Kier's head of infrastructure - proceeding with caution

Jon Masters
14 June 2016

Twitter FacebookLinkedIn

Print

A concerted move back into the roads market has propelled Kier to a prominent position in infrastructure. Jon Masters met the man driving it.

Just under half of Kier’s annual turnover now comes from infrastructure – about £1.5bn from roads, railways, water and energy markets, out of a total of £3.2bn from all construction, property and support services sectors.

The company’s pursuit of a greater share of civils work, particularly in the roads market, has put it at the top table as one of the UK’s largest contractors in the infrastructure sector. Kier is working as a Tier 1 supplier on Crossrail and other major project programmes and it’s in the bidding for Phase One of HS2 and more.

So it might be expected that Kier executive director for infrastructure Sean Jeffery would have just positive things to say about the current outlook. But if Jeffery’s view is a test of the temperature in the market, it’s his cautious tone that stands out.

As an experienced civil engineer he’s been here before of course; seen substantial programmes of government funded work temporarily or permanently shelved due to the vagaries of economic conditions. It might all be different this time around. Government has highlighted a pipeline of £411bn of infrastructure projects, but 64% of that figure, £264bn, has to come from the private sector.

“We’re aware there’s a lot of positive things happening to give more surety of sustainable growth in the industry. But we’ll have to see how that develops over the next couple of years because it’s easier to talk about than fund. The money has to follow the message,” Jeffery says.

Analysis this year by the Construction Products Association has forecast a slow down in UK construction activity during 2016, while predicting that 102% growth in the infrastructure sector will underpin a 21% increase in overall construction activity between 2015 and 2019.

The analysis came attached with caveats: that infrastructure funding is at risk from the effects of the global economy and the industry’s capacity to deliver – to up-skill quickly enough for such a rapid build up in activity.

“These are two important risks, but whether it’s a symptom of economic factors or not, surety of workload has to be in there as a major risk as well,” Jeffery says. “Skills shortage is self-generating in some ways and will always appear to exist when looking at work ahead, because if you don’t know exactly how much work is coming, it can’t be known how many people are needed. No-one wants to recruit and train people for work that ultimately doesn’t come about."

“I’m not an economist, but the current market feel is that we’re still in quite tough times, but there’s enough in the pipeline to suggest we’re going into a better more productive period.”

A large chunk of Kier’s turnover from infrastructure, some £600m, now comes from the roads market since the acquisitions of local authority highway maintenance contractor May Gurney and consultant Mouchel. The latter came with the EM (Enterprise Mouchel) Highways business, which has been combined with the former to set up the circa £600m turnover Kier Highways.

“The acquisition of Mouchel was for two reasons: It gave us the opportunity we were looking for, to build the vertical service offering in design and build that highways clients have been asking for, plus we were keen to move more into the Highways England market. Acquiring the EM Highways area-wide contracts has helped us along a journey that started with May Gurney, moving back into the roads market in general,” Jeffery says.

Kier Highways is led by Dave Wright, who came across with Enterprise Mouchel, whereas Mouchel Consulting retains its brand and remains relatively autonomous as a stand alone business under managing director Miles Barnard.

Jeffery’s responsibility covers major projects, “generally anything over about £30m in value”, he says, in roads, energy, water and rail – a business now worth about £700m annually. Kier has completed four of the main civils contracts of Crossrail in joint venture with BAM and Ferrovial. It has also built a dozen gas fired power stations. In the major roads market, Kier is dualling the A30 in Cornwall between Temple and Higher Carblake, while also working on a Smart Motorway scheme on the M6 in joint venture with Carillion.

“We’re also building the Mersey Gateway, which is a six lane stretch of road with a big bridge in the middle of it. So as a business we’ve journeyed strongly into the highways market; a deliberate plan that we had,” Jeffery says.

Having Mouchel in house helps he says: “we know we’re getting hundred percent from the consultant we’re working with; it supports the right behaviours and collaboration.”

Kier will still work with other consultants, however: “We have a number of strong long standing relationships with other design firms. That will continue and Mouchel will work with other contractors. It’s about selecting the right job for the Kier-Mouchel partnership, still very much on best athlete principle for each joint venture,” he adds.

The Carillion-Kier JV working on the M6 has secured a total of £475m of Smart Motorway work through the Highways England Collaborative Delivery Framework, but the majority of that is due to start from 2017.

These are still not quite yet the boom times for infrastructure contracting. The energy market has failed to live up to promise so far, due partly to government’s capacity auctions not bringing new power generation schemes forward as hoped. Kier also has construction equipment standing by on site in Somerset, waiting for the nod to start the next phase of enabling works for the delayed Hinkley Point C nuclear project.

Next year looks like being the start point for the real ramp up in work for contractors. Besides the HE’s investment programme, the first major contracts of Phase 1 of HS2 should be on site by summer 2017. Kier is in the running for a share of £7bn of HS2 work as a part of the CEK (Carillion Eiffage Kier) consortium.

So will there be enough skilled people available to recruit as the workload ramps up? “Yes, I think there will,” Jeffery says.

On the brink of such a big uplift in infrastructure in the UK, there have also been questions asked over whether industry can deliver it all.

“For me, deliverability is about surety of the product, what we produce. We pride ourselves on winning projects by coming up with clever engineering solutions, so deliverability is always about making that happen. It might not be going for lowest cost, or could be tunneling in a way that takes lorries off the road, or using materials imported by river, or whatever makes the project work,” Jeffery says.

“The key to it once arrived on a project is then being sure you can deliver that on site. It will affect productivity and commercial performance if encountering a lot of change. One of the things that makes us strong as an infrastructure business is our engineers and engineering and approach to solving problems.”

Being “enthusiastic on collaboration” is the other key factor that makes Jeffery confident that the big programmes of work will be delivered on time and within budget. The majority of the work Kier does in the infrastructure sector will be in joint ventures with other contractors and consultants.

For the planned £2bn Silvertown Tunnel in London, for instance, Kier will enter the bidding for the design, build, finance and operate project in partnership with Ferrovial. “It’s in collaboration where you see the most success in projects,” he says.

An example he gives is the Devonport Dockyard, where Kier built one nuclear submarine dock for £29m, then, with less money available, worked with the client Devonport Management and its designer to work out how a second dock could be built for less.

“We took the project duration from two and a half years down to one and built it for £22m, so achieved a saving on the pain-gain share and we returned a cheque to the client. Everything you do is about the good ideas brought to a project, it can’t be about a race to the lowest cost, but finding better ways of doing things.”

Sean Jeffery – career path

Sean Jeffery is a Bristol born civil engineer, brought up used to travelling the country following his civil engineer father as he worked on different road build projects. Sean’s career started in 1990 in the roads unit of Balfour Beatty, as an engineer and ultimately project manager on schemes such as the Second Severn Crossing approach roads.

He joined Kier, partly to diversify and because opportunities to progress were looking less promising in the diminishing roads market of the late 1990s, he says. His role for Kier initially became one of area manager responsible for delivery of a long list of contracts at the Devonport Dockyard, including major submarine dock refits, before a secondment to Kier Build and subsequent promotion to look after all of Kier’s infrastructure work in the south west.

As sector manager for the south west, Jeffery was responsible for projects such as the Langage combined coal and gas power station, plus more work at Devonport and projects for Babcock Marine and Centrica in industrial and energy markets. 

He was Kier’s MD for the south for a year until June 2013 and has been Kier’s executive director for UK Infrastructure and Utilities since then, also responsible for the Kier Mining and Engineering Consulting businesses.