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Bonus culture helps construction professionals deliver

Mark Hansford

News this week that Simon Kirby is will be paid a bonus-free salary of £750,000 to run High Speed 2 worries me.

News this week that Simon Kirby is will be paid a bonus-free salary of £750,000 to run High Speed 2 worries me.

It’s a big old salary for sure - and a considerable hike on his £368,000 basic salary at Network Rail. But that’s not what’s worrying me. As project promoter HS2 Ltd chairman Sir David Higgins noted, Kirby’s exemplary track record means his skills are much sought after throughout the world. HS2 is lucky to get him.

No, what’s worrying me is the lack of a bonus.

Does the government now believe that bonuses do not motivate civil engineering project bosses? Or are civil engineering projects not significant enough for controversial incentive schemes?

It’s a worry, I think, because we’ve only just started to get major project delivery right.

It began with London 2012, where the Olympic Delivery Authority brought the whole £9.3bn show in early and for £528M less than expected.

Surely it is no coincidence that there the man in charge - a certain Sir David Higgins - was heavily incentivised on delivery.

Indeed, he was delivering so well that by 2008/09 he was considered to have earned a £210,000 bonus on his £384,000 base salary.

Olympic success seems to have rubbed off on Crossrail, which last week celebrated reaching the halfway stage with the project still on time and still on budget.

Can it be a coincidence that senior executives accountable for delivery are on healthy bonuses?

This year Crossrail chief executive Andrew Wolstenholme got a £123,000 bonus on top of his £443,000 salary. Programme director Andy Mitchell collected £222,000 on top of his £328,000 pay.

It’s good money. But these bonuses pale into insignificance in comparison with those earned by, say Premier League footballers. Take Manchester United striker Robin Van Persie, who bagged a £250,000 bonus on top of his £235,000 weekly wage for helping his club win the league last season.

Are we jealous? Of course we are. Do we grudgingly accept he deserved it? Of course we do. Winning the league banked Man U a record £60.8M in TV money. Van Persie’s 26 league goals were crucial. If that bonus helped motivate him, even in a small way, it has to have been money well spent.

The same argument must go for the front men and women of the construction industry.

Higgins earned a big bonus at the ODA, but the ODA delivered. Wolstenholme and Mitchell are making good money at Crossrail, but Crossrail is delivering. Kirby has made good bonuses at Network Rail but he has delivered project after project on time and on budget.

So why change a good system? Much is spoken about the need to find 20% savings to make the £42bn High Speed 2 project affordable. Surely the likes of Kirby should be incentivised to the max to wring out every saving possible.

It could be a costly mistake not to.

  • Mark Hansford is NCE’s interim editor

Readers' comments (3)

  • Nick Munro

    I trust that there are also bonuses for the members of the teams achieving completion of projects observing the necessary quality, cost and time requirements and not just the cheerleaders at the top!

    Nicholas Munro

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  • Bonuses should be an anathema to professionals. To put it simply, if there are bonuses for making widgets it is amazing how many widgetscan be made. The author has clearly never had to set up a bonus system on a construction site.

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  • Professions, and their Institutions, developed because of the need for a culture that delivered the right outcome in situations where quality isn't directly measurable. Incentives only promote the behavior required to gain the reward, not the right overall outcomes; read the book "Freakonomics" for evidence. Professional motivation works, if it runs right up the organisation, but incentivisation kills it. It saddens me that ICE has sold off its members magazine to people who don't understand what their Institution is for.

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