There are many theories about what caused the spectacular demise of Carillion. Ultimately, it all comes back to skills.
As the business select committee of MPs put it so succinctly, Carillion’s failure came down to a complete failure of business planning. Or to put it another way, bad management.
And ultimately, that comes back to skills. There is a startling contrast in the recent fortunes of Britain’s two biggest contractors and their equivalents across the Channel. While Carillion has been put into liquidation, Vinci has announced “excellent” results with a declared double-digit profit margin.
Scale and diversification
It is a undoubtedly a question of scale and diversification. Carillion turned over £5bn. Balfour Beatty, Britain’s biggest contractor, turns over £8bn. Neither are in the same league as the likes of Vinci and Bouygues who both have turnovers well in excess of £35bn and are hugely diversified, owning and operating everything from car parks, autoroutes, railways, airports and even TV stations.
But it goes deeper than that. Another area that is markedly different when comparing the great European contractors with most major UK contractors, is the level of technical skill and expertise. The issue is raised often, but rarely provokes more than a shrug.
It is time to look again, more seriously. Here are the facts. Whereas UK contractors have gone towards management contracting, where the risks are mostly sub-contracted to specialists, our French, German and Spanish friends have maintained very considerable technical skills in-house. Many have design teams with technical strengths that would put most UK consultants to shame, never mind UK contractors.
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With high levels of technical skill and experience you can control risk very effectively – projects that appear risky to a UK contractor, only used to managing projects, appear much less risky to a technically strong team. The Chernobyl Arch, for example, by Vinci and Bouygues, is pretty much the same weight and technology as used by Vinci on the Clackmannanshire Bridge in Scotland. So, it would not scare them in the same way it would terrify a UK player.
As a result, the European contractors are larger, more confident and operate more effectively on a global stage. In contrast, the UK contractors (who retreated to the strong UK market in the 1990s) are smaller and less able to roll with any punches that come their way.
This explains why every major bridge project, and major project, to a certain extent, in the UK for the last 25 years has been led by a European technical giant, with a UK management contractor in tow to keep the supply chain in order.
There are important parallels between the Carillion collapse and the genuinely tragic and genuinely catastrophic Grenfell Tower fire. In both cases one can point to management failure, and in particular failure of management to detect and understand the technical risks, as key factors.
Now running in the wake of Grenfell is the ICE’s review into the risks of infrastructure failure. Professional competence is a key issue under investigation, this work being led by ICE past president Richard Coackley. It is a hugely important piece of work and it, coupled with another review of skills needs being conducted by ICE vice president Ed McCann, could and should lead to some very challenging questions about what a professional civil engineer looks and acts like.
In the year of ICE 200, This Is Engineering and the Year of Engineering campaigns, much energy is being put into making the profession look more exciting and “sexy” to young people. All very worthy. But it is vitally important to remember that as well as being exciting and “sexy”, civil engineering is highly technical, deadly serious and, as a result, demanding and earning respect and reputation. You don’t hear many French engineers bemoaning a lack of respect or recognition. I wonder why?
- Mark Hansford is New Civil Engineer’s editor