Colorminium interview Phil Sedge – Head of Facades at Mace

Phil has worked in the Curtain Walling Industry for 30 years. He has worked for facade contractors building prestigious projects across London.  Phil then acquired a main contractor role 13 years ago, where he has successfully operated a facade department, he is now currently Head of Facades at Mace, with a 38 strong team.

 

I’ve been Head of Facades at Mace for 4.5 years now, with £250m of façade delivery on the books at any point in time.  When I first started at Mace, there were only 2 or 3 people focussing on facades, we now have a team of 38!

I was brought into the company to set up a façade team and help the company manage their risk.  When I arrived, Mace had realised that although the façade of a building is approximately 15% of the build value, it represented 40% of the risk – they wanted to manage that risk better. It wasn’t an easy task as we had a lot of projects that had been won as single stage, lump sum biddings where they hadn’t been procured correctly; scope not understood, programme not being delivered etc. Initially I ended up being a facilitator or mediator between the project team, façade contractor and board, trying to make sure the end goal was delivered.

The split of our façade turnover is normally 4-5 projects in tendering that equate to £100m, £100m of live projects in full flow and £50m finishing. It’s my duty to look after them from point of enquiry to when we close the final account. Some projects need a lot of input, some do well by themselves. We find that the bigger projects swallow more of my team.  The new Tottenham football stadium has 5 people on it and Battersea has 6 people spread across 9 façade packages!  The opportunity and ability to build my own team has helped with the expansion of the business, which is a great sense of achievement.

On Mace generally, we set a vision out in 2013 to go from a £1bn turnover company to £2bn by 2020 but we actually achieved this in 2017.  With this being successful, the focus is now on work we know we can deliver, the right projects, with the right clients, right programme, right risk evaluation.  Going forward the business is targeting more on margin expectation than turnover.  The next business plan takes us up to 2022 – steady growth up to £2.2bn. Margin expectation for main contractors is low compared to the risk factors involved, this would not excite Google or Apple!

 

Why do you do it then?

We do it well and know the construction industry is like that. We offer management expertise through our consultancy side of the business as well as a company that is taking on contractual work themselves. We look to bring on people like Colorminium that understand what scope, Contractors Proposals (CPs), or Employers Requirements (ERs) are, and have a grasp of what contractual conditions and delivery methodologies they have to operate under.  We effectively manage that between the trade and trade handovers work well and make sure the design is being controlled and the programme is being delivered.  We focus more on making sure we are the facilitator and the management company and focus on that rather than take on risks we don’t have the skillset to deliver.

Of the 78 façade contractors able to operate in London, we tend to only work with 20-25. We prefer to work on building that bond and the partnership rather than exposing ourselves to greater risk with companies we don’t know or have experience with however there are projects where we do need to outside our current supply chain due to financial or capacity pressures. Collaboration and capacity understanding is the biggest thing we are trying to drive. Securing right people for right projects that fits their profile and risk analysis.

 

What are the current views within Mace on the top challenges facing façade specialists?

Understanding the design, contract conditions, and the employee’s requirements. Specification compliance is key for us and our clients. If not compliant, then we need to understand that at an early stage and give our client the alternative that meet the aesthetics and performance. If contractors don’t understand that then it proves a risk for both parties resulting in commercial disputes, programme being affected, and relationships being broken down. We cannot afford for it to go wrong, all of us are only as good as our last job. We work with the same clients in London on a continued basis so for us delivering well to the correct quality, on time and with no accidents is key for us to continue working with the Tier 1 clients in London.

Although managing the design and programme delivery has a constant key focus, there’s now a push on micro managing delivery now. Programme control rooms have been instigated on every project. People can deliver a 20-page programme from key dates, but actually helping them understand the cause and effect of not meeting a particular time-bar or not getting approval at the right stage or not meeting your design freeze needs more understanding. Using a planning and programme control document, breaking down pre-construction and construction, we work out the micro analysis of delivery. For example, we would ask for your design deliverable schedule, we would then review the planned versus actual to ensure key programme dates are met on weekly basis. Or site delivery – if you don’t have the right trade to trade handovers from us, or right benchmarking and inspections as you go, you end up with it all to do at the end. Trying to do simple analysis to work with our top partners leads to more programme transparency and helps all to understand what all parties need to do to deliver on time.

The plan has been rolled out across many of our live projects already. It is not supposed to be a commercial/contractor tool but a collaborative piece aimed at how we can deliver a programme better together as a partnership.

Cash is another factor for sending a lot of people out of business, but I wouldn’t say it’s a root cause.  I did some analysis on the façade industry and since 1988, numerous façade contractors have gone bankrupt. Some small some large, but all gone due to cash exposure or poor performance.  Often rising out of recession or slow period, going into growth market, where it’s easier to achieve higher rate of turnover.  However, this only stretches your cash requirements then all you need is difficult payment terms, like 90 days, from a main contractor or a dispute up or down the line.

 

As a main contractor, what are your top concerns on façade delivery for your projects?

Design – understanding what the architectural requirements are against what’s actually in your tender package. Starts with making sure design and approvals are in the right place, that leads into better procurement with potential better buying gains and a more profitable opportunity.

Leading on from design, procurement, manufacture & install are the key milestones. Key 4 points we always look at.  We have looked at breaking those down to say design, fabrication, materials and then installation. From discussions with the market, its telling us that installation equates to 56% of their contract value in terms of risk, fabrication 11%, materials 10%, Design 23%.  It says for me nearly 80% of your risk is in the installation and design.

 

How important is early involvement for façade specialists in the planning stages of a scheme?

Bit hit and miss, depends on the scheme and façade contractor. When we are engaged we bring the right partners over, it may mean the client has already appointed and it’s understanding that dynamic early on. By making sure we have regular relationship meetings, we will know what Colorminium are working on for example, and it may be a project we are future tendering, and if we are, its understanding we need to bring you on the same journey as well. We need to understand who has been working on it before, who is suitable for the project, who has the right capacity and overall who do we think the client is going to be working with as well as us, as client has a bigger impact about who they employ especially on an envelope basis.  Also important for the architect to get the right people on board to understand the scheme from the complexities to the technical performance and some of the challenging details. When we get engaged in a 1st stage tender process, we only have to understand the prelims and programme. We are bringing on our partners to tell us as to complexities, how to deliver, and issues raised…early stage, raise it and make sure we have included it in our prelims, and aligned before going into the 2nd stage tender phase. Mitigating risk as an investment for the future, and de-risk key items on the project. We would work with our clients helping them develop a programme, understand key aspects of design, and even supply chain that they should procure with. Free advice at a cost, but without early engagement and partnership some of the key projects you can negotiate won’t be achieved. Even if in tender phases at least you mitigate some risk as you have been involved from early on and are always on the front foot. When it reaches full tender stage, you can be much leaner on your risk profile on the project

 

In your opinion, why do so many façade contractors regularly go out of business?

It can be for a number of reasons, but there are some definite trends;

  1. Not having the right partnership/relationship with the Main Contractors who want to work with them regularly. To work with unknowns can be exposing them to unfamiliar risk or quite simply they’re not there to build relationships and longevity of supply chain partnerships.
  2. Their own supply chain is weak, and they don’t have the right partners on board that will go the extra mile when issues arise.
  3. Not understanding or getting the right risk proportion on projects when pricing.
  4. For a Main Contractor to understand their Sub-Contractors is key, but for a trade contractor, if they don’t have the right glass supplier on board giving them the right understanding of technical performance and rates when tendering could that be an exposure to risk? If they don’t have an installation company on board who know what needs to be delivered and how, that’s a risk. Bringing the supply chain in early at all tiers allow you to de-risks problem going forward.
  5. Not exposing to cash flow – key for longevity at all levels.