Top 30 UK M&E Contractors 2024

UK M&E ContraCtors

May 2024

03 Welcome to the Top 30 UK M&E Contractors report, from Gokhan Hassan, MD of GHCS/GH Engage and David Frise, CEO of BESA Group.

05 The top 30 UK M&E contractors, with rankings and annual turnovers. vi EWs froM th E

08 Gratte Brothers

‘Taking the lead’ with MD Remi Suzan

10 skanska

‘Customers are being more cautious’ says Skanska MD Dan Williams

12 Crown house technologies

‘The bigger and more complex the better’ for UK operations general manager Gavin Body

14 Briggs & forrester

‘ We have a lot to be chirpy about’ enthuses chief executive Paul Burton

16 stothers

‘Time is of the essence’ urges commercial director John Randall 18 J&B hopkins

‘Frustrating time’ but Hopkins sees more growth ahead, encourages sales director Mike Jenkins

20 suir Engineering

Suir’s CEO John Kelly is ‘optimistic but calls for a better risk/reward balance’.

Building Engineering Services Association (BESA)

Rotherwick House, 3 Thomas More Street St Katharine’s & Wapping, London E1W 1YZ

T: 020 7313 4900

E: membership@thebesa.com thebesa.com

david frisE

CH i EF E xECUTivE OFFiCER, BESA GROUP

Building Engineering Services Association (BESA) is the leading trade body for the Building Engineering Services Sector and includes SFG20, REFCOM, SKILLcard and Welplan within the group.

A former nuclear submariner, David left the Royal Navy to move into building engineering services contracting working as an M&E contractor for 25 years, before branching out into renewable energy systems.

David has had a long association with BESA as an active member and in 2018 was appointed Chief Executive.

He is a frequent speaker on competence and compliance, energy efficiency, system integration, low carbon initiatives, the future of the sector and the gap between design and performance in buildings.

GoKhan hassan

Gokhan is the energetic and tenacious owner and founder of GH Engage and GHCS and has qualifications in both Building Services Engineering and Quantity Surveying, as well as a Master’s Degree in Construction Economics, he is also a member of the Royal Institution of Chartered Surveyors (RICS).

During his career Gokhan has worked on a diverse range of projects for several major contractors and end-users within various construction sectors with a value range of £500k to £300million, rising from a Trainee M&E Quantity Surveyor to a Senior M&E Commercial Manager. Prior to setting up GH Engage, Gokhan founded GHCS, a Chartered M&E Quantity Surveying consultancy, working in partnership with several developers, end-users, main contractors and leading M&E contractors within the construction industry.

MAnAGinG DiRECTOR , GHCS & GH EnGAGE

Welcome

Without doubt, this last year has been a challenging time for the industry with a string of high-profile insolvencies, notably Michael J Lonsdale, and continuing consolidation, with Dalkia being the highest profile. However, this year’s report finds senior managers more hopeful, with most firms saying they have turned a corner and that there is a clear pipeline of work emerging – potentially for the next three to five years.

Why does this report matter? The UK M&E contracting market is worth approximately £20 billion1 and constitutes around a fifth of the UK construction sector GDP. This value is likely to increase over time as building engineering services become increasingly sophisticated and technology driven to meet net zero targets and because of the growing trend towards refurbishment and retrofit versus new build.

Due to the fragmented nature of the industry, the financial stability of the top 30 companies is vital for the wider sector as risk and cost pressures tend to get passed down the chain.

Gokhan Hassan, managing director of GHCS/GH Engage said the report reflected 16% growth in turnover for the top 30 M&E contractors, which shows the industry is heading in the right direction, but he warned that financial headwinds are likely to persist for the next two to three years.

to the 5th edition of the Top 30 Mechanical and Electrical (M&E) Contractor Report, jointly produced by GHCS/GH Engage and the Building Engineering Services Association (BESA)

16% growth in turnover for the top 30 shows the industry is heading in the right direction.

GoKhan hassan MAnAGinG DiRECTOR , GHCS & GH EnGAGE

“This, of course, is merely reflective of the workload of the contractors included within the report, but balance sheets and achieving respectable financial returns on complex projects is still incredibly challenging,” said Hassan.

“We have seen the consequences of the race to the bottom which is an issue that can only be resolved collectively. The challenge is being able to convince developers to forego a portion of their return to effectively support an industry or for public sector clients to increase their budget. However, it is hard to convince them when their priorities are generally short-term and their own margins and budgets are diminishing because of the exponential rise in interest rates and inflation over the past three years.”

David Frise, group CEO of BESA, added that market conditions were still tough and profitability among M&E contractors remained relatively low but has been improving over the last two years. This is more so for

larger contractors, as companies have refocused their business on profitable sectors and have avoided low bidding as much as possible.

Despite the positivity, investors are still treating construction-related businesses with caution. The sector is seen as ‘risky’ and cash poor by the money markets and shifting that perception will take some time, he added.

There have been alarming reports about the difficulties of some sub-contractors in getting access to trade credit insurance, which has forced them to turn down projects. This prompted intervention from the Construction Leadership Council who called on the government to intervene by reintroducing the Trade Credit Reinsurance Scheme applied at the height of the Covid 19 epidemic.

There has also been a significant rise in the cost of performance bonds, which means many clients are no longer willing to pay for them.

However, our report and the interviews demonstrate that most large MEP firms have a strong foundation for progress and are focused on reducing their exposure to risk, which should play well with insurers.

Project bank accounts are also expected to play a larger part in industry financing over the next few years as more clients recognise how they can be used to insulate them from risk while ensuring better cash flows through supply chains. n

1Barbour ABI, AMA Research, M&E Contractors Report, UK 2021 to 2025.

Focus on high value sectors

The key for those companies who have weathered the economic storms has been concentrating effort in those sectors and with those clients that recognise the importance of building engineering and where MEP (mechanical, electrical, and plumbing) services account for an increasingly high percentage of the overall project value. For example, data centres are booming, and those clients need reliable, high-tech solutions built on engineering that delivers energy efficiency and long-term performance. Similarly, our Top 30 survey reflected healthy demand in the research, healthcare, and pharmaceutical sectors, which also require top quality indoor environments and high-class technology.

MEP services account for a high proportion of the overall value of this type of project, which means that

building services specialists are now being asked more regularly to take on the role of principle contractor –even on contracts worth upwards of £100 million. This puts them in the driving seat and reduces their exposure to high-risk pricing and contractual conditions.

Working in these sectors means working with clients who recognise value when they see it. They are actively seeking out those contractors who battled through the hard times, proved their ability to deliver and kept their supply chains in good shape.

The penny has dropped for many about the value of technical and commercial competence, and they are now being a bit more careful about who and what they are buying. Fewer are getting sucked into the usual headlong dash to the bottom on price – they see that squeezing too hard will simply expose them to business risk by pushing suppliers to the brink.

This is borne out in the latest annual procurement trends report produced by consultant RLB, which found that widespread concern about supply chain failures was driving greater collaboration between clients and contractors.

The RLB survey found that more than half of contractors (54%) had seen more collaborative practices in procurement, while 35% of contractors said clients were more willing to share risk. And 16% of contractors reported increased use of project bank accounts as clients seek to protect themselves from market volatility.

Of course, there will always be those who simply want to procure a building that looks a bit like the one they need at 10 or 20% below a realistic cost…but some of the UK’s growth markets are showing signs of more mature and longer-term decision making.

Retrofit and refurbishment is gathering pace with more commercial building managers looking for better energy efficiency and improved carbon footprints – many have little choice faced with the demands of Minimum Energy Efficiency Standards legislation if they want their expensive built assets to remain viable. This is where building services can show an immediate return on investment and demonstrate the benefits to the client of working directly with an MEP specialist. n

Retrofit and refurbishment is gathering pace with more commercial building managers looking for better energy efficiency and improved carbon footprints.

Top 30 UK M&E contractors

Relative economic stability

Contractors still face a tough combination of economic and legislative challenges

Also, the UK remains one of the most expensive places to build in the world, according to the international engineering consultancy Arcadis (London is the most expensive city). This is partly because of the cost of factoring in higher safety and sustainability standards to specifications; alongside relatively high labour and material costs.

On the plus side, a key development highlighted by the firms in our report was the end of rampant inflation. While prices remain at historic highs, at least stability has returned making it easier to price projects with some confidence.

The industry is going to take some time to adapt to the biggest change to building safety regulations in a generation in the shape of the Building Safety Act . However, this alongside the UK’s legal obligation to cut carbon emissions and mitigate the worst impacts of climate change means demand for high quality building engineering services is more pressing than ever.

This reinforces the importance of investing in recruitment and retention of skilled people able to work with the latest technologies – including rapidly evolving digital systems – to improve productivity and keep pace with demand. Companies employing good people who can prove their technical capabilities will do well.

However, productivity is still a major stumbling block for our industry. This is partly to do with a shortage of skills but is also because of the dysfunctional way projects are often structured. The UK government’s infrastructure team tells us that just one in 200 construction projects come in on time and on budget. What other industry could survive on that productivity level?

One of the great ironies of the pandemic was that it forced many construction project managers to think more carefully about how they sequenced work. Social distancing meant you had to be very careful about who was on site and when. This led to more streamlined programmes and

the industry, in the main, carried on effectively…and more productively.

Of course, many have simply reverted to type in the years since and, as soon as it looks like a project is falling behind, they simply throw all the trades on site together with inevitable results. There was also a glimmer of hope that payment issues were improving in the wake of pandemic, but that also faded somewhat when the economic crises hit.

However, those more sophisticated clients and sectors do reflect a better understanding of what it takes to get good people all pulling in the same direction – they see the value (to them) of paying people properly and fairly in the expectation of a more robust and reliable result.

Late payment will remain a problem and a threat to cash flow. It has persisted throughout the history of the Association, but the UK government has now considerably tightened up the ‘prompt payment’ rules following persistent lobbying by BESA and others with firms required to pay within 55 days. This will fall to 45 days next year and then to 30 days from 2026 onwards.

However, our report shows that many contractors now feel more able to take the law into their own hands by avoiding exposure to the worst payers. As our industry extends its value offering so contractors can be ‘choosier’ about who they work for and what sectors offer the best returns.

There are other developments that point towards better productivity – not least the wider adoption of digital systems.

Construction and its related engineering disciplines were noticeably slower than many other sectors to adopt the latest process technologies, but we are now racing to catch up.

Artificial intelligence has also been identified as a major potential productivity benefit, but several of the industry leaders we surveyed recognise they have some way to go before they can properly harness it.

Traditional building services trades will remain crucial, but there are now more IT-based tools that do much of the ‘grunt work’ and free up human engineers so they can focus on the higher value activities. n

There are other developments that point towards better productivity – not least the wider adoption of digital systems.

Construction and its related disciplines were noticably slower than many other sectors to adopt the latest process technologies, but we are now racing to catch up.

it is going to be a big year for elections in 2024. We will have had a general election by the time of our next report and Donald Trump could well be US president again.

The lack of stability created by the wars in Ukraine and Palestine obviously have serious implications for us all and any escalation could affect energy and raw material prices again. However, our sector’s focus on avoiding reckless growth is the only sensible way forward against that backdrop.

Financial markets are very good at moving quickly to insulate themselves from risk and it is potentially highly significant that investors moved strongly out of shares and bonds into cash last year. Money market funds now hold a historic high $6.5 trillion and that cash is ready to be invested in those areas that offer good returns with relatively low risk when investors are satisfied that interest rates are falling worldwide.

abdul tantouch, head of content at aMa Research, said the M&E contracting market had demonstrated “significant resilience” having rebounded from a 12% decline in 2020 caused by the Covid-19 pandemic.

“The sector has not only recovered to pre-pandemic levels, but is now on a trajectory of robust growth,” he added. “This is being driven by the integration of innovative practices and technologies aimed at advancing towards net zero carbon emissions.”

Tantouch said the market was expected to achieve a value of almost £21 billion in 2025, supported by key trends such as increased demand for data centres and green energy solutions.

and what value areas are money managers looking at that could benefit from these huge injections of capital to deliver best returns on investment?

Infrastructure, renewable energy, digital technology, healthcare…all identified by our top 30 firms as areas where MEP services command significantly higher proportions of the value.

It is a mixed picture, when is it ever different? But the future looks promising for those MEP contractors who weathered the storm of the past few years and have a strong fix on the ‘added value’ business. n

Remi Suzan became managing director of Gratte Brothers Ltd (the M&E arm of Gratte Group) on April 1st taking over from Iain Thomson, who will remain with the business as chairman.

no stranger to the business, Suzan has been with the company for more than 20 years, having previously served as design director, engineering director, as well as deputy managing director for the past three years.

Gratte Brothers is 78 years old this year and with the business in a very stable place, Suzan is not planning any radical changes; rather he aims to “keep driving the business in the right direction”.

His priorities for the company are increased digitisation, a greater focus on sustainability, growing use of offsite assembly, and training schemes to help the company cope with the wider industry’s skills shortage. He believes that the latter requires a strong element of “growing our own” to ensure it has the right calibre of skills in-house.

“Part of the reason the industry is struggling from a skills gap is because

Taking the lead

it prioritised the academic route for a long time,” Suzan says. “It moved its focus away from the apprenticeship HNC/HND route and focused instead on a full-time university pathway creating a generation of project managers with less practical experience. This has had a damaging impact on our technical skills base.”

One of the ways in which the business is looking to improve its skills base is through its graduate training scheme which Suzan launched three years ago. Amongst other opportunities, this allows labour manager Richard Harris

to identify technical apprentices who have the aspiration and attributes to train for senior roles.

opportU nity

Once they pass their apprenticeship, they are fast tracked into trainee project engineering positions and are given the opportunity to work their way up, learning from their peers.

“This means we can train up a group of future project managers who already have five years’ experience on site and, therefore, understand the work they are now being asked to manage. That experience is invaluable and can’t be learned from a book,” he adds.

Gratte’s rapidly growing off-site assembly facilities in Chelmsford and Worthing can also help to promote building services careers, he believes. They offer better working conditions and improve productivity. First used to pre-assemble complete risers for a large office development project, the company decided to retain and expand its in-house capabilities and now this method can deliver up to 60% of some projects.

Remi Suzan, MD, Gratte Brothers

“It is important to stress that this is not pre-fabrication using standard solutions,” says Suzan. “We are delivering core components of our projects using this method and by using our own inhouse teams, we can ensure that quality is maintained; the dream is to one day deliver 80% of a project this way.”

“The advantages in terms of quality, health and safety, working conditions and productivity are enormous,” says Suzan. “For example, we can produce a complete distribution board in one day that would have traditionally taken three days on site and I know from talking with our teams that they enjoy working there.”

However, there is some way to go before this approach becomes the norm. “Procurement is a big barrier. To deploy this process, the client must commit early on because it requires a far more detailed design to be prepared from the beginning and it becomes difficult when too many elements are brought into projects at later stages.”

Suzan believes that it is the result of their clients seeking unique solutions which has led to them delivering more and more projects as the Principal Contractor. This is happening more and more because of its reputation with clients and the increased value of the M&E services, he says.

“We have a reputation as a technologically-led contractor because of our track record in data centre projects and the high-tech sector. Many of our clients realised that in this sector, a large proportion of the project value was attributed to the M&E package, so they started asking us to take the lead and sub-contract the other parts of the project.”

He admits this was a daunting step for the company 10 or 15 years ago, but it has gained its confidence since then and is now taking on the principal contractor role on very large projects in this sector, including one worth more than £160 million.

orGaniCally

“This has allowed us to grow organically and sustainably, working with a close group of direct clients who have a great deal of trust in our ability to deliver these large-scale projects,” says Suzan. Gratte has also gradually insulated itself from some of the current challenges of ‘traditional’ procurement by working more directly for end clients. Also, between 80 and 90% of its work is repeat business.

“If you work directly for the owner/ manager of the building, you have more control over the process and the quality of the delivery,” he says. “We have a loyal customer base who keep coming back to us because of what we offer but we are very careful about managing expectations knowing our capabilities and keeping our delivery standards high.”

By way of illustration, he predicts that this year’s turnover of around £250m, which was double last year’s, will not rise significantly next year. “Doubling put a lot of pressure on us, but we are

Many of our clients realised that in this sector, a large proportion of the project value was attributed to the M&E package, so they started asking us to take the lead and sub-contract the other parts of the project.

now consolidating and being cautious to make sure that we don’t over trade.”

“I strongly disagree with people who say having too much work is a good problem to have. You can get into just as much trouble by having too much as not enough.”

As a result, Suzan is confident about prospects for the business, but admits concern about the industry’s procurement model which often passes on the design risk to the contractor even when the design has been carried out prior to contract award. He also thinks the Building Safety Act will have an impact on some aspects of behaviour.

“We have taken a very positive approach to the Act because we see it as an opportunity to ensure we’re continuously improving as a business and delivering a quality output but proving that people are competent can be a challenge. It is relatively straightforward for blue collar workers as that is mainly about their statutory and vocational qualifications. It is more complicated with white collar, management level employees whose competency is undoubtable but is often the result of years of experiences rather than qualifications.”

As a result, all Gratte project managers and engineers have undertaken the CIBSE Building Safety Act awareness course and can now be upskilled if required through additional work experience or training.

Another aspect of legislation that he thinks may have an impact is the new Minimum Energy Efficiency Standards (MEES). This requires all non-domestic rented buildings to achieve an Energy Performance Certificate rating of C by 2027 rising to a B by 2030.

Suzan believes this will give M&E firms the opportunity to work with building owners/operators to help them get properties up to standard and operating more efficiently so that they don’t end up with ‘stranded assets’ that they cannot legally sell or rent out without facing sizeable financial penalties.

“Most people in this sector want to do the right thing and deliver the best project. Adding value to property assets will be the driving force for making the right investments in building services retrofits and upgrades.” n www.gratte.com

Customers are being more cautious, says Skanska MD

“Last year was a challenge for the construction industry,” says Dan Williams, managing director at Skanska UK’s building services division.

“Alot of projects that started around the time of the Covid-19 pandemic and Brexit came to completion. With the pressure of rising costs, getting them over the line with an acceptable financial outcome, was difficult for everyone.”

Skanska, which was originally founded as a concrete maker in Sweden in 1887, has grown into one of the world’s largest development and construction companies, with global revenues of £12.5 billion in 2023. It employs around 27,000 people in the Nordics, Europe, and the US.

The UK building services arm, which includes SRW (Skanska Rashleigh Weatherfoil) experienced growth in revenues of 10% during 2023 largely driven by the data centre market, and is on track for growth in the future, according to Williams.

“We can see a clear pipeline of projects for the next three to five years. Customers are also being more discerning and careful about who they appoint as they look to ensure they are insulated from any future market shocks – and that is good for companies like ours that can offer greater financial stability.”

The market was shocked into taking a more cautious and responsible approach in the wake of Carillion’s collapse in 2018 but Williams said “that had started to slide a bit” until last

year’s high-profile failures in the M&E supply chain.

“When major contractors get into difficulties it naturally makes customers look again at their exposure to risk and it would be nice to retain that more cautious approach for the long term this time,” he says, adding that fewer were getting sucked into the “headlong dash for the lowest price.”

trUst

“We are proud to be one of the more financially stable contractors, and it is important to talk about these matters with customers. It is a challenge for

customers to really consider who they are employing and how much they can trust them to deliver.”

However, Williams says the market will be “nothing but very competitive” over the next couple of years but he sees great opportunities for Skanska in the commercial office, media, data centre, defence and energy sectors in particular.

The company also has a developing ‘smart building’ platform that is gaining traction with customers who recognise the additional value that MEP services can add to their projects. The new technology will be used to collect and analyse live building performance information, helping building owners and tenants to make better decisions about how they use and manage their properties. “

We began developing our smart building platform in 2020,” he recalls. “That was an important step in the process of differentiating ourselves from the competition and offering more value to our customers.”

He also sees the defence industry as an obvious focus for investment in the wake of global events and expects that will happen even if there is a change of government.

There are also some subtle shifts going on in the data centre sector with a geographical shift away from some of the established areas as developers follow the availability of electrical supply capacity.

“We are seeing more projects outside the traditional areas around London and the Home Counties, as customers look for locations closer to sources of available energy.”

norton Folgate project

Dan Williams, MD, Skanska UK building services division

We are proud to be one of the more financially stable contractors, and it is important to talk about these matters with customers. It is a challenge for customers to really consider who they are employing and how much they can trust them to deliver.

He also said it is positive to see the healthcare sector picking up again with the government’s new hospitals programme and general pent-up demand in this sector.

With all these diverse markets and technical challenges to tackle, the “war for talent” is heating up, according to Williams. “The frequency of people joining one company and then staying there for 30 or 40 years is reducing. We must work harder to capture and retain talent”.

talE nt

“Skanska continues to invest in its emerging talent pool and that will feed through into having more diverse management teams in the future.”

Getting more new entrants into the industry is a real focus area. “We need to continue to sell our industry better, with the strong story that we have. For example, we’re actively working to reduce carbon emissions in the built environment and be part of the solution in tackling climate change. This is a persuasive sustainability message to

promote and demonstrates the impact our sector can have.”

Williams is fundamentally optimistic about the future of the industry: “This is a challenging industry but can certainly offer rewarding careers.”

Over the last two decades Williams has grown his own career at Skanska, rising up the ranks from student engineer to become managing director last year.

“A lot of people, including myself, joined the industry because we came out of school not knowing what to do with ourselves, but once you find it you do tend to stay.

“It offers great opportunities and as we work more and more with cutting edge technologies, the value we provide will only increase.” n

www.skanska.co.uk

The YY Building, Canary Wharf

The bigger and more complex the better

Big projects that present significant technical challenges are exactly where Crown House Technologies (CHt) wants to be, according to UK operations general manager Gavin Body.

He oversees delivery of a major portfolio of MEP services work including Laing O’Rourke’s construction projects and those of several external clients, including Kier and Lendlease.

Following a “difficult year” of trading to the end of March 2023, Body sees better times ahead with a clear pipeline of projects, as its parent group owner

Laing O’Rourke continues to win work in its priority sectors – healthcare, science and research, nuclear and green power, and data centres. Laing O’Rourke was recently appointed as preferred bidder to deliver Calderdale Royal Hospital in West Yorkshire and is working on several large science and research projects, among them the 30,000 sq m Ellison Institute of Technology site in Oxford designed by Foster + Partners. CHt will be responsible for the delivery of all the MEP services on these major schemes and is also already on-site at the Hinkley Point C nuclear project, and Body expects the Government’s ambitious New Hospitals Programme to result in more work.

“We focus on the larger, more complex projects as this is where we think we can offer most value and it differentiates us from the rest of the market,” says Body.

“There are not many engineering firms out there that can deliver MEP schemes valued at £50 million – and we are already working on a number that are worth more than £100m.

“The New Hospitals Programme team has questioned the industry’s capacity and ability to deliver at scale, and we have been working closely with them to demonstrate how a manufacturing led approach to construction – and to MEP systems – can improve productivity and quality and shorten programmes. By demonstrating this, we want to avoid the more price driven end of the market and we rarely engage with multiple stage bidding anymore.”

lEGaCy

Like much of the sector, CHt has had to manage some significant challenges during 2022, mainly related to inflationary pressure and its impact on jobs secured before the Covid-19 pandemic on a fixed cost basis. Body has been alarmed by the rate of insolvencies among small to medium sized contractors in the last two years, which he described as the worst he had seen in 25 years in the sector. However, he now believes the industry is turning the corner.

Gavin Body, UK operations general manager, Crown House Technologies

We focus on the larger, more complex projects as this is where we think we can offer most value. There are not many engineering firms out there that can deliver MEP schemes valued at £50 million – and we are already working on a number that are worth more than £100m.

“Whilst you will see our 2022/23 turnover is down on the previous year’s trading, our 23/24 forecast has increased significantly, and we see this trend continuing in the financial year to the end of March 2025”. We are working with some fantastic clients who really understand the value that our delivery model offers. For example, we have been working with Oxford University for many years and they really appreciate and value the way we work.”

CHt is also benefitting from the fact that complex, high tech projects are increasingly MEP-driven because it can account for more than 50% of the total project value.

“There is strong demand for what we do, but we must also be aware that the industry is not attracting and retaining enough people. To continue to meet demand and deliver these high value projects we need to capture more talent,” he says.

With construction as a whole requiring something like 225,000 new recruits over the next six years to meet demand, Body is clear that the industry must also

become far more diverse. For example, women still represent only 12% of the MEP workforce.

Crown House is putting more investment into recruiting apprentices and graduates as that is where it believes it can influence the campaign to attract more people from different backgrounds. However, MEP is still something of a “hidden industry”, according to Body, who started out as an apprentice at Haden Young more than 25 years ago.

The increase in the amount of work carried out offsite could also make the sector more ‘attractive’ as it continues to struggle with its image, he says. CHt operates the largest offsite manufacturing centre in the country at over 120,000 sq ft and it delivered its highest ever output with record breaking turnover.

“Offsite has been around a long time and it has been a real challenge to get more people in the industry to recognise the value, but more of our clients now understand this approach,” says Body. “Data centres, in particular,

have picked up on this and we are delivering more packaged pump rooms and switchgear assemblies.

“A lot of the clients in our priority sectors can see the benefits of the MEP services being manufactured and inspected in our factory. This improves quality and can help achieve defect free installation on day one. It also has significant health and safety advantages for our people – it’s a more comfortable working environment –and it is also more productive.”

valUE

Body also believes more clients are looking at “what they are buying for the long-term”, including energy efficiency and reduced carbon emissions. This growing focus on the sustainability of systems supports more work being completed offsite.

The Building Safety Act is also concentrating minds on the quality of the work and the ability of firms to demonstrate competence and compliance with new legislation, but clients will have to rethink some of their cost planning to reflect the new requirements, adds Body.

“It is a simple message: We need more standardisation of design so that we construct more buildings in the same way. That’s beneficial and true whether it’s a hospital, a power station, a prison or an office.” says Body. “Although that does not mean buildings cannot be unique and have their own characteristics.

“But clients and a large part of our industry are not there yet. The change needs to begin upstream of construction, with all delivery partners clear as to what is expected of them and willing to collaborate to achieve the best outcome.”

“From a technical point of view, we are a highly literate business. Our engineering know-how and ability to develop solutions for clients are second to none. This means we are well equipped to manage the changes required by the Act, and we can also help our clients and sub-contractors understand what’s required of them.” n www.crownhouse.com

Delivering MEP services at the new Louisa Martindale Building at Royal Sussex County Hospital

Briggs

& Forrester chief executive

Paul Burton (above) believes better times are returning to the UK construction market.

“We have a lot to be chirpy about,” he says. “The last six to nine months have seen a definite uptick particularly in the London residential and commercial office market and there is a strong pipeline of other work ahead too.”

The resurgence in commercial office projects has been a particularly pleasant surprise for the company with clear signs that the ‘work from home’ trend is reversing leading to a strong forward order book including many commercial new builds and refurbishments worth up to £500 million – the largest it has ever been.

Burton cites the vacant House of Fraser store in London’s fashionable Oxford Street as an example of the kind of building that might have been expected to be converted into housing but is about to become a mixed retail and office development instead.

“Some high street stores have been converted to residential, but not nearly as many as we might have expected in the aftermath of the pandemic.”

Briggs’ Living division, which specialises in large scale design and build residential, student accommodation

We have a lot

to be chirpy about

and hotel projects, is bouncing back strongly, and Burton also expects to see more projects coming in from the pharmaceutical, healthcare, and research sectors.

However, the industry veteran, who has been with the company for 24 years, says the last few years has been extremely troubling.

shoCK

“I have been through several recessions, but the last two to three years was the worst by far,” says Burton. “It all started with Brexit and then we had an unprecedented pandemic, but Ukraine was the biggest shock because of the inflationary impact it had on commodity prices.

“It was impossible to price jobs accurately because we were seeing material price increases four or five times a year. We will never get back down to the level of costs we experienced before [the Russian invasion] but at least the market has stabilised, and it is easier to predict where prices are going.”

The pandemic produced one positive impact in that it forced the industry to be more productive, according to Burton. He explains that social distancing meant that projects were sequenced more carefully which meant delivery went more smoothly.

“Sadly, most projects have just gone back to the old way of getting all the

Briggs & Forrester undertook the fit-out of the mechanical, electrical and public health works to block F of Chelsea Creek residential development

trades on site at the same time because a project is running behind.”

However, on the upside Burton is seeing a much stronger recognition among clients of the importance of delivering quality and performance reliability.

“It always comes down to supply and demand, but clients appear to

be recognising those companies who have successfully worked their way through the difficult times and demonstrated had healthy supply chains. Many are much more focused on quality and reliability of delivery and are turning their backs on ‘first past the post’ bidding,” he adds.

Supply chain relationships are the key, according to Burton. “If you work honestly with people for a long time sharing your long-term objectives with them, they tend to look after you when times are more difficult. There’s a lot more to supply chain relationships than just giving your supply chain projects to do – you need to build up an understanding over time,” he says.

When times are tough you tend to pull in your horns and deliver what you can, but now we can see a clear pipeline of work ahead which makes it easier to plan and invest more in training and recruitment.

Briggs’ most recent annual supply chain gathering attracted over 350 of their most trusted partners to its Northampton home which is testament to the strong relationships the company has built up over its 75 years in business, but like everyone else in the sector, attracting new talent and retaining these individuals is a challenge.

“It’s all about how attractive you can make yourself,” says Burton. “Skilled people want to work on good quality projects for reputable companies in addition to attracting the right financial package.”

The company’s four-year training programme gives each recruit the opportunity to work across different departments before deciding where they want to be. Many of the current senior management came up through that route, but the current skills shortage means that most employers need to retain as many of these as possible, rather than lose good people to competitors.

ExpE ri E nCE

However, Burton acknowledges that employers have not been investing enough in training in recent years but says that is already starting to change.

“When times are tough you tend to pull in your horns and deliver what you can, but now we can see a clear pipeline of work ahead which makes it easier to plan and invest more in training and recruitment.”

Burton thinks new investors from the Middle East could help to power the UK’s recovery.

The Building Safety Act is also presenting some new challenges which the industry needs to factor into its planning, according to Burton. Things like the new ‘2nd staircase’ rule for some high-rise buildings has forced several projects back to the planning stage, but he believes the industry will adapt over time to the new pricing structure.

“We have definitely turned the corner and those of us who came through the last few years in one piece have a lot to look forward to,” he adds. n

briggsandforrester.co.uk

time is of the essence for Stothers

Founded by Denis Stothers in 1957, Belfast-based Stothers (M&E) Ltd has evolved from a small-scale maintenance provider to a national M&E contractor which turned over around £60m this year.

it has more than 100 directly employed staff and a supply chain of around 1,000 approved suppliers and sub-contractors.

The company also has regional offices in Glasgow and Manchester and saw business grow by almost 20% in the last 12 months, although commercial director John Randall (below) says that was partly due to several delayed projects finally reaching completion.

There are plenty of opportunities out there... but what makes me nervous is the time it is taking from tender through to project award. This has become greatly extended over this past couple of years leaving it difficult to plan resource levels.

However, he remains optimistic that Stothers can deliver similar numbers over the next 12 months “with a following wind” but project delays continue to be a major concern.

“There are plenty of opportunities out there, so we are not having to lift the phone but what makes me nervous is the time it is taking from tender through to project award. This has become greatly extended over this past couple of years leaving it difficult to plan resource levels.”

The industry’s slim margins don’t help, which is why clients spend so long trying to make the numbers work, he adds. “Ultimately, funders are looking to other sectors to invest in which is problematic for the construction sector, at least in the short term.”

One of Stothers’ ongoing projects with the Maybourne group is London’s all-suite Emory hotel

Stothers enjoys plenty of repeat work with a regular group of clients who see them as “a safe pair of hands”. As a result, they are involved early in many projects thanks to the good relationships they have built up over the years which helps to reduce their exposure to risk.

lUxU ry

For example, it is heavily involved in the hotel market including work for the luxury Maybourne Group which owns Claridges and the Berkeley where Stothers has just completed an extension worth £24 million. It also works for a new brand to the UK, TSH, and has recently completed a 500bed project in Glasgow for them which is worth £14m.

“I have read a few reports saying that the hotel sector is falling away but that is definitely not our experience,” says Randall. “We are still seeing a strong enquiry level for hotel projects right across the country.”

Another booming market for the company is student accommodation. Stothers has just completed one project with more than 3,000 beds and has bids under consideration for a further similar amount which would provide “a significant workstream” over the next four years. “We see this sector being a key element for potential growth of the company over the next number of years,” explains Randall.

Stothers is also looking to expand its client base with data centres one area of potential growth but says they will always be careful about who they work for. The wider industry also needs to be mindful of the next big challenge in the shape of the Building Safety Act, according to Randall.

“We are seeing the first of those projects coming through now and they require a lot more information at an earlier stage of the process. This is clearly going to be a very big change for everyone, and we will all have to adapt as we gain more experience of what is required.” n

https://stothersm-e.co.uk

J&B Hopkins was founded by John and Barbara Hopkins, who started working from their living room in 1978.

Today it is a £55 million turnover business directly employing 185 people and providing a full MEP design and build service to the construction industry and several end user markets.

It moved to its first self-built office in 1992, and then to its current home at Concorde House in Fareham, Hampshire in 2006. The company has satellite offices in the Thames Valley and near Brighton. The Hopkins family relinquished control to the staff in October 2021 when the company became an employeeowned trust (EOT).

Turnover increased from around £45m in 2022 to over £55m last year, and sales director Mike Jenkins is optimistic that the business will enjoy a similar level of growth in 2024.

“The projects are there waiting, we just need a few to get that final go ahead,” he says. “It is a frustrating time for everyone in the industry, but I think we can be quietly confident that a lot of delayed projects will finally get moving this year and next.”

The company operates throughout the south of England in a wide range of sectors including leisure, education and

‘Frustrating time’ but Hopkins sees more growth ahead

residential – and provides a complete building services design, installation, and commissioning service to several main contractors.

Hopkins is working on the largest Passivhaus care home project in Europe, just outside Luton, and is waiting for the go ahead from the Ministry of Justice on several prison contracts – an area where it has become something of a specialist in recent years.

prinCiplEs

It was also previously a key contractor for the Premier Inn hotel chain and was able to apply some of the same ‘room by room’ design principles to student accommodation when the hotel sector stalled.

“We have a large in-house design team of 26 that has helped some of our main contractor partners win projects over the years,” adds Jenkins. “It is a considerable investment for us, but it pays dividends.

“We are known for our collaborative problem-solving approach which means we benefit from a high level of repeat business. It also helps that the leadership team has been together for many years sharing a vision for the company’s future.”

One noticeable success was when the company worked in collaboration with a main contractor and his client on a large residential scheme in Milton Keynes. “We managed to gather valuable ‘real time’ information that allowed us to incorporate changes which the client could quickly approve so we could ensure the project met the desired budget level,” he said.

The projects are there waiting, we just need a few to get that final go ahead. It is a frustrating time for everyone in the industry, but I think we can be quietly confident that a lot of delayed projects will finally get moving this year and next.

However, continuing to attract skilled people to maintain that quality reputation is a challenge. In fact, Jenkins believes the skills shortage in the sector is the worst he has experienced since the 1980s.

“It is very hard to find quantity surveyors, estimators and designers,” he says. “Designers also take just about as long as doctors to qualify because they tend to have both an academic and company-based training process, but it is vital to train your own people so you can guarantee the quality that keeps clients coming back to us.”

By illustration, 10% of the 185 employees are apprentices and many others have personal development plans so they can see a clear career path ahead and have individual goals to achieve.

The company is also heavily focused on developing multi-skilled engineers who can work with new and emerging technologies and keep taking on new tasks so they develop and improve their earning potential.

Hopkins own headquarters building incorporates PV, ground source and air source heat pumps and optimised controls for power, heating, and cooling technologies. It is also doing more offsite assembly work, particularly with some of its lighting installations and expects to expand that facility as well. Modular systems help to reduce labour time on site and means the company can self-install more systems, which reduces its sub-contracted labour costs.

However, while growth prospects are positive, cash flow continues to be a headache for most MEP contractors, according to Jenkins.

“There is still a race to the bottom on price and we could do with greater honesty within the industry he says. “At the end of the day, the cost is the cost – you can only go so far, but at times it feels it’s never enough.

CU ltU rE

“Some clients get it and recognise you need to work together if you are going to get the best outcome. Balfour Beatty is a good example. They have the right culture and understand that you can’t leave all the risk on sub-contractors. They recognise the value that MEP firms bring,” says Jenkins.

The latest UK inflation figures were something of a relief because material and labour costs have put contractors under considerable pressure. The sector is not out of the woods and Jenkins would like to see payment terms maintained as well.

“We are in a better position than many, though, so have been able to keep investing in quality and growth. That allows us to offer the same high levels of customer service and industry knowledge to self-deliver more sustainable projects from design through to installation and then maintain the buildings, so they operate close to the original design principles,” he says. n

www.jbhopkins.co.uk

Suir’s Kelly optimistic but calls for a better risk/reward balance

The surging data centre and power distribution markets have fuelled a 41% rise in turnover for Suir Engineering , one of Ireland’s largest engineering services providers.

it reported revenues of €429 million for 2023 and CEO John Kelly expects more growth to come this year thanks to the robust performance of its Energy, Power & Renewables (EP&R) division, and Data Centre division.

The company, which is celebrating its 40th anniversary this year, was founded in Kilkenny in 1984 and is now based in Waterford, Ireland. It has operations in Sweden, Denmark, Germany, and most recently, the UK and Finland. It provides mechanical, electrical, instrumentation and high-voltage engineering services.

“Our EP&R business has operated for over 20 years and has quadrupled in size in the last six so that it now delivers €120 million per year, carrying out ground-breaking and first-of-a-kind electrical power projects across the UK and Ireland,” says Kelly.

He confirmed that Suir would also be expanding its employee base this year, aiming to grow its head count from around 1,500 to over 1,700 and sees major opportunities in four key sectors: Data centres, high tech, energy infrastructure, and life sciences.

Kelly predicts a turnover of about £40m in the UK this year, rising to £150m in 2025 and £250m the following year. He is optimistic about growth in the sectors where the company operates but has wider concerns about the UK’s construction model.

valUE

“We operate in markets where you have a direct relationship with the end client and we definitely won’t be going back to the UK Building Services main contractor/subcontractor model,” he says. “The UK construction industry has a lot of excellent businesses, employing

There are too many people wanting to procure construction services at the lowest possible cost and, until that changes, the industry will continue to struggle. There needs to be a much healthier balance between risk and reward, and unfortunately there is too much focus on passing down risk at the moment.

top quality people with great skillsets, but the business model often does not recognise or reward that value.

“There are too many people wanting to procure construction services at the lowest possible cost and, until that changes, the industry will continue to struggle,” adds Kelly. “There needs to be a much healthier balance between risk and reward, and unfortunately there is too much focus on passing down risk at the moment.”

Suir is in the enviable position of operating largely outside of that model because the sectors in which it works requires a direct relationship with the end client, but that also means the pressure is on to deliver a high-quality solution with excellent reliability.

“You need to be able to back up what you promise, so we don’t overstretch ourselves. You are only one bad job away from ending up on the naughty step,” explains Kelly.

John Kelly, CEO, Suir Engineering

He believes there is considerable pent-up demand in the UK following a period of instability and investment uncertainty caused, partly by Brexit, but also other political decisions and economic circumstances. There are many sites that have been earmarked for development for as long as 10 years that could finally get the investment to proceed this year.

The UK’s skills shortage remains a major cause for concern, however, but Suir will be taking on 200 apprentices this year – most of whom are electricians, plumbers and pipefitters – as part of its solution to ensure it has enough quality people “on the tools”.

The fact it has been operating in Ireland for 40 years also gives the company access to an established workforce, but Kelly is concerned about the sector’s ageing demographic with many people reaching retirement age at the same time.

Suir has a big and growing presence in Germany which it sees growing at a faster rate than the UK this year due to the expansion of its high-tech development programme, particularly around Frankfurt which has become a data centre ‘hot spot’ in recent years. The business is also very active in the Nordic area.

The technical challenges facing data centres includes improving sustainability and Suir offers a range of renewable power solutions and looks for the opportunity to connect to sources of green energy wherever they are available.

“But you can’t get away from the fact that these are energy intensive facilities and the smaller the technology becomes the hotter it gets, so finding energy efficient cooling systems is another key focus for us,” says Kelly.

“These are well-managed properties and most of our clients realise the importance of using green energy wherever possible and control systems that ensure robust energy efficiency.” n https://suireng.ie