This year is more than likely to be one of considerable change for many roads firms, with local authority cash tight and a major review underway at the Highways Agency. For Colas’ UK operation it’s certain to be, with new chief executive Lee Rushbrooke taking the helm this week.
For Colas’ UK operation it’s certain to be, with new chief executive Lee Rushbrooke taking the helm this week. Filling the shoes of outgoing chief Frederick Roussel, who has given up his UK duties to concentrate on his role as deputy managing director of Northern Europe in the larger Colas Group, will not be easy.
The last few years have seen turnover grow dramatically from £186M in 2007 to £283M in 2009, a performance that made the firm a finalist in the NCE/CECA Contractor of the Year Awards last year. The firm now employs more than 2,000 across the UK, in roads, highways maintenance, airfields, products and processes and winter maintenance.
“We are actually investing in some areas to make sure we come out of this [period of spending cuts] stronger”
Keeping that pace up, in the face of massive cuts in government spending, is clearly unrealistic. For the year just ended Rushbrooke is expecting to report turnover broadly static on 2009 at £282M and expects turnover this year to drop back to around 2008 levels, when the firm earned £242M.
But for Rushbrooke cash is king. Back in 2004 the firm operated in debt. Now, it has £20M in the bank, and he intends to keep it that way.
“Our cash is positive all year round and that allows us to make continued investment and to get through tough times without cutting resource. We are actually investing in some areas to make sure we come out of this [period of spending cuts] stronger.”
Last year the firm pumped almost £10M into buying new plant and equipment, an investment that can be used to immediately deliver more for less to its clients – and that’s critical for a firm that sells itself on its innovation.
“We only work on term maintenance contracts where we can add value. We are not going to buy work or work for clients where it is just all about price”
“We only work on term maintenance contracts where we can add value,” says Rushbrooke. “We are not going to buy work or work for clients where it is just all about price.”
Backed by the larger Colas Group and its ultimate parent Bouygues, Colas UK is in the enviable position of getting first sight of a raft of innovations in surfacing materials, condition surveying techniques and intelligent transport systems. The latest innovation to hit the streets – a laser-based road condition survey tool - is one of several to come out of its highways maintenance PFI deal in Portsmouth (see box).
The Portsmouth deal was Britain’s first highways maintenance PFI and Colas has six years’ experience of working with a long-term programme. Now, through the core investment period, Rushbrooke says the firm has learnt a lot about lifecycle costs – and how to minimise them.
“For example, in Portsmouth we have to do street cleaning. We’ve worked out that if we do educational programmes and campaigns in schools aimed at giving kids pride in their community they drop less litter, and we have to spend less cleaning it up,” he explains. “It’s not a quick return, but over 25 years, it can be a big saving. Little things like that really add up.”
“We’ve worked out that if we do educational programmes and campaigns in schools aimed at giving kids pride in their community they drop less litter, and we have to spend less cleaning it up”
With experience of contracts like Portsmouth, Rushbrooke is rueful – if realistic – about the situation the Highways Agency now finds itself in.
“The Agency is under pressure to cut costs and there is an element of make do and mend coming in, as opposed to providing the best whole-life cost solution,” he says. “Our solutions are more about whole-life cost, but there may be an opportunity to deliver on the process side.
“For example, with innovative surface dressings and microasphalts that can solve a problem for five years or so,” he explains.
More value will be delivered to clients through Colas’ new Value Management Team. This is another investment being made possible through the firm’s strong balance sheet, and it will see team of up to a dozen experts drawn together to ensure every tender and contract benefits from all the skills, techniques and processes that exist across the Group.
“The amount of research and development that goes on in the Group really is our key strength and the VMT is our unique selling point,” says Rushbrooke.
And it leads directly to the strategy moving forward – no major revolution, but a subtle emphasis on the firm moving from service provider to intelligent service provider. “That’s intelligent in the way we work and deliver solutions,” he says.
The proof, as they say, is in the pudding, and in Rushbrooke’s case it’s the firm’s top targets – the Isle of Wight highways maintenance PFI where detailed submissions are due next month, and Kent county council’s highways deal where initial approaches have just been made.
“Colas is the sort of firm where if you make it two years you end up here for life”
What won’t let him down is any difficulty getting to know the culture and values of the firm – he joined as a trainee estimator at 16 and in the 24 years since has done pretty much every discipline. And yes, that does make him just 40.
“When I was at school I wanted to be an architect, but didn’t fancy the idea of studying for another seven year. So I left, joined Colas, and ended up studying for another nine for my ONC, HNC and degree!” he jokes.
“Since then the challenge has always been there to keep me engaged, and my big break came with the Portsmouth PFI where I was business manager,” he says. It was enough to get him onto the main board at 35, and now to chief executive at 40. But he’s not forgotten his roots.
“Colas is the sort of firm where if you make it two years you end up here for life. But you’re not a number. We may have 2,000 people, but I know most of them by name. We’re an SME but backed by a European giant. It’s ideal.”
Stepping up the research
Colas has developed its own analytical method of calculating the residual life of pavements in Portsmouth. The contractual environment of the company’s
PFI arrangement there has given it good reason to do so and made worthwhile the task of proving
the system works.
The Portsmouth PFI contract was set up with a repayment mechanism based on numbers of HGVs using the city’s roads and a network condition index (NCI) to be calculated partially from a pavement condition index (PCI). Key for calculating the PCI and NCI would be the evaluation of the residual life of pavements, with the traditional measurement method of deflectograph surveys interpreted with PANDEF software written into the contract.
This last has its limitations, however, including the fact that it is no longer the favoured software of the Highways Agency and so has not been supported with updates to latest material standards for some years. Most notably it cannot be used for back calculation for design of resurfacing inlays or to give accurate measurements for composite pavements.
Around 70% of Portsmouth’s principal roads - those with the strongest weighting within the PFI repayment mechanism – consist of bituminous layers over concrete bases or substrate. So, with the Portsmouth PFI contract allowing a change of method, Colas set out on developing an alternative.
The result is Colas’ Rational Design Approach (RDA) developed in partnership with Portsmouth City Council (PCC) by a French and English Colas team (the Portsmouth PFI is being delivered by Ensign Highways, a partnership of Colas UK and Colas SA); and based largely on French analytical pavement design.
It was proven by Colas via a series of comparisons with other methods of analytical pavement analysis and independently evaluated by PCC’s professional advisor Mott MacDonald.
“RDA is really an adaptation of classic tools, but gives a lot more flexibility in how the software can be used,” says PCC’s PFI contract manager Ray Privett. “Whereas PANDEF at best gave an approximation of residual life and could produce an over designed product, with RDA we get a more realistic design of inlays and we can reverse the process to assess how pavements are performing in comparison to that expected. It’s a big benefit for our PFI contract, giving more confidence in the long term management regime established.”
Colas’s efforts were not aimed at reducing the quantity of work to be carried out during the project’s five-year, £60M core investment period - from 2004 to 2009. The contract conditions state that the minimum amount of work to be carried out is set at the level determined by the standard method of calculation. This quantity of activity cannot be reduced. If the new technique shows less work is needed, the NCI is lifted instead.
“It was in all parties’ interests to have good confidence in the pavement analysis system and use of the latest innovations,” says Colas principal engineer Bashir Abdulrahim. “It was important for PCC and the investment banks to know that the work was being done correctly and for Colas, as the long term steward responsible for managing and maintaining Portsmouth’s roads at the same good condition set by the NCI for the following 25 years, accurate analysis is vital for future resurfacing programmes.
Best value, minimal disruption within Portsmouth and long term success can only be achieved with well informed knowledge of the residual life of the pavements concerned.”