Gleeds CEO: 'Tech giants are my biggest worry'
Technological change is sweeping the built environment and Graham Harle, global CEO of Gleeds, is not going to be left in the analogue era. Will Mann spoke to him.
“One of my biggest worries,” says Graham Harle, “is an Amazon or Microsoft going to see one of our clients, setting up a laptop, and doing for them in 24 hours what it may take us six months to do.
“With the tech investment in the built environment, the growth of artificial intelligence, it’s going to be possible to automate the optimised design and construction for any given project. They will be able to feed in planning policy, client requirements and automate the whole thing. That’s what we have to be ready for.”
The global CEO of Gleeds is forthright in spelling out the challenges facing his business and the built environment sector more broadly, but also optimistic about the transformative changes that digital technology can bring. Harle has been with the consultancy giant for 24 years, taking the CEO role last year. But he warns that the construction industry must be ready for major changes over the next three to five years.
Graham Harle CV
Since January 2019: Chief executive officer
2007-2019: Main board partner
2000-2007: Equity partner
1995-1999: Cost manager
1990-1994: Anglia University, Quantity Surveying
“Currently there are 800 built environment software apps in development in the UK, which aim, in some way, to automate the development, design, and build process. Artificial intelligence (AI) will play an increasing role. Not all those apps will be successful, but we can see the direction things are moving.
“And the big tech giants are moving into our sector. We’ve seen Oracle buy Aconex. Amazon, which is now the largest real estate developer in the world through its data centres and distribution hubs, is hoarding built environment data.”
Partnering with tech giants
Gleeds has first-hand experience of the technical giants, delivering the new global HQ for ARM in Cambridge, Microsoft’s new HQ in Prague, and working with Amazon across Europe. The strategy now for Harle is to “insulate our business”, as he puts it, from these unprecedented challenges from the technical sector. And part of that strategy is data.
“Data is the new oil,” he says. “The challenge is to find it, mine it and refine it. We are involved with $300bn of construction work every year. So we have the data. Now we have to refine it, which means commercialisation of the data. This is where AI comes in. Can we take the data from, say, an office project, analyse everything that went right and wrong, so that next time we have the optimum design, programme and cost?”
But Harle acknowledges that Gleeds isn’t big enough do everything by itself. “We’re not an IT company so we are looking to partner with a tech giant to harness built environment data,” he explains. “Amazon spends more on R&D than the entire turnover of the world’s biggest real estate firm – CBRE [£16bn]. We can’t compete with that so we have to partner with them.”
Focus on digital
In the meantime, Harle is making sure Gleeds’ staff and new recruits are digitally up to speed. The consultant has recruited an AI specialist from Nottingham University, while another four are doing master’s degrees in data.
“We’ve taken on an extra 40 graduates this year – on top of our regular intake – with a focus on digital,” Harle says. “Around a quarter are from non built environment courses, such as business studies or geography, who we put through a master’s degree at Reading, and they have been brilliant for us.
“Youngsters are frustrated if anything by pace of change in our industry. When you compare our industry to the likes of KPMG and PWC, where they have an average age of 27, they are focused on the bright young things. They are used to working on screen. ‘Why print off drawings?’, they say.”
“We’ve made a commitment to pay our subcontractors in 28 days, which has been tough, but we’ve seen a better performance from those suppliers. We’re collating that data at present, but anecdotally we’re seeing improvements in quality and speed.”
“We’ve added more rigour to our quality management process, since Grenfell. We have brought in an extra layer of governance which applies on all our projects. We sent out 850 clients’ satisfaction questionnaire last year and had only six red flags, which is bloody good.”
Harle is a huge advocate of BIM. “We are using its potential across all the BIM dimensions – 3D, 4D, 5D, 6D,” he says. “We use it for logistics and clash analysis – it can make construction far simpler. Our QSs use CostX software, linked to Revit, to take quantities off the models.”
Last year, Gleeds launched a BIM project management app, Frame, which Harle describes as a BIM Level 2 toolkit. “We gifted that to the industry because we wanted to make a statement about how the different members of a project team can collaborate through BIM,” he says.
Harle reckons a “high proportion” of Gleeds’ projects are now working to BIM Level 2, including all its Department for Education and Scape projects. “We’re also starting to see the private sector come on board,” he says.
“Educated clients like Hammerson and Landsecs are seeing the asset management and lifecycle benefits of BIM, and lot of funders and REITs are also taking an interest.
“They’re also warming to the benefits of modularisation – chiefly speed and reduced risk,” he adds.
“The perception used to be that modular was too expensive. But because of labour shortages, the costs of traditional versus offsite have come much closer. Three years ago, clients wouldn’t even ask us to compare modular costs against traditional, now we are being asked to run this exercise more commonly.
“Many of these are PRS [private rental sector] clients who are driven by IRR [internal rate of return], so the faster construction delivery of modular is very appealing to them.”
Gleeds is working on 18 modular schemes across the UK. This includes the world’s tallest modular tower in Croydon, for developer-constructor Tide, plus schemes with L&G and Swan Housing. “Compared to traditional, we’re seeing better quality and safer construction,” Harle says.
He subscribes to the view that the traditional tier 1 contracting model is under threat and describes Ray O’Rourke as a “pioneer” for his investment in Laing O’Rourke’s manufacturing capability.
“The digital agenda will only push us further towards offsite,” Harle adds. “I’ve been to Laing O’Rourke’s factory three times, and watched their digital engineers controlling the production of precast units, precision placing of all the rebar, in a controlled environment. We work with Laing O’Rourke, mainly in health, and we’ve seen the benefits.”
“Brexit has been factored into the markets. We want political stability and clarity, and if we get that, the amount of equity and debt available for the UK is unbelievable, particularly for PRS: it’s just 2% of the UK resi market but 20% in US and Germany. If we Brexit on 31 January, I think the UK is in for a boom.”
“We’ve got 200 project managers in the UK business, most of them CIOB members, out of 900 staff in total. We have great relationships with the professional bodies – I would like them to work together more closely on their course programmes, so new graduates understand how the different professions fit together in our industry.”
Digital technology is also changing Gleeds’ workloads across different sectors. Industrial, driven by logistics and warehousing projects, was up around 20% last year, while retail is moving towards a ‘bricks and clicks’ service, Harle notes. “It is about making the high street work in a different way to suit a shift in the market,” he explains.
As the industry changes, the CEO mulls over what is the best “shape for our business”.
“An issue for us is that many of the public sector frameworks are now multi-disciplinary packages,” he says. “Do we add on other professional services to our offering? If we do, we would grow organically. But we have to look at the balance of risk and opportunity.
“Grenfell has tightened up the market in terms of what designers can and can’t do, from a professional indemnity perspective. Gleeds does not take design risk and Grenfell has reaffirmed our position on that.
“I am very competitive and want us to be the best at what we do, but that doesn’t mean being the biggest – we will not be an Aecom or Arcadis. We’ve had people with us who moved on to the big multi-disciplinary firms, and have since gone off to set up on their own – which tells me the one-stop-shop approach doesn’t always work.”
Gleeds has 134 years of history, with more than 2,000 staff working in 71 offices across 20 countries, and Harle wants to keep its core values intact.
“I will be a very open CEO, and I have an email address – ‘Ask Graham’ – which means staff can contact me directly,” he says. “We’re strong on ethics and we’ve adopted the Wates Principles of corporate governance and committed to fair payment of suppliers.
“Our staff training, I believe, is the best in the industry – clients who started out with us tell me that. Although a global firm, we’re at a scale where you can move on and around the business quickly.
“But the industry is changing, and we need to be at the heart of this digital transformation.”