Modus Group

modus group A MOVING EXPERIENCE

MODUS GROUP

MODUS GROUP

MODUS GROUP

A MOVING EXPERIENCE odus is a company that provides a complete range of design, installation and maintenance services, employs 170 people and turns over in excess of £75million. It is surprising then to hear Managing Director Toby Benzecry describe how the idea for the company first came about: “over a pint of beer in ‘The Ship’ in Wandsworth!”

Then again, Modus is in itself a surprising company.

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HUMBLE BEGINNINGS Formed in 1992 by Toby Benzecry, a former manufacturing engineer and management consultant, and Project Manager Ashley Davies, its origins were unimaginably humble: a company trading from Toby’s dining room. At the time, neither man imagined what Modus would become: “We had an idea of how the business was going to work” says Toby “we thought that we were going to be a consultancy; we were going to offer a combination of management consultancy and project management to clients who were relocating or essentially changing their offices. That was the market we thought we were getting into, but it quickly became apparent that, because the country was in the depths of the recession and there was very little activity in terms of those kind of people moving around and refurbishing, the only opportunities we could get hold of were ones where they were far more interested in having us quote them for some partition walls. So we became a contractor really just to take advantage of the opportunities that were presented at that time.”

AN UNEXPECTED OPPORTUNITY Though some might say that forming a company in the middle of a recession could be described as ‘brave,’ there were certain advantages to getting into business when business was slow, as Toby points out:

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“it’s quite lucky we started when we did because the market was so much more open to a new entry. It was also at a time when, because of the recession, we didn’t pile on overheads too quickly – you could get office space cheaply, people weren’t demanding enormous salaries, so our start up costs were quite low.”

SOMETHING DIFFERENT Being in the right place at the right time is certainly helpful, but Modus also had a unique vision. “This idea we had was that when a business goes through a fundamental change like moving its offices, most companies think it’s quite a frightening, potentially disruptive process;” explains Toby, “what we wanted to do was show companies that this could be a fantastic opportunity to change not just their address but all sorts of other things about the organisation. You can pretty much completely re-launch the business on the back of a relocation and that’s what we were trying to sell and that idea still permeates everything that we do.”

So, though they may have appeared to be, as Toby describes, a “lowly contractor,” they were anything but. They were taking something that most companies would have thought of as catastrophic and turning it into something inspiring, practical and affordable. “That was very different from what others were offering at the time” continues Toby, “if you went to an architectural practice to design an office, the emphasis was going to be very much on what it looked like and if you went to a contractor, the emphasis would be very much on the contractor making as much money as he could. We were trying to create a client-friendly approach where the client would get fantastic value for money through the process, but also have this huge extra added

value element where we really sat on their side of the table thinking about all the things that they could achieve during the project. It was a very different emphasis that came out of my background in management consultancy.”

After a couple of very successful months, Modus had to move themselves: first, to a small attic office in Kingston, where they remained for about a year, then to a larger office on the Edgware Road and finally, in 1994, to their current location in Victoria SW1, a premises that occupies 10,000 square feet and contains 100 desks. A far cry from Toby’s dining room.

A STAFF THAT SUPPORTS AND STAYS Modus staff in 1992 was only two, joined six months later by a designer to make it three. Modus now employ 170 to cover every single aspect of the company’s ever-growing enterprises. “What you must realise about Modus,” says Toby “is that it’s not just one business any more – we’re still offering the design and fit-out of office space, but we also design and fit-out technical spaces, we act as a pure contractor for many clients, and we have a facilities management business that maintains support in our clients’ premises. We’ve got everyone from the Finance Director to the guys driving around in vans providing our rapid response support service. There’s a hugely wide range of different skills in the business.” In addition to the head office-based staff, Modus also employs around 30 staff on client sites and a further 30 mobile operatives.

Complementing the wide range of skills possessed by the staff is a unique high level of loyalty of staff to the Modus Group, Toby reveals: “We’ve got one of the lowest staff turnover rates in the industry so

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we’re doing something right. We’ve got many people here who’ve been with us for more than ten years. I think that part of it is the culture of the business – it’s hard-working, it’s cheerful, it’s supportive, it’s empowering.”

It also underplays the hierarchy; “the office is entirely open plan and I believe in MBWA (management by wandering about). I enjoy chatting to people about what they’re doing and offering advice when I’m able, but I pretty much leave them to get on with their jobs,” emphasises trust; “I trust them to get on with their jobs, so we don’t have massive reporting structures or targets that people are supposed to be meeting with,” and common sense; “I like to give them enough guidance for them to be confident that they know what their doing, but they’re adults, I’m paying them a decent amount of money, so I just leave them to get on with it.”

There is also a very strong social culture and recognition apparatus at Modus: “We have a very healthy social network in Modus, the people here socialise together a lot –amazingly, many marriages have come out of the business – Modus is responsible for dozens of children out there – once people have joined the company, they feel that they’re part of a big family. We reward people with decent bonuses for performing well, we have a share options scheme to spread the ownership of the business.”

But above all is the fact that every member of Modus staff feels like they are contributing to the company’s success: “above everything else, this is a business that people are very proud of – it’s not just Ashley and Toby’s business, it’s something that they feel responsible for creating as well. I don’t think you can get better satisfaction than that – some of our

competitors are businesses that can make quite a lot of money but ultimately they’re like sausage machines, trying to make the most out of every project and ultimately it’s not a great place to work.”

LEADING THROUGH EXPERIENCE Modus Group is directed by four men, each with their own unique experience in the industry: • Ashley Davies. Co-Founder with Toby Benzecry, Ashley was formerly a quantity surveyor and project manager and has over 25 years experience in the construction industry.

• Matthew Short. Matthew has over 18 years experience as a qualified architect, and, at 29, was made the youngest ever Director of epr, a major architectural practice, in 1989. He joined Modus in 1995.

• Roger Potter. Modus Financial Director, Roger has been a qualified accountant for over thirty years. He joined Modus in 1998.

• Toby Benzecry. Originally from an engineering background, Toby moved into management consultancy in 1986. He formed Modus with Ashley Davies in 1992 and is now managing director of Modus Interiors.

DIVIDE AND CONQUER A key to Modus’ continued success is being able to offer very specific services and support to their clients. To achieve this, Modus has four specialised but integrated divisions: Modus Workspace, Modus Unitech, Modus Projects and Modus FM.

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MODUS WORKSPACE Modus Workspace is the original core business of Modus and is concerned with the design and fit-out of office space. Projects carried out

by Workspace usually range from 1000 square foot offices right up to 100,000 square foot premises. Costs can be as little as £50,000 and the upper end for this type of work is around £3 million, although in 2005 Workspace completed a £7million project for Petro-Canada. Currently, a lot of work is being carried out in the financial sector in London, for businesses such as hedge funds and private equity companies, who are spending a lot of money on unique offices with a very high quality feel. “Our design teams are exceptionally good – they really like to create these very special interiors for high value organisations, so that’s a very exciting time for us.”

Projects are based on a four phase system, the first of which involves brief gathering and finding suitable buildings for the client: “We have some clients – for instance incoming American hedge funds – who have almost no representation in the UK at all when we first meet them and have been trawling around with a commercial agent looking for office space, but they have no ability to do anything in the UK until their new office is up and running. For companies like that, we will probably do absolutely everything for them: we’ll help them find the space, we’ll do the design for them, we’ll fit the thing out and we’ll put all the technology in as well – right up the line to putting

all their servers in – so at its ultimate, Workspace can take quite a sketchy client brief and turn that into a working office and hand the client the keys when it’s finished. I don’t think you can get any higher value than that.”

Part of this process is helping clients to assess their needs, which they do by using Modus’ dedicated Ready Reckoner software tool, designed by Toby. The software uses simple questions and representations of room layouts so that clients can build up a list of potential spaces simply and swiftly. The Reckoner then calculates the cost per square foot for the construction. “It’s a really useful little tool,” says Toby, “because in the space of a short meeting with a client you can pretty accurately work out how much and what sort of space they need, and also give them a range of fit-out costs for their requirements.” The tool has been refined over the last seven years of use and is now remarkably accurate.

The next phase is the detailed design and budget sign off. When designing offices for clients, Modus likes to keep an eye to a company’s future: “We were very much pioneers of fit-outs that wouldn’t just suit your requirements now, but have an eye to how the business might change in the future. We were the first designers to start putting benching systems into offices as a matter of course because they offered the greatest flexibility in terms of future use. We have noticed some of our competitors have provided extremely bespoke solutions for clients

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which, in six months, don’t work anymore because they’ve hired another two people in Sales and you’ve got to knock a whole wall down to get the new desks in. What we do is try to help clients to think about how the business is likely to evolve over the next three years and build that flexibility in. We keep the fixed elements like comms rooms and meeting rooms off to the periphery of the space so you don’t wind up having to demolish something a year in – that sort of approach has saved our clients and enormous amount of money over the years.”

Phase three is the implementation and construction of the fit-out, which with some clients who are having their offices refurbished around them can be very awkward, but again Modus bring their experience to bear to make the operation as smooth as possible. “We also have a particular expertise of working with clients that want to carry out a change to their existing premises and those projects are always much harder than a fresh fit-out project in a new building. For instance we’re helping Hilton refurbish their Watford offices, and that’s a 71,000 sq ft multi-phase project. This means that at every phase people need to move around to make space for the refurbishment work and they need really, really user friendly project management, lots of hands-on help for the client to make sure that they don’t get disrupted, you need assistance with internal PR programmes so the staff are kept on side, and we help the client with that as well.”

The fourth phase is move management, something that Toby considers to be as important as any other part of the process: “What I always say to our clients is ‘I imagine that you’re hearing from a lot of companies that want to pitch a fit out at you; for us, the fit-out is only

part of the process. If you move in and the fit-out’s beautiful, but the telephones aren’t working, it’s a failure.’ ” Modus’s focus is on giving the client complete peace of mind that all the work that should be done, will be done.

To reinforce this peace of mind, Modus offers a 12-month warranty period and beyond to clients and is the only company in the industry to do so. “Modus FM provides our warranty support, which makes us very different from other construction based businesses. With most contractors, if you have some work carried out by them, once the project’s complete, you’ll really struggle to get them to come back and fix anything. We recognised that this was an issue, that was the original rationale for setting up Modus FM; it would always provide a vehicle that we could effectively pass completed projects to so that they’d be properly supported after completion. However, Modus FM is going way beyond that now – it’s attracting its own clients, and its clients are very happy to be supported by a company that has the ability within the Group to carry out projects so we get clients from FM saying that they have a big fit out they need doing and we wheel in whichever division is needed to carry that out. It’s a really good business model.”

Once the warranty has expired, many companies renew with Modus FM: truly a testament to the quality of Modus’s support network.

MODUS UNITECH Modus Unitech, principally managed by Engineering Director Gary Payne, specialises in the design and build of technical spaces such as laboratories and data centres. Its principal clients are in the higher

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education, pharmaceutical, IT and banking industries, and prices range from £1million to £35million. Modus’s decision to move into the technical arena lies in the dotcom rise and fall of the late nineties, as Toby explains: “During the late nineties, we started to get a bit of a reputation for being very technically able and as a result quite a few technology companies started to use us to roll out facilities through the country, companies like EDS, Telewest and Guardian IT. Eventually these companies started asking us to build data centres for them. On the back of that, we assembled a highly skilled team of people with very specialist knowledge of electrical and cooling systems in those sorts of facilities. When the dotcom bubble burst and data centres took a down turn, instead of getting rid of those skills, we decided to find other sectors where we could use them.”

Modus has been able to provide the necessary skills for building highly-specified computer spaces, laboratories and technical areas for the last ten years, but Unitech has only existed as a separate entity for a relatively short time. “We didn’t have a separate

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MODUS GROUP

division for a long time,” explains Toby, “but then we thought it’s ridiculous having university work done by the same people doing hedge funds, so that was when we started splitting up as separate divisions, which has worked for us really well. Unitech is now recognised as a specialist provider to that sector – there are very few companies that have those skills. And it’s a very large market.”

Though Unitech remains a very technically specific division, being part of the Modus Group gives it the unparalleled advantage of access to the other divisions, and the advantage works both ways. “We’re all in one office building, which is a huge help,” says Toby, “so from a client’s point of view they are probably unaware that people from other divisions may get involved in their projects because whoever’s handling the account will remain the same. It’s very helpful for the Workspace guys, because if someone needs some modifications to the air conditioning in their offices for instance, they’ll just wander into the Unitech bit and say ‘Hi guys, can someone help me with this air conditioning design?’ and there’ll be an air conditioning specialist there who can pick it up.

Equally, you might get a Unitech client who’s having a laboratory done but who also wants some nice interior design done for the front of house bit, and they’ll borrow some resource from the Workspace design team.

There’s a huge amount of crossover in that respect.”

MODUS PROJECTS Modus Projects is the pure construction division that deals with traditional tendered contracts. Principally managed by Operations Director, Craig Weatherhead, it was initially formed to capture larger projects: “Modus Projects was started because we were getting opportunities to carry out construction only work for clients,” says Toby. “Being able

to tender for construction works where the design had been provided by others was a useful place for us to be for a number of reasons.

Primarily it meant that we could be the delivery vehicle of choice for clients regardless of procurement route. However it also diversified our risk because these projects tended to be larger and on a different procurement cycle to our other businesses. Lastly, but very importantly, it provides another way of winning clients for the support services side of the business. This underlines the business model – that procurement route shouldn’t be an obstacle to doing business with us, and that once we’ve recruited a client we should keep them.”

Projects usually start at about £1million and require a completely different set of skills to the other divisions, as Toby explains: “because you’re dealing with QSs and architects, the amounts of paperwork is far greater and you have to have your own QS team in house who can deal with theirs, together with project managers who are used to dealing with these large teams of professionals. As a result we’ve had to expand our construction teams and recruit people from other companies who are used to this work.” Work in Modus Projects is progressing very well, their biggest job to date being a £14million project for Kaupthing Bank in 2006.

MODUS FM Modus FM provides clients with a single point of contact through a 24 hour help desk and a wide range of business support services ranging from reactive callout to fully tailored management packages. It is not, surprisingly, something found as standard within in the industry and, as Toby explains, there are good reasons for adding it to the Modus roster: “As a shareholder of the business, I was always a bit depressed

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about the value that the stock market put on construction-only businesses, because a construction company is only ever as good as what it currently has on its order books. So, I wanted to get us into a business where we actually had clients we were contracted with to provide a long term service. Facilities Management is the obvious vehicle to do that; that’s the overriding reason, to start to move Modus into a different space, to stop it being perceived as just a construction company.

Secondly, it makes good business sense; no other companies out there can say ‘once a project is complete, we’ve got this special vehicle that will support it.’ They don’t have help desks, they don’t have 24 hour service, they don’t have rapid response teams - we’ve got all of that; if something goes wrong on our clients’ sites, we can be there in two hours to put it right; no one else can do that. And when we’re bidding for a job we can say ‘here’s our price for the job and, by the way, first year maintenance for the finished solution we’ll throw in for nothing.’

It’s a fantastic differentiator!”

Modus FM portfolio of managed property has grown considerably in the last couple of years and now covers more than 4 million square feet for clients including The Institute of Cancer Research, and ranging from legal and banking to education and healthcare. As well as being a profitable and growing business, Modus FM also provides a fantastic opportunity to contact clients for other parts of the business.

“Clients are able to enter the business through a number of different routes and then we’re can offer them such a strong ongoing service that they just stay with us and stay with us for years and years.”

REACHING NEW CLIENTS Though Modus is highly dedicated to its client base, the team is always looking for new customers who they can introduce to their way of working. “Each of the four operating areas has its own business development people, so they are out there doing whatever’s appropriate in that sector,” says Toby, “for instance, in the Workspace sector it’s well known that the route to market is through networking with commercial agents. Similarly, Modus Projects would be networking with QSs and project managers in order to get onto tender lists; Unitech has people who are really directed at universities and pharmaceutical companies; Modus FM has a sales force that are talking primarily to the consultant engineers out there who put together tender lists for FM opportunities. But in fact our business development numbers carrying this work are far lower than other companies in these various sectors because we get such a high level of retained customers.

We need to generate more business though, because I want to continue to grow the business.” Modus is also a member of the British Council of Offices, which brings them into contact with many leading figures in the industry. “I think it’s important that we’re seen to be associated with industry recognised bodies. It gives us exposure to other people’s ideas,” confesses Toby, “we’re not so proud as to think we’ve got all the best ideas – there’s some brilliant work being done by others out there – and it’s good to have opportunities to take clients to trade events and make them feel part of a bigger industry.”

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PROJECTING A CONTINUOUS SERVICE Another important part of Modus’s operation is to give the client a unique continuity of service. When a project is bid for, Modus will put together a pre-contract team consisting of design team, which includes an interior designer, a CAD man, a 3D visualiser, and a project manager. Once the contract is won, the design team remains with that project and the project manager becomes an account manager. The team is completed by a construction manager who co-ordinates the on-site project. “The client has complete continuity of personnel throughout the project, which is so important,” says Toby, “I’d hate to have a project sold to me and then, once you’d bought it, have some other team you’ve never met before show up to do it.”

Having fitted out 10million square feet, Modus are highly experienced in construction management, have access to many skills and have numerous quality systems in place, including an in-house health and safety manager, external health and safety audits through Operandi, environmental risk assessment and ISO14001 certification.

“I’m sure this is the most professional set up you’ll encounter in this industry,” Toby says proudly. It for these reasons that Modus have a 100% to deadline project record. “We have a fantastic group of people here who are willing to burn the midnight oil if necessary,” says Toby, “and I’d just like to take the opportunity to say thank you to all the subcontractors and suppliers for supporting us. It’s only through their hard work and goodwill that we can achieve that 100% success rate.”

SUPPLYING WITH CONSIDERATION Modus has access to a well-established supply chain with companies that have grown as Modus has grown, resulting in clients receiving the

best possible service. “I know that I can pick up a phone to a number of MD’s of our suppliers,” Toby confides, “and say ‘I need a favour; can we get another crew onto this project because it’s starting to fall behind.’ And it happens.” Some of Modus’s suppliers have been with them for as long as 10 years. The longer standing companies make up the 20 ‘partners’ that share a special working relationship with Modus: “we don’t have them bidding against lots of people, we negotiate contracts with them,” says Toby, “but we expect a high level of service from them as well.” The 20 companies also receive the benefit of knowing in advance where Modus will be requiring their services and that Modus will whenever possible match their specialist skills to appropriate jobs.

Modus are also very careful to use environmentally-friendly processes, products and designs whenever possible, and Toby is fairly passionate about this: “Our industry has a big role to play here – the carbon footprint of the construction industry must be absolutely enormous. We’re not building buildings, but our activities have huge environmental consequences. One of the things that distresses me is if you go into a brand new development space that has just been finished by a landlord who’s installed all the ceilings, lights and put a carpet down, then the first thing that the new tenant does when he comes in is take up the carpet and take down the ceilings and throw them away. So, for a start, we’ve got a duty to try to reduce the amount of that sort of activity that goes on. Having said that, I don’t want to stop our client from being creative about their office space, so we need to also be able to recommend to them products that have a low carbon footprint or are ultimately going to be recyclable.” To this end, Modus are also careful to recommend timber from renewable sources and make sure that their

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electrical and mechanical systems are as energy efficient as possible.

They have also been collaborating with developers, particularly MECP, and helping them to make their new developments as green as possible. “With our experience of how people occupy and use buildings, if we can influence how buildings are set up in the first instance then we can have enormous impact going forward – I’ve been greatly impressed by MECP’s ambitions to create highly efficient, very tenant-friendly buildings and we’re delighted to be helping them with these aims.”

GROWTH AND THE FUTURE Modus have grown impressively since 1992. In the first year, the turnover was £300,000; this to an incredible £65million in 2006 and projected £80 million in 2007. During that time, the company has served almost 1000 clients and completed work worth more than £350million. This year, Workspace is forecast to turnover £30million, Unitech £30million, Projects £10million and FM £10million. Toby is very happy with the figures, but is adamant that Modus is not just about making money: “I’m satisfied with profitability, I mean, there’s always room for marginal improvements and we keep that under review. What I’m not about is making abnormal profits from giving clients low value. Effectively, they’re clients that are with us all the time, the last thing that I want to be doing is giving them the feeling that we’re making too much money. I don’t want our clients to look at our accounts and think ‘these guys are raking it in!’ In many respects, you’d look at us and think our margins are relatively low, but it’s almost purposefully like that because I want to have longevity in our relationships with clients. What I’m more interested in doing really is growing the business across all of the divisions quite substantially

over the next three years. This divisionalised model of the business is something that we’ve only had in place over the last 18 months or so and it’s really changed everything about the way we do business; in particular it’s helped our teams focus on their specific product areas.

I’ve got a really exceptional management team in place in each area who are all very ambitious themselves, so I can certainly see us growing to well over a hundred million over the next 18 months and, as far as I am concerned, the sky’s the limit. Our business model is absolutely compelling and our clients aren’t going anywhere else.”

Neither are they a company driven purely by award recognition, though they have been the only company to be named in Deloittes/Independent newspaper’s ‘Indy 500’ of the UK’s fastest growing companies five years running. Modus want to be a class apart from their competitors, as Toby concludes: “There’s no other company out there that has got the range of skills and activities that we have; and if you combine that with the sorts of people that make themselves a career at Modus – they are exceptional because they’re so pleasant to work with and yet have a fantastic work ethic – you’ve got an absolute winner – watch this space!” And with Modus, you can be sure that the space will be designed with the future in mind.

MODUS GROUP GREENCOAT HOUSE, FRANCIS STREET LONDON SW1P 1DH TEL: 020 7828 9009 WEB: www.modusgroup.com

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Modus Group Greencoat House Francis Street London SW1P 1DH Tel: 020 7828 9009 Web: www.modusgroup.com