CEO interview: McAlpine’s Paul Hamer – ‘Quality is our single biggest focus’
Robert McAlpine’s first job when he entered the construction business in 1869, aged 22, was to repair a mine chimney in Lanarkshire for the princely sum of £2.45. In the 150 years since then, the privately owned family business has grown to a predicted annual turnover of £1.5bn and can list the Dorchester Hotel, the 02 Arena, the Olympic Stadium among projects it has delivered.
Paul Hamer CV
CEO, Sir Robert McAlpine, since July 2017
CEO, WYG, March 2009 to July 2017
Managing director, VT Nuclear Services
Director of projects, BNFL Environmental Services (responsible for decommissioning of the UK’s civil nuclear sites)
Director of projects (UK & Europe), Costain
Last month, near the contractor’s work on Battersea Power Station in south London, chief executive Paul Hamer hosted a three-day event celebrating Sir Robert McAlpine’s (SRM) heritage.
The event invited clients, employees and their families to discover the contractor’s history and try out virtual and augmented reality technologies, drone racing, exosuits, Lego building challenges and other attractions.
“It’s a celebration of the company’s ability to reinvent itself and adapt. When you walk through the exhibition, you see the contribution SRM has made to society, building major infrastructure and creating a legacy,” says Hamer, who is only the second non-family member to run the business.
Key to SRM’s success has been its reputation for managing highly complex projects. One of these is just across the river, the Elizabeth Tower restoration at the Palace of Westminster. Another, the refurb of Oxford Street retail development The Plaza, won project manager Joseph McNeil this year’s Construction Manager of the Year award.
With so many technical challenges in his project portfolio, Hamer has placed greater emphasis on quality since he took up his role two years ago. “Safety is always superordinate, but when I arrived, time and money were always in there but there wasn’t enough emphasis on quality,” he says. “We had a very honest debate where people were saying well you can’t really finish a construction project because there are always snags and defects. And I reject that idea completely. So we have upped our focus on quality.”
Making the well-worn comparison with the car industry, Hamer notes that it wouldn’t be acceptable to take delivery of a car with windows missing, or scratches in the paintwork, and that the same principles should apply to construction.
“This year, we will have a total turnover of £1.5bn and about a third of that will be construction management (CM). It takes away the hard risk of contracting. Clients who choose the CM route tend to be heavily invested in the end product. CM is usually used on projects that are large and complex, so tends to be London-centric.”
“When I arrived, I mandated that every project, no matter who we did it for and whether the client wanted it or not, would be done in a digital manner. We started off with a 40% BIM maturity for all our projects. This year we have set ourselves a target of 75% BIM maturity. The next step is how we use data.”
He says: “We have to understand how we are going to finish so we can plan backwards. We have recruited a central core of subject matter experts who sit in national positions – a head of facades, a head of MEP, a head of finishes, a roofing specialist – and their job is to make sure that we are thinking about the quality that our client is asking us to deliver.
“If we get quality right you will pretty much guarantee that we finish on time. If we finish on time and our quality is good then it is likely to be a very safe site and the commercials will probably take care of themselves. So inside McAlpine right now, quality is our single largest focus.”
SRM has also introduced a programme called Build Sure, which measures all projects against five key pillars: safety, sustainability, quality, on time and profitability. And each project is delivered using a systematic, “gateway” approach.
“We have got nine gates that each project has to go through, four in preconstruction and five during construction,” says Hamer. “That allows us to monitor a project and to innovate and learn as we go.
“The key ingredient is getting it right in pre-construction. That is probably one of the reasons why we tend not to engage in single-stage contracting. We don’t like the risk profile and it is too late for us to add value.”
While the 150th anniversary celebrations revel in past glories, they also examine SRM’s future. “In construction, we have got significant problems in terms of talent and skills,” Hamer says. “We are trying to open the eyes of young people and people who aren’t in this industry to what construction can be. It is not all about hard hats. We have digital experts too.
“The pools that we would fish in for talent are drying up very quickly,” he continues. “We need anywhere between about 500 and 1,000 additional people and we can’t find those people in the places that we would normally look so it is business-critical for us to start appealing to different avenues.”
Hamer describes diversity as a “critical” issue. “We talked about ethnicity, diversity and inclusion (EDI) and we quickly realised that it didn’t articulate what we wanted to achieve. So we moved away from EDI and back to something much more simple which is a vision for SRM to be the best place to work,” he explains. In Hamer’s view, if that is achieved, then EDI will take care of itself.
The gender make-up of SRM’s board is starting to change, with Karen Brookes, director of people and infrastructure becoming the first female on the executive board, and Alison Cox, currently project director of Battersea Power Station Phase 3A, joining on 1 January 2020, as executive director of engineering and technical services.
Recruitment challenges aside, Hamer believes that SRM is currently “in a good place”. The business put a new five-year strategy together 12 months ago, driven by quality, relationships with key clients and margin.
“It’s not driven by growth,” Hamer says. “In my first year of tenure, our revenue dropped and that is because we started to exclude certain sectors and certain types of projects – single-stage contracting. This year, without us looking for turnover, the business is probably going to grow about 30% and the key success there is the right type of turnover – great clients, repeat business, good margin, projects that we have got great competency in.”
Hamer declares himself uninterested in making the 1-1.5% margin often achieved by rival main contractors. Instead, the company is targeting 5-7% over the next few years, from around 2-2.5% this year.
He adds: “Our front-end filter is very stringent. Is it the right client? Is it the right type of project? Do we possess the competencies? Can we do it successfully, drive value for the client and generate margin for ourselves? If the answer to all of those are yes, we are very interested. If the answer to any of those is no, we don’t touch it. We have got a shareholder who has got a 150-year view.”