. And so making the right kinds of decisions with our limited resources to allow us to grow is critical.

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Where in the Chicago area will the new headquarters be located, and who will work there?

We haven’t made a decision. What many companies do is make a site selection and then release this information. We decided to be very transparent to both our employees and the community.

We decided to go public with that information, tell our employees, tell the community, and then start a site selection process. We’re not going to build a new building. Again, back to my previous point, we really want to invest our resources in new products, services and solutions to help us grow.

So what we’ll do is lease space in an existing building and we honestly have not made a decision where that will be. I suspect we’ll start with 100 employees, probably less by the end of the year. And when this new office is up and running, it will probably be around approximately 300 employees.

One thing I want to make clear is we’re not moving the top 300 people to Chicago. That’s not happening. Many officers will continue to be in Peoria. We’re talking about the executive office, maybe a couple of the vice presidents. It will be a small group, and then, as with any lean headquarters, there will be support staff around, including a few key finance functions, human resources and members from the legal department.

Who will remain in Peoria?

There will be more vice presidents in the Peoria area than there will be in our new location. We have over 12,000 employees in the Peoria area, and we’ll still consider Peoria our hometown. This is where we grew up, this is where our employees are. We’ll be here a lot, so you’ll see us knocking around town. It won’t be a situation where we’re gone.

We’re not looking for a building the size of AB (the current Downtown Peoria headquarters) to fill up. We’re not going to build a building.

We’re going to lease space in an existing building. We are not abandoning Peoria, we are not going to be moving everyone in Peoria to Chicago.

The great, great majority of employees in Peoria will still be here. We’ll still be investing in our products here. Our engineers out at Mossville, who design our products, are not going to be moving to Chicago.

Our goal here is to free up resources to upgrade existing products and design new products.

So I’d like to think they will be busier than ever. There are many facilities in the Peoria area that will continue operating.

What will happen to the Downtown Peoria property where Caterpillar intended to build a new administrative campus?

Our intent would be to work with the city to find a suitable use for the Chase Bank building block. We want to do the right thing there and work with the city to find a good use for that property.

What do you have to say to people in Peoria who will be disappointed by this news?

Certainly, we empathize and understand there will be some disappointment. I understand that. But when you stop and think about what we’re trying to accomplish, and if in fact we’re successful in taking the money that we were going to invest in a new headquarters building and use it to improve our products, services and solutions, it will allow the company to grow, to prosper again.

I think that will be a positive thing for the city. I expect disappointment that we’re not building a new office building. When Caterpillar prospers again and grows, I think it will be a positive thing for Peoria.

Original Source: View

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The 50 States of Construction: How NY firms adapt to complex logistics, soaring demand Chris Pepey, a senior estimator with Turner, explores the unique challenges and opportunities for companies operating in the nation’s largest market.

Millions of people passing by a job site each day. Tight quarters restricting access to equipment and materials; project schedules lengthening amid booming demand; opportunities arising to transform an iconic city skyline.

These are all realities of the New York construction market, according to Chris Pepey, a senior estimator with Turner Construction.

New York–based Turner is one of the nation’s largest contractors and, while it performs work throughout the state, it is best known for its New York City presence.

Throughout Pepey’s 20-year career with Turner, he has seen the market and the company evolve to adapt to new labor conditions, project delivery methods and technologies.

Construction Dive spoke with Pepey about how the New York market is unique, and what he predicts for the coming years.

Q. Why is demand so strong?

A. After the market fall in 2008 and 2009, there was a lot of freeze-up, and now there’s availability of funds. The economy is getting stronger, and clients have a need for growing their businesses. Hospitals have a need for continued growth, schools, infrastructure, like airports. We’re seeing the market open up in a lot of those sectors.

Q. What are some of the biggest challenges to operating in New York City?

A. Complicated site logistics. There are millions of people passing through every day — working, living, visiting.

Keeping them protected and safe is difficult in and around a heavy metropolitan area such as New York. The market’s tremendously busy, and that creates obstacles and difficulties, and we have to plan ahead and work with the subcontractor environment in the market to ensure we can perform these projects in the future. Limited labor is also something we see. It’s a growing problem; we’re always seeking skilled labor both in the trades and in project management.

Q. Do you think the labor shortage will ease anytime soon?

A. There’s a lack of availability in the younger generation coming into the industry, so that’s a little problematic.

We’re trying to make our environments more enticing to the trades and to attract younger generations.

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We’re hopeful that it’s going to improve, but I expect challenges moving forward.

Q. What is Turner doing specifically to attract those workers?

A. Turner has initiatives like Build LIFE, which is Live Injury Free Every day. The new approach to construction is much different than I’ve seen in the past. It deals with the issues that construction people bring up every day that used to be ignored. It humanizes the construction industry. For example, something like clean bathrooms. It’s a huge thing. It might seem simple, but it’s something that we’re trying to improve.

It’s a much more collaborative, open environment.

Q. Is Turner a union or open-shop contractor in New York?

A. The majority of projects is union, but we explore different opportunities as they come up with clients.

Q. Do you see that shifting in New York, with more of a nonunion presence emerging?

A. It’s always been out there. It’s definitely in the markets.

Clients come to us with different desires. Union, nonunion, open-shop, prevailing wage. We try to mold ourselves and provide the services to the clients that they need. I do see it growing, but it’s always been there.

Q. Switching gears to project delivery, how is Turner using designbuild and other alternative methods?

A. Design-build is an up-and-coming sector of the market for us. A couple years ago, we started the Turner Engineering Group, which is the design-build sector of Turner. Jacob K. Javits Center is a project we just acquired with Lendlease.

That’s a big win for that group. There’s more coming, and we’re excited about the new opportunities in the designbuild world. Integrated Project Delivery is another one. IPDlight is kind of a facet of that, where you use some factors of it but not necessarily fully. It depends on what the owner is looking for. That is a very collaborative environment.

Everybody’s involved — owners, design teams, architects, contractors. It’s a collaborative onsite environment. The design is put together as a group, rather than a designer handing over the design to us and we just build it. It allows for better constructability, safety and opportunities for modular. Modular is something that we’ve been seeing as a growing trend in buildings such as B2 [461 Dean] from Forest City Ratner, where we built a residential tower modularly, and also the Rockefeller University River Building building over the Franklin D. Roosevelt East River Drive.

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It’s a 900-linear-foot building, almost like a high-rise on its side, sitting over the FDR. There were tremendous complications with safety and labor availability. We built it in sections over in New Jersey, which opened up our labor force and allowed us to build in a controlled environment rather than over the FDR. We built the modules at the building, put them on a barge, shipped them over and erected them in the middle of the night over the FDR. It sounds very simple, but it was 16 sections and was built over the course of the summer. We did three months’ worth of erection. It probably would’ve taken us over a year to do that same work in a much more dangerous and difficult scenario over the very active FDR, which sees millions of cars a day.

Q. Going back to the topic of design-build: There have been reports that New York is slow to adopt the design-build delivery method. Have you seen that occurring?

Q. Do you expect modular to be incorporated with more projects in the future?

A. I don’t think design-build is necessarily new to the industry.

For instance, in other states, it’s probably been around for a while. New York is just slower to use that type of project, and it’s growing here. Maybe people are more comfortable around the U.S., and now it’s coming to New York and just getting to us.

A. Definitely. We’ve done jobs where it might not be a modular building, but instead with pods, which maybe are just the bathrooms. We might manufacture those in a warehouse, they get shipped out to the site and dropped into the building. It makes for much quicker connections, it helps schedule, and you’re working in a controlled environment — which is attractive to the labor force. It could be in New Jersey, in New York, it could be anywhere, so [modular] helps. So yes, in terms of complete buildings, but even more so pieces of buildings, like prefabricated racks for electrical conduits. There’s definite benefits to modular, and we see growth in that.

Q. Going back to the topic of design-build: There have been reports that New York is slow to adopt the design-build delivery method. Have you seen that occurring?

We built the modules at the building, put them on a barge, shipped them over and erected them in the middle of the night over the FDR. It sounds very simple, but it was 16 sections and was built over the course of the summer. We did three months’ worth of erection. It probably would’ve taken us over a year to do that same work in a much more dangerous and difficult scenario over the very active FDR, which sees millions of cars a day.

Q. Do you expect modular to be incorporated with more projects in the future?

A. Definitely. We’ve done jobs where it might not be a modular building, but instead with pods, which maybe are just the bathrooms. We might manufacture those in a warehouse, they get shipped out to the site and dropped into the building. It makes for much quicker connections, it helps schedule, and you’re working in a controlled environment — which is attractive to the labor force. It could be in New Jersey, in New York, it could be anywhere, so [modular] helps. So yes, in terms of complete buildings, but even more so pieces of buildings, like prefabricated racks for electrical conduits. There’s definite benefits to modular, and we see growth in that.

A. [Design-build] is a growing trend. Five years ago, it was few and far between. Today, the opportunities are growing. I think it might be a comfort thing, where people might need to see it happen in practice and in execution, and once that happens, you’ll start to see it become more prevalent in the market.

Q. Do you expect the public sector to embrace design-build going forward?

Q. How do projects differ when you have public sector clients as compared to private sector clients?

A. We approach them similarly. We have guidelines and restrictions and policies in place. On a lot of our projects, it’s the same. In the private sector, things flow easier with money and budgets. Whereas in the public sector, it could be a little slower, the process is a little longer.

Q. Are there any other factors of the New York market that are unique to the area?

A. The difficulties of working in New York. I’m sure other cities see similar type challenges, but I know our busy market, our complicated site logistics, our limited labor availability. The market is so busy right now in certain sectors like steel and concrete, we talk to contractors a year or a year and a half in advance to book a spot.

We have to acclimate to that. We’re big planners, so we’re always planning far out. Now we’re in a market that’s so busy we have to plan even further out. That’s what we have to do to secure the trades and the contractors to put the work in place.

Q. Do you expect the New York construction market to slow down anytime soon?

A. I like to be an optimist rather than a pessimist. I would say the next two to three years are pretty solid. We have backlog, we have work ahead. After that mark, it’s a guess.

Speaking for the next couple years, we’re busy now, the market’s busy now, and I don’t see New York City slowing down.

Original Source: Construction Dive

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UK Offsite Manufacture: The challenges and opportunities for construction markets Offsite manufacture for construction promises to deliver greater build efficiencies in the areas of: • Costs • Build standards and sustainability • Reliability • Health & safety • Labour and speed of construction Recent industry reports have signalled greater focus on the methods of Offsite Construction. Last October’s Farmer Review, “Modernise or Die”, challenges construction to do things differently, “to reduce the reliance on building in the same way that we have for decades if not centuries, with its heavy demand for on-site labour.” More recently, the government white paper into “Fixing our Broken Housing Market” seeks to encourage Modern Methods of Construction in house building, to boost productivity.

The report “Tackling the under-supply of housing in England” also champions Modular Construction as the answer to meeting housing demand, during an ever-increasing skills shortage. Indeed, these reports all present Offsite as a potential answer to meeting demand, overcoming skills shortages and encouraging innovation.

Offsite Manufacture has a track record of delivering efficiencies. Use of ‘flying factories’ by Skanska and Costain for phase one of the Battersea Power Station redevelopment resulted in 44% cut in cost, 73 per cent less rework and a 60% reduction in time.

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Laing O’Rourke meanwhile says that 80% of the Leadenhall Building was constructed Offsite, resulting in a 50% reduction in deliveries to site, as was Vinci’s Circle Health building in Reading, resulting in a 20% programme reduction and a 28% cost saving.

Research by Arcadis shows Brexit could see British construction miss out on 215,000 workers: they say that, “The likes of robotics and off-site manufacturing have never been taken as seriously as they should, but they could well make a sizeable difference.”

Often a tipping point is referred to when adopting new techniques, a point when it makes more sense to adopt the method in question and adapt, rather than remain.

Surely now is the tipping point for the adoption of mainstream Offsite Manufacture? Or, as the Farmer Review would say, now is to time to ‘Modernise or Die’.

Competitive Advantage Consultancy Ltd has produced this research in response to growing interest.

The purpose of the report is to provide manufacturers and other suppliers with an understanding of the Offsite Manufacture construction market and the background information, all in marketing plan format.

Original Source: Construct UK

“Gamechanger: A visionary strategist bringing fresh and unique ideas to the table, an individual or business that stands out from the crowd with ideas that inventively change the way a situation develops.�

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REPORTS R EPO RTS

A PRESENTATION OF FACTS OR FINDINGS

77.

Clearthought: Architecture, Engineering & Construction Software

78.

Housing: The moment of maximum opportunity

52.

79.

GLENIGAN

POINTMAKER

Construction Review and Forecast for 2017

ClearthoughT

ARCADIS

International Construction Costs Report 2017

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International Construction Costs Report 2017 This latest edition of our annual International Construction Costs report details the relative cost of building in 44 of the world’s major cities across 13 building types. The 2017 Report considers typical developments in city locations, and illustrates the significant product quality, supply chain and cost differential factors in popular cities around the globe, including New York, London, Geneva and Hong Kong.

New York construction shows no signs of slowing down The Big Apple is the most expensive place in the world to build. This trend is likely to continue into 2017 and beyond as large-scale construction projects and international investors drive development.

New York is almost 50 percent more expensive in construction costs than the national average in the US, and more than 20 percent higher than other major cities like Chicago, Los Angeles, Seattle or Boston. San Francisco is the second most expensive city for hard construction costs, due to its equally cramped environment, the rigorous seismic requirements and competition for contractors. Meanwhile, Houston is a bargain, relatively speaking, as the city’s hard construction costs are currently 10 percent below the national average.

To control rising hard construction costs, constructability is key Costs associated with constructing the infrastructure and buildings of tomorrow remain both varied and hard to predict. Shifting commodity prices, significant political moves and currency volatility add to the dynamic mix, resulting in complex investment decisions and the need for greater certainty of return.

Owners and developers will continue to chase return on investment, which will drive the need for sophisticated, innovative project management tools. Navigating the decision criteria and gaining a level of foresight and predictability will be increasingly hard, but valuable if we are to make the best cost and constructability decisions for our clients.

Arcadis Cost and Commercial Management expert, David Hudd takes the lead, across sector to find innovative, custom solutions to mitigate the rising hard construction costs. Read his perspective on how to make smart investments, with cost certainty to effectively manage risks, in an increasingly uncertain world. Construction Costs in New York have increased by about 25% over the last 10 years, with New York remaining the most expensive place to build. To control rising hard construction costs, constructability is key. Watch our “Why is New York so expensive to build in?” video with David Hudd, Cost and Commercial Management Director.

Report: https://goo.gl/z1SnUO Gamechangers 52

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INTERNATIONAL CONSTRUCTION COSTS 2017: COST CERTAINTY IN AN UNCERTAIN WORLD

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CONTENTS

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1.0 FOREWORD – EDEL CHRISTIE 2.0 CITY COST COMPARISON

2.1 SUMMARY 2.2 RESULTS TABLE: INTERNATIONAL COST COMPARISON

3.0 GLOBAL CONSTRUCTION MARKET TRENDS

3.1 TRENDS IN COMMODITIES 3.2 TRENDS IN CURRENCY 3.3 TEN OF THE MOST EXPENSIVE CONSTRUCTION PROJECTS IN 2017

4.0 REGIONAL CONSTRUCTION MARKET TRENDS

4.1 AMERICAS - NEW YORK 4.2 ASIA - HONG KONG - SINGAPORE - PROJECT SPOTLIGHT: OBOR 4.3 AUSTRALIA PACIFIC - MELBOURNE 4.4 EUROPE - FRANKFURT - LONDON - PARIS - PROJECT SPOTLIGHT: GRAND PARIS EXPRESS 4.5 MIDDLE EAST - DUBAI - DOHA - PROJECT SPOTLIGHT: DUBAI AL MAKTOUM AIRPORT

5.0 CONCLUSION 6.0 METHODOLOGY 7.0 FURTHER READING 8.0 CONTACT DETAILS

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FOREWORD

1.0

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Capital costs associated with constructing the infrastructure and buildings of tomorrow vary widely by location and remain hard to predict. Fluctuating currencies and commodity prices, and unexpected political developments have added to a complex and dynamic mix over the past 12 months. These factors add further dimensions of risk to investment decision making, increasing the challenges associated with securing certainty of outcome.

This latest edition of our annual International Construction Costs report details the relative cost of construction in 44 of the world’s major cities. Last year’s theme was ‘forewarned is forearmed’, where we highlighted that cost was one of the key factors that determine which developments go ahead and deliver positive outcomes. We made the case that access to reliable data and insight, combined with effective control, was a key part of the toolkit for successful delivery.

In 2017, our theme is Cost Certainty in an Uncertain World. Risk can result in increased costs, and given construction’s poor record in improving productivity, there is a possibility that growing uncertainty might become a barrier to the successful delivery of project investment. Given the significant shift in the political landscape seen in 2016, the challenge for businesses and government has increased in many markets. Meeting investment decision criteria and achieving predictable project outcomes may be increasingly challenging in many markets, but will remain essential if vital infrastructure investment is to be delivered.

Agility is a valuable capability in uncertain markets. The ability of investors and developers to flex their approaches to project procurement, finance and delivery will continue to be extremely valuable as politics and markets continue to be buffeted by both unexpected events and shifts in the business cycle. However, in seeking to be agile, developers and investors may have to relinquish some level of control over the detail of project delivery.

Ultimately the challenge for clients remains how to make smart investments in an increasingly uncertain world. Having access to high quality data and current, relevant market insight is one tool that will help clients to successfully navigate these challenges.

Edel Christie - Global Solutions Leader, Program Management 57 Gamechangers

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2.0

CITY COST COMPARISON 2.1 SUMMARY

World cities, including London and New York, continue to be some of the most expensive locations in the world to build. However, a slowdown in the rate of global growth, led by China and the resource economies, such as Brazil and Saudi Arabia, points to wider changes affecting the world’s construction markets.

The change in London’s position, from second most expensive to fourth, has been driven entirely by changes in exchange rates. Inflation remained relatively high in the UK during 2016. However, in other markets, such as in Chinese cities, a slowdown in previously high levels of construction inflation is also driving changes in the rankings.

There are some exceptions. Some US cities, New York, San Francisco and Denver for example are seeing high levels of activity and are likely to see continuing competition for contractors and construction labour.

Amsterdam is also in the midst of a mini building boom which has seen relatively high levels of inflation in local markets. Simply by being one of the largest and fastest growing economies in the world, India is also seeing some cost escalation, albeit from a very low base. However, across some markets, weaker growth in demand and slow resource markets have helped to eliminate construction inflation from cities including Dubai, Sinagpore and Hong Kong.

Elsewhere, modest growth has been the theme in many locations in Europe and Asia where limited changes in construction workload have had correspondingly little impact on local prices. Whether such stability can be sustained through 2017 will be of crucial importance to consultants, contractors and other members of local construction supply chains.

In this year’s rankings our assessment is based on typical developments in city locations, illustrating the significant product quality, supply chain and cost differential factors specific to these locations, including London, Geneva, New York and Hong Kong. The findings also point to significant cost differentials within the Eurozone, with costs in Lisbon and Athens still at an almost 50% discount to Brussels, for example.

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2.2 FIG. 1: RESULTS TABLE - INTERNATIONAL COST COMPARISON INDEX ◄►

1

HONG KONG

▲

2

GENEVA

▲

3

CENTRAL LONDON

▼

4

NEW YORK

MACAU ◄ ►

5

COPENHAGEN ◄ ►

6

STOCKHOLM ◄ ►

7

FRANKFURT

◄►

8

PARIS

◄►

9

VIENNA

▲

DOHA

▲

11

BRUSSELS

▲

12 13

10

AUCKLAND

▲

MELBOURNE

▲

14

SINGAPORE

▼

15

MILAN

▼

16

TOKYO

▲

17

JEDDAH

▼

18

DUBAI

▼

19

AMSTERDAM

▲

20

SEOUL

▼

21

KIEV

◄ ► 22

MADRID

▲

23

RIGA

▲

24

ANKARA

▼

25

ZAGREB

▲

26

BRUNEI

▲

27

LISBON

▲

28

WARSAW

▲

29

BELGRADE

▲

30

SAO PAULO

▼

31

ATHENS

▲

32

SOFIA

▲

33

SARAJEVO

▲

34

SHANGHAI

▼

35

PRAGUE

▲

36

BUCHAREST

▲

37

MANILA

▼

38

BANGKOK

▲

39

TAIPEI

▲

40

HO CHI MINH

▼

41

JAKARTA

▼

42

KUALA LUMPUR

▼

43

BANGALURU

▼

44

▲

0

HIGHER RANKING = MORE COSTLY TO CONSTRUCT

◄ ► NON MOVER ▼

50

100

150

LOWER RANKING = LESS COSTLY TO CONSTRUCT 200

250

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3.0

GLOBAL CONSTRUCTION MARKET TRENDS 3.1 COMMODITY TRENDS Commodity prices remained largely stable and at a low base through most of 2016. Whilst the mining and oil and gas industries felt the pain, for construction low prices helped keep a lid on inflationary pressure on input costs. Since October 2016, industrial commodity prices have staged a mini-recovery, increasing by around 15% in the 4 months since October 2016. Whilst crude oil prices have fluctuated by 50% in the past 12 months, these price movements have had a limited impact so far on prices charged on construction projects.

Looking forward, the question is whether the recent rapid adjustment in prices will continue, or whether a more stable pattern of supply

and demand will be re-established.

According to latest World Bank forecasts, following action to correct supply and demand imbalances on many commodity markets, commodity prices will increase over the next five years. Crude oil is expected to make the biggest recovery, with prices now forecast to rise to around $60/bbl by 2018, a rise of over 100% from the low point seen in early 2016. However, $60/bbl is not enough to get above the level needed to enable many Gulf Oil producers to balance their budgets, which could weigh on a recovery in public spending programs that have been pared back over the past two years.

Whilst high levels of oil stocks could hold back the further recovery of oil prices, production constraints

and low investment could result in further price increases in metals, particularly if demand from China continues to strengthen as it has over the past few months – the price of iron ore for example is expected to peak at $65/tonne during 2017 - 8% above its long term trend value.

Inevitably there is a high degree of uncertainty attached to these forecasts – associated not only with the potential for additional supply or geopolitical disruption but also further fall in demand. Furthermore, as seen following the fall in the value of sterling, the strength of a country’s currency relative to the dollar plays a key role in defining the local cost of commodity-based goods.

FIG. 2: WORLD COMMODITY PRICES 2005 - 2021* 700

600

Index (Base 2005 = 100)

FORECAST 500

400

300

200

100

0

2005

2006

Aluminum

2007

2008

2009

Crude oil, avg, spot

2010

2011

Coal, Australian

2012

2013 Copper

2014

2015

2016

2017

Iron ore

Source: IMF and World Bank

*Please note that the huge rise and fall in iron ore prices between 2009 and 2015 distort the data.

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2018

2019

2020

2021

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-15%

-10%

-5%

0%

10%

5%

15%

20%

PLANT

COMMODITIES

RISK

PRICE GROWTH EQUILIBRIUM LEVEL

CURRENCY

REGULATION

A mixture of inflationary and deflationary factors influence tender price growth rates in markets around the world.

LABOUR

FIG. 4: THE CONSTRUCTION PRICE MIX ¹

OVERHEADS & PROFIT

The balance between construction cost growth and the attractiveness for overseas investors is shifting in a range of construction markets around the globe, including the UK,

AUSTRALIAN DOLLAR CHINESE YUAN CZECH KORUNA DANISH KRONE EURO HONG KONG DOLLAR INDIAN RUPEE INDONESIAN RUPIAH JAPANESE YEN MALAYSIAN RING GIT NEW ZEALAND DOLLAR POLISH ZIOTY QATAR RIYAL SAUDI ARABIA RIYAL SINGAPORE DOLLAR SOUTH KOREAN WON SWEDISH KRONA SWISS FRANC THAI BAHT TURKISH LIRA UAE DIRHAM POUND

MATERIALS

Elsewhere in the world, the Chinese yuan and Indian rupee also saw depreciation against the dollar of up to 5% during 2016, a trend that is expected to continue for the yuan, guided by government intervention, and which will ultimately have a greater impact than Brexit on costs and trade. The US saw relatively strong performance, including raised expectations which is likely to continue into 2017 driven by expectations for further interest rate hikes. The currencies of many AsiaPacific economies, including Japan and Indonesia, have strengthened over the past year, recovering losses against the dollar and euro seen in 2015.

FIG. 3: US DOLLAR MOVEMENT AGAINST GLOBAL CURRENCIES: OCTOBER 2015 - OCTOBER 2016 ¹

DEMAND

The volatility of the currency market has continued over the past year as prominent currencies have recovered against the US dollar. The big story has of course been the post-Brexit fall of the value of the British pound, which stands out for its speed, scale and impact. In a reversal of last year’s strong performance, GBP has lost around 15% against the dollar since this time last year. It was the world’s worst performing currency during 2016. Further uncertainty surrounding Brexit negotiations following the triggering of Article 50 could maintain the pressure. Devaluation has been a significant inflationary factor for UK construction as in many cases the cost of imported materials influences around 20%-30% of the total value of a project. Across the Channel, the relative resilience of the euro in the past year will continue to be tested as the region adjusts to the postBrexit future, as well as competing with capital flows responding to the strength of the dollar.

US and Hong Kong. In the case of London, the weakness of the pound is encouraging inward investment from dynamic countries including Malaysia, China or India. Whether these positive effects continue to be felt in London could be influenced by measures adopted by the US to address what the new administration perceives as currency manipulation.

UNCERTAINTY

3.2 CURRENCY TRENDS

Client and supply chain behaviour will influence many of these factors or the response to them.

1 Source: Arcadis Strategic Research

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3.3 FIG. 5: TEN OF THE HIGHEST VALUE CONSTRUCTION PROJECTS IN 2017 (TOTAL VALUE / US$BN)¹

PROJECT OR PROGRAM

LOCATION

VALUE (US$ BN)

1.

ONE BELT, ONE ROAD

CHINA TO CENTRAL ASIA

150

2.

DELHI MUMBAI INDUSTRIAL CORRIDOR

DELHI TO MUMBAI, INDIA

90

3.

DUBAI AL MAKTOUM AIRPORT

DUBAI, UAE

33

4.

GRAND PARIS EXPRESS

PARIS, FRANCE

30

5.

HINKLEY POINT C

SOMERSET, UK

22

6.

HUDSON YARDS

NEW YORK CITY, UNITED STATES

20

7.

JEDDAH ECONOMIC CITY

JEDDAH, SAUDI ARABIA

20

8.

CROSSRAIL

LONDON, UK

20

9.

BEIJING DAXING INTERNATIONAL AIRPORT

BEIJING, CHINA

13

10.

CHENGDU TIANFU INTERNATIONAL AIRPORT

CHENGDU, CHINA

11

CONSTRUCTION AND COST: 10 OF THE HIGHEST VALUE PROJECTS AND PROGRAMS AROUND THE WORLD No matter what city or country you’re in around the world, a fundamental truth is that the cost of constructing critical infrastructure and new buildings over the course of a long build phase is notoriously difficult to predict, making the challenge of providing cost and commercial certainty a vital one.

However difficult the process of construction, when completed, built assets generate a formidable economic contribution to the communities and cities within which they’re built. For example, in 2016 the built environment generated a huge US$36trillion of GDP globally. This is evidence that throughout history constructing built assets, from roads and railways to residential high-rises, is critical to national wealth.

Across the globe, governments are planning, constructing and redefining their built environments in order to create

thriving communities that improve quality of life for their citizens and generate better returns for the economy. This year’s International Construction Cost report highlights ten of the largest, most costly construction projects that are in flight in 2017 that are being created to benefit both the communities of those in which they exist, and the wider global economy.

For project spotlights on One Belt, One Road (OBOR), Grand Paris Metro, and Dubai Al Maktoum Airport, please visit the regional summary pages.

1 Source: Arcadis Strategic Research

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4.0

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REGIONAL CONSTRUCTION MARKET TRENDS 4.1 AMERICAS Continuing growth in the US has been sustained despite a slowdown in investment in the oil and gas sector and a slight rise in interest rates. Job creation, low interest rates and GDP growth have supported steady rather than spectacular growth in the US construction sector. With the new US administration, expectations have risen with respect to a significant increase in investment in critical national infrastructure.

The strength of the US economy helped to underpin global growth as China’s rate of expansion faded in 2015, but the US is now growing at about 1.5% per year. Prior to the election, construction output growth was expected to increase at around 3% per year, driven by the housing market recovery in large metro areas such as Los Angeles and Houston.

Housing continues to be a bright sector, but with build rates remaining 30% below the pre-crisis peak there should be potential for further growth.

80% of US infrastructure is either in private or municipal ownership, funding models other than federal spending will need to be identified suggesting that expectations raised during the election might be difficult to fulfill. The spread of the Public Private Partnership (PPP) model, now supported in 33 states, is likely to be one of the major vehicles used to attract infrastructure investment in the foreseeable future.

What are some of the construction cost challenges ahead for the US? Reusing existing building space can compromise the design process due to an existing building’s structure or envelope. Another challenge is the scarcity of talented, skilled workers who are being pulled from different sector’s project and raising labor costs. The hyper-competitive market means developers are seeking low cost construction delivery models like design-build and construction management which allows owners to share risk to release the project for an early construction start, even though not all design aspects are complete.

CONSTRUCTION COST TRENDS FOR BUILDING AND INFRASTRUCTURE

COMBATING CONSTRUCTION COST CHALLENGES ON THE HORIZON FOR THE Commercial industrial manufacturing AMERICAS has been experiencing a renaissance in the US, partly as a result of low energy costs and increasing costs of imports from Asia, driven in part by higher wages. This is clearly a trend that will accelerate with renewed political support. Investors are able to consider manufacturing across sectors in the US due to further innovations in technology and sophisticated management systems in recent years. There will be continuing investment in manufacturing if the pace of “reshoring” accelerates.

Infrastructure such as roads, bridges and utilities is discussed as having massive market potential given the $3.6tn renewals program identified by the American Society of Civil Engineers in 2014. As more than

Other countries in the Americas are facing different fortunes. Mexico, for example, has benefitted from increased competitiveness due to low energy and labor costs, but faces huge uncertainty with respect to the future of NAFTA and its wider relationship with the US. Brazil faces a tough future both politically and economically. New fiscal measures introduced by the current Brazilian president, Michel Temer, aim to return the economy to growth by 2017 with the hope that it will lead to a recovery in demand from the commercial and private residential sectors.

However, prospects for investment in resource industries remain poor given continuing conditions of oversupply.

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NEW YORK, USA RANKS # 1 / [NON-MOVER] The Big Apple is the most expensive place in the world to build. This trend is likely to continue into 2017 and beyond as large-scale construction projects and international investors drive development. New York’s dense environment, unique local regulatory requirements, labor shortages and lack of contractor competition means hard construction costs, across classes of construction, are up to 50% higher than the US national average and more than 20% higher than other major cities like Chicago, Los Angeles, Seattle, or Boston.

San Francisco is the second most expensive city for hard construction costs, due to their equally cramped environment, the rigorous seismic requirements and competition for contractors. The Houston market is a bargain, relatively speaking, as the

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city’s hard construction costs are currently 10% below the national average.

Owners, developers and builders must be smart about how they construct in this tough market and constantly look for ways to save on costs and do more with less. Sourcing an adequate pool of qualified contractors to bid at the outset of a project can be challenging.

Contractors can selectively decide which projects to work on so there is a need for project owners to aggressively market projects so that they are attractive to increase bidding competition. This can slow projects or even halt them completely, and it may be necessary to use alternative contractors with workers from outside the local area or sub-contractors, as top firms are often busy.

The construction management procurement approach allows contractors to buy materials and thoughtfully manage their integration into the project (i.e. just-in-time release) to stay in front of the project and optimize productivity. Building in such a dense urban environment like NYC means expertly handling material storage, transport and staging which requires key cost decisions such as the option of renting space or facing a complex delivery schedule which is likely to include a lack of proper laydown space. Modularized construction solutions may be the right answer for many in NYC to contain costs and keep the project moving. In New York City, contractors and developers must continue to take the lead in finding innovative, custom solutions to their build approach to mitigate the rising hard construction costs.

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4.2 ASIA The effects of China’s continuing transition away from an investmentdriven economy are having a particular impact on Asian markets that have previously seen Chinese inward investment. In some cases real estate markets are suffering from over-supply exacerbated by a slowdown in demand from Chinese tourists and investor occupiers.

Whilst economic growth levels in emerging Asian economies such as Malaysia, Indonesia and Philippines are way in excess of the developed world, growth rates in established hubs including Hong Kong and Singapore are similar to those seen in the US and Eurozone.

Growth rates in many construction markets have eased significantly over the past 18 months as commercial and residential development rates have peaked. Whereas double-digit growth has been common across the region, expansion at around 5%-7% per year is the best prospect for many construction markets. Looking forward, demand is expected to be tied into large-scale investment in energy and transport infrastructure (such as the One Belt One Road project), much of which will need to be funded by PPP, and affordable housing, which will need central government support. Given the importance of private funding, the maintenance of investor confidence in the face of potential turbulence from China will be vital for the health of Asian construction markets.

HONG KONG RANKS # 2 / [NON-MOVER] Hong Kong markets are stabilizing at peak levels of activity, which have seen projects affected by significant resourcing challenges.

Output in 2015 reached yet another record – up by 100% compared with 2010. While big projects such as the Zhuhai Macau bridge link and the Guangzhou-Shenzhen High Speed Rail link are well advanced, new programs – the third runway at Chek Lap Kok, expansion of the East Kowloon central Business District and maintenance of a large-scale housing programme totalling 480,000 units over 10 years - are expected to sustain workload at current levels. Hong Kong’s residential, hospitality and commerce markets depend on mainland demand, which so far has been sustained.

The private sector represents around 30% of overall activity, so the health of the construction market is closely linked to wider Chinese markets. Operating at peak levels spells a problem for Hong Kong’s authorities because of the shortage of construction operatives available. This shortage, estimated to be over 10,000 people, has been driving up prices and delaying project completions. However, the ageing workforce and labour force problem is difficult to solve as solutions based on migrant labour are not acceptable to the local population. As a result, initiatives to increase industry productivity are gaining a higher profile in Hong Kong.

SINGAPORE RANKS # 15 / DOWN FIVE PLACES (PREVIOUSLY #10) Singapore’s construction market has seen a continuing correction since 2014 triggered by over-supply and a slowing economy. The residential sector has the highest vacancy levels since 2005 and public housing delivery has also been scaled back down to around 18,000 units compared with 22,000 delivered in 2014. 2017 is currently forecast to be between US$27bn and US$32bn - down on previous forecasts but representing a stable market after a steep correction. Sustained workload in the public sector in areas such as public housing and civil engineering has supported the industry during the correction, and as a result, prices have remained broadly stable.

Looking forward, continuing investment in aviation, metro, road and high-speed rail through projects such as the Changi Airport Terminal construction and High Speed Rail terminus is planned to sustain both the local industry and Singapore’s competitive position. Output is forecast to increase by about 2% per year, showing the trademark resilience of the economy. However, like Hong Kong, Singapore also faces a labour shortage. In an effort to incentivise local contractors to invest in their workforce, the Singapore government has increased the cost of levies charged on the wages of mid-skilled overseas workers to encourage talent retention in the city-state.

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PROJECT SPOTLIGHT: ONE BELT, ONE ROAD (OBOR) With an expected program lifespan of 13 years at a total value of US$150bn, the One Belt, One Road (OBOR) initiative, linking up Eurasian countries with China through Central Asia and across Southeast Asia, Oceania and North Africa, is a construction giant.

Commissioned by Chinese leader Xi Jinping as part of a strategic approach to open up new avenues to sustain its appetite for growth, OBOR is a development strategy and framework that focuses on connectivity and cooperation among countries primarily between the People’s Republic of China and the rest of Eurasia. It proposes to do so through two main components, the land-based “Silk Road Economic Belt” (SREB) and oceangoing “Maritime Silk Road” (MSR).

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The initiative calls for the integration of the region into a cohesive economic area through building infrastructure, increasing cultural exchanges, and broadening trade. There are several nodes, corridors and other elements of the belt. One of the earliest nodes to take shape was the New Eurasian Land Bridge, a railway that connects China to Central Europe through Kazakhstan and Eastern Europe.

Economic corridors extend across the Eurasian land mass including in regions on the periphery like the Russian Far East.

The strategy, which as a mega-scale construction program, is being underpinned by the dedicated Asian Infrastructure Investment Bank (AIIB), underlines China’s push to take a bigger role in global affairs, and its need for priority capacity cooperation in areas such as steel manufacturing. Over the next two decades the initiative will be realised, and the impact of this massive construction project will be seen on the world stage.

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4.3 AUSTRALIA PACIFIC Construction markets in Australia continue to be impacted by a big overhang caused by the slowdown in commodity markets, but infrastructure and housing markets remain strong in New South Wales and Victoria in particular. Prospects for growth are closely aligned to an ambitious A$184bn transport infrastructure plan focused on rail and motorway construction, though some of this relies on developer contributions, user payments and political commitment.

Growth of 1% was forecast for 2016, albeit output fell by nearly 4% in the second quarter and is down 10% in the year. The housing market has been a bright spot in Sydney and Melbourne in particular, with prices rising by about 30% since 2012, driven in part by high levels of overseas investment. Some analysts believe that the peak in the cycle has been reached although output continues to rise at around 4% per year. However, to contrast this, looking ahead, infrastructure is likely to be the brightest sector with road, metro and airport development providing the bulk of the opportunities, already seen through major programs such as the new Western Sydney Airport, Metro developments, and Melbourne’s Western Distributor highway project.

MELBOURNE, AUSTRALIA RANKS # 14 / UP ONE PLACE (PREVIOUS #15) Ranked 14th globally in our International Construction Costs Survey, Melbourne sits in the top third of the most expensive cities to build in globally. Compared to cities in the traditional resource states of Western Australia and Queensland, Victoria’s capital Melbourne has significant public and private construction planned in the coming years. This is largely driven by the Victorian State Government’s commitment to infrastructure spend and addressing the needs of Melbourne as a global city.

Construction costs remain high in part due to Australia’s geographic isolation. Compared to Europe and the Americas, there is far less private sector competition to complete construction work and these companies import the majority of construction materials, which can fluctuate in price due to the Australian dollar and taxes. Adding to this, Melbourne like all Australian cities has a long history of powerful trade unions, which protect workers’ rights but can contribute to the cost of construction. Despite the cost, Melbourne has a strong plan for construction across rail, roadwidening projects and new buildings underway.

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4.4 EUROPE Despite falling energy prices and quantitative easing, the Eurozone’s recovery remained weak in 2016, and a combination of political uncertainty and the impact of Brexit could knock future forecasts backwards. The European commission forecasted GDP growth of 1.6% in the euro area for 2016 and 2017, however due to slower growth in emerging markets, risks resulting from the economic rebalance in China, and rising interest rates in the US, the commission reports that risks to its forecast are increasing.

A further risk comes from the political scene, where many of the EU’s major markets, including Germany, France, Italy and the Netherlands, will see either a general election or a referendum in the next 12 months. Given the feverish nature of national politics in the EU, it is quite possible that even more instability will be added to the post-Brexit mix. A rebound in infrastructure investment had been expected in 2016, driven partly by the €350bn Juncker infrastructure investment plan. Analysis carried out in May 2016 suggests €11bn of project funding has been approved so far, although evidence that the Juncker funding is replacing rather than creating new investment means that a significant increase in overall infrastructure spend may not be realized.

Construction markets in Europe grew by 1.5% in 2015, with activity in Central and Eastern Europe growing at the fastest rate. However, current forecasts estimate an increase to 2.6% per year, with most growth coming from the six largest markets, including Spain and Poland, the latter of which received a high rate of construction investment alongside the UK. Spain and Hungary are all expected to see a rapid rate of growth following a steep decline in activity since the financial crisis.

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FRANKFURT, GERMANY RANKS # 8 / [NON-MOVER] Real estate experts expect Frankfurt, as “the City of Banks”, to be on the winning side after Brexit.

Although the banking industry is still concerned about the effects of the financial crisis and low interest rates, we expect Frankfurt to see a rise in speculative property purchases and construction activities due to relocation of companies from London to Frankfurt.

LONDON, UK RANKS # 4 / DOWN TWO PLACES (PREVIOUS #2) London is one of the costliest cities in the world for construction. However, the nation’s recent Brexit vote has unleashed a wave of uncertainty which is bringing the balance of risk and reward under sharp focus in the market. An unpredictable outlook for future asset values and end user demand threatens development pipelines in some key commercial sectors. A resulting potential softening of tender prices, coupled with rising input costs, gives cause for concern that the industry could come under intensifying commercial pressure. As uncertainty escalates, increasingly clients will need to take greater risks on development decisions, whilst suppliers will need to take risks on pricing strategies.

Meanwhile, the UK construction skills crisis continues to take its toll on the capital with some sectors, such as infrastructure, particularly feeling the pinch. We estimate that, even excluding the potential impact of forthcoming migration controls, the house building and infrastructure sectors in London will need to recruit an extra 50,000 new people each year to meet needs. The government and industry will need to act swiftly to mitigate these risks and position the sector for the future opportunities of a post-Brexit boom.

Whether in residential construction or commercial real estate, the demand for land and buildings in Frankfurt and the surrounding area is likely to rise further in the coming years. However, the weak Euro and increasing construction costs of recent years are being balanced by disproportionately high prices for new buildings caused by foreign investors from China, Russia and the US. Against the background of a buoyant economy, record exports and all-time low borrowing rates, the German construction industry experienced a boom in 2016. The most sought after developments were logistics/ industrial and residential. The demand for logistic and industrial properties is reaching unprecedented levels, with the churn in new lease agreements alone in Frankfurt for 2016 at a rate 44% higher than average, two thirds of which were for newly constructed properties.

In the residential sector, historically low interest rates and high job security have increased purchase power for home buyers, and have made property a more attractive investment for savers. Rental demand for residential property in the cities is extremely high, with a shortfall of supply against demand in all categories, but particularly affordable housing and executive high-rise apartments.

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PROJECT SPOTLIGHT: GRAND PARIS EXPRESS One of the largest infrastructure projects in Europe today, Grand Paris Express began construction in Paris in June 2016. The project, managed by a specially-formed entity, Société du Grand Paris (SGP), will cost an estimated €28bn of investment to 2030.

The 200 kilometers of new metro lines will have capacity to carry two million passengers, creating new connections between underserved parts of the Paris metropolis. The main stations will become major development hubs, creating jobs and homes. The project’s backers expect it to generate €100 to €200bn of additional GDP for the Paris region and tax revenue of between €40bn and €80bn.

PARIS, FRANCE RANKS # 9 / [NON-MOVER] In a European Union dominated by austerity and strict budgetary rules, examples of innovative investments in construction are scarce. However, in Paris a number of such investments are underway, in recognition of the fact that a well-performing infrastructure is the lifeblood of a country’s and a cities’ economic prospects.

Within the Paris historical city limits, Paris Rive Gauche and Clichy Batignolles are two major developments that combine infrastructure and new urban forms in an innovative way to invent the city of the future. Innovation has also been harnessed by the City government through a new form of urban competition. “Reinventing Paris” awarded 22 sites for development with no pre-established program based on an assessment of the social and environmental value-added.

Arcadis has been involved in the process through the design of two

buildings, including “Mille Arbres” which is sure to become an iconic addition to Paris’s urban landscape.

In its capacity as entity responsible for the delivery of Grand Paris Express, SGP commissioned an Arcadis joint venture for global operational project management of three lines of the Grand Paris Express. The services include program and project management, contract and procurement management, costs and risk analyses, technical advisory, BIM management and other tasks, with a full-time dedicated team of more than seventy Arcadis consultants.

Ultimately however it is thanks to the €28bn Grand Paris Express project that Paris is undergoing the greatest infrastructural metamorphosis since the days of Baron Haussmann – the creator of modern Paris. 200 kilometers of new high-speed metro lines with 68 new stations will create new connections and stimulate new areas for development on the perimeter of the most densely builtup areas.

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4.5 MIDDLE EAST The steep fall in the oil price since 2014 and the strength of the US dollar, continue to have a significant and long-term impact on construction markets in the Gulf Cooperation Council (GCC) countries.

Over the last twelve months, deficits have continued to grow, particularly in oil-dependent economies such as Saudi Arabia and Kuwait. To address this challenge, several nations have trimmed back their public expenditure through cuts to spending programs and subsidies.

They’re also increasingly focused on the economic diversification agenda which is a central part of many of the National Visions across the region. In the medium to long-term, this focus on diversifying revenue streams will bring significant benefits. However, in the short-term, there’s a degree of uncertainty, with some industry analysts suggesting that member states like Qatar, Kuwait and the UAE need the price of oil to be US$65-70 per barrel to balance the books.

DUBAI, UAE RANKS # 19 / DOWN ONE PLACE (PREVIOUS #18) Recent developments in the UAE have demonstrated the wider impact of uncertainty associated with falling commodity markets on the local construction industry. Despite the significant levels of investment needed to help deliver Expo 2020 and to boost wider transport interconnectivity, the development pipeline has taken a hit as a result of greater caution by local investors.

Traditionally, Dubai has benefited from strong residential, retail and hospitality markets however these sectors have cooled since 2014 and remained flat in 2016. Projects are now being initiated ahead of Expo 2020 but many of these will not

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be procured until mid-2017 at the earliest, and could result in further weakness in construction inflation in early 2017.

Transport infrastructure remains a big priority in Dubai even though the existing infrastructure is some of the best in the world. This is hardly surprising though given the population of the Emirate is estimated to double in the next 13 years alone. Ambitious plans for rail, metro and airport expansion form the background to construction programs worth more than US$70bn.

These will continue to be developed, although at a slower rate than initially planned.

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PROJECT SPOTLIGHT: DUBAI AL MAKTOUM AIRPORT Approved in 2014, the AED120bn (US$32.67bn) expansion project for Al Maktoum International Airport is expected to result in the world’s biggest airport, both in terms of size and passenger capacity, by 2050. It will also ease pressure on the nation’s first airport, Dubai International Airport, which is expected to witness 100 million passengers by the end of 2020, and has limited scope for further growth.

The expansion will be executed in two phases over the next six to eight years. After the project’s completion, the airport will be able to handle more than 220 million passengers a year. The initial phase has been divided into two sub-phases, the first of which will see construction of a new 165,000m² terminal facility, offering a capacity of 35 million passengers a year, and two 385,000m² satellite concourses, and satellite terminals.

The second sub-phase will see the construction of two more runways with similar dimensions and capabilities, increasing the total number of runways at the airport to five. With construction at the airport itself enabling far greater capacity allowance, infrastructure needs to be put in place to transport passengers in and out of the airport and on and off the planes. Therefore, in addition to the new runways, six new train tracks will be built to connect the terminals with the concourses, with two each for departures, arrivals and transfers.

Three stations will be constructed at each concourse, with another built at the west terminal.

DOHA, QATAR RANKS # 11 / UP ONE PLACE (PREVIOUS #12) Qatar continues to race towards the delivery of the 2022 FIFA World Cup™, and it could be argued that the wider slowdown in the GCC construction market has been beneficial, given the scale of the program still to be delivered. Despite the wider fall in energy prices, Qatar continues to experience positive GDP growth although at a slower rate than before. In 2017 the economy is expected to grow by ~3.9%.

Although we’ve seen a recent slowdown in the pace of delivery, infrastructure investment will continue to be a big priority as its central to both the delivery of the World Cup and the wider 2030

National Vision. Some projects have already been deferred or taken off the critical path however there’s still significant investment being planned including the world’s largest Greenfield port development, 8,500km of roads and a combined US$75bn rail and metro program.

Once complete, the Al Maktoum Airport will serve as the focal point for Dubai World Central, a purpose-built “airport city” located 23 miles outside of Dubai. The 54-square mile airport metropolis will feature everything from commercial, residential, and leisure developments, to state-of-the art cargo and air passenger facilities.

As Qatar proceeds towards the World Cup, it continues to face infrastructure delivery challenges, including the sourcing of labour and materials, and local logistics that impact the pace of construction and development. The nation’s industry will also soon need to start planning for the slowdown in work that will inevitably follow the peak of World Cup-related expenditure.

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CONCLUSION: DIGITAL ENABLEMENT OF COST CERTAINTY With an increasingly volatile and uncertain geo-political and economic landscape, the importance of monitoring and controlling the cost life-cycle has never been more evident.

Fluctuating currency, commodity and politics can directly affect project capital expenditure and supply chain performance underpinning investment decisions; the events of 2016 show that these fundamentals can shift quickly and unexpectedly .

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It is increasingly important to leverage available data analytics and digital construction methods to develop a higher degree of cost certainty and investment confidence.

A digitally enabled cost and project delivery framework allows for a more agile response to these shifts in investment fundamentals during project delivery as well as driving long term asset life-cycle performance.

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FIG. 6: ARCADIS DIGITAL INTEGRATION THROUGHOUT COST LIFE-CYCLE MODEL

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METHODOLOGY

The comparative cost assessment is based on a survey of construction costs in 44 locations undertaken by Arcadis, covering 13 building types. costs are representative of the local specification used to meet market need. The building solutions adopted in each location are broadly similar and as a result, the cost differential reported represents differences in specification as well as the cost of labor and materials – rather than significant differences in building function.

Costs in local currencies have been converted into a common currency for the purpose of the comparison, but no account has been taken of purchase power parity. High and low cost factors for each building type have been calculated relative to the UK, where average costs for southeast England = 100, using US dollar as the currency unit. The relative costs plotted in the chart represent the average high and low cost factor for each of the 13 buildings included in the sample. Construction costs are current in Q4 2016. Exchange rates were current on 5 October 2016.

FIG.5 SOURCES – 3.3.

EDF: https://www.edfenergy.com/energy/nuclear-new-buildprojects/hinkley-point-c Crossrail: http://www.crossrail.co.uk Wikipedia – https://en.wikipedia.org/wiki/Hudson_Yards,_ Manhattan Le Figaro – http://www.lefigaro.fr/conjoncture/2016/12/21/2000220161221ARTFIG00006-grand-paris-les-chiffres-du-chantier-dusiecle-a-retenir.php Airport Tech – http://www.airport-technology.com/projects/almaktoum-international-airport-expansion-dubai/ McKinsey – http://www.mckinsey.com/global-themes/China/ Chinas-one-belt-one-road-will-it-reshape-global-trade Financial Times – https://ig.ft.com/sites/special-reports/one-beltone-road/ Wikipedia https://en.wikipedia.org/wiki/One_Belt,_One_Road Shanghaiist –http://shanghaiist.com/2016/05/28/chengdu_tianfu_ international_airport_construction.php Centre for Aviation – https://centreforaviation.com/profiles/ newairports/beijing-daxing-international-airport DMIC – http://delhimumbaiindustrialcorridor.com/ Wikipedia – https://en.wikipedia.org/wiki/Jeddah_Economic_City THE AMERICAS CITY COMPARISON SOURCES – 4.1:

The data gathered for other US city comparison was accessed from the Marshall & Swift Valuation Service using published indices through the end of 2016.

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RELATED MATERIAL

CITY INVESTOR GUIDE LONDON

CITY INVESTOR GUIDE SYDNEY

GLOBAL BUILT ASSET PERFORMANCE INDEX 2016

INTERNATIONAL CONSTRUCTION COSTS 2016

GLOBAL INFRASTRUCTURE INVESTMENT INDEX 2016

SUSTAINABLE CITIES INDEX 2016

The materials above can be downloaded at www.arcadis.com

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CONTACT US Edel Christie Global Solutions Leader, Program Management T +44 (0)20 781 225 584 E edel.christie@arcadis.com @edelchristie Edel Christie

Simon Rawlinson Head of Strategic Research T +44 (0)20 7812 2319 E simon.rawlinson@arcadis.com @SimonRawl Simon Rawlinson

@ArcadisGlobal @ArcadisGlobal Arcadis

www.arcadis.com

Arcadis. Improving quality of life Gamechangers 76

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Clearthought: Architecture, Engineering & Construction Software 2017

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Following decades of underinvestment the Architecture, Engineering and Construction (AEC) software market is waking up and is expected to see significant growth over the next few years The latest issue of Clearthought is now available, which gives an overview of activity and opportunities in the architecture, engineering and construction (AEC) software industry with specific focus on market drivers in the UK and Europe. This is the latest report published by Clearwater International’s specialist TMT team.

The global AEC industry is in the midst of a paradigm shift. Following decades of underinvestment in the technology needed to support and improve business functions, the AEC software market is waking up and is expected to see significant growth over the next few years.

Increasing project complexity, the advent of Building Information Modelling (BIM) and the rise of cloud computing are creating new demand for innovative technology solutions across the sector, with many providers using M&A to fill gaps in their portfolio in order to capitalise on the growing market opportunity.

Clearwater International has experience of working across various segments of the AEC software industry, having advised: • Union Square, a provider of information management software to the AEC industry, on its sale to Deltek Inc; Business Collaborator, a leading provider of BIM software tools, on its sale to private equity house YFM Equity Partners and the management team; • On the sale of Byggeweb, a Danish developer and worldwide marketer of SaaS based collaboration software solutions, to RIB Software; and • On the sale of CSC, a developer of innovative software solutions for structural engineers, to NASDAQ-listed Trimble.

Report: https://goo.gl/RCaO8n 77 Gamechangers

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Housing: The moment of maximum opportunity Pointma

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HOUSIN G: NOW IS THE T TO SEIZ IME E THE O PPORTU KEITH BO NITY YFIELD & DANI 

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Unless SUMMAR radical action Y Governm is taken ent will not now, the achieve one million its target  The new hom to build social and es by 202 econom 0. worsenin ic conseq  This g afforda uences could bility are of hav divide bet e considera consequen severe ween tho ble: the ces. Ho se who electoral those wh using is inherit we salient pol o don’t will an increa alth and itical issu bec singly ome mo and UK pro e. Accord voters now re pronou ing to Ips ductivity nce consider will continu os Mori, d, high hou housing five most e to stagna se prices to be one important te as tie up sig of the unproduct issues fac ahead of nificant ive assets ing Britain sums in education . today, , poverty foreign affa  The , defenc irs, and crim current sys e and e. tem con spires to the interes  Pub make it lic opinio t of any ind not in n on new ividual sta on this cha has also housing keholder llenge. It changed developm to take is a dysfun dramatica ent years. In ctional ma lly in the  It is 2010, the rket. therefore last few British Soc Survey fou hardly any ial Attitud towns hav nd that surprise 46% of es e been that no new they would responden built in Milton Key oppose this cou ts said any new nes bac ntry since in their loc homes bei k in the restriction al area. ng built 1970s. Pla In 2014, s, fragme fallen to this opp nning nted lan just 21%. institution osition had d owner al capital ship lack of funding treatment  The and importanc of new the tax e of hou developm authoritie reflects sing to the ent – s have the fact been the local electorate pro tha visi t big enough there are on of soc losers on places ial and phy simply not the for for peo new sical infr house pric ple to live developm astructure es continu ents – in. With stifle new have com ing to rise wages, the initiatives bined to far faster need for . than new hou been gre  A pro sing has ater. gramme never of reform, vision and inspired as bold by a gra as that out nd ‘Right to lined in Buy’ White the 1979 Paper, is needed now.

1

There will never be a better time to initiate a housing revolution with an impact as great as that of council house sales, write Keith Boyfield and Daniel Greenberg in Housing: Now is the time to Seize the Opportunity, published by the Centre for Policy Studies on Thursday 2 February.

With the UK Government due to publish a new Housing White Paper shortly, now is the time to deliver new housing.

Without radical action, the Government will not achieve its target to build one million new homes by 2020 Attitudes towards housing are also changing: a recent British Social Attitudes Survey found that 21% of respondents would oppose building new homes in their area, compared to 46% in 2010. Those supportive of the construction of new homes in their area have climbed from 28% in 2010 to 56% in 2014. Nimbyism is waning.

Voters now consider housing to be one of the top five most important issues facing Britain today. As a result, inaction will result in real consequences for the Government and the country: • The electorate will not look kindly on a Government which fails to meet its housing targets, particularly as it has recognised the problem at the highest level • The economy already suffers as a result of inadequate housing stocks; significant sums of money are tied up in unproductive assets and high house prices distort the labour market, forcing working people to waste fruitless and uncomfortable hours commuting • A restricted housing market only increases the divide between those who inherit wealth and those who do not This report outlines detailed recommendations for the Government to drive forward a housing revolution including: 1. Planning Simplification. The complexity of the current system makes any significant housing development risky and the high fixed costs of navigating the planning system are a barrier to entry for smaller developers, reducing competition 2. Reducing the tension between developers and local residents. Legislation should be introduced to create Special Purpose Vehicles (SPVs) which can act to bring together developers, local communities, utility providers, and any other parties and provide a balance between the groups to facilitate a smoother process 3. Pink Zones. Areas with diluted red tape – hence Pink – where community co-operation is incentivised at the beginning of the planning process.

Report: https://goo.gl/2axaA9 Gamechangers 78

R EPO RTS

Construction Review and Forecast for 2017

Glenigan’s Economics Director has shared his thoughts and analysis on current topical issues including the impact of recent political events and their impact on construction, and the wider economic outlook.

The Construction Review and Forecast for 2017 has since been produced, offering an assessment of the challenges and opportunities facing the industry next year.

Topics covered include: • Weaker economic growth forecast for 2017 • Overall weakening in construction project starts and output • Business investment forecast to slow • Strong long-term pipeline of planning submissions • Renewed growth in civil engineering starts • Weaker housing market activity forecast for 2017 • Industrial starts recover • Slowdown in office development activity • Retail property facing structural change This report analyses the latest data on construction activity and provides an assessment of the industry prospects for 2017 and beyond.

UK construction activity has been buffeted during 2016 by economic and political uncertainties.

Industry workload pipelines and order books have been disrupted as investors and clients have delayed and reappraised their development plans in the light of the EU referendum vote.

During the course of this year the construction industry has seen the flow of projects on to site moderate as political and economic uncertainties surrounding the EU referendum adversely affected the private non-residential sectors in particular.

Overall Glenigan estimates that the value of underlying projects starts declined by 4% this year and a similar decline is anticipated for 2017.

Report: https://goo.gl/X9BfcE 79 Gamechangers

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