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It’s a seller’s market; secure your supply chains now

Patricia Moore, Turner & Townsend

Clients must react to the changing market and “book their slots” with suppliers for years ahead if they want to be able to deliver projects and take advantage of falling commodity prices says Turner & Townsend’s new head of infrastructure Patricia Moore.

Moore says that clients must adapt and react to a market which is now starting to operate  in favour of sellers. “It is an interesting market there are so many mixed messages,” she says. Firms are going to the wall, commodity prices are reducing but tender prices are rising and there is a skills shortage. It is simply a case of supply and demand, but the balance of power is moving from employer to suppliers particularly as skills are in short supply.

"Data and technology are going make a big difference over the next few years. “We are doing things now in six days that it used to take us six weeks to do."

“Infrastructure clients need to wake up to how they are going to secure their supply chains and innovate around that so they can meet the challenge of what needs to be delivered,” she says.

“They have the advantage of being long term clients who are serial purchasers so they can drive a better relationship model with the supply chain if they give it certainty of work and then they should be able to enjoy the benefits of reduced input prices. Or to put it another way, you’ve bought your slots, now work with the supply chain to engage them on how to use the benefits of the input price fall.”

It is an opportunity not available to one off clients such as many of those in the property sector, she points out but for infrastructure clients it should be a positive thing. “Clients need to be open, clear about the pipeline and work with their suppliers to enjoy the benefits of the market and make sure they cascade down to all the tiers," she says. “There are a few ground rules that clients need to remember though. They need to collaborate and create open, honest and consensual relationships. There might have been a shift away from that in recent years.”

Moore took over as Turner& Townsend’s head of UK infrastructure in June when Murray Rowden was promoted to the consultant’s global infrastructure work.

Infrastructure is a star performer at T&T. It grew its revenue by a fifth in the year to April 2015 contributing £106M to the firm’s overall £380M turnover. The UK market  contributed 80% of that and Moore and her 700 staff are aiming for further significant growth this year.

“The infrastructure offering in the UK is more mature than in the seven other regions we operate in,” Moore says.  “The point of the management change in the UK is to allow me to focus here and let Murray concentrate on making sure we get our market share globally, leveraging off the expertise and experience of the UK."

She is feeling confident about the future in the UK. “Our reorganisation four years ago means we now have a truly national capability and its led to a step change in our growth.”

The firm is working with most major clients across the transport, utilities and power sectors including  Hinkley C and Anglian Water as examples and is a fourth generation framework contractor with Network Rail.

“Infrastructure clients need to wake up to how they are going to secure their supply chains and innovate around that so they can meet the challenge of what needs to be delivered”

“Highways England is the key target for us this year. We are waiting on the professional services framework which is due out any day.”

The culture of the firms is one of the reasons clients like to work with Turner  &  Townsend Moore says. “They like that we are independent and that we are a complete meritocracy. “We like to be client side, part of the planning and our Vision 2020 ambition is to get even higher up the value chain, moving into advisory services.”

That aim will be helped by successes such as that at Crossrail where the firm put in a supplier performance regime that drove a 66% increase in supply chain performance and which has since been picked up on by Infrastructure UK as a standard that could be applied across the industry.

“The biggest challenge for us is – as everyone else – is skills,” Moore says.  “We have lots of mature relationships with key clients so how do we meet the demand over the next three to five years in a shrinking market in terms of people?”

The company, with foresight ,maintained its graduate recruitment at 50  a year through the recession but this year it is taking on 120 new graduate recruits. It also operates a growing apprenticeship scheme.  But Moore can see that data and technology are going make a big difference over the next few years. “We are doing things now in six days that it used to take us six weeks to do. That’s the future,” she says. “But there’s more work to be done on looking at what the data is telling us.”

Turner & Townsend’s decision to not go down the flotation route but convert from private limited company to a limited liability partnership will help the firm develop and retain its people, Moore believes.

“We are all really excited about the LLP. It has removed a degree of uncertainty about the future, lets us plan the business and it gives clarity of career path to attract and retain  top  talent..’

 

If you would like to contact Jackie Whitelaw about this, or any other story, please email jackie.whitelaw@infrastructure-intelligence.com.